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HomeMy WebLinkAbout03-29-10 Special Called Regular Meeting of the Fiscal Affairs Committee MINUTES OF THE SPECIAL CALLED REGULAR MEETING OF THE FISCAL AFFAIRS COMMITTEE March 29, 2010 1. Call to Order The meeting was called to order by Chairman Chuck Engelken at 5:04 p.m. Members of Committee Present: Board Members Chuck Engelken, Louis Rigby, Tommy Moser and Daryl Leonard. Daryl Leonard arrived at 5:32 p.m. Also, Councilmember Zemanek was in attendance. Members of Committee Absent: None Members of City Council. City Executive Staff and City Employees Present: City Manager Ron Bottoms, Assistant City Manager John Joerns, City Attorney Knox Askins, Director of Finance Michael Dolby and City Secretary Martha Gillett Others present: Kathryn Aguilar, Phillip Hoot, Ted Powell and Dottie Kaminski. 2. Consider approval of Minutes of the Special Called Regular Meeting of Fiscal Affairs Committee held March 8, 2010. Motion was made by Committee Member Rigby to approve the minutes as presented. A second by Committee Member Moser. The motion carried. Ayes: Engelken, Rigby, Leonard and Moser Nays: None Abstain: None Absent: None 3. Discuss questions and inquires from citizens related to Town Plaza and the Alamo Building - C. Engelken/K. Askins Committee Chairman Chuck Engelken and City Attorney Knox Askins discussed the questions and inquires from citizens related to Town Plaza and the Alamo Building. The committee requested the following information to be discussed and followed up on at the next meeting: · Knox Askins to conduct a title search on the properties purchased by Garson at Five Points · Staff to obtain information on the URS Contract outlining pricing and reimbursable · Staff to obtain information on landscaping for the Town Plaza. They would like a list of items the $200,000 purchased · Staff is to provide change orders associated to landscaping expenses Fiscal Affairs Committee - Special Called Regular Meeting - March 29, 2010 2 . Appraisal of Triangle Property · Staff to provide lien on property for underground storage tank removal · Staff to provide lease agreement for the Alamo Building. In addition, they need to provide a list of deliverables on what Garson has completed and where he is on each one. · The committee directed staff to send Code Enforcement to the Alamo Building to ensure there are no code violations and if any codes are being violated that would force the project to move forward more quickly. · Items 6 & 7 were noted the were commentary only and nothing was discussed · Staff was directed to implement a policy regarding artwork being displayed in public buildings · A copy of the lien on Virginia Street boarding house was requested · More information was requested on block 198 and 199 with regards to taxes It was the consensus of the committee to get these additional items from the City Attorney and City Staff. Once the information has been obtained, the City Secretary will poll the committee and schedule the next meeting. At the next meeting, the committee will determine if additional information is needed and/or whether or not an external audit needs to be conducted. Prior to the next meeting, Mr. Engelken will meet with the public to determine if they have any additional matters for the Fiscal Affairs Committee. It was the consensus of the committee to release the draft back-up to citizens. 4. Administrative Reports There was no additional information reported. 5. Committee Comments Matters appearing on agenda A. Recognition of community members, city employee, and upcoming events B. Inquiry of staff regarding specific factual information or existing policy There were no additional comments from committee members. 6. Adjournment There being no further business to come before the committee, the meeting was adjourned at 6:40 p.m. Respectfully submitted, 3 Martha Gillett, TRMC City secreta:!tln tft/:iiJtL .I<1d Approved this day of 2010. Chuck Engelken, Chairman cJwd April 16, 2010 Re: Katherine Aguilar inquiry Chairman Engelken: At our last meeting the committee requested the following information which is attached: 1) Garson's note/mortgage information for when he paid off his loan to the city 2) The professional services contract with URS 3) A list of the landscape material for the plaza. 4) Lien on the apartment building property. 5) Lien on the tank removal on Garson's property. 6) The appraisal of the triangle property. 7) Copy of Garson's lease 8) A list of items Garson owes the City The committee also requested staff to develop an art display policy for city hall, which we will be working on. In addition, Ms. Aguilar submitted some additional questions, which I have attached. I have numbered her questions and provided answers to her questions, either listed here or in Knox's response: . Questions 1, 2, 3 and 5 are answered in Knox's letter. . No money flowed out of the City. . Question #4: URS was selected based upon their submittal. As I recall, we requested proposals from three finns and heard from two: URS and Knudson. The original contract was for $223,900. The final contract is for $249,300 - change orders were issue for Geotechnical services ($6,900) and audio and wifi design ($18,500). Both URS and Knudson have landscape architects, with Knudson being a landscape architect firm. . Question #6: We worked with Garson Silvers because he was the owner of the property. Ifit had been someone else who owned the property, we would have worked with them. . Question #7: This project was discussed in detail at numerous City Council and La Porte Development Corporation meetings. The cost/benefit was a major part of this discussion and consideration of this proj eel. let me know if you have additional questions. Page I of 3 Bottoms, Ron From: charles engelken jr [cengelken@att.net] Sent: Sunday, April 11, 20107:44 PM To: knoxaskins@comcast.net; Bottoms, Ron Subject: Fw: Additional questions in pursuit of a forensic audit for Town Plaza Know/Ron Below are some additional questions from Ms Aguilar from our meeting Friday. I requested them in writing again. Thanks Chuck ----- Forwarded Message ---- From: Kathryn Aguilar <kaybay40@hotmail.com> To: engelken <cengelken@att.net>; moser <mosecelectric@sbcglobal.net>; gillettm@laportetx.gov; jzemanek@zemanekmarine.com; "ted .a. powell@exxonmobil.com" <ted .a. powell@exxonmobil.com> Sent: Sat, April 10, 2010 10:19:00 AM Subject: Additional questions in pursuit of a forensic audit for Town Plaza Here are the questions that I was trying to express in the meeting yesterday. I hope this is adequate. I have further documentation, if needed. I really appreciate all of the efforts and professionalism of the city staff and councilmen in assisting with this effort. ~~ / The Wire transfer of $150,000 Garson Silvers unsecured loan repayment + $3182.70 in interest repayment was made and documented in 4/09. The questions associated with this are: Kathryn Who actually made this loan repayment and how is that documented? @ Did the same sum, i.e. $150,000 plus $3182.70 flow back out ofthe City accounts to an outside entity and jf so, where, when, and who received this money? ~o Why does the RELEASE OF LIEN Document # 20090131184 signed 3/12/09 actually occur a month before the repayment date of 4/9/09 indicated by the wire transfer? ~ Please explain Exhibit C: This appears to be a closing document for land purchase of block 198 (';) (land between Alamo bldg and Parks and Wildlife) in which the City of La Porte is acting as \J' lender. The price for this land is $295,OOO!!! (plus some closing costs.) This land appraisal 4/16/20 I 0 Page 20f3 based on HCAD in 2009 at $25,000 for HCAD # 024004090980006 (which includes lots 6,7 block 198) and $8,230 for HCAD # 0240040980025) lots 10,9 and W 56.4 ft of TR 11,12,13 block 198) . Did the City of la Porte act as lender for this highly inflated land purchase? . Was any appraisal done? If so, please provide it. Why was URS chosen as the designer of the park? Was there competitive bidding on this contract? @ It appears that neither of the key designers listed in the contract Bruce Broberg (experienced in healthcare facilities design) and Dan Wardrop (planning/design) have any listed experience in landscape architecture. Was a landscape architectural firm contacted and allowed to bid this project? What is the reason for the gross cost overrun on URS's contract for $223,900? Actual payments to URS appear to be $316,997. This is more than a 40% cost overrun! It appears based on Harris County Clerk document 20070477563 that the "purchase" for $60,000 of the Alamo building was secured only with a promissory note by Garson Silver's company(s) --- no actual final sale was made until the City of la Porte purchased a portion of this property (Triangle) for A $150,000 and then added a "loan" of $150,000 and acted as lender for the sale of the adjoining (}I property for $295,000. Owner/Seller in all instances was actually Wade Cooper with Garson Silvers deriving a very substantial profit from this land transfer. In other words, the taxpayers of La Porte were used to finance the land sales at highly inflated prices to benefit Garson Silvers and to a lesser extent Wade Cooper. WHY? Are there documented business practices that allow the City of La Porte to act against the interests of the Citizens of la Porte and FOR the interest of a private citizen? No What are the documented criteria to determine when a developer should be offered such favorable treatment by the city government? No"'" - rwf err, ~'- Are there documented procedures to determine the financial capability of the developer BEFORE these agreements are entered into? As I recall, Ron Bottoms personally indicated in January of 2009 (Bayshore Sun front page article) that Garson Silvers was properly "vetted" prior to the signing of ~ documents to allow this highly favorable (to Garson Silvers) financial arrangement to transpire. Please provide the documentation whereby this was determined. From my research, there is certainly no evidence of financial capacity to fulfill any of the stated contractual obligations (repayment of loan, development of high rise building, completion of Alamo building, provision of $150,000 of public art) on the part of Garson Silvers. Are COST/BENEFIT analysis calculations done as part ofthe Project Development cycle for all significant 4/16/2010 Page 3 of 3 proposed projects to compare the value of one project in terms of cost versus value added to the community? If not, why not? This is a part of all significant business decisions and is a requirement in industry. All projects go through a rigorous set of hurdles to determine if objective criteria are met ~ before the project is funded. This is something which a city, particularly one facing serious issues of cj; quality of life degradation due to industrial incursion on residential property, a hurricane recovery, and revenue losses due to a severe economic downturn cannot afford to bypass. Citizens are in desperate need of representation to preserve their property values, quality of life and health right now on the SE area of la Porte due to industrial encroachment. As far as I am aware, there is no official representation of the communities interests and all homeowners are being advised by La Porte city government to make individual decisions concerning acceptance of an Easement which will have profound effects on the future of the SE area. Hotmail is redefining busy with tools for the New Busy. Get more from your inbox. See how. 4/16/2010 a skins & askins P.c. ATTORNEYS and COUNSELORS Knox W. Askins Clark T. Askins April 12, 2010 via email. Charles Engelken, Jr. Chairman, Fiscal Affairs Committee Darrell Leonard Tommy Moser Louis Rigby cc: John P. Zemanek, Jr. Re: Town Plaza Gentlemen: As requested, I have obtained a title report on all of Lots 6, 7, 8, 9, 10, and the west 56.4 feet of Lots 11, 12 and 13, Block 198, Town of La Porte, Harris County, Texas. A copy of the title report is attached. The record owner of the property is East A Developments, LP. Page 2 of the report lists three (3) current deed of trust mortgage liens on the property. The lien for $28,916.00, due June 30, 2011, secures a promissory note to the City of La Porte Development Corporation, for tank removal expense. An unrecorded side agreement, provides that the lien will secure the actual cost of removal, which was $31,083.00. The second lien listed was for $110,000.00, secured by a deed of trust mortgage from East A Developments, LP, to Gayle Investments. The third lien listed is for $157,000.00, which was executed on March 26, 2009, from East A Developments, LP, to Real Property Mortgage and Investment Co., Inc., which was the re-financing of the East A Developments, LP, deed of trust mortgage to the city of La Porte Development Corporation. This lien was transferred on the same date to Gayle Investment Company. The lien affidavit for $4,300.00 on page 3 of the report, is a contractor's lien, in favor of Halligan's Foam Coatings of Houston, Inc., relating to construction on the Alamo Building. 702 W. Fainnont Parkway. P.O. Box 1218. La Porte, TX 77572-1218 281.471.1887 phone . 281.471.2047 fax . knoxaskins@comcast.net . ctaskins@swbel1.net )' @ Charles Engelken, Jr. April 12, 2010 page 2 Additionally, Chuck Engelken has forwarded to me, a copy of an email from Kathryn Aguilar, on April 10, 2010, which contained a number of questions. I will attempt to address the legal questions in the email. First, let me correct the statement that the $150,000.00 loan from the City of La Porte Development Corporation to Bast A Developments, LP, was unsecured. This loan was secured by a deed of trust mortgage. This deed of trust mortgage was released by the Release of Lien, referred to in the email. (j) As shown by the title report, this loan re-payment was made by Real Property Mortgage and Investment Co./ Inc. (J) The Release of Lien was executed on March 12/ 2009, two weeks before the closing, so that the Release of Lien could be placed in escrow with stewart Title company/for the closing. The wire transfer was made after the mortgage company funded the loan through stewart Title Company. The request for an explanation of Exhibit "C", the $150/000.00 loan from the City of La Porte Development Corporation, referred to above, was a purchase money loan for the purchase by East A Developments, LP, from Wade Cooper. In clarification of the statement that Wade Cooper was not the actual seller to East A Developments, LP (Garson Silvers), please see page 1 of the title report, which shows the special warranty deed from East A Developments, LP, to La Porte Economic Development Corporation, on October 29/ 2008. This deed had to be corrected by correction deed from Wade Cooper to East A Developments, LP, on March 25, 2009, at the time of the mortgage refinancing, as shown on the title report. The assertion that purchase of the property by East A Developments, LP, on July 30, 2007, was not secured, is incorrect. Wade Cooper retained a vendor's lien mortgage for $59,990.00/ as part of that transaction. I will defer to city staff for reply to the remaining questions by Ms. Aguilar concerning City policy. Please let me know if you have any further questions. Yours very truly, ~ins City Attorney City of La Porte Charles Engelken, Jr. April 12, 2010 page 2 KWA: sw Enclosure cc: via email Ron Bottoms, City Manager John Joerns, Assistant City Manager Michael Dolby,Director of Finance Clark T. Askins, Assistant City Attorney Martha Gillett, City Secretary a TliE RESEARCH STAFF, INC. Member of Public Record Retrievers Network Member of Title Agents ot America [) THIS REPORT IS NOT TITLE INSURANCE. By aa:eptlllCe of this n:pon it ia undel'ltClOd that the lilbillly hcmlndcr iilimilcd to tile amount paid for SlIlIe. This report is issued fbr the use of and sholl inure to the benefit ofdle perty rcqllllSlinll SIIIIC IIId may not be giVCllto. or used by, lilY t111rd pll1y. THIS REPORT IS ISSUED with the express undcrslMding, mdenc:ed by Il:Ceptanc:e of SlIme, that the undcrsillled does not uoderttlke or give or Rpres5 lilY opinion as to the validity of the title to the property dclcribed, but is a reporting h=in as to the lnSlnlmllnts IIIl1Ched hado and found of record penalninl to the said property. The information provided is guaranteed to be as aceul'tlte as reasonable care CIIlIll.e it IS ofdle certification daIc and we ISsumc no responsibility !"or updatlna the information unless pulSUll1l: to e specifIC l'Cllueal THIS REPORT IS BASED ON ,PUBLIC INFORMA nON CONTAINED IN THE RECORDS STATED HEREIN, WHICH ARE COMPILED. MAINTAINED AND INoexeD BY mE AOENCY (IES) NAMED HEREIN. WE CANNOT INDEPENDENTLY VERIFY THE COMPLETENESS. OR ACCURACY. OF nm UNDERL YINO RECORPS. Tbls report is not title lamnnce. If e policy oftille insurance is purchased, any liability t1~ shall be determined solely by the terms of such policy. TITLE REPORT for Knox W. Askins Askins & Askins, PX Client Reference TRS! Control # Jurisdiction City of La Porte-Harris C-20o- 100730 Harris County. Texas Abstractor's Initials Examiner's Initials Certification HC/OOW CaW/AM From: 0810312007 To: 03124f2010 Owner of Reeord Listed In Last Title Deed b: Eut A. Developments, LP SPECIAL WARRANTY DEED to East A. Developments, LP Executed by: Wade Cooper Executed on: 07/30/2007 Filed for record on: 08/0312007 Recorded under: 20070477563 Remarks :. Vendor's Lien $59,999.00; Released by 20070632971 SPECIAL WARRANTY DEED to LaPorte Economic Development Corporation Executed by: Ease A. Developments, LP Executed on: 10/29/2008 Filed for record on: 10/3112008 Recorded under: 20080542457 Remarks . h_ CORRECT WARRANTY DEED to East A. Developments. LP Executed by: Wade Cooper Executed on: 03/2512009 Filed for record on: 03/3] 12009 Recorded under: 20090 J 31 J 82 Remarks · COlTection of 20080542455 Yow: Me*ucb StaEf 5718 Hewitt .. Houston, T@xas 77092-5125 Telephone: 713-688-3584 .. F4cdmile: 713-688-1121 www.researchstaffonline.com Jlpproval : Certified: TRSI Control .: Page: 03/24/201Cl C- 100730 1/3 111 ~ERESEARCH STAFF, ~. M~mber of Public Record Retrievers Network Member of Titl. ~98nt5 of America Correct Deserlption of Property: All of Lots 6, 7, &. 9, 10 and the West fifty-six and four tenths (56.4) met of Lots 11, 12 and 13, in Block One Hundred Ninety-Eight (198) of TOWN OF LA PORTE. an addition in Harris County, Texas, according to the map or plat thereof recorded in Volume 8, Page 16 of tile Map Records of Harris County, Texas. Transcribed from Client's Request Subject to: . Rell Property Liens DEED OF TRUST for $28,916.00; due 06130/2011 Executed by: East A. Developments, LP Trostee: Knox W. Askins Beneficiary: City of LaPorte Development Corporation Executed on: 07101/2009 Filed for record on: 07/14!2009 Recorded under: 20090310843 Remarks · -. DEED OF TRUST for $110,000.00 Executed by: East A. Developments, LP Trustee: Frederick B. Cull Beneficiary: Gayle Investments Executed on: 10/1712007 Filed for record on: 10/1912007 Recorded under: 20070632972 Remarks · -- DEED OF TRUST for $157,000.00; due 04/01/2010 Executed by: East A. Developments, LP Trustee: Thomas Clarke Beneficiary: Real Property Mortgage and Investment Co., Inc. Executed on: 03/2612009 Filed for record on: 03/3112009 Recorded under: 20090131183 Remarks · Transfer executed on 03/2612009, filed on 03/31/2009, under document #20090131185; Gayle Investment Company Approval. : Yow: M..arab staff 5719 He~1tt ~ Houston, Texas 77092-5125 Telephone: 113-688-3584 .. Faca1lll1le: 713-699-1121 www.researchstaffonline.com Certifiec1: TRBI Control *: Page: 03/2412010 c- 100130 2/3 a ""B RESEARCH STAFF, INC. Member ot Public Record Retrievers Network Member of ~itle Aqents of America LlEN AFFIDAVIT fur $4,300.00 Filed by: Halligan's Foam Coatings of Houston, Inc. Filed against: East A. Development, LP Filed for record on: I 0109/2009 Recordl:d under: 20090463380 · Penonal Liens whkh may affect title No Abstracts of Judgment or Tat Limr (10 year search) located IJ.J a/the dot, a/this review. . Property Tax Inrormatlon Tn Texas. all taxes are assessed in October of eoch year. In Tum. ail/axes are due and payable by 01/31 qf eoch year. after which they are delinquent CAD Account # 024-004-098-0006 Taxpayer Name East A Developments LP Situs Add ress 109 San I acinto St. CAD Land Value $ 7,37S.00 (2009) 7,373 Square feet CAD Imprv Value $17,749.00 (2009) No Exemptions Status of payment of taxes ( }HAS (x )NOT been reviewed . Notes to Client Additional documeflls qffect/ng tille to this property are listed as follows: · A ffida"it of Completion executed on I 0/0712009, filed on 1 0/0912009, under document #20090463381. · THIS TITLE REPOR T DOES NOT INCLUDE review of the status afOil. Gas and Minerals i~teresls . 11IE RESEARCH STAFF, INC. Control # C.I00730 CertirlCation Date: 0311..11010 I!:ow: b~oh staff 5718 Hewitt .. Houston, Texu 71092-5125 Telephone: 113-688-3584 . ~acsimile: 713-688-1121 www.researchstaf.fonline.com ~oval : Certi tied: TRSI Control .: P.tg.: 03124/2010 C- 100730 3/3 URS Q October 1, 2008 Mr. Ron Bottoms City Manager City of LaPorte 6500 Fairmont Parkway LaPorte, Texas 78730 RE: Five Points Plaza Design, Construction phase services and Studies Proposal Dear Mr. Bottoms: I appreciate this opportunity to have URS provide planning and design services for the Five Points Plaza Site. I would like to thank you, Gretchen Larson, Deborah Dye, John Joerns, and Tim Tietjens for the support we have received thus far. We hope you have found our previous efforts to be valuable tools to the redevelopment of the Five Point area. The renderings provided our initial vision of the possibilities for the Five Points area. Recently we were excited to develop the thought provoking and inspiring video presentation. URS is prepared to proceed into the development of the plaza based on the two previous efforts. From the initial conversation with Bruce myself and the subsequent visits with your staff I am confident that we can help you realize your objectives for an exciting public plaza for the citizens of laPorte and southeast Texas. The work plan as understood will establish requirements for the Five Points Plaza, and assist in the establishment of a direction and strategy for your near-term and long-term development. Our compensation for the design of the plaza and the traffic and infrastructure plaza on a time and material not to exceed are as follows: $140,000.00 for the plaza design $22,000 for construction phase services $35,000.00 for traffic and utility infrastructl!~e studies relating to the plaza area. $19,900.00 for reimbursable expenses $7,000.00 allowance for surveying plaza $223,900.00 URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713 789-9801 Fax: 713 789 8404 URS OUR UNDERSTANDING OF THE PROJECT- Five Points Plaza SCOPE OF WORK Design Tasks URS proposes to develop a planning and design and construction administration proposal for the development of the LaPorte Five Points Plaza. The Plaza is defined as the area east of Broadway form the curb line, to the realignment of East A street new curb line, eastern edge of the building fa<;ade line, and northwesterly up to the triangle tip near main street. Any work beyond this boundary is not included in this proposal. (See attachment B project boundary)URS proposes to utilize cost effective LEED principles of design for all work in this project. This design proposal will include the above grade features such as Landscape, Hardscape, Architectural Facilities, and Water Features etc. URS will provide complete design services form preliminary documents through construction documents. Study and Analysis tasks · URS will provide underground and above ground studies for utilities and traffic analysis. The results of these studies will allow for a clearer picture of the below gl:'ade systems-and provide direction to a design project. below grade and historic utility plans including water, waste water, electrical, telephone, fiber optic, natural gas, documentation detailing maintenance records, historical deployment, loading information, upgrades, and future planned initiatives. The Plaza Design will include: · Landscaping which have water native plant material or southeast Texas adaptable plant material that is low water demand. The landscaping will include an irrigation system that will use rain water or gray water as available to support the plant material. Also planned is the use of mulch material that will assist in the preservation of water and moisture in the soils. URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713789-9801 Fax: 7137898404 URS . Hardscape which will include side walks, plaza pavers, curbs, and drivable areas for delivery vehicles. An area for a prominent piece public art will be included (public art is not included.) Hardscape will also include street lights, signage, and ornamental fencing. . Facilities to be part of this effort include the Gazebo and 2 entrance gates farchways. . Water Feature to include at least one major water feature and possible a smaller one as indicated on the video. . Cost estimates for the project from initial concept through final design. The design and construction will be completed with LEED criteria in mind. We want to provide and exciting venue for the public gatherings and also encourage and support the redevelopment (by private developers) of the Five Points area. Knowledge of the existing surface, and sub surface infrastructure will need to be fully understood early in this process. Phase One 300/0 DesiQn Project Initiation f Visioning - This phase shall incorporate the project kick-off, to include an overall site tour, as well as a visioning work session to identify project goals and priorities. Key tasks associated with this phase include: . Establishment of a working group consisting of key representatives from the City of LaPorte, and may include other east Harris County leadership, for review and approval of planning options. · To provide a forum for communication and consensus-building, a one day visioning retreat will be held with key staff. to confirm the planning process, priorities, timeline, project objectives and anticipated project outcomes. Orientation site tour(s) to understand existing site, architectural, engineering and functional conditions. Data Gathering - This phase shall involve the gathering of data including information related to documents available from LaPorte, Harris County, Center Point data etc. and existing surveys, plans, drawings and studies. Key tasks involved include: · Gathering of information related to surveys and land plats, historical utilization, zoning information, environmental etc. · Gathering of information related to the physical facilities, including architectural and engineering drawings, master planning studies, etc. . Current above grade utility plans including water meters, hydrants, waste water, electrical (power poles overhead lines, telephone (communication poles or structures, fiber optic stations, natural gas meters. URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713 789-9801 Fax: 713 789 8404 URS Documentation . Landscape Plan Concept . Hardscape Plan Concept . Water Feature Plan Concept . Architectural Facilities Plan Concepts . Concept Cost estimate . Professional Services scope schedule and budget update Phase One A Infrastructure Study Analysis Phase Concurrent to design Phase services- A high level overview of the cities' existing infrastructure systems will be conducted to identify current conditions and capacities to support any additions or renovations proposed by the five points development plan and other proposed adjacent development as of the date of this proposal. Key tasks involved include: . The Engineer will collect information on all existing utilities from municipal, private and industrial sources. . The Engineer will also obtain existing statistical information about water flows and demands, wastewater flows and storm water flows. . The capacities of the existing system will be estimated and compared to the existing flows for adequacy determinations. . Future flow projections will be estimated based on population and development plans and trends. . Future flows will be compared to existing infrastructure capadties and needed new or upgraded facilities will be sized. . Traffic counts at three intersections . $ignal warrant study at three intersections. Documentation . Plan View' Layout of revise street pattern . Street, roadway and "new" sidewalk at parking . Intersection layout (3) . ROW requirements (corner clips only) . Cross section of each new street layout. URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713789-9801 Fax: 7137898404 URS . The background information, system analyses and recommendations will be summarized in narrative format and graphics will be prepared illustrating recommendations. Phase Two 60% Design . Refine Options Development - In this phase URS, working closely and on-site with the City of LaPorte working group, shall develop the options for the listed. Options shall be developed that identify alternative planning solutions for the departments, as well as associated phasing requirements and anticipated costs. Key tasks associated with this phase include: . Develop facility planning alternatives in departmental block form that illustrate departments to be expanded, renovated or relocated; as well as site development concepts to address improvements to access, entry and parking. Integration of findings from the infrastructure study to include current mechanical, plumbing, electrical and structural systems and their adequacy for future use and expansion. Documentation . Landscape Plan Best Option . Hardscape Plan Best Option . Water Feature Plan Best Option . Architectural Facilities Plan Best Options . Cost estimate for Best Option . Professional Services scope schedule and budget update Phase Three 100% Design Plan Finalization - The final plans shall be developed and a published document distributed during this phase, with preferred landscape plan, hardscape plan, water features plan, Facilities plan, and infrastructure and utilities plan. URS will also provide short range and long range development options, capital cost estimates, and option(s) with advantages / disadvantages. . Landscape Final Plan . Hardscape Final Plan . Water Feature Final Plan . Architectural Facilities ( Gazebo, gates), Final Plan . Cost estimate for Final Plan Phase Four Construction URS will assist the City of LaPorte in by developing documents for bidding. URS will provide construction administration services for the Plaza project. URS Corporation 9801 Westheimer,Suite 101 Houston,Texas n042 Tel: 713 789-9801 Fax: 713 789 8404 URS Construction Administration Make periodic visits (approximately biweekly), as distinguished from the continuous services of a resident Project Representative to familiarize ourselves generally with the progress and quality of the work, and to determine in general if the work is proceeding in accordance with the contract documents. PROJECT TEAM URS proposes a veteran consulting team versed in the public spaces and infrastructure unique Plaza development for the development of the proposed Five Points Plaza. Leading the overall effort, and serving as Client Executive, will be Mr. Bruce Broberg, PE. As the primary day-to-day contact for this project, Mr. Wardrop has over 29 years of extensive experience in the design and delivery of healthcare facilities. His experiences have evolved into an expertise in project formation, master planning, delivery and management, with a commitment to responsive, responsible service. Sharing leadership responsibilities and serving as Project Manager will be Mr. Dan Wardrop, AlA, for nearly 29 years, Mr. Wardrop has provided unique planning and design projects to clients throughout the world. His application of functional problem-solving principles and responsiveness to clients will result in unique and innovative project. As Client Executive and Engagement Leader, Mr. Wardrop and Mr. Broberg will be source of authority, accountability and communication between URS and the City of LaPorte. In support of Mr. Wardrop and Mr. Broberg, URS has assembled a senior, talented project team of experts for the engagement. Other key team members on the team include: URS Corporation 9801 Westhaimer,Suite 101 Houston,Texas 77042 Tel: 713 789-9801 Fax: 7137898404 URS Mr. Michael Bagstad, PE Utility Infrastructure Leader Mr. Rich Squire, PE Traffic Leader Mr. Bill O'Brien ALSA Landscape Design Leader Mr. David Cabage, Cost Estimation Leader FEES AND EXPENSES and additional services Time and Materials not to exceed $197,000.00 Design and Construction Administration Traffic and Infrastructure Studies $162,000.00 $35,000.00 Attachments A: Hourly Rates for URS staff B: Boundary of the Plaza C: Contract for services URS PSAl REIMBURSABLE EXPENSES The professional fees do not include reimbursable expenses. Reimbursable expenses are all expenses incurred in connection with the project including copies, photos, models, renderings, express mail, supplies travel(site trips, meetings), lodging, meals, printing, and long distance phone calls in connection with the project,. Reimbursable expenses are typically between 5% and 15% of the professional fees, depending upon travel distances and frequency of meetings. Due to the proximity of the Five Points Plaza we anticipate the project-related expenses not to exceed $19,900.00. Additional services not include in the above URS has in-house capabilities Geotechnical Services Estimate To be Determined (TBD) Environmental Testing TBD *Surveying of the Plaza area allowance $7,000.00 additional Construction phase services TBD Designs outside Plaza boundary TBD Cost Of Permitti ng TBD Contractors as built documents TBD URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713 789-9801 Fax: 713 789 8404 URS SCHEDULE An outlined design schedule is proposed to be completed in an approximate 14.5- week time frame, pending availability of all parties. URS will tailor this schedule as needed to accommodate these specific needs. A notice to proceed for example on October 15, 2008 would result in a final of design by January 30. This assumes a close coordination with decision makers for approvals in a few days from completion of tasks. Study and Analysis Services will be approximately 6 weeks Payment shall be made within thirty (30) days of dated invoice. Late payments shall bear interest at one percent (1 %) per month on the outstanding balance, however, not to exceed legally allowed rate. Mr. Bottoms if this proposal is in accordance with your intent and meets with your approval please indicate your acceptance by signing each of the three proposals and return one original to my attention. Please do not hesitate to call if you have any further questions. Sincerely, URS Corporation B~b:h r;Y-/'-~ //~ Dan Wardrop, AlA ~ Accepted By: City of LaPorte Signature Title Date URS Corporation 9801 Westheimer,Suite 101 Houston,Texas 77042 Tel: 713 789-9B01 Fax: 713 789 8404 Attachment A URS CORPORATION - HOUSTON, TEXAS PAYMENT PROVISIONS & 2008 SCHEDULE OF FEES AND CHARGES The following describes the basis for compensation for services performed during the calendar year 2008. This Schedule of Fees and Charges may be adjusted annually on January 1 of each subsequent year to reflect merit and economic salary increases, and changes in the expected level and mode of operations for the new year. The new Schedule of Fees and Charges will apply to existing and new assignments from the date this fee schedule is approved. PERSONNEL CHARGES The charge for all time required in the performance of the Scope of Service, including office, field and travel time, will be at the Hourly Rates set forth below for the labor classifications indicated. Billing Category (BC) Loaded Rate ($/hr) Principal Project Manager Senior Consultant Sr. PM Sr. StaffEng/Sci/Designer Eng/Sci II/Designer Technician Staff Eng/Sci Designer Secretary Project Administrator Scientist 210 180 120 105 92 81 75 65 65 60 Overtime (hours worked in excess of eight [8] hours per day) by exempt personnel will be charged at the above straight time hourly rate. Overtime by non-exempt personnel (classifications identified with an asterisk"*") will be charged at 1.5 times the above hourly rate. Special project accounting, reporting and financial services, including submission of invoice support documentation, will be charged at the rate of a Sec/Clerk IV. PAYMENT PROVISIONS Payment provisions are as stated in the PSA-l under Article II - Payments. OTHER PROJECT COSTS Subcontracts Equipment Rental and Other Costs The cost of services subcontracted by URS Corporation to others and other costs incurred by URS Corporation will be charged at cost plus 10%. Communications The cost of communications for office telephone, facsimile, postage, and incidental copying costs will be charged at a flat rate of3% of total gross labor charges. Courier services and express delivery will be charged at cost plus 10%. Document Reproduction No charges will be made for routine copying and printing. Large copying and printing jobs will be charged at $0.12/page for black and white and $1.20/page for color. Vehicle Rental Field vehicles (pick-ups, vans, trucks, etc.) used on proj ect assignments will be charged at a flat rate of$50.00/day or $200/week. Personal vehicles usage will be based upon the U. S. Government designated rate. Specialized Equipment The use of specialized URS Corporation equipment will be the fixed rental rates set forth in the Schedule of Specialized Equipment Charges. This fee schedule contains confidential business information and is not to be copied or distributedfor any purpose other than the use intended in this contract or proposal en +-' C Q.) E .c () ro +-' +-' <{ TIME AND MATERIALS WORK ORDER NO. 2 In accordance with the Agreement for Professional Services between City of LaPorte ("Client"), and URS COrPoration ("URS"). a Nevada corporation, dated [insert effective date of Aareement. not this Work Orderl . this Work Order describes the Services, Schedule, and Payment Conditions for URS Services on the Project known as: Five Points Plaza audio and wifi desian and consultation services Client Authorized Representative: Ron Bottoms Address: 401 West Fairmont Parkway, LaPorte, Texas nS7 Telephone No.: (281) 471-S020 URS Authorized . Representative: Bruce Broberg Address: 9801 Westheimer, Suite 500 Houston, Texas 77042 Telephone No.: (281) 914-6614 SERVICES. The Services shall be described in Attachment...A....- to this Work Order. SCHEDULE. The Estimated Schedule shall be set forth in Attachment to this Work Order. Because of the uncertainties inherent in the Services, Schedules are estimated and are subject to revision unless otherwise specifically described herein. PAYMENT. Payment of $ is due upon signature of this Work Order and will be applied against the final invoice for this Work Order. URS charges shall be on a "time and materials" basis and shall be in accordance with the URS.Schedule of Fees and Charges in effect at the time the Services are performed. Payment provisions and the URS current Schedule of Fees and Charges are attached to this Work Order as Attachment A ($18.500.00) .with this addition the total contract value is $242,400.00 TERMS AND CONDITIONS. The terms and conditions of the Agreement referenced above shall apply to this Work Order, except as expressly modified herein. signatures of the URS Signature Ron Bottoms City of LaPorte Type~a7Js /6, Date of Signature . Date of ~i~mature ':::;:';;~~\~;'::~:':' '.~"'::;:"\::"::""~'. '~":.":'r:y~" " '.... \~::.~:;'::: ............,-:.... ...,..~~....,~~, ", '.' ..~.' .'~..."" . ," . ',. ".' ..... "",YO""_:' .,.'.~.~r....,.'.......,; :-_,''-: ""'. -", '-," ... .~.' ~~". '~'" . . '-. . -, ,"". _., ,. "~", .;. .....,~~O'.:-... '... .. _. h. '-:' ," ~ .';:' ~ ~."'.: TIME AND MATERIALS WORK ORDER NO. 3 In accordance with the Agreement for Professional Services between Citv of LaPorte ("Client"), and URS Corporation ("URS"). a Nevada corporation, dated finsert effective date of Aareement. not this Work Orderl , this Work Order describes the Services, Schedule, and Payment Conditions for URS Services on the Project known as: Five Points Plaza -Geotechnical Services Client Authorized Representative:. Ron Bottoms Address: ~~ .401 West Fairmont Parkway, LaPorte, Texas 7757 "'1' Telephone No.: (281) 471-5020 URS Authorized Representative: Bruce Broberg Address: 980fWestheimer. Suite 500 Houston. Texas 77042 Telephone No.: (281) 914-6614 SERVICES. The Services shall be described in Attachment A to this Work Order. SCHEDULE. The Estimated Schedule shall be set forth in Attachment 1L- to this Work Order. Because of the uncertainties inherent in the Services, Schedules are estimated and are SUbject to revision unless otherwise specifically described herein. PAYMENT. Payment of $ is due upon signature of this Work Order and will be applied against the .. final invoice for this Work Order. URS charges shall be on a "time and materials" basis and shall be in .accordance with the URS Schedule of Fees and Charges in effect at the time the Services are peiformed. payment provisions and the URS current Schedule of Fees and Charges are attached to this Work Order as Attachment A ($6900.00) .with this addition the total contract value is $249,300.00 . TERMS AND CONDITIONS. The terms and conditions of the Agreement referenced above shall apply to this Work Order, except as expressly modified herein. Signature Ron Bottoms City of LaPorte TYP~Ui~;09 Date of Signature ~tt4 Bruce Broberq URS Comdration Typed Namefritle tf/.21/ ()q Date of Signature " .;':.,", ....'....\e.... ._' ~",,;,"\,. ,~, ""\ . ., .,.;--.....h........'... ..,~..~. "'''''. ...,.~. ..,~.,~., .-.'~ . .... ............ '" ....,,~':"-. .~ .~. ....:f..,-,:..,...:-'""". ...\..:..........._. _.~"':'~" .." ",' . . ,":": :: "" :.~.. .~..~. , ..:.:...:.\:.~\.;\:...:.'.:.;,.... . .. .............,. ,,' City of La Porte Lien "'701. O()0937 66 03/11/2010 RP3 $16.00 State of Texas County of Harris G) 1'"\ ! \. , .,~.; Notice of Den for Work ArtiCle 4436,RCS Pursuant to Section 342.007 of the Texas Health and Safety Code, and City of La Porte ordinance No.716, enacted on the 24th day of May, 1965, notice is hereby given that the City of La Porte, a municipal corporation situated in the County of Harris, State of Texas, acting by its duly authorized representatives and under the authority contained in said statute and ordinance, on or about the dates hereinafter shown, has caused a certain valuable work or improvements, to-wit: The cutting of weeds or brush, the filling of pools, or the removal of trash or other objectionable or unsanitary matter, to be done with respect to certain real property situated within the \ QJ property situated within the corporate limits of the City of La Porte, Harris County, Texas, and located as described as follows: ' - \ .:': u q(A :"1' 1\ Date/Action Amount Name/Legal Description ~.\.,{., La Porte Block 198 E 68.6 Ft of 11,12 &13 Bay View Loan Servicing 024 004 098 0008 01/28/10 Demolition $19,926.00 C; -' That the City of La Porte, in connection with such work or improvements, has expended, and has heretofore determined to be the reasonable value of such work or improvements, the sum of money shown as to each tract or tracts of land, as tabulated above; that pursuant of said statute and ordinance, the City of La Porte has become vested with., and by this instrument does hereby perfect, a privileged lien against the property herein above descnoed, to secure the payment of the said sum stated above, plus interest thereon at "he rate often percent (10%) per annum from and after the effective date hereof, the lien hereby created being inferior only to valid and existing tax liens for street improvements. m TESTIMONY OF WHICH the CITY OF LA PORTE has caused this Lien to be executed on the 25h day of January 2010. CITY OF LA PORTE \\jQ STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on the Wednesday, March 03, 2010. @ . 'CZ" FILED FOR RECORD . :-II h ~ ) !i 1..UhCUtf 8:00AM BY. ILWJ...U?--/' i/l? ~~~~~~~art MAR 11 2010 _ ':f'1-A..4~tlr#..../ _:-::7. ';'" _.L T9X88 . ~5tt,r;rYt;;z,~.. .:~w -.1;ti~ f*: :rE ... .... 't~.. ..~~ "'~(,IY;:I~~'~" LORIE A. DOUGHTY MY COMMISSION EXPIRES September 13, 2011 ./" F~f.(GnDr:R!S ;iitr--'10?..ANDUr7J: ,< ti'~:: ti{(;-e of i r:(..;rd3~;~jn} lhls lnstrurnE{\t \~S fOUitd ,,) t.~ ir,3[L:'q~;?::e (or tile best photographic r,,:;;'c{j:xLon L-:C,3iJ',e of illegibility, carbon or photo ::;::, ji:;.(o!w::d peper, etc, .AII blackouts, additions .,nd c-liir;ges wa'? pr52nt at tile time the instrumenl ~"'?.s med arid reco,'"ded. After Recording Return to: ;/ / City Of La Porte \.: .J 604 W. Fairmont Parkway La Porte, Texas 77571 Attn: Accounts Receivable Department Approved: ~ ! .!: -A-d~;A~ lark Askins City Attorney F'~ ~ i""ODY 'I..~ ~ '. cJ:n or LA PORT. DBVBLOPlOIBT CORPORATJ:ON La Porte, Tex.. 77571 @ 604 West rairmont Parkway July 1, 2009 Mr. Garson Silvers, Manager GSDB Management, L.L.C. General Partner of East A Developments, L.P. 1001 Usener Houston, TX 77007 Dear Mr. Silvers: This letter will confirm agreements reached in our recent telephone conversations. The City of La Porte Development Corporation (hereinafter "Development") is presently constructing Town Plaza Park on the property which it purchased from East A Developments, L. P . , including the triangle tract of land, and the former San Jacinto Street right-of-way. In the course of construction, the contractor has discovered two underground petroleum fuel tanks, on Lots 6 and 7, in Block 198, Town of La Porte, an addition in Harris county, Texas, according to the map or plat thereof recorded in Volume 8, Page 16, of the Map Records of Harris County, Texas, and the alley adjoining said Lot 6 (hereinafter "Property"). Petroleum products from one or both of the petroleum fuel tanks has migrated into the former San Jacinto Street right-of-way property, and into the alleyway abutting Lot 6 of the Property. Under applicable State of Texas and federal statutes and rules, these fuel tanks must be removed, and the affected soil must be properly remediated and back-filled. The estimated cost of the removal, remediation, and back-fill is $28,916.00. This estimated cost is subject to adjustment as the remediation is conducted. Development agrees to engage, supervise, and pay contractors to remediate the Property. This letter is to confirm the agreement of East A Developments, L.P., that Development, and its contractors, may enter upon the Property, as necessary, to conduct these remediation activities. Development will assign its contractor warranties to East A Developments, L.P. This letter is further to confirm the agreement between East A Developments, L . P. , and Development, that Development will initially pay for the cost of remediation, in the estimated sum of $28,916.00, or as that cost may be finally adjusted upon completion of the remediation, and that East A Developments, L.P., Garson Silvers July 1, 2009 page 2 will execute a promissory note, and a deed of trust mortgage, on the property described in said deed of trust, to secure the payment of the promissory note, to reimburse Development for the final cost of remediation. If this letter accurately states East A Developments, L.P. 's understanding of its agreement with the City of La Porte Development Corporation, please have the promissory note and deed of trust executed as indicated, and return to me, with an executed copy of this letter, evidencing your firm's understanding and approval of the agreement between the parties. The original of this letter will be your copy of the agreement. Yours very truly, By: PORTE o ORATION Manager ACCEP'rED AND AGREBD; EAST A DEVELOPMENTS, L.P. By: By: JJ: sw Enclosure 5 \)1 .) N " M ~ I l ~ ~ I ~ ~ C \\I 0: ~q9~M:1l3f1y:.P't?:lo DEED OF TRUST AND SECURITY AGREEMENT NOTICB OF CONPIDBNTIALITY RIGHTS: IF YOU AR8 A NATURAL PBRSON, YOU MAY RBMOVB OR STRIKB ANY OF THB FOLLOWING INFORMATION FROM THIS I>>STRUMBRT BBFORB IT IS FILm PaR DooRD IN TBB PUBLIC RECORDS: YOUR SOCIAL SBCURITY NUMBER ~UR DRIVBR' S LICBIlSB NUMBBR. Date: July 1, 2009 BAST A DBVBLOPMBNTS, L.P. a Texas limited partnership Grantor: Mailing Address: Trustee: Mailing Address: Beneficiary: 1001 Usener, Houston, TX 77007 KNOX W. ASIURS P.O. Box 1218, La Porte, Texas 17572 Mailing Address: Hote (.) CITY OF LA PORTE DEVELOPMENT CORPORATION a Texas non-profit corporation 604 West Fairmont parkway, La Porte, TX 17571 Date: July 1, 2009 $28,916.00 Amount: Maker: BAST A DEVELOPMBNTS, L. P . CITY OF LA PORTB DBVBLOPMBH'T CORPORATION Payee: Final Maturity Date: June 30, 2011 Property (including any imProvem~tB): I I ~ ~J. 5t ~I( 1J /0' vi ..,-.'1 All of Lots 6 and 7, 1n Block One Hundred Ninety- ight (198) of TOWN OF LA PORTE, an addition in Harris countr' Texas, according to the map or plat thereof recorded n Volume 8, Page 16 of the Map Records of Harris county, Texas. Por value received and to secure payment of the note, Grantor conveya the property to Trustee in trust. Grantor warrants and agre.. to defend the title to the property. If Grantor performs all the covenants and pays the note according to its term., this deed of trust shall have no further effect, and Beneficiary shall release it at Grantor'. expense. FILED FOR RECORD 8:00 AM JUL 14 2009 ~d~'*--- / County 0'8rl(, Harrill <:ounty, Texes I~ lJJ D Grantor's Obligations Grantor agrees to: 1. keep the property in good repair and condition; 2. pay all taxes and assessments on the property when due; 3. preserve the lien's priority as it is established in this deed of trust; 4. maintain, in a form acceptable to Beneficiary, an insurance policy that: a. covers all improvements for their full insurable value as determined when the policy is issued and renewed, unless Beneficiary approves a smaller amount in writing; b. contains an 80% coinsurance clause; c. provides fire and extended coverage, including windstorm coverage; d. protects Beneficiary with a standard mortgage clause; e. provides flood insurance at any time the property is in a flood hazard area; and f. contains such other coverage as Beneficiary may reasonably require; S. comply at all times with the requirements of the 80% coinsurance clause; 6. deliver the insurance policy to Beneficiary. and deliver renewals to Beneficiary at least ten days before expiration; 7. keep any buildings occupied as required by the insurance pOlicy; and 8. if this is not a first lien, pay all prior lien notes that Grantor is personally liable to pay and abide by all prior lien instruments. Beneficiary's Rights 1. Beneficiary may appoint in writing a substitute or successor trustee, succeeding to all rights and responsibilities of Trustee. 2. If the proceeds of the note are used to pay any debt secured by prior liens, Beneficiary is subrogated to all of the rights and liens of the holders of any debt so paid. 3. Beneficiary may apply any proceeds received under the insurance pOlicy either to reduce the note or to repair or replace damaged or destroyed improvements covered by the policy. 4. If Grantor fails to perform any of Grantor's obligations, Beneficiary may perform those obligations and be reimbursed by Grantor on demand at the place where the note is payable for any sums so paid, including attorney's fees, plus interest on those sums from the dates of payment at the rate stated in the note for matured, linpaid amounts. The sum to be reimbursed shall be secured by this deed of trust. S. If Grantor defaults on the note or fails to perform any of Grantor's obligations or if default occurs on a prior lien note or other instrument, and the default continues after Beneficiary gives Grantor notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Beneficiary may: a. declare the unpaid principal balance and earned interest on the note immediately due; 2 b. request Trustee to foreclose this lien, in which case Beneficiary or Beneficiary's agent shall give notice of the foreclosure sale as provided by the Texas Property Code as then amended; and c. purchase the property at any foreclosure sale by offering the highest bid and then have the bid credited on the note. Trustee's Duties If requested by Beneficiary to foreclose this lien, Trustee shall: 1. either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then amended; 2. sell and convey all or part of the property to the highest bidder for cash with a general warranty binding Grantor, subject to prior liens and to other exceptions to conveyance and warranty; and 3. from the proceeds of the sale, pay, in this ord~r: a. expenses of foreclosure, including a commission to Trustee of 5% of the bid; b. to Beneficiary, the full amount of principal, interest, attorney's fees, and other charges due and unpaid; c. any amounts required by law to be paid before payment to Grantor; and d. to Grantor, any balance. General provisions 1. If any of the property is sold under this deed of trust, Grantor shall immediately surrender possession to the purchaser. If Grantor fails to do so, Grantor shall become a tenant at sufferance of the purchaser, subj ect to an action for forcible detainer. 2. Recitals in any Trustee's deed conveying the property will be presumed to be true. 3. Proceeding under this deed of trust, filing suit for foreclosure, or pursuing any other remedy will not constitute an election of remedies. 4. This lien shall remain superior to liens later created even if the time of payment of all or part of the note is extended or part of the property is released. 5. If any portion of the note cannot be lawfully secured by this deed of trust, payments shall be applied first to discharge that portion. 6 . Grantor assigns to Beneficiary all sums payable to or received by Grantor from condemnation of all or part of the property, from private sale in lieu of condemnation, and from damages caused by public works or construction on or near the property. After deducting any expenses incurred, including attorney's fees, Beneficiary may release any remaining sums to Grantor or apply such sums to reduce the note. Beneficiary shall not be liable for failure to collect or to exercise diligence in collecting any such sums. 7. Grantor assigns to Beneficiary absolutely, not only as collateral, all present and future rent and other income and 3 receipts from the property. Leases are not assigned. Grantor warrants the validity and enforceability of the assignment. Grantor may as Beneficiary's licensee collect rent and other income and receipts as long as Grantor is not in default under the note or this deed of trust. Grantor will apply all rent and other income and receipts to payment of the note and performance of this deed of trust, but if the rent and other income and receipts exceed the amount due under the note and deed of trust, Grantor may retain the excess. If Grantor defaults in payment of the note or performance of this deed of trust, Beneficiary may terminate Grantor's license to collect and then as Grantor's agent may rent the property if it is vacant and collect all rent and other income and receipts. Beneficiary neither has nor assumes any obligations as lessor or landlord with respect to any occupant of the property. Beneficiary may exercise Beneficiary's rights and remedies under this paragraph without taking possession of the property. Beneficiary shall apply all rent and other income and receipts collected under this paragraph first to expenses incurred in exercising Beneficiary'S rights and remedies and then to Grantor's obligations under the note and this deed of trust in the order determined by Beneficiary. Beneficiary is not required to act under this paragraph, and acting under this paragraph does not waive any of Beneficiary's other rights or remedies. If Grantor becomes a voluntary or involuntary bankrupt, Beneficiary'S filing a proof of claim in bankruptcy will be tantamount to the appointment of a receiver under Texas law. 8. Interest on the debt secured by this deed of trust shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of that maximum amount shall be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this and all other instruments concerning the debt. 9. When the context requires, singular nouns and pronouns include the plural. 10. The term "noten includes all sums secured by this deed of trust. 11. This deed of trust shall bind, inure, to the benefit of, and be exercised by successors in interest of all par-ties. 12. If Grantor and Maker are not the same person, the term "Grantor" shall include Maker. 13. If Grantor transfers any part of the property without Beneficiary'S prior written consent, Beneficiary may declare the debt secured by this deed of trust immediately payable. In that event Beneficiary will notify Grantor that the debt is payable; if it is not paid within thirty days after notice to Grantor , Beneficiary may without further notice of demand to Grantor invoke any remedies provided in this instrument for default. Exceptions to this provision for declaring the note due on sale or transfer are limited to the following: a. creation of a lien or encumbrance subordinate to this deed of trust; ~ b. creation of a purchase-money security interest for household appliances; c. transfer by devise, descent, or operation of law on the death of a joint tenant; and d. grant of a leasehold interest of three years or less without an option to purchase. ~4. Grantor represents that this deed of trust and the note are given for the following purposes: In addition to the provisions herein, Noteholder requires that all taxes due on property described herein be paid by January 15 of each and every year and that Grantor furnish to Noteholder the paid receipts of same by January 31 of each and every succeeding year thereafter until this Deed of Trust is of no further force or effect. EXECUTED effective July 1, 2009. EAST A DEVELOPMENTS, L.P. By: By: STATE OF TEXAS ~ ~ COUNTY OF HARRIS ~ . . 0 Th1S 1nstrument was acknowledged before me on the 0 day of July, 2009, by Garson Silvers, Manager of GSDB MANAGEMENT, L.L.C., General Partner of EAST A DEVELOPMENTS, .P. ~tt\\ ROBIN R. ELDRIDGE ~.~..~/ MY COMMISSION EXPIRES f.f~., July 16. 2010 AFTER RECORDING RBTURJ1' TO: PREPARED IN THE LAW OFP:ICE OF c ASKINS & ASKINS, P.C. P.O. Box ~2~8 La Porte, TX 77572-1218 ASKINS & ASKINS, P.C. P.O. Box 1218 La Porte, TX 77572-1218 5 REAL ESTATE LIEN NOTE Date: July 1, 2009 Maker: EAST A DEVELOPMENTS, L.P. a Texas limited partnership 1001 usener, Houston, TX 77007 Mailing Address: Payee: CITY OF LA PORTE DEVELOPMENT CORPORATION a Texas non-profit corporation 604 West Fairmont Parkway, La Porte, TX 77571 Place for Payment: Principal Amount: $28,916.00 TWENTY-EIGHT THOUSAND NINE HUNDRED SIXTEEN DOLLARS Annual Interest Rate on Unpaid principal from Date: 6% Annual Interest Rate on Matured, unpaid Amounts: 10% Terms of Payment (principal and interest) : The full principal balance and all interest due thereon shall be due and payable on or before June 30, 2011. Any amount of principal and/or interest may be prepaid at any time without prepayment penalty. Security for Payment: Deed of Trust of even date herewith to KNOX W. ASKINS, TRUSTEE, covering the tracts of land and property described therein, to which Deed and Deed of Trust and the record thereof reference is here made for further identity of the security for this note. Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note or in the performance of any obligation in any instrument securing or collateral to it, and the default continues after Payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on this note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment, presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent permitted by law. If this note or any instrument securing or collateral to it is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if collected or enforced through probate, bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs of collection and enforcement, including reasonable attorney's fees and court costs, in addition to other amounts due. Reasonable attorney's fees shall be 10% of all amounts due unless either party pleads otherwise. Interest on the debt evidenced by this note shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of that maximum amount shall be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this and all other instruments concerning the debt. Each Maker is responsible for all obligations represented by this note. When the context requires, singular nouns and pronouns include the plural. EAST A DEVELOPMENTS, L.P. By: By: PRBPARBD IN THE LAW OFFiCE OF: ASKINS & ASKINS, P.C. P.O. Box 1218 La Porte, TX 77572-1218 a skins & askins P.C. AITORNEYS and COUNSELORS Knox W. Askins Clark T. Askins July 6, 2009 Mr. Benjamin P. Miller b~m~iller-attornev.com Dear Ben: As we discussed on Thursday afternoon, I have revised the proposed agreement between the City of La Porte Development Corporation and East A Developments, L.C., for the remediation of the two fuel tanks I by adding new first and last sentences to paragraph 5, setting forth the obligation of City of La Porte Development Corporation to engage, supervise, and pay contractors to remediate the property, and providing that the City of La Porte Development Corporation will assign its contractor warranties to East A Developments, L.P. Further, as we discussed, the Real Estate Lien Note has been revised to provide that the full principal balance and all interest due thereon shall be due and payable on or before June 3D, 2011. Any amount of principal and/or interest may be prepaid at any time without prepayment penalty. If the agreement and promissory note, as revised, are satisfactory, please have Garson Silvers come by John Joerns's office today, to execute the agreements. Mr. Joerns will give a fully executed copy to Mr. Silvers, and send you copies of the executed agreements, for your files. I will record the deed of trust, and send you a copy, when recorded. Thank you for your cooperation in this matter. Yours very truly, ~ Knox W. Askins City.Attorney City of La Porte KWA: sw Enclosures cc: Mr. Ron Bottoms bottomsr@la~ortetx.qov Mr. John Joerns ioernBi~la~ortetx.qov Mr. Clark T. Askins ctaBkinB~Bwbell.net 702 W. Fairmont Parkway, P.O. Box 1218, La Porte, TX 77572.1218 281.471.1887 phone . 281.471.2047 fax . knoxaskins@comcast.net . ctaskins@swbell.net THE BILICEK COMPANY A Professional Real Estate Consuhinll Firm April IS, 2008 Gretchen Larson Economic Development Coordinator City of La Porte 604 West Fanmont Parkway La Porte, Texas 77571 RE.: Summary appraisal of a 0.3297 acre vacant tract of land located at the southeast comer of San Jacinto Street and South Broadway Street in La Porte, Texas. Dear Ms. Larson: In accordance with your request, I have appraised the above referenced property. The purpose of this appraisal is to develop my opinion of the subject property's as is market value. I completed an unescorted cursory site visit to the property on March 11,2008. FINAL VALUE CONCLUSION: FIFTY~TWO THOUSAND FIVE HUNDRED DOLLARS ($52,500) CLIENT & INTENDED USERS: The client and intended users of this repOlt are the City of La Porte, the Texas Parks And Wildlife Depaliment, and Garson Silvers. INTENDED USE OF REPORT: This appraisal is intended to assist the client with deciSIon making regarding the possible purchase/sale of the subject property. LEGAL DESCRIPTION: The subject property is legally described as 0.3297 acres, more or less, being Lots 1,2,3,4,5,6, 7, 8, and 9 of Block 199, City of La Porte, Ranis County, Texas. Neither the appraiser nor his legal counsel has verified the legal description. Verification of the legal description should be made prior to its use. PURPOSE OF THE APPRAISAL: The purpose of this appraisal is to develop my opinion of the as is market value of the subject property's fee simple estate. MARKET VALUE DEFINITION: Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably. and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a 12695 Whittington Drive, Suite 220, Houston, Texas 77077 Telephone (281) 497-2774 FAX (281) 497-2366 E-Mail sbilicek@sbcglobal.net SUMMARY APPRAISAL REPORT 2 sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, acting in what they consider their own best interests; (3) A reasonable time is allQwed for exposure in the open market; (4) Payment is made in telms of cash in U.s. dollars or in terms of financial anangements comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Source: Markel Value Definition Pel' Financial Institution Reform, Recovery and Enforcemenl Acl of 1989 (FIRREA), Efficfive Augusl 24, 1990. EFFECTIVE DAT:E OF VALUE: The effective date of the as is market value opinion for which this appraisal shall apply is March 11, 2008. DATE OF REPORT: April 15, 2008 APPRAISAL PROCESS: It has been the appraiser's intention to prepare this appraisal in conformity with FlRREA and the requirements of the Ullifol11l Standards of Professional Appraisal Practice of the Appraisal Founqation iiS well as the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Apptaisal Institute. The appraisal was also prepar~ with the intent of being in compliance with the appraisal policies of the City of La Porte and the Texas Parks And Wildlife Department. The appraisal process involves a step-by-step analysis which begins with the definition of the apprais~l problem. Once the problem is defmed the tnethods for solving it are outlined and planned. The final step is the collection of data which is classified, analyzed and interpreted into an estimate of value. The appraisal problem defmition has five basic step; 1) Identify the property to be appraised, 2) Specify the rights involved, 3) State the purpose of the appraisal, 4) Ascertain the date as of which the estimate is desired, and 5) Define the value to be estimated. Once the problem is defmed, apreliminary survey is made to determine the character, scope and the amount of work it would take to solve the problem. In addition, the limitations of the problem are also addressed. lfthe problem is to estimate the market value of a property, the "highest and best use" must be determined (or most profitable use) as well as any qualifications relating to that estimate of value. The Bilicek Company SUM:MARY APPRAISAL REPORT 3 Two types of data are accumulated relevant to the appraisal of the property; general data and specific data. The general data relates to facts about conditions in the region, the city and the neighborhood and all elements outside of the property which affect its value. The specific data inCludes information about the title, the improvements (if any) and the physical site. This data is then classified, analyzed and reconciled within three approaches to value. These three approaches are the Cost Approach, the Sales Comparison Approach, and the Income Approach. The final step is a reconciliation of all these indications into a final opinion of value. SCOPE: Any property is valued principally by means of one or more of the three approaches to value: Income, Sales Comparison" and Cost. The indications of these analyses and the weight accorded to each lead to an opinion of value. The three approaches are defmed briefly as follows: Income Approach: This approach entails an analysis of the property in terms of its ability to provide a sufficient net ammal return on investment capital. The analysis can be on the actual level income at the time of the appraisal, a forecast for the first year of the investment, a forecast of income over a specified holding period, or a stabilized, average annual, income over a specifieq holding period. This income stream is then converted into a value indication using either Direct Capitalization or Yield Capitalization. In the Direct Capitalization method, ~ single year's income expectancy is converted into a value indication by either dividing the income estimate by an overall capitalization rate or by multiplying it by an appropriate factor. In Yield Capitalization, ~ommonly referred to as Discounted Cash Flow Analysis, the incomy is projected for a series of years and then convelied to a present value with an appropriate discount rate. Sales Comparison Appr()ach: This approach is based on the principle of substitution. That is, when a property is replaceable in the market, its value tends to be set at the cost of a~quiring any equally desirable substitute property, assuming no costly delay occurs in making the substitution. Since no two properties are ever truly identical, the necessary adjustments for differences in quality, location, size, services, and market appeal between the appraised property and comparable (substitute) propeqies are a function of the appraiser's experience andjudgmeIlt. Cost Approach: The Cost Approach involves an analysis of the physical value of the property. That is, the current market value of the land, assumed to be vacant, plus the depreciated cost of the improvements present on the site. Depreciated cost is based on the estimated cost of replacing the structural and site improvements, less any accrued depreciation from physical deterioration, functional obsolescence, and or external obsolescence, as described hereinafter. The subject property is a vacant tract of land and in its analysis the appraiser has used the sales Comparison Approach only. The Cost Approach was not used since the subject includes no significant structural improvements. The Income Approach was also not used The Bilicek Company ~~-~----~~ -- - - - --- - --~-~~___ ____~_~.k~___._'"____,_~" SUMMARY APPRAISAL REPORT 4 since the appraiser has determined that matket participants do not scrutinize income parameters in the analysis of vacant land. This appraisal is limited only by the accuracy of the data reported to the appraiser. Your attention is dir~cted to the following report, which presents the analysis and conclusions pertaining to the valuation of the subject property. EXPOSURE TIME: One of the conditions in the above definition calls for reasonable exposure time. Exposure time is always presumed to precede the effective date of the appraisal. It may be defined as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an an~lysis of past events assuming competitive and open market. The overall concept of reasonable exposure encompasses adequate, sufficient, and reasonable time and effort. An estimate of the time pe1"iod fat reasonable exposure is not intended to Pe a prediction of a date of sale. It is gell.erally based on one or more of the following; (1) statistical irrformation about days on the market; (2) infol'illation gathered through sales verification; and (3) interviews with market participants. A reasonable exposure period is a function of price, time, and use. After considering the available data, which consists prim. arily of interviews with real estate brokers active in the local market, it is the appraiser's opinion that a reasonable exposure time for the subject is a period of not more than twelve months. HISTORY OF THE PROPERTY: The subject property is currently owned by East A Development and La POlte 5 Points Properties LP. A representative of the owner, Garson Silvers, reported that the subject property, along with a second property, was purchased in one transaction ftom Wade Cooper on August 3, 2007 (Doc. No. 2007-0477563 & 2007- 0731724). The consideration for both propeliies Was reported to be $60,000 with no allocation being given between the 2 properties. The second property is located at the northeast comer of San Jacinto Street (l07FF) & East Main Street(56.4FF). This 8,230 square foot site is improved with a one-stolY retail building that Was built in 1955. Thi$ building was in poor condition and the Buyer plans to renovate the structure for future retail use. The appraiser is not aware of any additional transactions regarding the subject that have OCCUlTed within the past three yeats. REAL ESTATE TAX. DATA: The subject property is located in Harris County within the city of Houston. It is subject to taxation by several taxing jurisdictions. These jurisdictions and their tax rates are summarized within the following table. The Bilicek Company SUMMARY APPRAISAL REPORT 5 Taxing Jurisdictions Taxing Entity La Porte ISD Harris County Harris County Floog ~Qntrol Port of Houston Authority Harris Co. Hospital District Harris Co. Education Dept. San Jacmto Community College City of La Porte Total: Percent Change Sql/rce: Harris CQ1I11ty Appraisal District 2006 $1.63500 $0.40239 $0.03241 $Q.01302 $0.19216 $0.00629 $0.14537 $0.71000 $3.13664 2007 $1.30500 $0.39239 $0.G3106 $0.01437 $0.19216 $0.00585 $0.14537 $0.71000 $2.79620 -10.9% According to the Han"is County Appraisal District the subject property is carried on the Harris County tax roll under account number 024-004-099-0001. .. .. .. Assessed Value For Account No. 024-004-099-0001 Year Land Improvements 2006 $14,062 $0 2007 $14,062 $0 Source: Harris County Appraisal District Total $14,062 $14,062 Cj ~ .' ,."~- " , . .~~:f~.~ ~. JO- , --~~ /-~ L REGIONAL DATA: In the development of the Regional Analysis the appraiser has l'elied upon data provided by the City of La Porte and the La Porte Chamber of Commerce. The The Bilicek C011lpany SUMMARY APPRAISAL REPORT 6 subject property is located in La Porte, Texas which was incorporated in 1892. La Porte is located on the west bank of Galveston Bay, south of the Houston Ship Channel along the east and West lines of State Highway 146. La Porte encompasses about 19 square miles. According to the 2000 census La Porte had a population of 31,880 people and an estimated 2005 population of 35,213 people. La Porte is projected to have a population of 37,460 people by year 2010. The draw to La Porte is its close proximity to a variety of employment opportunities in eastern Harris County. The Houston Ship Channel is located just to the north while NASA and the Clear Lake area is just south. The city is viewed as being an industrial community anq it is flanked on the north and south sidys by petrochemical plants. However the city also offers a variety of other attractions including Sylvan Beach Park & Pavilion, Galveston Bay, The Ross Sterling Mansion, Bay Forest (Jolf Course, San Jacinto State Historical Park, Little Cedar Bayou Park, and the Houston Yacht Club. Another notable landmark in the city is the Fred Hartman Bridge which is the world's second largest cable stayed bridge with a main span of2,475 feet. La Porte, and the surrounding Houston Metropolitan Area, has a strong relationship with the petrochemical industry. The industrial district is home to more than 3,200 manufacturing plants and the nation's largest concentration of petrochemical plants. Other major industries in the area include aerospace technology, medicine, and computer related technology. La Porte's top businesses include Equistar Chemicals, LP, Celanese, Ltd., Conoco, Inc., Air Liquide America, Mon,teIl USA, Inc., Aristech Chemical Corp., Lyondell Chemical, Akzo Nobel Catalysts, LLC, Haldor Topsoe, In,c., an,d Air Products, Inc. The following table presents the historical unemployment rate for La Porte, as well as the overall area, l Unemployment Data City of Harris Houston MSA State of La Porte County MSA Texas 1998 3.;3% 4.4% 4.4% 4.9% 1999 3.6% 4.8% 4.8% 4.7% 2000 3.4% 4.3% 4.3% 4.4% 2001 3.7% 4.7% 4.7% 5.0% 2002 4.8% 6.1% 6.0% 6.4% 2003 5.3% 6.8% 6.7% 6.7% 2004 4.9% 6..3% 6.2% 6.0% 20,05 5.5% 5.6% 5.6% 5,4% 2006 4.8% 5.0% 4.9% 4.9% 2007 4.1% 4.2% 42% 4.3% Feb-08 4.2% 4.1% 4.3% 4.3% Source: Bureau Of Labor Statistics As of February 2008 La Porte recorded a total labor force of 18,180 people with an unemployment rate of 4.2%. The city's unemployment rate exceeds the rate for both the The Bilicek Company SUMMARY APPRAISAL REPORT 7 Houston MSA and the state of Texas as a whole. It is anticipated that as the petrochemical and oil & gas industries continue to prosper so will La Porte and its surrounding area. Real estate activity in the city has been good and the development of the city's zoning ordinance restricts certain land uses to clearly defined areas of the city. The use break-downs are as follows. Use Low Density Residential Industrial Public Commercial Mid to High Density Residential Commercial/Industrial Percent 48.33% 18.52% 11.83% 11.22% 5.07% 5.03% Residential development in the city is represented by 53.4% of the land area while commercial uses are less than 20%. Commercial development in the city is focused on the major roadway cQrridors of the city with the most significant road being State Highway 146. Real Estate agents report that demand fot all property types in the city appears to be good with the bulk of activity being within the residential market. However new commercial development is scattered throughout the city and include retail, office, and industrial users. ",I Conclusion: The subject property is located in a La Porte which is an industrial community which has recorded steady growth over the years. The city is located within close proximity to a variety of employment opportunities. It, is anticipated that the city wjll continue to record steady growth that will be heavily influenced by the economic prosperity of the industrial base of the area. The Bilicek Company SUMMARY APPRAISAL REPORT 8 CIty of La Porte 604 w. FallmOlIl _,rN;;Y La Ptd.. 1)( 17571 (2B1)471-5020 WWW.fapodetx!P'1 La Porte GIS Mapping 1 . equals 168' 9 The Bilicek Company SUMMARY APPRAISAL REPORT 9 Q6. ..\ ," tl6. I ~~-7(,o. . ~'''..'' l,,~ qj\ ~ . "~a," .. r. I ~.. -" ~~5...~ ,.(FJ~L~ ;-'I~ . .Qil~ ~. I" - 5~..J' 6 ~ WEst A STREEt :f::'--::~ ,-0 *___ -}~.3 ~.l].__....~ '26 r%o t . 2S . t ~~~~;;~:~~ .!~. ,Gll2t ' ,. ?L .--..~ '.21 1:S ;1 '20 -llD2B ~ ~i'9' ';;"-' i. .!~.~.,u~ I I'l'.. 'i.-- '!:Q.... .._t~-~ ~.-}..._.;;-" 5 S. @:I..~ .6~i\?Ji1~ '_1.....! \~ B~7 ~ 19 9 .. :'IQIO.&10 ." iiiij ." l'iU-;;- " : ri3,~;. .n" ~ !;\4AQf~. .~ .I i SUBJECT PROPERTY DESCRTIPTION: The subject property is located at the southeast corner of South Broadway Street and San Jacinto Street with additional frontage on the north line of West A Street. The appraiser was provided with a survey that was prepared by D~am Epgineers, Inc. and is qated April 4, 2008. This document indicates a land size for the subject property of 0.3297 acres and that the tract has a triangular shaped configur~tion. The subject property hlls 236.17 feet of frontage. on South Broadway Street, 265;66 feet of frontage on San Jacirito Street, and 121.64 feet of frontage on West A Street. The Bilicek Company SUMMARY APPRAISAL REPORT 10 ---1 I I I Subject Property -i I r-- Subject Property The Bilicek Company SUMMARY APPRAISAL REPORT 11 r - ------------l I San Jacinto Street The Bilicek CompanY SUMMARY APPRAISAL REPORT 12 ".. ~ ,- , --'"j . .JI --'"-~-~-"-- .... '.....-';' ---- --. West A Street South Broadway Street is a 4-1ane concrete paved roadway with curbs and gutters. Both San Jacinto Street and West A Street are 2-laneconcrete paved roadways with curbs and gutters. The Bilicek Company SUMMARY APPRAISAL REPORT 13 However in front of the subject San Jacinto Street is one way, south bound. All three !'oadways appear to be average condition and to be adequately maintained. According to the published flood plain maps the subject property is not located within a known flood hazard area. However it is important to note that I am not a surveyor and I am not qualified to make a flood plain determination. I suggest that a professional in this area be engaged to make such a determination. IIJ.DtSON .. t; I; Ii t; t; ."" WI' !;CAli; l' - ,~ o 1000 ~F6T f~~~~~~ l'OU: f~n~ ....... NlCllOAfl'II fUl:I.u.~ ......l:l:IL. &z:S IUJ'. NUllJrR U2lllCll4..'l. H.lP REYllfO: illIN!1I.2llIIl The appraiser is not aware of any surface faults or earthqual\e hazards associated with the subject site. It must be noted thafthe appraise!' has not conducted either a soil or engineering survey of the subject she and aSSU1Iles no liability therefore. The subject site is located within the city of La Porte in an area that is mostly developed; however there are scattered vacant tracts of land in the area. Due to this location, as well as the terrain and vegetation, this area appears to be well suited as a natural habitat for a vatiety of wild game, plants, and insects. While the appraiser is not an exp<;:rt in the identification of all the endangered anirn,al, insect, and plant species, to the best of the appraiser's knowledge no such species are known to exist oil the site. The subject property is served with both public water and sewer services by the city of La Porte. Both telephone and electricity service is also available to the property. Police The Bilicek Company SUMMARY APPRAISAL REPORT 14 protection is provided by both the La Porte Police Department and the Harris County Sheriffs Department. Fire protection is provi4ed by the La Porte Fire Department. city CJf La Port. tiO.: W F.IJ:m:n '\It,,~ t.~ AYff>. TX 7751. (281) 411..sOZV vi'l.....~~'Oo1~.llC s:w La Porte GIS Mapping 1 . ~""I$ 828 . 9 The subject is located within La Porte and the city does have a zoning ordinance controlling the use of properties within its jurisdiction. The subject property is zoned Main Street District (MSD). . The following description of this zoning designation was taken directly from the City of La Porte Code Ordinance available on the city's web site. The Bilicek C-ompany SUMMARY APPRAISAL REPORT 15 Sec. 106~510. Purpose; Main Street district; Main Street overlay district defined. The purpose of the Main Street district is to pre$l9lVe the character of the original Main Street area of La Porte. The intent of I:l Main Street district within an overlay an~a is to allow greater flexibiHty of normal city reql.!lrements and create an environment reflective of an era when travel wa.5 based ress on vehicular traffic and more on pedestrian access w:ith retail traqe more closely clustered. The general boundaries of the Main~treet overlay portion of the district shall extend (rom SH 146. to Kansas,and include the properties along both sidE;!s c:>f tylain Street. These properties are !:lounc:led qn the north by the alley loca~e<:J nortl) of an,d par~dlef t9 Main Street arid on the south by the alfey located south of and parallel to Main Street (see map). The general lJoundaries of tlie Main Street distric~ shall be froril SH 146 eastward to Kansas St on both sides of MaIh Stre~t from the alley one-half block north to the alley one-half block south .of Main Street. The overall boundary Shall be SH 146 to Kansas plus oneblock south (1st and W. "B" to Virginia ang back up to E. "A"). (See Map) (Ord. No. 1501-AAAA, g 6.10-11-04) Sec. 106-511. Permitted, accessory. and special conditional uses. Commercial and all resic;lential activities are permitted. except warehousing and storage; however, if .owned by or incidental to a primary business they would be allowed as Indicated in Table A, Main Stieet Overlay uses, section 106-441 (Ord. No. 1501-AAAA, g 6.10-11-04; Ord. No. 1501-MMMM, g 6(Exh. F), 4-2~.05) Sec.106~512. DensityJintensity regulations. Refer to Table B, Main Street overlay requirements, section 106-443 (Ord. No. 1501-AAAJ\, ~ 6,10-11-04) Sec. 106-513. Special regulations and procedures. For new construction no cys.tomer parking is required; however, businesses are required to provide a minimum QftwQ employee parkir)g spaces. Also for new construction, no parking lots shall be developed in fronl of the building Within the oVt?rlay portion 9f the Main street district. Alley ways within the district shall be considered as driVIng aisles for the purposes of parking requirements. E.~ch I?uslness is allowed one wall sign not to co,!er morethan 25 percent of the their exterior facade. as well as one shingle with a maximum face of 15 square feet per side and a required eight feet minimum clearance. VlIhen m01$t of a dumpster Is visible from a public streeUhe dumpster shall be screened. If it is visible only via the alley from a public street, screening will not be required. Property owners are not required to install sidewalks within the district. Refer to articles IV, V. VI and VII of this chapter for further regulatIons and pracedures. (Ord. No. 1501-AAAA, 96,10-11.04) Sees. 106-514--106-520. Reserved. The Bilicek Company SUMMARY APPRAISAL REPORT 16 The subject property is available for most commercial uses an~ to the appraiser's knowledge, there are no restrictions, deed or otherwise, which would inhibit the use or development of this property. The subject property does include concrete paved area that appear to be portions of a building slab or parking areas associated with a prior use. Garson Silvers repoiied that the property was once used as a service station and that the fuel tanl\s associated with this prior use have been. removed. The appraiser was not provided with an environmental assessment eval1,latin.g the presence of, or lack Of, hazardous materials on the subject site. I suggest that a professional in this area be engaged to make such a determination. The appraiser's cursory site visit revealed no detrimental easements or encroachments on the property. It is important to. note that the appraiser has not completed a title or abstract search regarding the subject property. Conclusions: The subjectpropetiy is ofa size that it could accommodate a variety of uses. The property is served with all public utilities and it does not appear to be located within a knoWn flood hazard area. The property is zoned for commercial use but the development of the site is limited by its shape. Overall the subject property has features that that would allow the tract to be developed in a manner that is compatible with the commercial development patte~ of the area. aIGHEST AND BEST USE: Highest and Best Use is defmed in The Appraisal Of Real Estate, 12th Edition, page 305, as "the reasonably probable and legal use of vacant land (jr improved property that is physically possible, appropriately supported, and fthancially feasible and that results in the highest value." Highest and best use of a property is determined both lias vacant" and lias improved". In the subject's case it is vacant land artd only its highest and best use as vacant willbe determined. Four tests have been applied in order to deterrlline highest and best use. The tests applied to determine highest and best use inClude: (1) physically possible use, (2) legally permissible use, (3) finanCially feasible use, (4) max.imally ptoductive use. Physically Possible: The subject property is a triangular shaped property that has adequate frontage, ac~ess. and exposure to the three adjoining streets. The subject site appears to be typical of sites in the immediate area in regards to vegetation and tel1'ain, but its triangular shape is limiting to the development potential pf the site. The property has all utilities available and it does not appear to be located within a known flood hazard area. Overall the subject property has features that that would ~l1ow the tract to be developed in a manner that is compatible with the development pattern ofthe area. Legally Possible: The subject site is located within the city limits of La Porte and is zoned Main Street District which allows for commerCial use with the intent "to pre$erve the The Bilicek Company SUMMARY APPRAISAL REPORT 17 character of the original Main Street area of La Port." The appraiser is not aware of any restrictions, deed or otherwise, which are of any detrimental consequence to the development or use of the site. Financially FeasiblelMaximally Productive: The financially feasible/maximally productive criteria dictates that uses must create value and generate a positive net income. The subject property is located in an older commercial area of La Porte. The property itself was once used as a service station. Across San Jacinto Street there is an older building that is currently being renovated as part of the Five Points Square development project. This building is intended for retail and offlce use with suites ranging in size from 698 square feet to 1,612 square feet. The developer of this project, Garson Silvers, reported that the plan is to acquire additionall~nd around this project and develop a mixed use project which will include a 6-story office buildiIlg on the site currently owned by the Texas Parks And Wildlife Department. In front of the subject San Jacinto Street is a one way thoroughfare which limits traffic but would allow the site to serve well as off-site parking for the overall planfied mixed Use development. The development pattern of the Main Street corridor and the city's zoning ordinance dictate that the subject be put to a cori1inercial use. The development potential of the site is somewhat hampered by the ttacts $.lender triang~lar shape. The site could be developed as ~mall single-user cOll1111ercial property, but the configuration of the site would likely dictate that a building be set-back on the tract ilear West A Street and use the northern portion of the site for limited parking. The appraiser spoke With several local real estate professionals including LouAnn Martin, Horace lceopard, and Dave Turnquist. All three of these agents have had dealings with commercial property in the subject's immediate area an4 f,l,11 reported steady demand for COnmiel'cial property in La Porte. They did state that over the past few years the focus of the demand has been upon newer commercial areas such as the Fainnont:patkway corridor to south and State Highway 146 to the west. However it was reported that efforts are being made by the city and developers to attract new commercial growth along Main Street. Over the past 18 months there have been several commercial properties sold. One suc~ property is the former b~nk building at the northwest corner of Main Street and Broadway Street. Two additional sales involved a former service station and a former cOl1venieMe store on West Main Street. Both of these buildings. are also planned for commercial use. These 3 trallsactions demonstrate commercial activity and demand. The subject property would be suited for a similar commercial; however such a use would only warrant the development of the subject if the project were for owner occupancy or was successfully pre-leased. c;onclllsion: As a result of the foregoing analysis, it is concluded that the highest and best l,lse of the subject property would be for a commercial use compatible with the Ma41 Street District. S~ch a use of the site would be limited by the subject's small land size and triangular shape. However such a use would only warrant the d.evelopment of the subjegt if the project were for owner occupancy or was successfulIy pre-leased. The Bilicek Company SUMMARY APPRAISAL REPORT 18 SALES COMPARISON APPROACH: This section of the appraisal is concerned with estimating the value of the subject property using the Sales Comparison Approach. This is accomplished by comparing the subject property with similar properties which have recently sold in the open mark~t. In order to identify comparable sales that have taken place the appraiser has researched the Harris County deed records and contacted ptofessionals familiar with the Main Street District and the L~ Porte market. Professionals contacted include LouAnn Martin with Main Propelties (281-470.0655), Horace Leopard with LeoPatd Realty (713-858.4716, and Dave Tt!tnqtiist with Baystar Real Estate (281-470-0400). The identified transactions were investigated and write.ups on the most similar properties fOt which data was available are included within the Addenda of this report. In order t6 arrive at a value estimate for the subject property, variapces between these sales and the subject are taken into considetation. The basis for comparison is the price per square foot. This ratio is calculated by dividing the sales price by the number of square feet in each property. All adjustments are then made from this base factor, The adjustments are made of the comparables for significant variations which typkally include changes in market conditions (time), location, and physical characteristics, such as size. The appraiser has included with this report 6 land transactions of which 3 are pending sales involving Garson Silvers. Among the closed transactions the sale dates range from April 2007 to October 2007. Among the entire date set the land sizes range from 0,2152 acres to 0.5998 acres. The transaction prices range from $1.44 per square foot to $3.66 per square foot. j -, ! Among the 6 transactions the appraiser has placed primary emphasis on Sales 3, 4, 5, and 6. Sales 1 and 2 were considered but were granted only secondary emphasis silice they are part of an assemblage of several tracts by Mr. Silvers. Sale 3 is also a pending transaction involving Mr. Silvers but this transaction is not contiguous to Mr. Silvers other holdings. This pending sale appears to be an arms length transaction and seller is represented by a local real estate professional who is knowledgeable of the market. Sale 3: This is the pending s!1le of 4-1/2 lots on the west side of South BrQadway Street, acroSs the street from th~ stlbject property.. The property contains 14,063 square feet or 0.3228 acres. The property is pending sale for $51,500 or $:3.66 per square fo()t. Sale 3 is l()cated within the Main Street District and it has a rectangular configuration. Sale 3 appears to be very similar to the subject in all factors except the subject is superior with road fi'ontage on all sides; however, Sate 3 has a superior rectangular shape that allows the tract a superior development potential. Overall the appraiser has considered Sale 3 Qn an l.madjusted basis. Sale 4: This is the sale of 5 lots on East Main Street at Idaho Street in October 2007. The prop~rty contains 13,375 square feet or 0.3071 acres and it sold for $20,000 or $1.50 pet square foot. The selling agent reported that the property could be used for commercial The Bilicek Comp(lny SUMMARY APPRAISAL REPORT 19 purposes; however, the site is zoned for low density residential use by the city. The property has an inferior location on East Main Street and a +10% adjustment for this factor was warranted. Sale 4 has a superior rectangular configuration but its zoning designation would significantly limit the development potential of this tract. Therefore a very large + 13~% adjustment was applied to reflect this property's inferior potential for use. The adjusted value indication from Sale 4 is $3.65 per square foot but this transaction waS granted limited emphasis due to the significant magnitude of the tequired adjustments. Sale 5: This is the sale of an 8 lot property on South Idaho Street, south of East Main Street. The property sold in September 2001 for $37,5QO which is $1.43 per square foot. The property contains 26,125 square feet or 0.5998 acres and it is also zoned for low density residential use by the city. This property located east of Broadway ancI it has no frontage on Main Street. Therefore a +20% adjustment was applied for its inferior location. Sale 5 has a superior rectangular configuration but its zoning designation would significantiy limit the development potential of this tract. Therefore a very large +133% adjustment was applied to reflect this property's inferior potential for use. The adjusted value indication from Sale 5 is $3.62 per square foot but this transaction was granted limited emphasis d1.1e to the significant magnitude ofthe required adjustments. Sale 6: This is the sale of a 5 lot property at the southeast corner of 11th Street and West Polk Street. The property sold in April 2007 for $30,000 which is $1.92 per square fQot. The property contains 15,625 square feet or 0,3587 acres and it is also zoned for general c011lIl1ercial use by the city. This property is located 1 block west of the freeway and just north of West Main Street (Spencer Highway). Overall S~le 6 has an inferior location and paired sales analysis of Sale 6 with pencIing Sale 4 indicates the need for a significant location adjustment and a +90% adjustment for this factot was applied. The lJilicek Company SUMMARY APPRAISAL REPORT 20 J Land Sales Adjustment Grid Date of Appraisal Mar-1I-2008 Subject Sale #3 Sale #4 Sale #5 Sale #6 Property . Date Of Sale Pending Oct-07 Sep"07 Apr"07 Lahd Size (Acres) 0.3228 0.3071 05998 0.358} 0.3297 Sales Price (Total Dollars) $51,500 $20,000 $37,SOO $30,OQO No. of LOts 4 4 8 5 ~ Per Unit (SqFt) $3.66 $1.50 $1.44 $1.92 Lo cation: Broadway Main St. Idaho Ave W. Polk St. Broadway & & idaho & East A & 11$ St. ~an Jacinto IMULTIPLIED FACTOES I PropertyRights COI!.veyedAdJusbneot 0% 0% 0% 0% Adjusted Price $ Pet Unit $3.66 $1.50 $1.44 $1.92 Financing Terms Adjustn1ent 0% 0% 0% 0% Adjusted Price $ Per Unit $3.66 $1.50 $1.44 $1.92 Condition Of sale Mjustment 0% 0% 0% 0% Adjusted Prlce $ PerU~t $3,66 $1.50 $1.44 $1.92 Time Prior To Appr:aisal Date NA 0.4 years 0.5 years 0.9 Years Changes in Market Conditions (Time) 0% 0% 0% 0% Adjusted Price $ Per Unit $3.66 $1.50 $1.44 $1.92 IADDED FACTORS I 0% +10% +20% +90% Location AdJustn1eot Other Physical Characteristics 0% Size Adj. -Acre Basis 0% 0% 0% Other 0% +133% +133% . 0% Net Loc. and Physical Adj. 0% +143% +153% +90% Adjusted Price $ Per Unit (Front Foot) $3.66 $3.65 $3.64 $3,65 . Land Value Indication Size (Acres) 0.3297 Acres x 5: Per SqFt $3.66 Rounded Total $52,'564 $52,$00 1 9 , I I -j Subject's Sale: The subj~ct property was purchased along with another property across San Jacinto Street in August 2007. The reported sales price was $60,000 for both properties and no allocation of value was provided to the appraiser. Gal"$on SUvel"s, the subject's owner, repOlted that there were a variety of factors affecting this transaCtion ilicludilig motivation on the part of the SeHer due to outstanding debt on both properties, as well as other properties owned by the Seller. Therefore the appraiser is aware of this transaction but it was granted minimal emphasis due to the reported Seller's motivation. Conclusion: Primary emphasis was placed on pendilig Sale 3. The appraiser spoke at length with the agents representing the Seller and this pending transaction appear~ to be the best indicator of value for the subject property. Theryfore it. is the appraiser's opinion that the as is market value of the subject property's fee simple estate is $52,500. The Bilicek Company SUMMARY APPRAISAL REPORT 21 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS: The following Assumptions and Limiting Conditions apply to this real estate appraisal conducted by TBEBILICEK COMPANY. Appraisals are performed and written reports are prepared with the intention of ~hem being in conformity with FlRREA and requirements of the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation as well as the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. No opinion is rendered as to property title, which is assumed to be good and marketable. Unless otherWise stated, no consideration is given to liens or encumbrances against the property. Sketches, maps, photosl or other gtaphic aids included in appraisal reports are intended to assist the reader in ready identification and visualization of the property, and are not intended for technical pUlposes. Appraisal reports may con41in estimates of future fmancial performance, estimates or opinions that represent the appraisds view of reasonable expectations at a pa1iicular point in time, but such information, es~ates or opinions are not offered as predictions or as assurances that a palticular level of income or profit will be achieved, that events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective fmancial analyses wiII vary from those described in our report, and the variations maybe material. 1. It is assumed that legal, engineering, or other professional advice, as may be required, has been or will be obtained from professional sources and that 'the appraisal report wiII :not be used for guidance in legal or teclmical matters such as, but not limited to, the existence of encroaclunents, easements or other discrepancies a,ffecting the legal description of the property. It is aS$umed that there are no concealed 01' dubious conditions of the subsoil or subsurface waters including ,vater table and flood plain, unless otherwise noted. We further assume there are no regulations of any goverrunent enthy to control or restrict the use of the property unless specifically refen'ed to in the report. It is assumed that the property will not opetate in violation of any applicable govel'nment regulations, codes, ordinances or statutes. f "I, In the absence of competent technical advice to the Gontrary, it is assumed that the property being appl"aised is not adversely affected by concealed or unapparent hazards such as, but not limited to asbestos, hazardous or contaminated substances, toxio waste or radioaotivity. The repQ~, the final opinion of value and estimates of future fmancial performance included therein, are intended for the infOlmation of the intended user, soll:}ly for the pUl-poseS stated therein, and should 110t be relied upon for any other purpose. The client shall not distribute the report to third parties without priorpetmission of THE !3ILrcEK COMPANY~ Before such permission shall be provided, the third party shall agree to hold nm BILICEK COMPANY halmless relative to their use of the report. Neither out report, nor its contents, nor any The Bilicek Company SUMMARY APPRAISAL REPORT 22 reference to the appraisers or THE BILICEK COMPANY, may be included or quoted in ~y offering circular or registration statement, prospectus, sales brochure, other appraisal, loan or other agreement or document without our prior written permission. Permission will be granted only upon meeting certain conditions. Generally, THE BILICEK COMPANY will not agree to the use of its name as a "named expert" within the meaning of the Securities Act of 1933 ~d the Securities Act of 1934. tnformation fumished by others is presumed to be reliable. and where so specified in the report, has been verified; but no responsibility, whether legal or otherwise, is assumed for its accuracy, and it cannot be guaranteed as being certain. No single item of information was completely relied upon to the exclusion of other information. Appra.isal assignments are accepted w. ith the understanding that there is no obligation to fumish services after completion of the original assignment. If the need for subsequent service related to an appraisal assignment (e.g., testimony, updates, conferences, reprint 01' copy service) is contemplated, special arrangements acceptable to THE BILICEK COMPANY must be made in advance. No significant change is assumed in the supply and demand pattems indicated in the report. (The appraisal assumes market conditions as observed as of the date of value stated in the report.) These market conditions are believed to be correct; however, the appraisers assume no liability should market conditions materially change because of unusual or unforeseen circumstances. .J Unless specifically stated, the value opinion(s) contained in the Appraisal applies to the real estate only. and does not include personal property, machinery and equipiUent, trade fixtures, business v~lue. goodwill 01' other non"1'ealty items. Income tax considerations have not been included or valued unless so specified in the Appraisal. We make no representations as to the value changes that may be attributed to such considerations. The Appraisal rep01i covering the subject is limited to surface rights only, and does not include any inherent subsurface or mineral rights. This report is fiot intended to be an engineering report. We are not qualified as structu1'al or envh'onmental enguleers; therefore we are not qualified to judge the structup:lI or envirol1lllental integrity of the improvements, if any. Consequently, no warranty or representations are l11ade nor any liability assumed for the structural soundness, quality, adequacy 01' capacities Of said impmvements and utility services, including the construction materials, particularly the roof, foundations, and equipment, including the HV AC systems, if applicable. Should there be any question concerning same, it is strongly recommended that an engineering. construction and/or environmental inspection be obtained. The value estirnate(s) stated in this Appraisal, unless noted otherwise, is predicated on the assumptiOnS that all improvements, equipment and building services, if any. are structurally sound and suffer no ~oncealed or latent defects or inadequacies other than those noted in the Appra.isal. We will call to yoU!' attention any apparent defects or material adverse conditions which come to our attention. The Bilic~k Company SUMMARY APPRAISAL REPORT 23 .J Any proposed construction of rehabilitation referred to in the Appraisal is assumed to be completed within a reasonable time and in a workmanlike manner according to or exceeding currently accepted standards of design and methods of construction. Any inaccessible portions of the Property or improvements not inspected are assumed to be as reported or similar to the areas that are inspected. Unless oth~rwise stated, no effort has been made to determine the possible effect, if any, on the subject property of energy shortage or future federal, state or local legislation, including any envrrolilllental or ecological matters or interpretations thereof We take no responsibility for any events, conditions or circumstances affecting the subject property or its value, that take place subsequent to either the effective date of value cited in the Appraisal or the date of our field site visit, whichever occurs first. The valuation applies only to the property described and for the purpose so stated and should not be llsed for any other purpose. Any allocation of total priCe between land and the improvements as shown is invalidated if used separately at in c()nj~mction with any other report. Neither the report nor any portions thereof (especially any opinion(s) of value, the identity of the appraisers or 'DIE BILICEK COMPANY, or any reference to the Appraisal Institute or other recogruzed appraisal organization or the designations they comer) shall be disseminated to the public through public relatiohs media,news media, advertising media, sales media or any other public means of communication without the prior written consent and approval of the appraisers and 'DIE BILICEK COMPANY. The date(s) of the valuation to which the value estimate conclusions apply is set forth in the letter of transmittal and within the body of the report. The value is based on the purchasing power of the United States dollar as of that date. The client agrees to indemnify 1HE BILICEK COMPANY and its respective partners} principals, and employees (1HE BILICEK COMPANY and each such person being an "Indemnified Partyll) from and against any and aJllosses, claims, damages and liabilities, joint or several, to which such Indemnified Parties may be subject under any ?pplicable federal or st?-te law, related to, or arising out ot: the subject appraisal and/or the engagement of THE BILlCEK COMPANY pursuant to the appraisal assigmrient and will reimburse any Indemnified Party for all reasonaple expenses (including coun$el fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense o~ any pending or threaten.ed claim or action pr proceeding arising there from, whether or not such IndeIUnified Party is a party. The client will not be liable under th~ foregoing indemnification provisions to the extent that any ioss, claim, damage, liability or expense is found in a fmal judgment by a court of competent jurisdiction to bave resulted primarily fro~ the bad faith, gross negligence or recklessn.ess of an Iridemnif1ed Party . The BiUcek Company SUMMARY APPRAISAL REPORT 24 This engagement may be terminated whether by client or THE BILlCEK COMPANY at any time upon written notice to that effect to the other parties, it being understood that, THE BILICEI< COMPANY shall unilaterally terminate the engagement without the client's consent and without reasonable cause, the provisions related to the payment of fees and expenses through the date of termination will s:urvive any termination, and it being further understood that the indemnification and hold harmless provisions shall survive any termination thereof, whether or not such termination is unilateral. Invoices are due upon receipt. Invoices not paid after 30 days from issual1ce will be subject to a late fee calculated at 10% rate of interest. The client is responsible for all costs of collection, including attorney's fees. THE BILICEK COMPANY'S maximum liability relating to services rendered under this report (regardless of form of action, whether in contract, .negligence, 9r otherwise) ~han be limited to tbe fee paid to THE BILICEK COMPANY for the portion of its sei"vices or work products giving rise to liability. In no event shall THE BILlCEK COMPANY be liable for consequential, special, incidental, 01' punitive losses, damages, or expenses (including, without limitation, lost profits, opportunity costs, etc.) even if it has been advised of their possible existence. It should be specifically noted by any prospective mortgagee that the appraisal assumes that the propeliy will he competently managed, leased, and maintained by f'll~ncially sound owners over the expected period o~ ownership. This appraisal engagement does not entail an evaluation of management's or oWner's effectiveness, nor are we responsible for future marketing efforts and other management or ownership actions upon which actual results will depend. ~ The Americans with Disabilities Act ("ADN') became effective January 26, 1992. THE BILICEK COMPANY has not made a specific compliance survey and analysis ofthis propeliy to determine whether or hot it is in conformity with the various detailed requirements of the ADA. It.is possible that a compliance survey oftl}e property, together with a detailed analysis of the requirements of the ADA, could l'eveal that the property is flot in compliance with one or more of the l'equirements of the Act, If so, this fact could have a negative effect upon the value of the property. . Since THE BiLICEK COMPANY has no direct evidenCe relating to this issue, THE BlLICEK COMPANY did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. CERTIFICATION: I certify that, to the best of my knowledge and belief: 1. The statement of facts contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my p~l'sonal, impartial, and unbiased professional analyses, opinions, and conclusions. The Bilicek Company SUMMARY APPRAISAL REPORT 25 3. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. I have no Qias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5. My engagement with this assignment was not contingent upon development or reporting a predetermined value or direction in value that favors the cause Of the client. the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use oftMs appraisal. 6. My analyses, opinions, and conclusions were developed, al)d this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 7. Steven J. Bilicek, MAl has made a personal inspection of the property that is the subject ofthis report. 8. No one provided significant teal property assistance to the person signing this celtification. 9. The reported analyses, opinions and conclusions wete developed, and this report has been prepared, in conforIl1ity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisa.l Institute. 10. The use of this report is subject to the requirements of the Appraisal Instimte relating to review by its duly authorized representative. ~ -! , 11. As of the data of this report, Steven 1. Bilicek. MAl has completed the requirements ofthe continuing education program of the Appraisal Institute. ~~ Steven J. Bilicek, MAl State Certified General Real Estate Appraiser, TX-1321554-G The BiIicek Company QUALIFICATIONS OF STEVEN J. BILICEK Professional Affiliations Employment Education Clients & Types of Property Appraised =:1 E;mmple Pl'operties l I I 1 I Member - MAI, Member, Appraisal Institute, No. 9257 I am a Candidat~ member of the A1i1erican Society ofFann Managers & Rural Appraisers Real Estate Broker, State of Texas, License No. 391124 State Certified General Real Estate Appraiser, TX-13215S4-G Owner of The Bilicek Company, a real estate valuation and consulting company - September 1992 to Present. Vice President, Real Estate Research Corporation (REJ;tC) Houston affiliated office. March 1992 to September 1992. Senior Staff Appraiser - The Gerald A. Teel Company, Inc. Real Estate Analysts and Appraisers. January 1989 to March 1992. Masters Degree in Land Economics and Real Estate, Texas A&MUniversity, December 199~. BClchelor of Science in Agricultural Economics, Texas A&MUniversity, August 1987. Associate Arts Degree, Wharton County rimior College, May 1985. Past clients have included financial institutions, condemnation authorities, attorneys, and individuals. :Mr. Bilicek has performed real estate appraisals and feasibility- -develoPn1~ntcinvestmentanalysis for a variety of property type~; office bui1qings, hotels, industrial facilities, nursing homes, regional shopping malls, restaurants, retail stores, apartments, warehouses, subdivisions, farms, ranches, partial interests, grain elevators, time share resorts, golf courses, multi-use developments, residences, and a wide variety of special purpose properties. The appraisal of two multi-story (35-story and a 22-story) Houston CBD office buildings for a major lending institution. The appraisal of a proposed LIHTC apartment project for a major lending institution. The appraisal of a feed mill in Oklahoma for a major lending institution. The appraisal of two rice mills in Freeport, Texas ?,nd Maxwell, California for a major lending institution. The appraisal ofa 7,678 acre managed game ranch in Kinney County, Texas; fot accounting purpos(;:s. The appraisal of 9,089.75 acre farm and ranch in Wharton County for partition litigation; for a major Texas law firm. The apprais~l of a conservation easement on a 1,093.4 acre ranch in Brazoria County, Texas. The appraisal of vario~s pl,Vce]s of vacant and improved property for eminent dotnain proceedings throughoufTexas. TEXAS APPRAISER LICENSING AND CERTIFICA TrON BOARD BE IT KNOWN THAT STEVEN JOHN BILICEK llA VING PRO VIDED S1 T/SFA CTOR Y EVIDENCE OF THQ QUALIFICA TlOi'VS REQUIRED BY TIlE TEXAS APPRAISER LICENSING AND CERTIFlCATIONACT, TE)(AS OCCU/'ATl(}NSCODE, C[{APTER /101, [S tlUTHORIZED TO usE: tHE TItLE STATE CERTIFIED GENERAL REAL ESTATE APPRAISER J Number; TX-1321554-G J Date of Issue: September 5, 2007 Date of Expiration: Novembcl' 30, 2009 lrt Witnes" Thereof Wa}-ne Thorburn; ('onlll1i~siIlI1N' Larry D. KOkel, Chnir William A. Faulk, Jr. l)ona S. Scurry Clinton P. 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I q;~ r;::-'.:-iJ U.' p~. . .~ ~.":-lt; ..... ~ ~ 00 QJ ~ ~ rLJ. :~~~~ t~i;~~; U,.:~ t~~~i -.-.-. ~f ~ M~~ LAND SALE SUMMARY Date of Map Sales Price VL Sale Sale Acres Ref LocationlFronta2e (SSqFt. ) ($Ac.) Ref# 1 Mar-20011 0.215 540Y West line of South Virginia Street (75FF), $3.20 $139,392 8629 south of East Main Street 2 Mar-2008 0.287 540Y Northwest corner of South Virginia Street $2.00 $87,120 8631 (lOOFF) & East A Street (125FF) 3 Mar-2008 0.323 540Y West line of Broadway (1l2.5FF), south of $3.66 $159,527 8627 West Main Street 4 Oct-2007 0.307 540Y Southeast comer of East Main Street (107FF) $1.50 $65,136 8634 & Idaho Avenue (125FF) 5 Sep-2007 0.600 540Y Northeast 90tner of South Idaho (209FF) $1.44 $62,526 8628 Avenue & East A (125FF) 6 Apr-2007 0.359 540X Southeast comer of 11 th Street (125FF) & $1.92 $83,635 8633 WestPolk Street (125FF) The Bilicek Company Land Sale No.: 1 LocationlFronta2e: West line of South Virginia Street (75FF), south of East Main Street Map Ref: 540Y Co: Harris Le2al Description: Lots 18, 19, & 20 of Block 198, City ofLaPorte, Harris County, Texas. Date of Sale: Grantor: Grantee: Sale Price: Financin2: March 11,2008 Estate of A.H. Holder Garson Silvers and or assignee$ $30,000 $3.20 per Sq.Ft. All cash to the grantor. Recordinl! Data: Pending Contract $139,392 per acre Land Area (Acres): Adiusted Price: Flood Plain: Zoning: Remarks: This is the pending sale of 3 adjacent vacant lots. The pending buyer is an. investor who is assembling tracts in the area for a development project. The transactioIl was originally SCheduled to close on March 6, 2008 but it was extended to March 31, 2008 or until such date that problems identified with the title could be cured. 0.2152 $30,000 Land Area(SF): 9,375 $3.20 per Sa.Ft. $139,392 per acre Utilities: All Available Nolie MSD; Main Street District The Bilicek Company Land Ref. No.: 8629 BCe File No.: 1592 Land Sale No.: 2 LocationIFrontag:e: Northwest comer of South Virginia Street (100FF) & East A Street (125FF) Map Ref: 540Y Co: Harris Leg:al Description: Lots 14, 15, 16, & 17 of Block 198, City ofLa Porte, Harris C01.mty, Texas. Date of Sale: Grantor: Grantee: Sale Price: Financing:: March 11, 2008 Recordinl! Data: Pending Contract Binkley Family Limited Partnership II Garson Silvers and or assignees $25,000 $2.00 per Sq.Ft. $87,120 per acre All cash to the grantor. Land Area (Acres): Adiusted Price: Flood Plain: Zoning: Remarks: This is the pending sale of 4 adjacent lots. The transaction was originally scheduled to close on March 6, 2008 and although the closing date has passed both partjes have chosen not to execute their option to terminate the contract and release the eScrow funds. The Buyer reported that he plans on moving forward with the closing in mid-April 2008. 0.2870 $25,000 None Land Area(SF): 12,500 $2.00 per Sa.Ft. $87,120 per acre Utilities: All Available MSD; Main Street District OJ w! -1 The Bilicek Company Land Ref. No.: 8631 BCo File No.: 1592 Land Sale No.: 3 LocationlFrontaee: Le2al Description: Date of Sale: Grantor: Grantee: Sale Price: Financine: Land Area (Acres): Adiusted Price: Flood Plain: Zoning: West line ofaroadway (112.SFF), sO\lth of West Main Street Map Ref: 540Y Co: Harris Lots 22, 23, 24, 25, and the southern one-half of Lot 26, Block 37, City of La Porte, Harris County, Texas. March 1,2008 Robert Hagerty Garson Silvers and or assignees $51,500 $3.66 per Sq.Ft. All cash to the grantor. Recordin1! Data: Pending Contract $159,527 per acre 0.3228 $51,500 Land Area(SF): 14,062 $3.66 per SQ.Ft. $159,527 per acre Utilities: All Available None MSD; Main Street District Remarks: This is the pending sale on 4 & I/2 vacant lots on the west line of Broadway, The lots have a depth of 1)~ feet. The transaction was originally scheduled to <<lose on Februaiy 29, 2008 and although the closing date has passed both parties have chosen not to execute their option to tenninate the contract and rylease the escrow funds. The Buyer reported that he plans on moving forward with the closing in mid-April 2008. ., I The Bilicek Company Land Ref. No.: 8627 BCo File No.: 1592 Land Sale No.: 4 Location/Frontage: Legal Description: Date of Sale: Grantor: Grantee: Sale Price: Financing: Land Area (Acres): Adiusted Price: Flood Plain: Zoning: Southeast comer of East Main Street (107FF) & Idaho Avenue (125FF) Map Ref: 540Y Co: Harris Lots 2, 3, 4, & 5, Block 92, Bayfront to La Porte, City of La Porte, Harris County, Texas. October 16, 2007 Recording: Data: 2007,0624766 Colleen C. Hicks, etal Benicio and Maria Botello $20,000 $1.50 per Sq.Ft. All cash to the grantor. $65,136 per acre 0.3071 $20,000 Land Area(SF): 13,375 $1.50 per SQ.Ft. $65,13613er acre Utilities: All AVailable None R-l; Low Density Residential Remarks: This is the sale of 4 adjacent lots to the adjacent property owner. The Bilicek Company Land Ref. No.: 8634 Beo File No.: 1592 Land Sale No.: 5 LocationlFrontalZe: LelZal Description: Date of Sale: Grantor: Grantee: Sale Price: FinancinlZ: Land Area (Acres): Adiusted Price: Flood Plain: Zoning: Northeast comer of South Idaho (209FF) Avenue & East A (125FF) Map Ref: 540Y Co: Harris Lots 6, 7, 8, 9, 10, 11, 12, & 13, Block 92, Bayfrontto La Porte, City of La Porte, Harris County, Texas. September 25,2007 Recordinl! Data: 2007-0583476 Pfeiffer Electric Benicio and Maria Botello $37,500 $1.44 per Sq.Ft. All cash to the grantor. $62,526 per acre 0.5998 $37,500 Land Area(SF): 26,125 $1.44 per SQ.Ft. $62,526 per acre Utilities: All Available None R-l; Low Density Residential Remarks: This is the sale of an effectively vacant tract of land that is located 1/2 block south of Main Street. J I -i The Bilicek Company Land Ref. No.: 8628 BCo File No.: 1592 Land Sale No.: 6 LocationlFrontaee: Leeal Description: Date of Sale: Grantor: Grantee: Sale Price: Financine: Land Area (AcreS): Adillsted Price: Flood Plain: Zoning: Southeast comer of 11 th Street (125FF) & West Polk Street (125FF) Map Ref: 540X Co: Harris Lots 1,2, 3, 4, & 34 of Block 50, City of La Porte, Harris County, Texas. April 26, 2007 RecOl'dinll Data: 2007-0251140 Marie Annette Orear Willis, etal Robert McAmis $30,000 $1.92 per Sq.Ft. All cash to the grantor. $83,635 per acre 0.3587 $30,000 None Land Area(SF): 15,625 $1.92 per Sa.Ft. $83,635 per acre Utilities: All Available GC; General Commercial Reinarks: This is ~he sale of 5 effectively vacant lots. The property was improved \~ith an older horne which was removed for the redevelopment of the site \"lith a 5,000 square foot metallic office warehouse building. 'j The Bilicek COInp~ny Land Ref. No.: 8633 BCo File No.: 1592 (j) NOTICE OF CONFIDENTIALITY RiGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING !NFORMATlON FROM ANY !NSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE REAL PROPERTY RECORDS: YOUR SOCIAL SECURfTY NUMBER OR YOUR DRfVER'S LICENSE NUMBER. LEASE ARTICLE 1. DEFINrTlONS Defined terms used in this Lease have the meanings assigned below. Other terms may be defined in connection with their use. Section 1.1 Landlord: East A Developments, LP., a Texas limited partnership. Section 1.2 Tenant: La Porte Economic Development Corporation, a Texas non-profit corporation Section 1.3 Tenant's Address: 604 W. Fairmont Parkway, La Porte, Texas 77571 Section 1.4 Premises: Landlord's land in Harris County, Texas, consisting afthe South seven (7) feet of Lot 9, all of Lot 10, the West fifty-six and four tenths (56.4) feet of Lots 11, 12 and 13 of Block 198 of the TOWN OF LA PORTE, as recorded in the Map Records of Harris County, Texas Volume 8, Page 16. Section 1.5 Landlord's Address: 1001 Usener, Houston, Texas 77009 Section 1.6 Rent. Rent consists of the following com ponents: 1.6.1 Base Rent: The amount determined as follows: 1.6.1.1 $5,200.00 per month during months 1 through 36 of the Term; and 1.6.2 Additional Rent, consisting of the following: 1.6.2.1 Taxes, Insurance Costs, and Maintenance Costs; 1.6.2.2 Other Periodic Charges (if applicable); and 1.6.2.3 Other charges designated in this Lease as Additional Rent. Base Rent during any option period will be determined in accordance with Section 1.14. Section 1.7 Permitted Use: any retail, educational, restaurant, museum, office, or municipal use. Section 1.8 Security Deposit The sum of $5,200.00 which Tenant agrees to deposit with Landlord within thirty (30) days of the execution of this Lease. Section 1.9 THIS LEASE IS NOT BINDING UPON LANDLORD UNTIL LANDLORD HAS SIGNED THIS LEASE AND THE FULL AMOUNT OF THE SECURITY DEPOSIT HAS BEEN DEPOSITED WiTH LANDLORD; BUTTHIS LEASE IS BINDING UPON TENANT IMMEDIATELY UPON TENANT'S SIGNATURE HERETO. Section 1.10 Term: 1..J.QJ. Commencement Date: The date upon which Landlord tenders the Prem ises to Tenant. The Term will commence on the Commencement Date and will continue for a period of :56 calendar months thereafter. The Term may be extended by the parties upon mutual written agreement. 1.10.2 If the Commencement Date is not the first day of a calendar month, the partial period between the Commencement Date and the first day of the next succeeding calendar month shall be added to the Term so that the Term ends on the last day of a calendar month. Rent for such partial calendar month shall be prorated on a daily basis. 1.10.3 A Lease Year com mences on the first day of the firstfull calendar month within the Term and ends on the last day of the twelfth calendar month thereafter; except that if there is a partial month at the beginning of the Term, the first Lease Year will include such partial calendar month (and therefore will be longer than twelve [12] months). Each subsequent Lease Year begins the day following the expiration of the prior Lease Year. The last Lease Year may contain less than 12 calendar months if number of months in the Term is not an exact multiple of 12. Section 1.11 Projected Tender Date: December 1,2008. Section 1.12 Number Of Renewal Options: Three (3). Section 1.13 Renewal Term Duration: Twelve (12) months. Section 1.14 Renewal Rental Rate: The amount determined as follows: lJ.U $5,460.00 per month during the first exercise of a Renewal Option (if applicable); 1.14.2 $5,720.00 per month during the second exercise of a Renewal Option (if applicable); 1.14.3 $5,980.00 per month during the third exercise of a Renewal Option (if applicable). Section 1.15 Date of this Lease or Date hereof means the date that the latest of the following has occurred:(i) Landlord and Tenant have each signed this Lease; Dr (ii) Tenant has paid the Security Deposit to Landlord. Section 1.16 Addenda: The following Addenda is attached to this Lease and incorporated by reference: Rules and Regulations Section 2.1 Landlord. Section ?.2 If Tenant performs all Its covenants Bnd agreements, Tenant will have peaceful and quiet possession of the Premises during the Term, subject to this Lease and any mortgages, leases and other matters to which this Lease is or becomes subordinate. ARTICLE 2. GRANTING CLAUSE AND QUIET POSSESSION Landlord hereby leases the Prem Ises to Tenant, and Tenant hereby leases the Prem Ises from Page -1- ARTICLE 3. DEUVERY AND ACCEPTANCE OF PREMISES; TERM OF LEASE; HOLDOVER Section 3.1 Tenant will accept possession of the Premises when Landlord tenders the Premises to Tenant, whether such tender is before, on, or after the Projected Tender Date. By occupying the Premises, Tenantwill have accepted the Premises in their then "AS IS" "WHERE IS" "WITH ALL FAULTS" condition and will have acknowledged that the Premises comply fully with Landlord's covenants and obligations hereunder, except only as to such items ("Punch List") which Tenant reasonably specifies to Landlord in writing within ten (10) days after such tender as not being in compliance, and which Landlord reasonably agrees are not in compliance. Section 3.2 Landlord shall not be in default for failing to tender the Prem ises on or before the Projected Tender Date, whether such delay is caused bya tenantor occupant of the Premises holding over, for a cause beyond Land lord's reasonable control, or for a cause within Landlord's control. However, if Landlord does not tender the Premises to Tenant within ninety (90) days following the Projected Tender Date, either party may term inate this Lease in which event both parties shall be released. Section 3.3 Excepting only any warranties that may be expressly set forth herein, Tenant accepts the Prem ises without warranty of any kind, express or im plied, including, but not lim ited to those arising under the Texas Property Code and Texas Business and Commerce Code. LANDLORD DISCLAIMS ALL WARRANTIES REGARDING MERCHANTABILITY, PROF!TABIUTY, FITNESS FOR A PARTICULAR PURPOSE, HABITABIUTY, SUITABILITY OR TENABILITY. Section 3.4 If Tenant remains in possession of the Premises after the Term, Tenant shall be in default hereunder, Tenant shall vacate the Premises immediately upon demand by Landlord, and Tenant shall be occupying the Premises as a holdover tenant at sufferance, from day-to-day, at a daily rental equal to 1/15th of the total of the following: (i) Base Rent for the last month of the Term; plus (ii) Additional Rent for the last month of the Term. Payment of such daily rental will not relieve Tenant from liability for any damages Landlord maysufferon account of such holding over. Damages which Landlord may suffer include economic damages for loss of a tenant who cancels its lease because of late delivery of premises, increased costs for remodeling, etc. to attempt to mitigate any delay in delivery, and similar items in addition to damages allowed under this Lease or by law. ARTICLE 4. PAYMENT OF BASE RENT AND ADDmONAL RENT Section 4.1 Base Rent and Additional Rentshall accrue beginning on the Commencement Date and shall be payable to Landlord without demand. All Rent shall be payable at Landlord's Address. Landlord may change Landlord's Address by notice to Tenant from time to time. Section 4.2 Tenant agrees and covenants to pay Base Rent to Landlord in monthly installments in the amounts specified in Section 1.10.1. The first monthly installment of Base Rent and Additional Rent is due and payable on the first day of the calendar month immediately following the month in which the Com mencement date occurs. This installment (as weil as Additional Rent due and payable at the sam e time) may be prorated as provided in Section 1.14.2. Succeeding installments of Base Rent and Additional Rent are due and payable on or before the first day of each succeeding calendar month for the entire Term. Tenant covenants and agrees to pay all Rent to Landlord or on before its due date, without deduction or offset of any nature. Section 4.3 In the event any Rent is not received within five (5) days after its due date for any reason whatsoever, a late charge penalty of $30 per day shall become due. The total amount thus due including any penalty shall bear interest at the maximum non-usurious rate which could legally be charged in the event of a loan of such Rent to Tenant in the state where the Premises are located. Any such late charge penalty or interest shall be payable on demand as Additional Rent hereunder. ARTICLE 5. MAINTENANCE COSTS, TAXES AND INSURANCE COSTS Section 5.1 The term Maintenance Costs means all costs and expenses of every kind and nature paid or incurred by Landlord in operating, managing, cleaning, equipping, repairing, replacing and maintaining the Premises, including, without limitation, costs of repainting, cleaning, sweeping and other janitorial services; landscaping; maintenance, repair and replacement of roofs, gutters, utility systems and drainage systems within and serving the Premises; rental charges for machinery and equipment; Premises identification signs; directional signs and other markers; costs of personnel to implement all of the foregoing, including wages, unemployment taxes and social security taxes; personal property taxes; fees for required licenses and permits; supplies; heating, ventilating and air-conditioning systems serving the Premises; and an allowance to Landlord for supervision of the Premises in an amount equal to fifteen percent (15%) of the total of all Maintenance Costs. Nothing in this Section shall create an obligation upon Landlord to provide any of the foregoing services. To the extent Tenant is obligated to, or does, perform any of the foregoing operating, managing, cleaning, equipping, repairing, replacing and maintaining of the Premises, the cost of the same shall be solely the borne by Tenant. Section 5.2 The term Taxes means all real estate and other ad valorem taxes, assessments, parking surcharges, water and sewer rents, and other governmental impositions, levies and charges of every kind and nature whatsoever, general and special, ordinary and extraordinary levied against the Prem ises for each real estat~ tax year during th.e Term, including also (i) any tax or excise (including any margin tax) on any Add rtlonal Rems, and/or (II) any other tax however described (except estate, inheritan ce, capital ga ins, income [except as provided herein] or excess profits taxes imposed upon Landlord) levied or assessed against Page -2- Landlord by any lawful taxing authority on account of Landlord's interest in this Lease, Rent or other charges reserved hereunder, as a substitute in whole or in part for, or in addition to Taxes described above. Section 5.3 Tenant shall pay before delinquency all taxes levied against Tenant's personal property and trade fixtures in the Premises. If any such taxes are levied against Landlord or Landlord's property and Landlord elects to pay the same, Tenant shall pay to Landlord upon demand as Additional Rent that part of such taxes for which Tenant is primarily liable hereunder. Section 5.4 The term insurance Costs means all premiums for liability insurance, fire and extended coverage insurance, rental loss and all other insurance as may be carried from time to time by Landlord covering all or any portion of the Premises. In the event that any insurance carried by Landlord covers property in addition to the Premises, Insurance Costs shall include the premium which would have been paid by Landlord for a similar policy of insurance covering only the Premises. Section 5.5 Landlord shall not be liable to Tenant orto Tenant's employees, agents, or visitors, or to any other person whomsoever, for any injury to person or damage to property on or about the Premises caused by the negligence or misconduct of Tenant, its employees, subtenants, licensees or concessionaires, or of any other person entering the Premises under express or implied invitation of Ten ant, or arising outofthe use of the Premises by Tenant and the conduct of its business therein or arising out of any breach or default by Tenant in the performance of its obligations hereunder; and Tenant hereby agrees to indemnity and hold Landlord harm less from and against any and all liability, loss, damage, expense or claim arising out of such damage or injury or resulting from any breach, violation or nonperformance of any covenants or conditions hereof by Tenant, its agents, employees or invitees. Section 5.6 Tenant shall procure and maintain throughout the Term a policy or policies of insurance, at its sole cost and expense, insuring both Landlord (by naming Landlord as an additional insured) and Tenant against all claims, demands or actions arising out of or in connection with the Premises, the condition ofthe Premises, Tenant's operations in and maintenance and use oftha Premises, and Tenant's liability assumed under this Lease, the limits of such policy or policies to be in an amount not less than $500,000 per occurrence and $1,000,000 aggregate for injury to persons (including death), and for damage or destruction, including loss of use thereof (Tenant's Required Insurance). All such policies shall be procured by Tenant from responsible insuranca companies licensed to do business in Texas satisfactory to Landlord. Certified copies of such policies or duly executed "Certificates of Insurance," together with receipt evidencing paym ent of premiums therefor, shall be delivered to Landlord prior to the Commencement Date of this Lease, or prior to the date Landlord delivers possession of the Premises to Tenant, whichever is the earllerto occur. Not less than thirty (20) days prior to the expiration date of any such policies, certified copies of the renewals thereof or the duly executed "Certificates of Insurance," bearing notations evidencing the payment of renewal premiums, shall ba delivered to Landlord. Such policies shall further provide that not less than thirty (30) days written notice shall be given to Landlord before such policy may be canceled or changed to reduce insurance provided thereby. If Tenant should fail to comply with the foregoing requirements relating to insurance, Landlord may obtain such insurance and Tenant shall pay to Landlord on demand, as Additional Rent hereunder, the premium cost thereof, plus an adm inistrative fee of fifteen percent (15%). Section 5.7 All other insurance coverage shall be the rasponsibility ofTen ant, including, without lim itation, fire and extended coverage, theft, liability, plate glass breakage, and all insurance covering Tenant's stock of goods, trade fixtures, and all other contents of the Premises. Any insurance against casualty loss which may be carried by either Landlord or Tenant shall be under the sole control of the party carrying such insurance. Tenant and its assignees hereby expressly waive any cause of action or right of recovery that it may hereafter have against Landlord for any loss or damage to the Premises or to the building of which the Prem ises are a part, or to the contents thereof belonging to Tenant conta ined .in said Prem ises caused by fire, explosion or other risk covered or which could be covered by a Texas Standard Form of Fire and Extended Coverage Policy, and no third party shall have any such right of recovery by way of subrogation or otherwise. Section 5.8 Tenant shall pay to Landlord monthly (as Additional Rent) an amount equal to Landlord's estimate of 1/12 of the annual Maintenance Costs, Taxes and Insurance Costs on the same day that Base Rent is due. Landlord's initial estimate of 1/12 ofthe annual Maintenance Costs, Taxes and Insurance Costs is set forth in Paragraph 1.10.3. Landlord may, at its option, increase the amount of Tenant's monthly payment towards the annual Maintenance Costs, Taxes and/or Insurance Costs from time to time, based upon Landlord's estimate of annual Maintenance Costs, Taxes and Insurance Costs. Section 5.9 Within one hundred twenty (120) days after the end of each calendar year, Landlord shall provide Tenant with a statement showing the actual amount of Maintenance Costs, Taxes and Insurance Costs for such calendar year, itemized in reasonable detail. If the aforesaid installment payments made by TenantTor a given year are more than such annual Maintenance Costs, Taxes and Insurance Costs, Landlord shall credit the amount of the excess to Tenant's next installm ent(s) of Additional Rent, or at Landlord's option refund same to Tenant or apply any such excess against any other amount Tenant owes Landlord. If said installment payments made are less than the actual Maintenance Costs, Taxes and Insurance Costs for such year, Tenant shall pay Landlord the difference within thirty (30) days after receipt of said statement. In either case, neither party shall be entitled to payment or credit for any amounts owing for more than two (2) years, unless claims for such amounts are made prior to the end of such two (2) year period. ARTICLE 6. USE AND OCCUPANCY OF PREMISES Page -3- Section 6.1 Tenant shall use the Premises only for the Permitted Use, and for no other use or purpose without the Drior written consent of Landlord. Section 6.2 . Tenant shall not, without Landlord's prior written consent, keep anything within the Prem ises Dr use the Prem ises for any purpose which increases the insurance prem ium cost or invalidates any insurance policy carried on the Premises. All property kept, stored or maintained within the Premises by Tenant shall be at Tenants sole risk. Tenant agrees, at its own cost and expense, to comply with all rules, regulations and requirements of the fire insurance underwriting organization and any similar body or governmental authority having jurisdiction. Section 6.3 Tenant shall not conduct within the Premises any fire, auction, bankruptcy, "going-out-of- business", "Iost-our-Iease", or similar sales. Tenant shall not permit any objectionable or unpleasant odors or sounds to emanate from the Premises; nor place or permit any radio, television, loudspeaker or amplifier on the roof or outside the Premises orwhere the same can be seen or heard from outside the building; nor place any antenna, awning or other projection on the exterior of the Premises; nor distribute or cause to be distributed any handbills or other advertising devices; nor do anything which would tend to injure the reputation of Landlord and/or the Premises. Section 6.4 Tenant shall take good care of the Premises and keep the same free from waste at all times. Tenant shall keep the Premises and sidewalks, service-ways and loading areas adjacent to the Premises neat, safe, clean alld free from dirt or rubbish at all times, and shall store all trash and garbage within the Premises, arrangillg for the regular pick-up of such trash and garbage from Tenant's dumpster at Tenant's expense. Receivillg and delivery of goods and merchandise and removal of garbage alld trash shall be made only in the manner and areas prescribed by Landlord. Tenant shall not operate an incinerator or burn trash or garbage within the Premises. Section 6.5 Tenant shall take prudent measures to provide for the security of its employees, agents, customers, and the Premises, and shall keep some of its interior store lights lighted from dusk until dawn every day. Section 6.6 Tenant shall procure, at its sole expense, any perm its req uired for the transaction of business in the Premises and otherwise comply with all applicable laws, ordinances, and governmental regulations. ARTiCLE 7. MAINTENANCE AND REPAiR OF PREMISES Section 7.1 Landlord shall keep the foundation, the exterior walls (excluding plate glass; windows, doors, door closure devices and other exterior openings; window and door frames, molding, locks and hardware; special store fronts; lighting, heating, air conditioning, grease traps, utility meters, plumbing and other electrical, mechanical and electromotive installations, equipment end fixtures; signs, placards, decorations or advertising media of any type, and interior treatm ents to the exterior walls), a nd roof of the Prem ises in good repair; provided, however, Landlord shall not be required to make any repairs occasioned by the act or negligence of Tenant, its agents, employees, invitees, subtenants, licensees and concessionaires (including, but not limited to, roof leaks resulting from Tenant's installation or servicing of air conditioning equipment or any other roof penetration or placement). The provisions of this Section 7.1 are expressly subject to the provisions of ARTICLE 13 and ARTICLE 20 of this Lease. In the event the Premises should become in need of repairs required to made by Landlord hereunder, Tenant shall give immediate written notice thereof to Landlord. Section 7.2 Tenant, at its sole cost and expense, shall keep and maintain the Premises in good order and in a neat, clean, safe and habitable condition, free of insects, rodents, vermin and other pests, and shall make all needed repairs and replacements, except for repairs and replacements required to be made by Landlord under the provisions of Section 7.1, ARTICLE 13 and ARTICLE 20 of this Lease. Without limiting the preceding sentence, it is understood that Tenant's responsibilities include the repair alld replacement of all cracked or broken glass and all lighting, heating, air conditioning, utility meters, plumbing, water heaters, sprinklers, and other electrical, mechanical and electromotive installations, equipment and fixtures in the Premises. If any repairs or replacements required to be made by Tenant hereunder are not made within ten (10) days after written notice is delivered to Tenant by Landlord, Land lord may at its option make such repairs or replacements without liability to Tenant for any loss or damage which may result by reason thereof, and Tenant shall pay to Landlord upon demand, as Additional Rent hereunder, the cost of such repairs or replacem ents plus an adm inistrative fee of fifteen percent (15%). Section 7.3 Additionally, Tenant shall pay to Landlord upon demand, and without contribution from Landlord, all costs and expenses for the maintenance, repair, replacement and/or construction of any utility lines, including, without limitation, gas lines, sewer lines, water lines and drains, drainage systems, drainage piping, water service pipes, underground water pipes, storm sewer systems or stDrm sewer piping, sanitary sewer systems and piping and any plumbing equipment, fixtures or appliances servicing the Premises as a result of any obstruction of the flow, clogging, backing-up or other malfunction or disrepair of said svstems due to any act or om ission of Tenant hereunder are not made within ten (10) days after written notice de'livered to Tenant by Landlord. Section 7.4 Tenantshall install and maintain fire extinguishers and other fire protection devices, and shall comply With all requirements of any insurance policies and the insurance underwriters insuring the Building in which the Premises are located. Section 7.5 Tenant sha II com ply with all req uirem ents of the Am ericans with Disabilities Act (Public Law 101-336 (July 26,1990)) and the Texas Architectural Barriers Act (Article 9102, Tex. Rev. Civ. St. (1991), Page -4- and/or any amendments or successor statutes thereof, applicable to the Premises. Tenant agrees to indemnify, defend, and hold Landlord harmless from any and all expense, liabilities, costs or damages suffered by Landlord as a result of additional obligations which may be imposed on the Premises under either of such acts by virtue of Tenant's operations. Tenant acknowledges that it will be wholly responsible for any accommodations or alterations which need to be made to the Prem ises to accom modate disabled employees and customers of Tenant. No provision in this Lease should be construed in any manner as permitting, consenting to, or authorizing Tenant to violate requirements under either such act, and any provisions of the Lease which could arguably be construed as authorizing a violation of either act shall be interpreted in a manner which permits compliance with such act and is hereby amended to permit such compliance. Section 7.6 TENANT EXPRESSLY UNDERSTANDS AND AGREES THAT TENANT SHALL BEAR SOLE RESPONSIBILITY FOR THE SECURITY OF THE PREMISES AND DESiGNATED PARKING AREA, AND FOR THE SECURITY OF TENANT'S AGENTS, INVITEES, CUSTOMERS, VISITORS, AND ALL OTHER PERSONS WHOSOEVER WHO COME ON OR ABOUT THE PREMISES. LANDLORD WILL NOT BE OBLIGATED TO PROVIDE SECURITY PERSONNEL, SECURITY UGHTlNG, OR ANY OTHER FORM OF SECURITY FOR THE PREM!SES. If Landlord, in its sole discretion, elects to provide security services, such action shall not constitute a waiver of this Section and the cost of such security services shall be included within Maintenance Costs. ARTICLE B. UTILITIES Section 8.1 Tenant shall promptly pay all charges for electricity, water, gas, telephone service, sewage service and other utilities furnished to the Premises, including any charges for utilities on Landlord's meters, which shall be apportioned in a manner deemed fair and reasonable by Landlord (Other Periodic Charges). In the event Tenant fails to reim burse Landlord for any Other Periodic Charges within thirty (30) days of billing, Landlord may, in addition to any other remedies herein, interrupt utility service to Tenant. Landlord shall not be liable for any interruption whatsoever in utility services. ARTICLE 9. ALTERATiONS Section 9.1 Tenant shall not make any alterations, additions or improvements to the Premises without the prior written consent of Landlord, except for the installation of unattached movable trade fixtures which may be installed without drilling, cutting or otherwise defacing the Premises. All alterations, additions, improvements and fixtures (other than Tenant's unattached movable trade fixtures) which may be made or installed by either party upon the Premises shall remain upon and be surrendered with the Premises and become the piDperty of Landlord at the termination of this Lease, unless Landlord requests their removal in which event Tenant shall remove the same and restore the Premises to their original condition at Tenant's expense. Section 9.2 All construction and removal work by Tenant within the Prem isas shall be performed in a good and workmanlike manner, in compliance with all governmental requirements, laws, ordinances, orders or regulations affecting the Premises or the removal of any substances therefrom, and in full compliance with Article 28 hereof. Tenant agrees to indem nify and hold Land lord harm less from and against any and all claim s, demands, losses, liabilities, damages, costs, fines or penalties resulting from or arising in connection with the performance of such work. ARTICLE 10. TENANTS FlXTURES Section 10.1 Tenant may place or install in the Premises Tenant's business fixtures and related furnishings and equipment that are not in the nature of a leasehold improvement, including but not limited to counters, shelving, floor fixtures,display cases, office furniture and safes, and shall remove same upon the expiration or termination of this Lease; provided, however, that Tenant, at Tenant's own cost and expense, shall repair any and all damage to the Premises resulting from or caused by such installation or removal. ARTICLE 11. TENANTS STORE FRONT AND S!GNS Section 11.1 Except as hereinafter expressly provided, Tenant shall not, without Landlord's prior written consent (a) make any changes to the store frontor (b) install any decorations or advertising media of any type (including anything within the Premises that can be viewed from the exterior of the Premises), excepting only dignified displays of customary type for its display windows, which have been approved by Landlord. Section 11.2 All signs, lettering, placards, decorations and advertising media shall conform in all respects to sign criteria (Sign Criteria) established by Landlord from time to time in the exercise of its sole discretion, and shall be subject to the prior written approval of Landlord as to construction, method of attachment, size shape, height, lighting, color and general appearance. Tenant shall not place or allow to be used any portabl~ and/or trailer signs anywhere within the Premises or adjacent streets or alleys. Section 11.3 All signs shall be kept in first-class condition and in proper operating order at all times, and shall be rem oved by Tenant upon the expiration or termination of this Lease. Section 11.4 , Tenant agrees to install, prior to the Commencement Date, a sign conforming to the Sign Criteria on the rrontofthe Premises. Landlord may amend the Sign Criteria, and Tenantwill modify or replace Its signs as necessary to comply with any amended Sign Criteria. ARTICLE 12. LANDLORDS RlGHT OF ACCESS: USE OF ROOF Page -5- Section 12.1 Landlord shall have the right to enter upon the Premises at any time for the purpose of inspecting the sam e, Dr of making repairs to the Prem ises, or of making repairs, alterations or additions to the adjacent premises, or of showing the Premises to prospective purchasers, lessees or lenders. Section 12.2 Tenant will permit Landlord to place and maintain "For Rent" or "For Lease" signs in and about the Prem ises during the last ninety (90) days of the Term. Section 12.3 Use of the roof and air space above the Premises is reserved exclusively to Landlord. Section 12.4 Neither Tenant nor any employee or invitee of any Tenant shall go upon the roof of the Prem ises except for the sole purpose of servicing its air condition ing units or roof top equ ipm ent; provided that this paragraph does not authorize Tenant to install any roof top equipment without the prior written consent of Landlord. In the event the installation or servicing of any roof top equipment (including air conditioning) requires a roof penetration, Tenant will pay the cost of a post-installation or post-servicing inspection by Landlord's roofing contractor and will pay the cost of any repairs which Landlord's roofing contractor determines are required by reason of such installation or servicing. ARTiCLE 13. DAMAGES BY CASUAL TV Section 13.1 Tenant shall give im mediate written notice to Land lord of any damage caused to the Prem ises by fire or other casualty. Section 13.2 In the event the Premises shall be damaged or destroyed by fire or other casualty insurable under standard fire and extended coverage insurance and Landlord does not elect to terminate this Lease as hereinafter provided, Landlord shall proceed with reasonable diligence and at its sole cost and expense to rebuild and repair the Premises. In the event (a) the Premises are destroyed or substantially damaged by a casualty not covered by Landlord's insurance, or (b) the holder of a mortgage, deed of trust or other lien on the Premises at the time of the casualty elects, pursuant to such mortgage, deed of trust or other lien, to require the use of all or part of Landlord's insurance proceeds in satisfaction of all or part of the indebtedness secured by the mortgage, deed of trust or other lien, then Landlord may elect either to terminate this Lease or to proceed to rebuild and repair the Premises. Landlord shall give written notice to Tenant of such election within sixty (60) days after the occurrence of such casualty and, if it elects to rebuild and repair, shall proceed to do so with reasonable diligence. Section 13.3 Landlord's obligation to rebuild and repair under this Article shall in any event be limited to restoring the Premises to substantially the condition in which the same existed prior to such casualty, exclusive of any alterations, additions, improvements, fixtures and equipment installed by Tenant. Tenant agrees, promptly after completion of such work by Landlord, to proceed with reasonable diligence and at Tenant's sole cost and expense to restore, repair and replace all alterations, additions, improvements, fixtures, signs and equipment installed by Tenant and to reopen for business in the Premises. Section 13.4 Tenant agrees that during any period of reconstruction or repair of the Premises it will continue the operations of its business within the Premises to the extent practicable. During the period from the occurrence of the casualty until Landlord's repairs are completed, the Base Rentshall be reduced to such extent as may be fair and reasonable under the circumstances; however, there shall be no abatement ofthe Additional Rent provided for herein. ARTICLE 14. NON-LIABilITY FOR CERTAIN DAMAGES Section 14.1 Landlord and Landlord's agents and employees shall not be liable to Tenant for any injury to person or damage to property caused by the Premises becoming out of repair or by defect or failure of any structural elem ent of the Prem ises or of any equipm ent, pipes or wiring, or broken glass, or by the backing up of drains, or by gas, water, steam, electricity or oil leaking, escaping or flowing into the Premises (except where due to Landlord's willful failure to make repairs required to be made hereunder, after the expiration of a reasonable time after written notice to Landlord of the need for such repairs, and then only to the extent Landlord is insured for such loss), nor shall Landlord be liable to Tenant for any loss or damage that may be occasioned by or through the acts or omissions of any other persons whomsoever, excepting only duly authorized employees and agents of Landlord. Section 14.2 Landlord shall not be liable to Tenant for losses due to theft, vandalism or burglary, or for damages or injuries done by unauthorized persons to the Premises or to any person or property located in, upon, or adjacent to the Premises. ARTICLE 15. ASSIGNMENT AND SUBLETTING Section 15.1 Tenant may subletthe Prem ises or any part thereof with written notice to Landlord, provided that such sublease is made expressly subject to the terms of this Lease. Tenant shall not otherwise assign or in any manner transfer this Lease or any estate or interest therein, or sublet the Premises or any part thereof, collaterally or otherwise, or grant any license, concession or other right of occupancy of any portion of the Premises without the prior written consent of Landlord. Consent by Landlord to one or more assignments shall not operate as a waiver of Landlord's rights as to any subsequent assignments. Section 15.2 If Tenant is a corporation, partnership or other business entity, and if at any time during the Term or any renewal or extension thereof the owners of a majority of the ownership interests in Tenant at the time of the executlon of this Lease cease to own a majority of such ownership interests (except as the result of tr~nsfe: by devise or descent), howsoever same may be brought about (including, by way of example but not 11m Itatlon, a merger or consolidation), the cessation of ownership of a majority of such ownership interests Page -6- shall be deem ed an assignm ent ofthis Lease by Tenant and therefore subject in all respects to the provisions of Section 15.1 above. The previous sentence shall not apply, however if at the time of the execution of this Lease Tenant is a corporation or publicly traded partnership and the outstanding voting shares of capital stock of Tenant (or ownership interests in such partnersh ip) are listed on a recognized security exchange or over- the-counter market. Section 15.3 Notwithstanding any assignment or subletting, Tenant shall at all times remain fully responsible and liable for the payment of all Rent herein speCified and for compliance with all of its other obligations under this Lease (even if future assignm ents and su blettings occur subsequent to the assignment or sublettings). Moreover, in the event that the rental due and payable by a sub-lessee or assignee (or a combination of the rental payable under such sublease plus any bonus or other consideration therefor or incident thereto) exceeds the Rent payable underthis Lease, then Tenant shall be bound a nd obligated to pay Landlord all such excess rental and other excess consideration within ten (10) days following receipt thereof by Tenant. Section 15.4 Tenant shall not mortgage, pledge or otherwise encumber its interest in this Lease or in the Pram ises. Section 15.5 Should Tenant request of Landlord the rightto assign, Landlord may charge an amount equal to one (1) month's Base Rent and Additional Rent as an administration fee, if such request is granted. Additionally, regardless of whether Landlord consents to a proposed assignment, Tenant shall reimburse Landlord for any direct costs incurred by Landlord in connection with a request by Tenant to assign, including legal fees and expenses. ARnCLE 16. ASSIGNMENT OF LANDLORD'S INTEREST Section 16.1 Landlord shall have the right to assign, or transfer in whole or in part, ever]' feature of Landlord's right and obligation hereunder and in the Premises, subject to this Lease. Such assignments or transfers may be made to a corporation, state or national banking association, trust, trust company, limited pa rtnership, partnership, individual or group of ind rviduals, and however made, shall be in all things respected and recognized by Tenant. Tenant shall not, however, be charged with notice, actual or constructive, of Dr with inquiry and respect to, any such assignment or transfer until Tenant is furnished with a written notice of such transfer or assignment by Landlord. Section 16.2 In the event of the transfer and assignment by Landlord of its interest in this Lease and in the building containing the P rem ises, Landlord sha II thereby be released from any further obligations hereunder, and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such obligations. Any remaining security given byTenantto secure performance of Tenant's obligations hereunder shall be assigned and transferred by Landlord to such successor in interest, and Landlord shall thereby be discharged of any further obligation relating thereto. ARTiCLE 17. SUBORDtNATiON; ATTORNMENT Section 17.'1 Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust or other lien covering the Premises as a whole, and to any renewals and extensions thereof (collectively, Mortgage). Tenant agrees that any such mortgagee shall have the right at any time to subordinate such Mortgage to this Lease; provided, however, notwithstanding that this Lease may be (or be made to be) superior to the Mortgage, the provisions of the Mortgage relative to the rights of the mortgagee with respect to proceeds arising from an eminent domain taking (including a voluntary conveyance by Landlord) and/or arising from insurance payable by reason of damage or destruction of the Premises shall be prior and superior to any contrary provisions contained in thrs instrument. Landlord is hereby irrevocab~y vested with full power and authority to su bordinate this Lease to any Mortgage, and Tenant agrees upon dem and to execute such further instrum ents subordinating this Lease as Landlord may request; provided, however, that upon Tenant's written request and notice to Landlord, Landlord shall use good faith efforts to obtain from any such mortgagee a written agreement that the rights of Tenant shall remain in full force and effect during the term of this Lease so long as Tenant shall continue to recognize and perform the covenants and conditions of this Lease. Upon request of any mortgagee of the Prem ises, Tenant shall agree to recognize and attorn to the purchaser at any foreclosure sale. Section 17.2 At any time when the holder of an outstanding Mortgage has given Tenant written notice of its interest in this Lease, Ten ant may not exercise a ny rem edies for default by Landlord hereunder unless and until the holder of the indebtedness secured by such Mortgage shall have received written notice of such default and a reasonable time for curing such default thereafter shall have elapsed. Section 18.1 Lease. ARTICLE 18. DEFAULT BY TENANT AND LANDLORD REMEDIES Each of the following events shall be deem ed to be an Event of Default by Tenant under this ~ Tenant shall fail to pay any installment of Base Rent, Additional Rent, or any other obligation hereunder involving the payment of money and such failure shall continue for a period of ten (10) days after the date due. 18.1.2 Tenant shall fail to comply with any term, provision or covenant of this Lease, other than as described in subsection 18.1.1 above, and shall not cure such failure within thirty (30) days after written notice thereof to Tenant. Page -7- 18.1.3 Tenant shall become insolvent, or shall make a transfer in fraud of creditors, Dr shall make an assignment for the benefit of creditors. 18.1.4 Tenant shall file a petition under any section or chapter of the Federal Bankruptcy Code, as am ended, or under any sim ilar law or statute of the United States or any State thereof, or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant. 18.1.5 A receiver or trustee shall be appointed for the Premises or for all or substantially all of the assets of Tenant. 18.1.6 Tenant shall abandon or vacate any substantial portion of the Premises or shall permit the Premises to remain unoccupied and unattended. 18.1.7 Tenant shall do or perm it to be done anything that creates a lien upon the Premises. 18.1.8 Tenant (if Tenant is a corporation, partnership, lim ited liability com pany, or other business entity) shall fail to maintain its existence or shall fail to remain in good standing with the Texas Com ptroller of Public Accounts (if applicable) or any other governm ental entity with which it is required by law to remain in good standing. 18.1.9 Tenant and/or any affiliate of Tenant hereunder shall default under any other agreement between such party and Landlord and/or any affiliate of Landlord; provided, however, if such other agreement gives the defaulting party an opportunity to cure such a default within a particular time, no Event of Default will be deemed to have occurred until such time has expired without such default having been cured. Section 18.2 Upon the occurrence of any such Events of Default, in addition to all other legal or equitable remedies now or hereafter available, Landlord shall have the option to pursue any and/or all of the following described rem edies without further dem and or notice whatsoever: 18.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, La ndlord may, without prejud ice to any other rem edy wh ich he may have for possession or arrearage in rent, enter upon and take possession of the Premises and expel Dr removl? Tenant and any other person who may be occupying sa~d premises or any part thereof without being liable for prosecution or any claim for damages therefor; and Tenant agrees to pay to Landlord on demand the amount of all loss and damage which Landlord may suffer by reason orsuch termination, whetherthrough inability to relet the premises on satisfactory terms or otherwise. 18.2.2 Enter upon and take possession of the Premises, without terminating this Lease, and expel or remove Tenant and any other person who may be occupying said premises Dr any part thereof, without being liable for prosecution or any claim for damages therefor, and, if Landlord so elects, relet the premises on such terms and for such purposes as Landlord may deem advisable and receive the rent therefor, and Tenant agrees to pay to Landlord on demand any deficiency that may arise by reason of such reletting, and in no event shall Tenant be entitled to any excess of any rent obtained by reletting over the sums for which Tenant is obligated hereunder. Actions may be brought from time to time to collect Rent prior to the expiration of the Term. 18.2.3 Enter upon the Premises, without being liable for prosecution or any claim for damages therefor, without being obligated to do so and without thereby waiving such default, and do whatever Tenant is obligated to do under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for all costs and expenses (including reasonable attorney's fees) which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, and Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenantfrom such action. In the event Landlord elects to re-enter Dr repossess the Premises after Tenant's default, Tenant hereby waives notice of such re-entry or repossession and of Landlord's intent to re-enter or retake possession and grants to Landlord full and free license to alter or change locks or security devices on the Premises. Pursuit of any of the foregoing remedies shall not preclude pursuit of any other remedies herein provided or provided by law, nor shall pursuit of any other such remedy constitute a forfeiture or waiver of any Rent due to Landlord hereunder or of any dam ages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such default. The loss Dr damage which Landlord may suffer by reason of termination of this Lease orthe deficiency arising by reason of any reletting by Landlord as above provided, shall include the expenses of repossession, brokerage fees and the cost of any repairs, alterations, additions, Dr remodeling undertaken by Landlord following repossession. 18.2.4 Accelerate the Rents for the rem ainder of the Term and declare any and all Rents for the remainder of the Term immediately due and payable. Tenant hereby waives any right to demand and/or notice, including, but not limited to, notice of default, notice of intent to accelerate, and/or notice of acceleration. 18.2.5 Terminate any and all remaining option periods on Dr under this Lease. 18.2.6 Exercise any and all other rights and remedies granted to Landlord under this Lease. 18.2.7 The service of any notice of termination or demand for possession, institution of any action for forcible detainer or the entry of a judgment for possession in such action, or any other act or acts shall not constitute an election of remedies on the part or Landlord nor result in the termination of Tenants obligations to pay all Rent hereunder during the balance of the Term or any extension Page -8- thereof. Landlord may collect and receive any Rent due from Tenant, and the acceptance thereof shall not constitute a waiver of or affect any notice or demand given, suit instituted or judgment obta ined by Landlord, or be held to waive, affect, change, modify or alter the rights or remedies which Landlord has in equity or at law by virtue of this Lease. Section 18.3 In the event Land lord shall have taken possession of the Prem ises pursuant to the authority herein granted, then Landlord shall have the right to keep in place and use all of Tenant's fixtures, furniture, equipment, signs, and other personal property at all times prior to any foreclosure thereon by Landlord or repossession thereof by any third party having a prior lien thereon or claim thereto, or Landlord may remove and store such items in a public warehouse or elsewhere at Tenant's expense. Section 18.4 Landlord may restrain or enjoin any breach or threatened breach of any covenant, duty or obligation of Tenant herein contained without the necessity of proving the inadequacy of any legal remedy or irreparable harm. The remedies of Landlord hereunder shall be deem ed cum ulative and not exclusive of each oth er. Section 18.5 If on account of any breach or default by Tenant in its obligations hereunder, Landlord shall employ an attorney to present, enforce or defend any of Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable attorney's fees incurred by Landlord in such connection. ARnCLE 19. LANDLORD'S CONTRACTUAL SECURITY INTEREST Section 19.1 In addition to the statutory Landlord's lien, Landlord shall have at all times a valid security interest to secure payment of all Rent and other sums of money becoming due hereunder from Tenant, and to secure paym ent of any damages or loss that Landlord may suffer by reason of the breach by Tenant of any covenant, agreement or condition contained herein, upon a\l goods, wares, equipment, fixtures, furniture, improvements and other personal property of Tenant presently, or which may hereafter be situated on the Premises, and all proceeds therefrom, and such property of Tenant may not be removed without the consent of Landlord until all arrearages in Rent as well as any and all other sums of money then due to Landlord or to become due to Landlord hereunder shall first have been paid and discharged and all the covenants, agreements and conditions hereof have been fully complied with and performed by Tenant. Section 19.2 Upon the occurrence of an Event of Default by Tenant, Landlord may, in addition to any other remedies provided herein, enter upon the Premises and take possession of any and all goods, wares, equipm ent, fixtures, furniture, im provem ents and other personal property of Tenant situated on the Prem ises, without liability for trespass or conversion, and sell the same at public or private sale, with or without having such property at the sale, after giving Tenant reasonable notice of the time and place of any public sale or of the time after which any private sale is to be made. Unless otherwise provided by law, and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable notice shall be met if such notice is given in the manner prescribed in this Lease at least seven (7) days before the time of sale. Any sale made pursuantto the provision of this paragraph shall be deemed to have been a public sale conducted in a commercially reasonable manner if held in the Premises orwhere the property is located after the time, place and method of sale and a general description of the types of property to be sold have been advertised in a daily newspaper published in the county in which the property is located, for five (5) consecutive days before the date of the sale. Landlord Dr its assigns may purchase any Dr all of same at said public or private sale, unless other\l\rise prohibited by law. The proceeds from any such private or public sale, less any and all expenses connected with the taking of possession, holding and selling of the property (including reasonable attorneys fees and legal expenses), shall be applied as a credit against the indebtedness secured by the security interest granted Landlord in this Article. Any surplus shall be paid to Tenant or as otherwise required by law; Tenant shall promptly pay any deficiencies. Section 19.3 This Lease shall constitute a Security Agreement underthe Uniform Commercial Code. Upon request by Landlord, from time to time Tenant agrees to execute and deliver to Landlord a Uniform Commercial Code Financing Statement in form sufficient to perfect the security interest of Landlord in the aforementioned property and proceeds thereof, or Landlord may file same on behalf of Tenant. ARTICLE 20. EMINENT DOMAIN Section 20.1 If more than thirty percent (30%) of the floor area of the Prem Ises should be taken for any public or quasi-public use under any governmental law, ordinance or regulation or by right of eminent domain or by private purchase in lieu thereof, this Lease shall terminate and all Rent shall be abated during the unexpired portion of this Lease, effective on the date physical possession is taken by the condemning authority. Section 20.2 If less than thirty percent (30%) of the floor area of the Premises should be taken as aforesaid, this Lease shall not terminate; however, the Base Rent payable hereunder during the unexpired portion of this Lease shall be reduced in proportion to the area taken, effective on the date physical possession is taken by the condemning authority. Following such partial taking, Landlord shall make all necessary repairs or alterations to make the remaining portions of the Premises an architectural whole. Section 2D.3 All com pensation awarded for any taking (or the proceeds of private sales in lieu thereof) of the Prem Ises shall be the property of Landlord, and Tenant hereby assigns its interest in any such award to Landlord; prOVided, however, Landlord shall have no interest in any award made to Tenant for Tenant's moving and re locating expenses or for the loss of Tenant's trade fixtu res and other tangible personal property Page -9- if a separate award for such items is made to Tenant. Under no circumstances, however, shall Tenant be entitled to compensation for the loss of its leasehold estate, even if such a sum is separately awarded. ARTICLE 21, LANDLORD'S CONSTRUCnON Section 21.1 The Leased Premises will be delivered by Landlord to Tenantwith the following im provements and none other: 21.1.1 Outside walls constructed; 21.1.2 Roof installed with ceiling provided; 21.1.3 two (2) working restroom s installed, each with one toilet and one sink; 21.1.4 Heating, ventilation, and cooling system installed; 21.1.5 Concrete slab installed; 21.1.6 Water, sanitary sewer and electrical connections available to an outside wall of the Leased Premises (Tenant to be responsible for the cost of connecting to); and 21.1.7 Windows and standard door installed. In the event that Tenant's construction calls for windows and/or doors wh ich are in excess of the cost of standard item s, such windows and/or doors shall be at Tenant's expense. Section 21.2 Landlord shall not be req uired to construct any other leasehold im provem ents as a part of this Lease. ARTICLE 22. NOnCES Section 22.1 Whenever any notice is required or perm itted hereunder such notice shall be in writing. Any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered when deposited in the United States Mail, postage prepaid, Certified Mail, Return Receipt Requested, addressed to Landlord at Landlord's Address or to Tenant at Tenant's Address (or at Landlord's option, to Tenant at the Prem ises). Landlord shall have the right to change Landlord's Address by notice to Tenant, and Tenant shall have the right to change Tenant's Address by notice to Tenant, but any such changed address must be within the continental United States. Notice given in any other manner shall be deemed received when actually received by the party to be notified. Such receipt may be evidenced, for example, by affidavit of the person making delivery or by confirmation by Federal Express or other package delivery service or delivery. ARTtCLE 23. SURRENDER Section 23.1 At the expiration or termination of this Lease, Tenant shall surrender the Premises in good condition, including the removals and repairs required to be made by Tenant in Section 9.1, Section 9.2, Section 10.1 and Section 11.3 of this Lease, excepting only reasonable wear and tear and repairs required to be made by Landlord under this Lease. Section 23.2 Should Tenant fail to remove any of its fixtures, equipment, signs or personality at the expiration or term ination of this Lease, Landlord may consider sam e to be aband oned and rem ove or dispose of same without liability to Tenant, at Tenant's expense. ARTiCLE 24. COMPUANCE WiTH ENViRONMENTAL REQUIREMENTS Section 24.1 Tenant shall com ply with all applicable federal, state, and local laws, ordinances, orders, rules and regulations concerning the protection of the environment (Environmental Laws) and affecting the Prem ises or the operation of Tenant's business therein. Notwithstanding a nything in this Lease to the contrary, Tenant shall not use, store, handle, manufacture, process or dispose of in, on or about the Premises any substance, material, chemical, gas, waste or other matter which is harmful to the environment (Hazardous Substances). Section 24.2 Tenant will not do or permit anything to be done in, on or about the Premises that would violate any Environmental Laws. Any Hazardous Substances (including any construction or remodeling wastes) shall be removed from the Premises by Tenant and shall be properly disposed of in compliance with all Environmental Laws at Tenant's sole cost and expense. Section 24.3 Tenant hereby agrees to indem nity and hold Landlord harm less of, from and against any and all claim s, actions, liens, dem ands, costs, expenses, penalties, fines and judgm ents (including court costs and attorney's fees) resulting from or arising by reason of the violation of this Article or any Environmental Laws by Tenant, its agents, employees, contractors, subtenants, licensees or concessionaires. Section 24.4 Tenant's obligations underthis Article shall survive the expiration or term ination of this Lease. ARTICLE 25. RENEWAL OPTIONS Section 25.1 Subject to the terms of this Lease, Tenant shall have the option (each such option being a Renewal Option) to extend the Term of this Lease (if and as applicable). The number of times a Renewal Option may be exercised is equal to Number Of Renewal Options. Upon each such exercise of a Renewal Option, the Term shall of this Lease shall be extended for the Renewal Term Duration. If the Number of Renewal Options is zero or left blank, no Renewal Option shall exist. Section 25.2 In order to exercise the first Renewal Option (if and as applicable) to extend the Term of this Lease for the first Renewal Term, Tenant must: 25.2.1 Give notice to Landlord of its exercise of this option no earlier than twelve (12) months before and no later than three (3) months before the end of the Term; Page -10- 25.2.2 Not be in default under this Lease at the time of giving such notice; 25.2.3 Not have assigned this Lease at any time; and 25.2.4 Not have paid more than four (4) installments of Base Rent and/or Additional Rent later than their respective due dates.' Section 25.3 In orderto exercise the each additional Renewal Option to extend the Term of this Lease for such Renewal Term (if and as applicable), Tenant must comply with Section 25.2.1 through Section 25.2.4 above as of the date of such exercise and additionally must have properly and timely exercised the previous Renewal Option(s) in accordance with this Lease (as applicable). Section 25.4 In the event Tenant exercises any Renewal Option, the monthly Base Rent for the Premises during the relevant Renewal Term shall be the relevant Renewal Rental Rate. Section 25.5 Each Renewal Term shall comm ence on the first day following the expiration of the Term (as previously extended) and shall term inate on the last day of the releva nt num ber of calendar month thereafter. Except as changed in the manner referred to in 25.4 above, this Lease shall be so renewed and extended on and subject to all of the same terms, provisions and conditions as are set forth in this Lease. For each Renewal Option that is exercised and not retracted, the Term shall be amended to include the that Renewal Term Section 25.6 Time is of the essence with respect to exercise of each of Tenant's Renewal Options, and if any of such options is not exercised within the time and in the manner herein stated, then such options shall expire and be of no further force or effect. If notice of exercise of any or all of Tenant's Renewal Options is given in accordance with the provisions hereof and not retracted under 25.4.2, such notice shall be effectTve to renew and extend this Lease for the applicable Renewal Term, without the necessity of execution of any additional agreements or instruments by either Landlord or Tenant; provided, however, that either Landlord or Tenant shall, at the request of the other, execute a document which confirms the exercise ofthe relevant Renewal Option, the commencement and ending dates thereof, the rental rates in effect, and such other factual information as either party reasonably requests. ARTiCLE 26. TENANT CONSTRUCTION Section 26.1 Tenant may construct improvements at the Premises only upon satisfying the following "conditions precedent": (i) that Landlord and Tenant shall have mutually agreed in writing upon plans and specifications and one Dr more general contractors (herein sometimes referred to as "contractor") to be utilized by Tenant; (Ii) that Tenant has tendered to Landlord: a true copy of a "Building Permit" (meaning all required governmental, regulatory authority and other permits, consents and letters of utility availability) for the work of Tenant and its contractors, and certificates of all insurance required to be obtained by Tenant pursuant to this Lease; provided, however, in the event that this Lease is in full force and effect but Tenant has not provided land lord with a Building Perm it within th irty (30) days after the date condition (i) is satisfied, Landlord may, in addition to other remedies which may then be available to Landlord, cancel and terminate this Lease by notice to Tenant given at any time thereafter. Upon any such cancellation and termination by Landlord, Landlord and Tenant shall each respectively be released from all further liability under this Lease, irrespective of what costs or expenses either of such pa rtles s ha II have incurred prior to any such cancellation and termination. Section 26.2 If Landlord and Tenant have not agreed in writing upon said plans and specifications Dr one or more general contractors to be utilized by Tenant on or before the date hereof, then within thirty (30) days after landlord informs Tenant that the Premises are expected to be ready for commencement of Tenant's construction within ninety (90) days thereafter, Tenant shall cause com plete plans and specifications ("working drawings") to be prepared and three (3) counterparts to be submitted to Landlord for examination along with a list of one (1) or more contractors acceptable to Tenant. If by the expiration of the aforesaid thirty (30) day period, Landlord and Tenant shall not have agreed in writing upon said completed working drawings and one or more contractors to be utilized by Tenant, then Landlord shall have the right to terminate this Lease at any tim e thereafter, upon which term ination neither party shall have any claim against the other under this Lease irrespective of what costs or expenses, if any, either party shall have incurred in connection with this Lease prior to such cancellation. If such final working drawings are mutually approved by Landlord and Tenant in writing, such working drawings shall be initialed Dr signed by Landlord and Tenant and dated and designated "Tenant's Final Working Drawings", but need not be attached to this Lease. Section 26.3 Upon tender of possession of the Premises by Landlord to Tenant, Tenant shall enter the Premises and Tenant will perform such construction work and provide and install such materials as are provided in Tenant's Final Working Drawings and this Lease Agreem ent to be constructed or perform ed and installed by Tenant. Tenant will also provide and install all other interior work, trade equipment, furniture, fixtures, and effects of every description necessary or appropriate for Tenant's business (other than those specifically stated in the Article 21 to be provided by Landlord) and all such items to be provided and installed by Tenant shall be new and modern and offirst-class quality. landlord may make changes in its construction work (other than substantial changes) without Tenant's approval; Tenant will not unreasonably withhold approval of substantial changes proposed by Landlord. In the event Tenant fails to satisfy the conditions precedent and also commence construction on Dr before the expiration of thirty (30) days from the date of tender of possession OT the Premises to Tenant, then such failure shall constitute an Event of Default under this Lease and, without further notice, Landlord shall have the right to either terminate this Lease at any time Page -11- thereafter or exercise such other remedies as may be available to Landlord pursuant to the terms of this Lease. Section 26.4 If at any time during the course of Tenant's work at the Premises the storefront of the Premises is not fully secure, Tenant shall construct a barricade of plywood or other material approved by Landlord to secure the Premises. Section 26.5 With respect to any labor performed or materials furnished by Tenant at the Premises, the following shall apply: All such labor shall be performed and materials furnished atTenant's own cost, expense and risk. Labor and materials used in the installation of Tenant's furniture and fixtures, and in any other work on the Prem ises performed by Tenant, will be subject to Landlord's prior written approval. Any such approval of Tenant's labor shall constitute a revocable license authorizing Tenant to permit such labor to enter upon the Premises prior to the commencement of the Lease term for so long as Tenant's labor does not interfere with labor utilized by Landlord or any other tenant. With respect to any contract for any such labor or materials, Tenant acts as a principal and not as the agent of Landlord. Tenant agrees to indemnify and hold Landlord harmless from all claims (including costs and expenses of defending against such claims) arising or alleged to arise rrom any act or omission of Tenant or Tenant's agents, employees, contractors, subcontractors, laborers, materialmen or invitees or arising from any bodily injury or property damage occurring or alleged to have occurred incident to Tenant's work at the Premises. Tenant shall have no authority to place any lien upon the Prem ises or any interest therein nor in any way to bind Landlord; and any attempt to do so shall be void and of no effect. Landlord expressly disclaims liability ror the cost of labor performed or materials furnished by Tenant. If, because of any actual or alleged act or omission of Tenant, any lien, affidavit, charge or order for the paym ent of money sha II be filed against Landlord, the Prem ises or any portion thereof or interest therein, whether or not such lien, arfidavit, charge or order is valid or enforceable, Tenant shall, at its own cost and expense, cause same to be discharged of record by payment, bonding or otherwise no later than fifteen (15) days after notice to Tenant of the filing thereof, but in all events, prior to the foreclosure thereof. All of Tenant's construction at the Premises shall be performed in strict compliance with the working drawings, all applicable building codes and other legal requirements, and in a good and workmanlike manner satisfactory to Landlord's Architect and in such manner as to not cause Landlord's fire and extended coveraae insurance to be canceled or the rate therefor increased. In the performance of such work, Tenant shall not interfere with or delay any work being done by Landlord's contractors. Section 26.6 Tenantagrees that its construction at the Premises will be completed in accordance with the Tenant's Final Working Drawings. Upon completion of Tenant's construction at the Premises, Tenant shall provide to Landlord in recordable form an affidavit of completion, in accordance with Texas Property Code S 53.106, or any successor statutes. Section 26.7 In connection with any construction of im provem ents at the Prem ises by Tenant, Tenant shall take out and maintain (or cause the contractor under its construction contract(s) to take out and maintain) public liability insurance in a minimum amountof$1 ,000,000.00 combined single limit. Said liability insurance shall name Landlord as an additional insured with Tenant (and shall contain a cross-liability endorsement) and shall be non-cancellable with respect to Landlord except upon thirty (30) days' notice to Landlord (given in the same manner as provided in this Lease) (or, at the request of Landlord, shall be in the rorm of a separate liability policy in which Landlord alone is the named insured). Tenant shall also take out and maintain (or cause the contractor under its construction contract(s) to take out and maintain) all builder's risk insurance to the full insurable value of improvements constructed and materials stored at the Premises. Said builder's risk insurance shall name Landlord as an additional insured and shall be non-cancellable with respect to Landlord. Certificates of all such insurance shall be delivered by Tenant to Landlord within five (5) days following Tenant's entering into any such construction contract(s) (but in all events prior to Tenant or Tenant's general contractor commencing construction). Section 26.8 All improvements constructed by Tenant at the Premises (excepting only unattached, movable trade fixtures installed by Tenant) shall, immediately upon such construction, become and remain the property of Landlord; and Tenant sha II have no right, title or interest (including lien interest) therein, except only as Tenant under the provisions of this Lease. The aforesaid improvements, if constructed by Tenant, are not intended as any nature of rent or compensation to Landlord. Any work at the Premises involving the sprinkler system (if any) serving the Premises shall be performed by Landlord or its contractors at Tenant's cost. Tenant shall pay the cost of any such work (or reimburse Landlord therefor) within ten (10) days after delivery to Tenant of a statement therefor. ARnClE 27. MISCELLANEOUS Section 27.1 Nothing herein contained shall be deemed or considered by the parties hereto, nor by any third party as creating the relationship of principal and agent or or partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. Sect!on 27.2 Tenant shall not ror any reason withhold or reduce or make any off-set against Tenant's reqUired pay~ents of Base Rent and Additional Rent provided in this Lease, it being agreed that the obligations or Landlord hereunder are independent of Tenant's obligations except as may be otherwise expressly provided. Page -12- Section 27.3 The liability of Land lord to Tenant for a ny default by Landlord under the term s of this Lease shall be limited solely to the proceeds of the sale on execution of the interest of Landlord in the Premises existing at the time any such liability is adjudicated; and Landlord shall not be personally liable for any deficiency or otherwise. Under no circumstances whatsoever shall Landlord ever be liable for consequential or special damages. This clause shall not be deemed to limit or deny any remedies which Tenant may have in the event of default by Landlord hereunder; which do not involve the personal liability of Landlord. Section 27.4 All remedies herein given to Landlord, including those not set forth but provided by law, shall be cumulative, and the exercise of one or more of such remedies by Landlord hereunder shall not exclude the exercise of any other consistent rem edy. Any waiver by Landlord, express or implied, of any breach of any term, covenant or condition hereof, shall not be deemed a waiver of such term, condition or covenant for any subsequent breach or of any other term, covenant or condition hereof, and consent or approval shall not be deemed to waive or render unnecessary consent to approval of any sub-sequential or sim ilar act. Acceptance of Rent by Landlord from Tenant or any assignee, subtenant, or other successor in interest of Tenant, or the payment Drtenderof any Rent to Landlord, with orwithout notice, shall never be construed as a waiver of any breach of any term, cond ition or covenant ofthis Lease. The failure of Landlord to declare any Event of Defau It upon the occurrence thereof or any delay by Landlord in taking action with respect thereto shall not waive such default, but Landlord shall have the right to declare such default at any time and to take such action as may be authorized hereunder to the extent herein provided. Section 27.5 Whenever a period of tim e is herein prescribed for action to be taken by Landlord, Landlord shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, government laws, regulations or restrictions or any other causes of any kind whatsoever which are beyond the reasonable control of Landlord. Section 27.6 Tenant agrees that it will from tim e to tim e upon req uest by Landlord execute and deiiver to Landlord within ten (10) days an Estoppel Letter or a statement in recordable form certifying that this Lease is unmodified and in full force a nd effect (or if there have been modifications that the same is in full force and effect as so modified), that Landlord is not in default hereunder (or it Tenant claims Landlord is in default hereunder, specifying the claimed default with particularity) and including such other information as Landlord may designate. Section 27.7 The laws of the State of Texas shall govern the interpretation, validity, performance and enforcement of this Lease. If any provision of this Lease should be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions or this Lease shall not be affected thereby. Venue for any action under this Lease shall be in the County in which said Premises are located. Section 27.8 The captions used herein are for convenience only and do not lim it or am plify the provisions hereof. Section 27.9 The terms, provisions and covenants contained in this Lease shall apply to, inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors in interest and legal representatives, subject to provisions contained in this Lease limiting assignment. Section 27.10 This Lease contains the entire agreement between the parties, and no agreement shall be effective to change, modify or terminate this Lease, in whole or in part, unless such is in writing and duly signed by the party against whom enforcement is sought. Section 27.11 Tenant warrants that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Lease, and Tenant agrees to indemnity Landlord and hold Landlord harmless from and against any and all costs, expenses or liability for commissions or other compensations or charges claimed by any broker or agent with respect to this Lease. (The remainder of this page left intentionally blank) . Page -13- EXECUTED by Landlord this _ day of September, 2008. EAST A DEVELOPMENTS, L.P. By: GSDB Management, L.L.C., its General Partner By: Garson Silvers, Manager EXECUTED by Tenant this _ day of September, 2008. LA PORTE ECONOMIC DEVELOPMENT CORPORATION By: Name: Pat Muston Title: President ATTESTATION: Name: Corporate Secretary ACKNOWLEDGMENTS STATE OF TEXAS 9 9 9 COUNTY OF HARRIS This instrument was acknowledged and sworn to before me on the _ day of September, 2008, by Pat Muston, in her capacity as President of La Porte Economic Development Corporation, Tenant. Notary Public, in and for the State of Texas STATE OF TEXAS 9 9 9 COUNTY OF HARRIS This instrument was acknowledged and sworn to before me on the _ day of September, 2008, by Garson Silvers, in his capacity as Manager of, and on behalfofGSDB Management, L.L.C., in its capacity as General Partner of, and on behalf of, East A Developments, L.P., Landlord. Notary Public, in and for the State of I exas Page -14- RULES AND REGULATIONS 1. Landlord agrees to furnish Tenant two keys without charge. Addiiional ke)ls will be furnished at a nominal charge. Tenant shall not change locks or install additional locks on doors without prior written consent of Landlord. Tenant shall not make or cause to he made duplicates of keys procured from Landlord without prior written approval of Landlord. All keys to the Premises shall be surrendered to Landlord upon term ination of the Lease. 2. Tenani shall not at any time occupy any part of the Premises as sleeping or lodging quarters. ~. Unless ancillary to a restaurant or other food service use specifically authorized in the Lease, Tenant shall not place, install, or operaie on ihe Premises any engine, stove or machinery, or conduct mechanical operations Dr cook thereon Dr therein, or place or use in or about ihe Premises any explosives, gasoline. kerosene, oil, acids, caustics, Dr any flammable, explosive or hazardous material without written consent of Landlord. 4. Landlord will not be responsible for lost Dr stolen merchandise, irade fixtures, furniture, furnishings, personal property, equipment, money Dr jewelry from the Prem ises regardless of whether such loss occurs when the area is locked against entry or not. 5. Vehicles must be parked entirely within ihe stall lines and all directional signs, arrows and posied speed limits musi be observed. Parking is prohibited in areas not striped for parking, in aisles, where "No Parking" signs are posted, on ramps, in cross hatched areas, and in other areas as may be designated by Landlord. Every person is required to park and lock his vehicle. All responsibility for damage to vehicles or persons is assumed by the owner of ihe vehicle Dr its driver. S. Tenant shall not lay floor covering within the Premises without written approval or Landlord. The use of cement or other similar adhesive materials not easily removed with water is expressly prohibited. 7. Tenant agrees to cooperate and assist Landlord in the prevention of canvassing, soliciting and peddling on or in the Premises. 8. If any governmental license or permit shall be required forthe proper and lawful conduct of Tenant's business, Tenant, before occupying ihe Premises, shall procure and maintain such license or permit and submit it for Landlord's inspection. Tenant shall at all times comply with the terms OT any such license or perm it. 9. Tenant shall not install any radio or television antenna, loudspeaker or oiher device on the roof Dr exterior walls of the Prem ises. 10. Tenant shall not use in the Prem ises any hand trucks except those equipped with rubber tires and side guards or such other material handling equipment as Landlord may approve. No other vehicles of any kind shall be kept in or about the Prem ises without prior wriiten approval of Landlord. 11. Tenant shall not permit ihe use or the operation OT any coin operated machines on the Premises, including, without limitation, vending machines, video games, pinball machines, or pay telephones without the prior written consent of Landlord. 12. It is Landlord's desire to maintain the Premises in the highest standard of dignity and good taste consistent with comfort and convenience for Tenants thereof. Any action or condiiion not meeting this high standard should be reported directly to Landlord. Tenani's cooperation will be muiually beneficial and sincerely appreciated, Landlord reserves the right to make such other and further reasonable rules and regulations as in its judgment may from time to time be necessary, for the safety, care and cleanliness of the Premises and for the preservation of good order therein. Page -15- (i) Items Garson Owes the City . Tank removal reimbursement of approximately $32,000 . We are also billing him for half the cost of the new fence. askins & askins p.c. ATTORNEYS and COUNSELORS Knox W. Askins dark T. Askins March 30, 2010 via email Charles Engelken, Jr. Chairman, Fiscal Affairs Committee Darrell Leonard Tommy Moser Louis Rigby cc: John P. Zemanek, Jr. Re: Delinquent Taxes on the Triangle Property, Lots 1 - 9, Block 199, Town of La Porte. Gentlemen: The $317.64 in delinquent taxes were paid on the triangle property. Attached is a copy of the Stewart Title Company closing statement on the City of La Porte's purchase of the triangle property. Line 511 shows the debit to the seller for tax proration from January 1, 2008, to October 29, 2008, in the amount of $324.44. Line 211 shows the credit to the La Porte Economic Development Corporation for tax proration, in the same amount, covering the same period of time. Tax prorations are based on a calendar year. Essentially, the seller reimburses the purchaser, in advance at the title company closing, for the portion of the current year ad valorem taxes for which the seller is responsible. The estimated proration of $324.44, was very close to the final amount of $317.64. There were no taxes for the period October 30, 2008, through December 31, 2008, as the property became exempt from taxation once it was purchased by the La Porte Economic Development Corporation. Please let me know if you have any further questions. Yours very truly, Kn~n. City Attorney City of La Porte 702 W. Fairmont Parkway, P.O. Box 1218, La Porte, TX 77572.1218 281.471.1887 phone . 281.471.2047 fax . knoxasktns@comcast.net . ctasldns@swbell.net Charles Engelken, Jr. March 30, 2010 page 2 KWA: sw Enclosure cc: via email. Ron Bottoms, city Manager John Joerns, Assistant City Manager Michael Dolby,Director of Finance Clark T. Askins, Assistant City Attorney > .- OF LOAN OMB No. 2~02-Q26~ A. U.S.DEPAR~MENT OF. HOUSING AND URBAN DEVELOPMENT B.TYPE : 1. [ ] FItA 2. [ ] FMHA 3. [ ]CONV. UNINS. , I 4. [ ]VA 5. [ ] CONV . INS. 6. FILE NUMBER: T 7. LOAN NUMBER: 08108646 8. MTG. INS. CASE NO.: C.NOTE: This form is furnished to give you a statement of actual settlement costs. Amowlts paid to and by the settlement agent are shown. Items marked ("p.o.c.") were paid outside the closing: they are shown here for information purposes and are not included in the IOtals. D. NAME OF BORROWER: LA PORTE ECONOMIC DEVELOPMENT CORPORATION ADDRESS: E. NAME OF SELLER: LA PORTE 5 POINTS PROPERTIES, loP. ADDRESS: SELLER TIN: F. NAME OF LENDER: ADDRESS: G.PROPERTY LOCATION: ALL OF BL!C 199, TOWN OF LAPORTE, VOL. 8 PG 16 MRHCT BROADWAY AND A & SAN JACINTO TX H.. SETTLEMENT AGENT: STEWART TITLE COMPANY CLOSER: PAM LESTER PHONE NUMBER: (713) 688-4300 ADDRESS: 9434 OLD !CATY ROAD, SUITE 230 HOUSTON TEXAS 77055 SE"ITLEMENT AGENT TIN: 74-0923770 PLACE OF SETTLEMENT: STEWART TITLE PHONE NUMBER: (713) 688-4300 I. I. SETTLEMENT DATE ADDRESS: 1900 NORTH LOOP WEST, STE 650 Closing date: 10/29/08 HOUSTON TEXAS 77018 Proratf on date: 10/29/08 J. SUMMARY OF BORROWER'S TRANSACTION K. SUMMARY OF SELLER'S TRANSACTION 100. GROSS AMOUNT DUE FROM BORROWER: 400. GROSS AMOUNT DUE TO SELLER: 101. Contractsalesorice 150 000.00 401. Contract sales "rice 150 000.00 102. Personalorooenv 402. PersOnal nro""rtv 103. Settlement charges 10 borrowernine 1400) 3 749.00 403. 104. 404. 10~. 4OS. Adjustments for items paid by seller In advance: Adjustments for items paid for seller in advance: 106. City/lOwn taxes 10 406. City/town taxes to 107. County taxes 10 407. County taxes to 108. Assessments 10 408. Assessments to 109. Mainrenance 10 409. Maintenance 10 110. SchoollTaxes 10 410. SchoollTaxes to III. 411. 112. 412. 120. GROSS AMOUNT DUE FROM BORROWER: 153,749.00 420. GROSS AMOUNT DUE TO SELLER: 150,000.00 200. AMOUNTS PAID BY OR IN BEHALF OF BORROWER: SOO. REDUCTIONS IN AMOUNT DUE TO SELLER: 201. Deposit or earnest money SOl. Excess denoslt(see Instructions) 202. Principal amount of new loan(s) S02. Settlement char..es to seller(line 1400' 1 734.95 203. Existinll loan(s) taken subiect to S03. Existinll loan(s) taken subiect to 204. Commitment Fee ~04. Payoff of first mOrtllalle loan 205. 50S. PavQff of second mortlralle loan 206. S06. 207. S07. 208. S08. 209. S09. Adjustments for items unpaid by seller: Adjustments for Items unpaid by seller: 210. CIlY/lOwn taxes to S 10. Cltv/town taxes to 211. CounlY taxes 01/01/08 to 10/29/08 324.44 S 11. County taxes 01/01/08 to 10/29/08 324.44 212. Assessments to S12. Assessments to 213. SchoollTaxes to S13. ScboollTaxes to 214. S14. Maintenance to 21S. SU. 216. S16. 217. S17. 218. S18. 219. S19. 220. TOTAL PAID BY/FOR BORROWER: 324.44 S20. TOTAL REDUCTION IN AMOUNT: 2 059.39 300. CASH AT SETTLEMENT FROMITO BORROWER: 600. CASH AT SETTLEMENT TOIFROM SELLER: 301. Gross amOunt due from borrowerOine 120) 153 749.00 60 I. Gros. amount due to seUer(linc 420) 150 000.00 302. Less amounts paid by/for borrowerOine 220) 324.44 602. Les. total reductions in amount due seller(linc S20) 2 059.39 303. CASH IX FROM] r TOI BORROWER: 153,424.56 603. CASH rx TOl r FROM] SELLER: 147 940.61 '- Gillett, Martha From: Sent: To: Askins and Askins [askinslaw@swbell.net] Tuesday, March 30, 201010:31 AM Engeljenc@laportetx.gov; LeonardD@laportetx.gov; District5 - public e-mail; Zemanek, Jennifer Clark Askins; Dolby, Michael; Joerns, John; Knox W. Askins; Bottoms, Ron Triangle Property - Tax Untitled.PDF - Adobe Acrobat Pro.pdf Cc: Subject: Attachments: 1 a skins & askins P.c. ATTORNEYS and COUNSELORS Knox W. Askins Clark T. Asldns March 30, 2010 via email Charles Engelken, Jr. Chairman, Fiscal Affairs Committee Darrell Leonard Tommy Moser Louis Rigby cc: John P. Zemanek, Jr. Re: Delinquent Taxes on the Triangle Property, Lots 1 - 9, Block 199, Town of La Porte. Gentlemen: The $317.64 in delinquent taxes were paid on the triangle property. Attached is a copy of the Stewart Title Company closing statement on the City of La Porte's purchase of the triangle property. Line 511 shows the debit to the seller for tax proration from January 1, 2008, to October 29, 2008, in the amount of $324.44. Line 211 shows the credit to the La Porte Economic Development Corporation for tax proration, in the same amount, covering the same period of time. Tax prorations are based on a calendar year. Essentially, the seller reimburses the purchaser, in advance at the title company closing, for the portion of the current year ad valorem taxes for which the seller is responsible. The estimated proration of $324.44, was very close to the final amount of $317.64. There were no taxes for the period October 30, 2008, through December 31, 2008, as the property became exempt from taxation once it was purchased by the La Porte Economic Development Corporation. Please let me know if you have any further questions. Yours very truly, gnor:F:tns City Attorney City of La Porte 702 W. Fairmont Parkway, P.O. Box 1218, La Porte, TX 77572-1218 281.471.1887 phone . 281.471.2047 fax . knoxask1ns@comcast.net . ctaskins@swbell.net Charles Engelken, Jr. March 30, 2010 page 2 KWA: sw Enclosure cc: via email Ron Bottoms, city Manager John Joerns, Assistant City Manager Michael Dolby,Director of Finance Clark T. Askins, Assistant City Attorney > _.- B.TYPB 01" LOAN OMB No. 2502-0265 A. U.S.DEPAR~MENT OF-HOUSING AND URBAN DEVELOPMENT : 1. [ lFH~ 2. [ J FMHA 3. [ JCONV. UNINS. , 4. [ JVA 5. [ J CONV . INS. 6. FILE NUMBER: I 7. LOAN NUMBER: D8108646 8. MTG. INS. CASE NO.: C.NOTE: This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked ('p.o.c.') were paid outside the closing: they are shown here for information purposes and are not included in the totals. D. NAME OF BORROWER: LA PORTE ECONOMIC DEVELOPMENT CORPORATION ADDRESS: E. NAME OF SELLER: LA PORTE 5 POINTS PROPERTIES, L.P. ADDRESS: SELLER TIN: F. NAME OF LENDER: ADDRESS: G.PROPERTY LOCATION: ALL OF BLK 199, TOWN OF LAPORTE, VOL. 8 PG 16 MRHCT BROAD~AY AND A & SAN JACINTO TX H.. SETTLEMENT AGENT: STE~ART TITLE COMPANY CLOSER: PAM LESTER PHONE NUMBER: (713) 688-4300 ADDRESS: 9434 OLD KATY ROAD, SUITE 230 HOUSTON TEXAS 77055 SETTLEMENT AGENT TIN: 74.0923770 PLACE OF SETTLEMENT: STE~ART TITLE PHONE NUMBER: (713) 688-4300 I I. SETTLEMENT DATE ADDRESS: 1900 NORTH LOOP ~EST, STE 650 Closing date: 10/29/08 HOUSTON TEXAS 77018 ProratIon date: 10/29/08 J. SUMMARY OF BORROWER'S TRANSACTION K. SUMMARY OF SELLER'S TRANSACTION 100. GROSS AMOUNT DUE FROM BORROWER: 400. GROSS AMOUNT DUE TO SELLER: 101. Contract sales Drice 150 000.00 40 I. Contract sales price 150 000.00 102. Personal Dro1>CrtY 402. PersOnal Droperty 103. Settlement charaes to borrower(line 1400) 3 749.00 403. 104. 404. 105. 405. Adjustments for items paid by seller in advance: Adjusunents for items paid for seller in advance: 106. City/town taxes to 406. City/town taxes to 107. County taxes to 407. County taxes to 108. Assessments to 408. Assessments to 109. Maintenance to 409. Maintenance to 110. SchoollTaxes to 410. SchoollTaxes to 111. 411. 112. 412. 120. GROSS AMOUNT DUE FROM BORROWER: 153,749.00 420. GROSS AMOUNT DUE TO SELLER: 150,000.00 200. AMOUNTS PAID BY OR IN BEHALF OF BORROWER: 500. REDUCTIONS IN AMOUNT DUE TO SELLER: 201. Deposit or earnest monev 501. Excess deposit(see instructions) 202. PrinciDal amount of new loan(sl 502. Settlement charges to seller(line 1400) 1 734.95 203. Existinll loan(s) taken subject to 503. Existing loan(s) taken sub'ect to 204. Commitment Fee 504. Payoff of first mortgage loan 205. 50S. Payoff of second mortgaae loan 206. 506. 207. 507. 208. 508. 209. 509. Adjustments for items unDaid by seller: Adjustments for Items unpaid by seller: 210. City/town taxes to 510. City/town taxes to 211. County taxes 01/01/08 to 10/29/08 324.44 5 11. County taxes 01/01/08 to 10/29/08 324.44 212. Assessments to 512. Assessments to 213. SchoollTaxes to 513. ScboollTaxes to 214. 514. Maintenance to 215. 515. 216. 516. 217. 517. 218. 518. 219. 519. 220. TOTAL PAID BY/FOR BORROWER: 324.44 520. TOTAL REDUCTION IN AMOUNT: 2,059.39 300. CASH AT SETTLEMENT FROMITO BORROWER: 600. CASH AT SETTLEMENT TO/FROM SELLER: 301. Gross amount due from borrower(line 120) 153 749.00 601. Oross amount due to seller(line 420) 150 000.00 302. Less amounts Dald bY/for borrowerlline 220) 324.44 602. Less total reductions in amount due seller(line 520) 2 059.39 303. CASH IX FROMl r TOI BORROWER: 153,424.56 603. CASH rx TO] r FROMl SELLER: 147 940.61 '-