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HomeMy WebLinkAboutOrdinance No. 03-1514 CITY OF THE COLONY, TEXAS AN ORDINANCE OF THE CITY OF THE COLONY, TEXAS, AUTHORIZING THE CITY MANAGER TO ENTER INTO A CONTRACT WITH HORIZON AMUSEMENT SOUTHWEST~ L.L.C. TO PROVIDE FOR A GROUND LEASE AND OPERATING AGREEMENT FOR AN AQUATIC PLAYGROUND AND WATER PARK; ATTACHING THE APPROVED FORM OF CONTRACT AS EXHIBIT "A"; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS: SECTION 1. That the City Manager of the City of The Colony, Texas is hereby authorized to execute on behalf of the City a contract with Horizon Amusement Southwest, L.L.C. to provide for a ground lease and operating agreement for an aquatic playground and water park. The approved form of contract is attached hereto as Exhibit "A", and made a part hereof for such purposes. SECTION 2. This Ordinance shall take effect immediately from and after its passage by the City Council of the City of The Colony, Texas. DULY PASSED AND APPROVED by the City Council of the City of The Colony, Texas this 1 st day of December, 2003. APPROVED: ATTEST: /' Jffim Dillard, Mayor City Attorney~ WATER PARK GROUNDLEASE AND OPERATING AGREEMENT This Agreement, made and entered into this if~day of~EC~O~.~ ~ ,2003 by and between the City of The Colony, Texas, a Texas home-rule municipality, hereinafter called CITY, and Horizon Amusement Southwest, L.L.C., a Missouri Limited Liability Company, hereinafter called HORIZON: WlTNESSETH: The parties hereto agree as follows: 1. PREMISES: 1.1 Grant of Rights, Deftnition of Termn: CITY, in consideration of the provisions of this Agreement, grants lets and leases to HORIZON for the purposes stated herein, the exclusive fight to design, plan, construct, equip, operate and maintain an aquatic playground and Water Park consisting of various developments and facilities (the "Water Park") at the specific location of approximately 7.6 + acres as delineated in Exhibit "A" (the "Water Park Premises"), which is incorporated by this reference. Although the fights conveyed under this Agreement, except as stated otherwise, are exclusive year-round, the parties anticipate that the primary commercial use of the Water Park will commence no earlier than April I and end no later than October 31 in any year. The period during which the Water Park is held open for business during these months shall be referred to in this Agreement as the "Operating Season". All property described in Exhibit "A" shall be referred to in this Agreement as the "Premises". 1.2 Warranties: CITY warrants that it has the power to transfer the rights and grant quiet enjoyment at the Premises as provided under this Agreement. CITY warrants that CITY has no knowledge of any existing conditions or occurrences with respect to the Water Park Premises and adjacent areas existing on or prior to the date of this Agreement that would give Water Park Groundlease&OperatingAgreement Page I of 27 59822 rise to any liability (as defined in Section 12 below) as a result of the entry on or possession of the Premises by Horizon and/or the execution of this Agreement by Horizon. Subject to the foregoing, HORIZON, by entry of the Premises under this Agreement, accepts the Premises "As Is" in the present state of repair. HORIZON is not being charged, nor has HORIZON made a security deposit for the occupancy and use of the Premises under this Agreement. In consideration of the waiver of the payment of a security deposits, HORIZON acknowledges that CITY makes no other warranties or representations, express or implied, as to the habitability or usability of the Premises, and further acknowledges that CITY has not made any other representations to HORIZON as to whether or not the Premises are fit and satisfactory for the use intended by HORIZON. Except for its rights and remedies pursuant to the covenants, obligations and representations in this Agreement, to the fullest extent of the law HORIZON waives and disclaims any other cause of action that HORIZON may now or hereafter have or obtain against CITY, its agents, employees or servants arising from the use, occupation or condition of the Premises. 2. TERM: The initial term of this Agreement commences on the date first written above and shall terminate on December 30, 2043. CITY grants to HORIZON options to extend this lease agreement for two (2) additional five (5) year periods (the "Renewal Options"). If the Renewal Option is exercised, the extended lease term shall be subject to all the terms and conditions of this Agreement, including, without limitation, the provisions on rent. To exercise a Renewal Option, HORIZON must deliver written notice to CITY stating HORIZON is exercising the option. Said notice must be given on or before thirty (30) days prior to expiration of the preceding term. Water Park Groundlease & Operating Agreement Page 2 of 27 59822 3. QLrlTCLAIM DEED: HORIZON acknowledges that no right of ownership fee or estate is granted by this lease. At the termination of this Agreement, HORIZON shall execute and deliver to CITY within thirty (30) days a good and sufficient Quitclaim Deed to any rights arising hereunder. The granting of a deed pursuant to this section however, shall not constitute an admission by HORIZON of any breach or acquiescence in any termination, and shall not prevent or estop HORIZON fi~om pursuing all available remedies at law or in equity. To the extent that the execution of a bill of sale or other instrument of conveyance is necessary to convey ownership of property to CITY as otherwise required by the terms and conditions of this Agreement, HORIZON shall convey any such instrument as reasonably requested by CITY. 4. PARKING AND ACCESS TO PREMISES: 4.1 CITY to Provide Parking: CITY agrees to provide a close, convenient and adequate parking area for primary non-exclusive parking access for approximately 400 cars for the use of HORIZON and customers of HORIZON during operation hours during the Operating Season, in the area indicated on Exhibit "B". In the event that the CITY has a special event which will utilize such parking area, the CITY and HORIZON shall mutually agree to a parking plan upon ten (10) business day notice. CITY shall construct a parking lot (the "Parking Lot") on the parking area in general accordance with the plans attached hereto as Exhibit "B". 4.2 Pedestrian Access: CITY shall provide a designated pedestrian access to the Water Park for customers, employees and service personnel related to HORIZON'S activities pursuant to this Agreement. Should CITY make changes in the physical layout of the Five-Star Complex, it may redesignate customer pedestrian access for HORIZON, provided CITY shall insure that such redesignated access shall be equivalent in convenience and quality of appearance of the initial access. Water Park Groundlease & Operating Agreement Page 3 of 27 59822 5. RESERVED RIGHTS OF CITY: 5.1 CITY's Right to Make Improvements and Repairs on Premises: CITY retains paramount use of and right to all property within Five Star, subject to the terms of this Agreement. CITY expressly reserves the right to inspect, investigate, survey, construct, reconstruct, replace, repair, maintain, and operate water lines, sewer lines, telephone lines, electrical power lines together with appurtenant facilities along the route of such lines and facilities existing throughout the Premises, and to authorize others to do so as necessary as determined by CITY, for the administration, management and development of the site. HORIZON will be given reasonable notice when such work may become necessary and shall adjust its operations in such manner that CITY may proceed expeditiously. During the Operating Season, however, CITY shall use all reasonable efforts to exercise this right in such a way so as not to interfere with HORIZON'S operations or customer access to the Water Park or in such a way as to detract from the appearance of the Water Park or deter or discourage patronage of the Water Park; provided, however, that CITY has no control over the conduct or activities of any utilities pursuant to the easements or rights of way of such utilities. 6. RESTRICTION ON COMMERCIAL ACTIVITIES IN CERTAIN AREAS 6.1 CITY shall not permit or conduct any sales, concessions, promotions or other commercial use of the pedestrian access areas designated for HORIZON'S customers except during periods the other contractors are sharing that pedestrian access for other activities on the site, and during these periods such activities shall be limited to those directly related to such other use, and shall not be directed primarily at HORIZON'S customers or interfere with their access to the Water Park. 7. RIGHTS OF HORIZON: Water Park Groundlease & Operating Agreement Page 4 of 27 59822 7.1. 7.1.1 Permitted Activities: Unless otherwise authorized by CITY, HORIZON may use the Water Park Premises as described in Exhibit "A" for commemial purposes only as follows: all activities normally associated with aquatic park and family oriented entertainment facilities, including, without limitation, various water-oriented entertainments, fides, and attractions, games, competitions, promotions, concessions, musical, dramatic or other stage shows or similar presentations. Any other rides or attractions not within the scope of the above described activities which HORIZON proposes to add to the Premises shall require the approval of CITY, which will not be unreasonably withheld. CITY agrees that it will not withhold such approval unless the ride or attraction proposed by HORIZON will either: (i) reflect negatively on the image of Five Star or CITY; or (ii) compete directly with attractions planned or anticipated elsewhere at Five Star, or unreasonably interfere with the use of the Five Star Complex. 7.2 Exclusive Commercial Rights on Designated Premises: 7.2.1 The fights conveyed under this Agreement include the exclusive right to commercial use of the Premises for the purposes set forth herein, except as limited by this Agreement. The use by HORIZON of any pedestrian access areas and Common Parking Areas shall be non-exclusive. 7.2.2 HORIZON shall have the sole and exclusive right to enter into concession, promotion or sponsorship agreements or exclusive use arrangements relating to the Water Park as described in Exhibit "A". HORIZON shall not enter into any promotional or sponsorship arrangements involving alcohol or tobacco products. CITY recognizes that HORIZON does not have complete control over ambient noise or incidental visibility, while the Water Park Groundlease & Operating Agreement Page 5 of 27 59822 volume of public address announcements will be modulated to the level necessary to be audible to Water Park patrons, it is possible that these announcements may be audible outside the Water Park. 7.3 HORIZON'S Right to Levy Charges: Approval by CITY 7.3.1 HORIZON may charge fees, rates or prices as follows: (1) for the initial admission to the Water Park (except as limited by this Agreement), (2) for amusement facilities within the Water Park, (3) for use of all other facilities operated by HORIZON upon the Premises, (4) for sales of food and other concession items on the Premises, and (5) for use of the Premises by concessionaires, licensees, and other third parties otherwise authorized by this Agreement. 7.3.2 HORIZON shall provide to CITY a complete list of its fees, rates and prices at the Water Park. HORIZON shall post schedules of prices and charges at ticket boxes, concession outlets, and other conspicuous places. 7.4 Control of Ticket Sales: HORIZON shall operate ticket sales for its operations. HORIZON will follow reasonable revenue control procedures approved by CITY to monitor revenues. CITY shall have access upon reasonable notice to the ticket sale operations to review and audit records of receipts and verify accuracy of the operations themselves. 7.5 Identifying Signs: 7.5.1 Water Park Signs: CITY will give HORIZON the option at HORIZON'S expense to erect signs, at the locations shown on the general development plan attached hereto as Exhibit "B". CITY shall have the right to review and approve these signs, including, but not limited to, location, size, design, content, method of attachment (if any) and materials used to manufacture the sign. Water Park Groundlease & Operating Agreement Page 6 of 27 59822 7.5.2 Other Signs: HORIZON, subject to the reasonable approval of CITY, may locate other identifying or directional signs at other points on the site provided that HORIZON complies with all city codes and regulations. 7.6 Promotion and Advertising: HORIZON shall have sole control over advertising and promotion of its facilities and attractions, provided that, without further consent of CITY, HORIZON shall have the right to use the name "The Colony Five Star Complex" or similar terms for purposes of identifying the location of its facilities. CITY, in its sole discretion, may provide to HORIZON the right to advertise or promote, on other portions of the site, its facilities and activities on the Premises, and CITY may levy a separate charge for such right. 8. DUTIES OF HORIZON: 8.1 Quality of Operation: 8.1.1 HORIZON shall operate the Water Park for a commercially reasonable period during its respective Operating Season. The operations shall be of first class quality in all respects, as compared to similar operations. HORIZON shall pursue a promotional program to increase the use of its services and facilities. 8.1.2 HORIZON shall establish its Operating Season and schedule hours of operation pursuant to operating plans that will maximize economic return from operations in HORIZON'S sole business judgment. Prior to each Operating Season, HORIZON shall prepare and submit to CITY a proposed schedule of operating hours. The operating hours of the Water Park shall conform to any city ordinances applicable to the hours of operation of such a facility. 8.2 HORIZON'S Employees: 8.2.1 HORIZON agrees that at all times its employees shall be clean in appearance and courteous in manner and shall be trained so that the public and patrons at the site Water Park Groundlease & Operating Agreement Page 7 of 27 59822 shall be treated and served with every reasonable consideration and courtesy. HORIZON agrees that it shall maintain trained and adequate aquatic staff in accordance with NASCO training standards or other generally applicable industry standards for staffing. 8.2.2 Employees engaged where food and beverage is sold shall comply with federal, state, city and county sanitary regulations. 8.3 Capital Improvements: HORIZON shall make new capital improvements on the Premises as follows: 8.3.1 HORIZON shall annually prepare or revise and submit to CITY a current Capital Improvements Plan that identifies contemplated capital improvements, including any substantial changes or alterations in any existing improvements, during the next following five years. Except as provided in this Agreement, HORIZON shall not be required to carry out such improvements, but HORIZON shall not carry out any improvements unless those improvements are set forth in the Plan and approved by CITY. 8.3.2 CITY may object to the inclusion of any contemplated capital improvement in the Plan if the improvement is inconsistent with appropriate standards of appearance or safety, as measured by the standards applied in other similar facilities or on the balance of the site. CITY shall, within forty-five (45) days of receipt of the Plan, notify HORIZON in writing of such objections. Failure of CITY to make such objections shall be deemed a waiver of CITY'S right to object to the proposed capital improvement in concept, but shall not waive its right to final review and approval of the plans and specifications for such improvements as set forth in this Agreement. Nothing contained in this provision authorizes CITY to reject improvements that are reasonably functionally appropriate for the uses permitted to HORIZON under this Agreement, although the provision does authorize CITY to impose Water Park G-roundlease & Operating Agreement Page 8 of 27 59822 reasonable requirements with respect to the design and appearance of such improvements based upon the need for compatibility with the balance of the Premises. 8.3.3 From the beginning of this Agreement through the end of the first Operating Season, HORIZON will expend no less than $3,000,000 on construction and capital improvements for the Water Park. 8.3.4 Except as specifically described herein, the timing of any capital improvements shall be entirely within the discretion of HORIZON. 8.4 Restrictions on Subletting and Concessions: HORIZON shall not sublet or allow occupancy of any portion of the Premises to or by concessionaires or other third persons except as follows: 8.4.1 HORIZON may grant the operation of some of the specialized shops and/or facilities to concessionaires on the following conditions: 8.4.2 Each concession granted shall be subject to the applicable terms and conditions of this Agreement. 8.4.3 The gross receipts from the operation of each concession shall be deemed a part of the Gross Revenues of HORIZON for the purpose of computing any rentals that are payable to CITY. 8.5 Non-discrimination: Neither HORIZON nor its employees shall discriminate because of race, religion, color, ancestry, age, national origin or physical handicap against any person by refusing to furnish any such person any accommodation, facility, service or privilege offered to or enjoyed by the general public. Nor shall HORIZON or its employees publicize the accommodations, facilities, services or privileges in any manner that would directly or inferentially reflect upon or question the acceptability of the patronage of any person because Water Park Groundlease & Operating Agreement Page 9 of 27 59822 of race, religion, color, ancestry, age, national origin or physical handicap. This provision shall not require HORIZON to provide handicapped persons access to its rides or other entertainments except as required by law. Except as limited by this paragraph and by applicable law, HORIZON may limit access to the Premises according to its best business judgment and as necessary to prevent disruption or to promote the safety of its customers or employees. 8.6 Acknowledgment of CITY's Title to Premises, Acquiescence in Reversion to CITY; HORIZON Shall Commit No Waste: 8.6.1 HORIZON hereby acknowledges the title of CITY in and to the land constituting the Premises (which does not include real property improvements, attractions, rides, and facilities placed or constructed by HORIZON on the Premises during the term of this Agreement) and hereby covenants and agrees never to contest said title. 8.6.2 At the termination of this Agreement, title to the real property improvements, attractions, rides, and facilities constructed by HORIZON that are permanently affixed to the Premises in accordance with the terms of this Agreement and fixtures or appurtenances in connection therewith reverts to CITY. HORIZON shall retain title and ownership of any goods, inventory, personal property, merchandise, vehicles, movable buildings, moveable equipment (not required to operate permanent attractions) and attractions which are not permanently affixed to the Premises, including, without limitation, any attractions, rides and facilities leased by HORIZON in connection with the operation of the Water Park. Within thirty (30) days of such termination, HORIZON may remove any such goods, inventory, personal property, merchandise, vehicles, moveable buildings, moveable equipment (not required to operate permanent attractions) and attractions (not permanently affixed to the Premises) located Water Park Crroundlease & Operating Agreement Page 10 of 27 59822 on the Premises other than such personal property owned by CITY. The personal property removable by HORIZON upon termination of this Agreement shall include all office equipment, supplies, inventory and equipment not an integral part of, or required to operate, the permanent improvements, attractions, rides and facilities at the Water park. In removing HORIZON'S moveable personal property, HORIZON shall not damage or render inoperable any of the permanent improvements, attractions, rides and facilities at the Water Park. 8.6.3 HORIZON shall commit no waste of the Premises and shall be responsible for any damages to the Premises caused by the activities of HORIZON, its agents, employees, guests, and invitees. HORIZON may not discharge any waste of hazardous materials on the Premises. Any use of the fertilizers, herbicides, pesticides or other hazardous or regulated chemicals by HORIZON shall be done in strict accordance with all applicable federal, state and local laws. HORIZON shall provide CITY with copies of all chemicals constituents and MSDS sheets prior to the application of any fertilizer, herbicide, pesticide or other chemicals to the Premises. HORIZON shall maintain strict liability for any spoilage or spills in handling such materials and chemicals. 8.7 Limitations on Liens: 8.7.1 During the term provided for in this Agreement, HORIZON (including any of its Contractors and concessionaires), will not in any way encumber or cloud the title to all or any portion of the land constituting the Premises. 8.7.2 During the term of this Agreement, HORIZON shall have the right to assign as collateral for a load or otherwise encumber any improvements, attractions, rides, equipment, and facilities constructed or placed by HORIZON on the Premises. HORIZON shall Water Park Groundlease & Operating Agreement Page 11 of 27 59822 have exclusive title to all such improvements, attractions, rides, equipment, and facilities until the date of termination of this Agreement. 9. CONDUCT OF CAPITAL IMPROVEMENTS: 9.1 Compliance: HORIZON will comply with all applicable codes and regulations in connection with the conduct of the capital improvements. 9.2 Construction in Conformance with Plans: The design and construction of each capital improvement will conform generally to the working plan described in Exhibit "B", which has been approved by CITY. 10. RENT: 10.1 Annual Rent Computation: Beginning in the first Operating Season, HORIZON shall pay CITY without demand an annual payment equal to the greater of: (i) Five pement (5%) of gross revenues for lease years 1-10; (ii) Six pement (6%) of gross revenues for lease years 11-20; (iii) Seven percent (7%) of gross revenues for lease years 21-40. 10.2 Annual Payment: HORIZON shall make the annual rent payments or an estimated annual payment on September 30th of each year. The parties shall, during the last calendar quarter, reconcile such payment. HORIZON shall make its rent payment on or before September 30 of each year and shall provide to CITY, in addition to such payments, a statement certified by an officer or agent of HORIZON of the Gross Revenues for the preceding year. 10.3 Annual Report and Reconciliation: Within one hundred twenty (120) days following the close of the calendar year, HORIZON shall furnish to CITY a statement of the Gross Revenues for the entire calendar year. In the event additional rent balance is due, such additional rental shall be due and payable within one hundred and thirty-five (135) days of the Water Park Groundlease & Operating Agreement Page 12 of 27 59822 close of the calendar year. In the event that the audits show that HORIZON has made an overpayment, such overpayment shall be refunded to HORIZON within one hundred thirty-five (135) days of the close of the calendar year. 10.4 Place of Payment: All rent Payments shall be made by HORIZON to CITY at CITY's office at it Department of Financial Services, 6800 Main Street, The Colony, Texas or at such other location as shall be designated in writing by CITY. 10.5 Late Payments: In the event a rental payment is not made on or before the last day of the reconcile period herein provided, HORIZON shall pay to CITY a late charge on unpaid rental payments at a rate of .75 percent per month from and after the due date thereof until the date of payment. Should there be tmusual or extenuating circumstances for not paying rental payments on or before the due date herein provided, CITY in its discretion may waive the late charge on the unpaid rental payments. 10.6 Computation of Gross Revenues and Definition of Terms: For all purposes under this Agreement, the term "Gross Revenues" shall mean all monies or money equivalents paid or payable to HORIZON for sales made or services rendered at or from the Premises during the Operating Season through the implementation of the Agreement, without any deductions, provided that "Gross Revenues" shall not include (i) any sales taxes or other admissions and/or amusement taxes imposed by any governmental entities and collected by HORIZON, or (ii) "tmdeouts" or other arrangements whereby HORIZON engages in advertising or promotion of the Water Park in exchange for non-cash benefits. 10.7 HORIZON shall provide annually "gratuity" day passes for all municipal employees of the CITY of The Colony to be used from May l*t to Memorial Day or Labor Day to September 30th during each year of this lease agreement. In addition, HORIZON shall provide Water Park Groundlease & Operating Agreement Page 13 of 27 59822 the maximum corporate discount to immediate family members for such authorized municipal gratuity pass date. 10.8 Additionally, HORIZON shall offer a seasonal pass at a reduced rate for all residents of the CITY of The Colony prior to the sale of such seasonal passes to the general public and such seasonal passes shall not exceed three thousand (3,000). 10.9 HORIZON shall execute and cause to be delivered a letter of credit in an amount equivalent to one (1) full year of the amount of the lease. Such letter of credit shall be delivered and made payable to the City of The Colony, executor of this Agreement and shall be maintained throughout the term of the lease. 11. RECORDS, REPORTS AND AUDITS: 11.1 Maintenance and Disclosure of Records: HORIZON shall keep true and accurate books and records showing all of its business transactions concerning its operations on the Premises in separate records of account, based on generally accepted accounting principles and ethics, in a manner acceptable to CITY and CITY shall have the right through its representatives, and at all reasonable times, to inspect such books and records including sales tax returns and other amusement and/or admissions tax records. HORIZON hereby agrees that all such records and instruments are available to CITY. 11.2 Cash Register Equipment: HORIZON agrees that as part of its record- keeping activity it shall at its own cost and expense install and maintain such cash register equipment as may be deemed necessary by CITY. Such cash register equipment shall contain a continuous registering tape or other vehicle for providing an audit trail acceptable to CITY for the accurate recording of gross receipts. Water Park Groundlease & Operating Agreement Page 14 of 27 59822 12. HOLD HARMLESS AGREEMENT: HORIZON agrees to indemnify, defend and hold harmless CITY and all of its present, future and former agents, employees, officials, and representatives in their official, individual, and representative capacities from and against any and all liability created by or arising from services performed, or goods provided, by HORIZON. As used herein, the term liability includes, but is not limited to, any and all claims, demands, causes of action, judgments, liens and expenses (including attorneys fees, whether contractual or statutory), costs and damages (whether common law or statutory), of any conceivable character, due to or arising fi.om injuries to persons (including death) or to property (both real and personal). The indemnity provided herein expressly includes any liability arising through the doctrine of strict or products liability, liability arising under the constitutions of the United States or Texas, and contractual indemnity for the breach by HORIZON of any of its obligations under this Agreement. The indemnity provided herein also expressly extends to any liability caused by the negligence or other fault of any indemnified party to the extent, BUT ONLY TO THE EXTENT, that such liability arises from the selection, hiring, retention, supervision or control of HORIZON, the Premises operated by HORIZON, or the acceptance of the services or goods performed or provided by HORIZON. Subject to the foregoing, the indemnity provided by Horizon herein expressly excludes any and all liability (1) arising out of activities, conduct or occurrences outside the Water Park Premises; provided that such liability is not caused by the negligence or willful misconduct of HORIZON; (2) arising out of conditions or occurrences with respect to the Water Park Premises and adjacent areas occurring or existing prior to the date of this Agreement; or (3) arising out of the sole negligence or willful misconduct of CITY. 13. iNSURANCE: Water Park Groundlease & Operating Agreement Page 15 of 27 59822 HORIZON agrees to purchase and maintain in full rome and effect during the term of this Agreement and any renewal, and at HORIZON's sole expense, the types and amounts of insurance coverages listed below, together with the coverage provisions and endorsements as indicated: 13.1 Worker's Compensation Insurance: 13.1.1 Worker's compensation coverage shall be maintained for not less than the Texas Statutory limits. 13.1.2 Employers' Liability Insurance shall be maintained with minimum limits of not less than $250,000 per occurrence and $500,000 aggregate. 13.1.3 The policy shall contain a waiver of subrogation in favor of the City of The Colony. 13.1.4 The policy shall contain a requirement that CITY be given not less than thirty (30) days written notice of cancellation, non-renewal or material change. 13.2 Commercial General (Public) Liability Insurance shall include coverage for Premises/Operations, Products/Completed Operations, Independent Contractors, Personal Injury and Contractual Liability insuring the indemnity provision contained in this Agreement. 13.2.1 Combined limit of $1,000,000 per occurrence for bodily injury and property damage. 13.2.2 Annual aggregate limit of $2,000,000. 13.2.3 The City of The Colony shall be listed as an addition insured. 13.3.4 The policy shall contain requirement that CITY be given not less than thirty (30) days written notice of cancellation, non-renewal or material change. Water Park Groundlease & Operating Agreement Page 16 of 27 59822 13.3 Business Commercial Automobile Liability Insurance shall include coverage for owned/leased vehicles, non-owned vehicles, and hired vehicles. 13.3.1 Bodily injury limit of $250,000 per person and $500,000 per occurrence. 13.3.2 Property damage limit of $100,000 per occurrence. 13.3.3 Aggregate limit of $1,000,000. 13.3.4 The City of The Colony shall be listed as an additional insured. 13.3.5 The policy shall contain requirement that CITY be given not less than thirty (30) days written notice of cancellation, non-renewal or material change. 13.4 Commercial Crime Insurance shall include coverage for employee dishonesty, forgery or alteration, and theft, disappearance and destruction. 13.4.1 Coverage shall be on a blanket basis. 13.4.2 Limits shall be equal to $100,000 per occurrence. Such insurance on the improvements, fixtures, furnishings, and equipment of HORIZON on the Premises, shall be in an amount adequate to insure the replacement and/or removal of said property in the event of loss. 13.5 Comprehensive property insurance for fire, windstorm, and other possible casualties. All policies of insurance shall be written with a company or companies approved by the Texas Department of Insurance to transact business in the State of Texas and acceptable to CITY, whose acceptance will not be unreasonably withheld. HORIZON agrees to provide CITY with certificates of insurance evidencing the required insurance coverages and shall provide CITY with certificates of insurance evidencing the required insurance coverages and shall provide CITY with certificates of current coverage upon the expiration or renewal of any Water Park Grotmdlease & Operating Agreement Page 17 of 27 59822 insurance coverage. Upon each renewal of this Agreement, CITY reserves the right to amend the foregoing insurance requirements or to require additional coverages and amounts as may be determined necessary by CITY. 14. MAINTENANCE: 14.1 HORIZON's Responsibilities: HORIZON agrees to maintain any and all facilities at the Water Park in clean, good order and repair at its own cost and expense during the entire term of this Agreement. At the beginning of each Operating Season, HORIZON shall provide CITY with a projected maintenance schedule for the upcoming Operating Season. 14.2 Other Maintenance Services: HORIZON further agrees to assume and pay when due all operating expenses for pest control, garbage and waste (hazardous and/or otherwise) removal, janitorial services, and any other operating services accruing or payable in connection with its occupancy of the Premises and, any part thereof, including deposits, fees, or other charges required by the supplier of any such service. 15. UTiLITIES AND SERVICES: 15.1 General Responsibilities for Utilities: HOR1ZON shall be responsible for the installation and provision of all utilities including sewage necessary to and used in connection with its occupancy of the Water Park Premises and Premises as described in Exhibit "A" and the removal and disposal of all rubbish, refuse and garbage resulting fi.om operation. The location and route for such utilities may be designated and redesignated by CITY. 15.2 Pawnent of Utility Charges: HORIZON shall assume and pay when due all charges for water, gas, power, telephone, light, and any other utility services accruing or payable in connection with its occupancy of the Premises and any part thereof, including deposits, connection fees or charges and equipment rental required by the supplier of any such Water Park Groundlease & Operating Agreement Page 18 of 27 59822 utility service, provided HORIZON agrees to reimburse CITY for utilities based upon a reasonable estimate of the proportion of such utility services actually used by HORIZON if the utilities are not separately metered. 15.3 Use of City Services: During the original and any extended term of this Agreement, HORIZON agrees to use all applicable municipal services offered or provided by CITY including, without limitation, electricity, water, wastewater, sanitation and landfill services so long as such services are readily available to HORIZON and competitive with similar services within the Dallas-Fort Worth metropolitan area. 16. Bankruptcy: Subject to the provisions of the United States Bankruptcy Code, as amended, should HORIZON file a voluntary petition in bankruptcy or be adjudged a bankrupt either upon the voluntary petition in bankruptcy of HORIZON or upon the involuntary petition of creditors of HORIZON, or should HORIZON seek a remedy afforded by any statute of the United States relating to bankruptcy, or should HORIZON make an assignment for the benefit of its creditors, or should a receiver be appointed over its assets, or should an attachment be levied, and permitted to remain for a period of more than thirty (30) days, upon any interest of HORIZON under this Agreement, then, all interest of HORIZON in this Agreement, except such interest as may have been validly assigned by HORIZON pursuant to the conditions of this Agreement, shall at the sole option of CITY terminate upon ninety (90) days written notice to HORIZON and CITY may enter and take possession of the Property. 17. NOTICES: Any notices provided for in this Agreement, or which otherwise may be given by either party to the other, shall be deemed to have been fully given when made in writing and deposited in the United States mail, certified or registered, return receipt requested, postage prepaid and addressed as follows: Water Park Groundlease & Operating Agreement Page 19 of 27 59822 To HORIZON at: Horizon Amusement South, LLC ATTN: President 11883 Silver CliffWay Gold River, CA 95670 with a copy to: Brad I. Pearson 4324 Belleview, Suite 100 Kansas City, MO 64111 To CITY at: City Manager City of The Colony 6800 Main Street The Colony, TX 75056 with a copy to Robert E. Hager, City Attomey NICHOLS, JACKSON, DILLARD, HAGER & SMITH, LLP 1800 Lincoln Plaza 500 N. Akard Dallas, Texas 75201 The address to which notices shall or may be mailed as aforesaid by either party, shall or may be changed by written notice given by such party to the other as hereinbefore provided, but nothing herein contained shall preclude the giving of any such notice by personal delivery in writing. 18. WAIVER OF AGREEMENT TERMS: No waiver by either party at any time of any of the terms, conditions or covenants of this Agreement shall be deemed as a waiver at any time thereafter of the same or of any other Water Park Groundlease & Operating Agreement Page 20 of 27 59822 term, condition or covenant of herein contained, nor of the strict and prompt performance thereof. 19. ASSIGNMENTS: 19.1 No Transfer Without CITY Consent: 19.1.1 No transfer, assignment or corporate merger by HORIZON that affects this Agreement or of any part thereof or interest therein directly or indirectly, voluntarily or involuntarily, shall be made unless such transfer, assignment or corporate merger is first consented to in writing by CITY as required by, and pursuant to the provisions of this Paragraph 20. 19.1.2 No consent shall be required for a transfer or assignment to, or a merger with, a corporation, person or other entity, controlling, controlled by or under common control with, HORIZON, directly or indirectly. In the event of such transfer or assignment, HORIZON shall be fully released and discharged from any and all obligations under this Agreement. 19.2 Assignment for Security: HORIZON's leasehold interest in the Premises under the terms of this Agreement, for the purposes of affording security only, may be assigned, transferred or encumbered when first consented to in writing by CITY. CITY shall give such consent upon verification that such assignee is a responsible commercial lender and that such assignment is made consistent with the requirements and restrictions of this Agreement. No mortgage shall be executed and no bonds or other evidence of interest in, or indebtedness upon the assets or proposed assets of HORIZON shall be issued except for the purposes of acquiring, installing, enlarging or improving plant and equipment and extending facilities for the accommodation of the public. In the event of breach and foreclosure on such mortgage or such Water Park Groundlease & Operating Agreement Page 21 of 27 59822 other indebtedness or of other assignment, transfer or encumbrance, the purchaser under the foreclosure sale shall succeed to the possessory interest of HORIZON, subject to the reasonable approval of CITY. Under these cimumstances, operating rights and privileges shall be as outlined in this Agreement. 19.3 Assignment for other than Security: Except as permitted in this Agreement, neither party shall assign or otherwise convey any interest of any sort granted by this Agreement, to any person or persons, entity or entities whatsoever without prior written consent and approval by the other party. Consent to an assignment shall not unreasonably be withheld. In deciding whether to consent, CITY may consider the financial capability and stability of the proposed assignee and the experience of the management of the assignee in operating water parks. 20. TIME OF ESSENCE: Time shall be of the essence in the performance of this Agreement. 21. PARAGRAPH TITLES: The paragraph titles in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of intent of this Agreement or in any way affect this Agreement. 22. ENTIRE UNDERSTANDING: This Agreement contains and embraces the entire Agreement between the parties hereto and neither it nor any part of it may be changed, altered, modified, limited or extended orally except by written amendment thereto signed by CITY and HORIZON, or their successors in interest. 23. CITY APPROVAL SHALL BE REASONABLY GIVEN: Except as specifically provided otherwise in each case in this Agreement in which CITY is given a right to consent to or approve any act, policy, or decision of HORIZON, CITY shall not unreasonably withhold or Water Park Groundlease & Operating Agreement Page 22 of 27 59822 delay such consent or approval, taking into account the standards established for such consent or approval. If no standards are established, then the standards shall be those that would reasonably apply to the profitable operation of an enterprise similar in kind and quality to the Water Park. 24. RELATIONSHIP OF THE PARTIV.~q: While engaged in carrying out and complying with the terms and conditions of the Agreement, HORIZON is and shall be an independent contractor and shall not, with respect to its acts and omissions, be deemed an officer, employee, agent or representative of CITY. HORIZON shall not in any manner, whether directly or by implication, represent that HORIZON is an officer, employee, agent or representative of CITY. The fact that CITY has the right to observe HORIZON's work or to exercise other prerogatives under this Agreement or by its regulatory authority is not intended to and shall not affect the status of HORIZON as an independent contractor. HORIZON acknowledges that it is extremely important to CITY that all activities conducted by HORIZON under this Agreement strictly comply with all City ordinances, regulations, permit requirements, and laws. Nothing contained in this Agreement shall limit the regulatory authority of CITY to terminate some of all of the activities of HORIZON for a violation of any City ordinance, regulation, permit requirement, or other law. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership, joint venture, or employment, it being expressly understood and agreed that no provision contained in this Agreement nor any act or acts of the parties hereto shall be deemed to create any relationship between the parties other than the relationship of independent parties contracting with each other solely for the purpose of effecting the provisions of this Agreement. Neither party has the authority to enter into contracts or to assume any obligation for the other nor to make warranties or representations on behalf of the other except in Water Park Groundlease & Operating Agreement Page 23 of 27 59822 accordance with the express terms of this Agreement or as otherwise authorized in writing by the other. Except for the provisions of this Agreement relating to the indemnification of employees, agents and representatives of CITY, there are no third-party beneficiaries to this Agreement and no third-party beneficiaries are intended by implication or otherwise. 25. DISPOSITION OF MOVEABLE PROPERTY: Upon termination of this Agreement, and continuing for a period of ninety (90) days thereafter, HORIZON shall have the right to remove any goods, inventory, personal property, merchandise, vehicles, moveable buildings, equipment or attractions which are not permanently affixed to the Premises. From and after the termination of this Agreement, the property described in this Section shall be and remain the property of HORIZON. 26. MISCELLANEOUS PROVISIONS: This Agreement supersedes all agreements, whether written or oral, previously made between the parties relating to the subject matter hereof. There are no other understandings or agreements between the parties hereto with respect to this subject matter hereof. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same agreement. Except as otherwise provided herein, the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and the respective successors and permitted assigns. Any failure of any party hereto to comply with any obligation, covenant, agreement or condition herein may be waived by the other party, but any such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver or estoppel with respect to any subsequent or future failure. Water Park Groundlease & Operating Agreement Page 24 of 27 59822 27. DISPUTE RESOLUTION: The parties agree that, prior to instituting any lawsuit or other proceeding arising from a dispute under this Agreement, the parties will first attempt to resolve the dispute by taking the following steps: (1) A written notice substantially describing the nature of the dispute shall be delivered by the dissatisfied party to the other party, which notice shall request a written response to be delivered to the dissatisfied party not less than three (3) days after receipt of the notice of dispute. (2) If the response does not reasonably resolve the dispute, in the opinion of the dissatisfied party, the dissatisfied party shall give notice to that effect to the other party whereupon each party shall appoint a person having authority over the activities of the respective parties who shall promptly meet, in person and at a mutually agreeable location, in an effort to resolve the dispute. (3) If those persons cannot or do not resolve the dispute, then the parties shall each appoint a person from the highest tier of managerial responsibility within each respective party, who shall then promptly meet, in person and at a mutually agreeable location, with a neutral third-party mediator in an effort to resolve the dispute (the costs of the mediator shall be equally shared by the parties). If the dispute between the parties cannot be resolved in accordance with the foregoing provisions, the prevailing party in any legal proceeding shall be entitled to recover its reasonable attorneys' fees and expenses from the non-prevailing party. 28. FORCE MAJEURE: Notwithstanding anything in this Agreement which is or may appear to be to the contrary, if the performance of any covenant or obligation to be performed hereunder by any party (other than the payment of rent) is delayed as a result of circumstances which are beyond the reasonable control of such party (which circumstances may include, without limitation, pending litigation, acts of God, war, acts of civil disobedience, fire or other casualty, shortage of materials, adverse weather conditions (such as, by way of illustration Water Park Groundlease & Operating Agreement Page 25 of 27 59822 and not of limitation, severe rain storms or below freezing temperatures, or tomados) labor action, strikes or similar acts, moratoriums or regulations or actions by governmental authorities), the time for such performance shall be extended by the amount of time of such delay, but no longer than the amount of time reasonably occasioned by the delay. The party claiming delay of performance as a result of any of the foregoing "force majeure" events shall deliver written notice of the commencement of any such delay resulting from such force majeure event not later than seven (7) days after the claiming party becomes aware of the same, and if the claiming party fails to so notify the other party of the occurrence of a "force majeure" event causing such delay and the other party shall not otherwise be aware of such "force majeure" event, the claiming party shall not be entitled to avail itself of the provisions for the extension of performance contained in this provision. 29. DEFAULT; TERMINATION: A party shall be deemed in default under this Agreement if such party fails to materially perform, observe or comply with any of its covenants, agreements or obligations hereunder or breaches or violates any of its representations contained in this Agreement; provided that before any such failure, breach or violation shall be deemed to be a default under this Agreement, (i) the party claiming such failure, breach or violation shall first notify, in writing, the defaulting Party and shall demand performance, and (ii) the defaulting Party shall fail to commence to cure such failure, breach or violation within thirty (30) days of the receipt of such written notice. Upon a default of this Agreement, the non-defaulting party, in any court of competent jurisdiction, by an action or proceeding at law or in equity, may (i) secure the specific performance of the covenants and agreements herein contained, may be awarded actual damages for failure of performance, or both; or (ii) declare this Agreement terminated, provided, however, that neither CITY nor HORIZON shall ever be liable for consequential, Water Park Grotmdlease & Operating Agreement Page 26 of 27 59822 exemplary or punitive damages of any kind or character. Except as otherwise set forth herein, no action taken by a party pursuant to the provisions of this Agreement shall be deemed to constitute an election of remedies and all remedies set forth in this Agreement shall he cumulative and non-exclusive of any other remedy either set forth herein or available to any party at law or in equity. Each of the parties shall have the affirmative obligation to use reasonable efforts to mitigate its damages in the event of a default by the other party. 1N WITNESS WHEREOF, the parties hereto have affixed their signatures, as of the date first above written. HORIZON: CITY: Horizon Amusement Southwest, LLC City of The Colony By: . By: ff ~ " c / ~.~/ ~, 'za /JO~-, ,~/~( t ~ Dale Cheatham Its: City Manager 11883 Silver CliffWay 6800 Main Street Gold River, CA 95670 The Colony, TX 75056 ohn Dillard vlayor Water Park Groundlease & Operating Agreement Page 27 of 27 59822 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA ) personally appeared, ~)c,~ O; c3, ~:,~,~ c ~ ~ ~ mo (or proved to me on the basis of satisfactory evidence) to be the person(~9-whose name(s,) is/are subscribed to the within instrumem and acknowledged to me that he/z~c/~l,,.y executed the same in hi~ authorized capacity(ips'), and that by his/hoe/O~ signature(i~r on the instrument the person~'), or the entity upon behalf of which the person(~') acted, executed the instrumem. WITNESS my hand and official seal. ~ NOTARy PUBLIC SIGNATURE OPTIONAL INFORMATION DATE OF DOCUMENT NUMBER OF PAGES SIGNER(S) OTHER THAN NAMED ABOVE SIGNER'S NAIvIE/ //~~