Item 9C - MemoM E M O R A N D U M
April 4, 2023
To: Shana Yelverton, City Manager
From: Daniel Cortez, Director of Economic Development & Tourism
Subject: Item 9C - Consider approval of an economic development agreement
between the City of Southlake, Texas, and Capital Grill Holdings, Inc.,
a North Carolina Corporation
Action
Requested: Consider approval of the economic development agreement between the
City of Southlake, Texas, and Capital Grill Holdings, Inc.
Background
Information: Capital Grille is an approximately 9,300 square-foot fine dining restaurant &
steakhouse that will be occupying existing tenant space in Carroll Pointe
located on the southeast corner of eastbound State Highway 114 frontage
road and N. Carroll Avenue.
In September 2022, Capital Grille Holdings submitted a request for public
investment to the City, seeking a fifty-percent reimbursement from the
General Fund sales tax to be generated from the future restaurant.
As established in the City’s Procedure for Investment Consideration, the
Community Enhancement and Development Corporation reviewed the
request at their November 17, 2022, meeting and comments from that
review were provided to the City Council for their review on January 3, 2023.
Following their review of the request at that meeting, the City Council
directed City Manager Shana Yelverton to enter into a Memorandum of
Understanding (MOU) whose purpose was to establish the mutually agreed
upon terms of a future incentive agreement. Due to the concise nature of
the request, City staff worked with the City Attorney’s office to draft the full
economic development agreement.
The proposed agreement is set to expire ten years after the opening date of
the restaurant and includes a number of performance requirements related
to minimum capital investment, minimum sales tax generation, design
standards, and employment targets.
Board Review: On November 17, 2022, the Community Enhancement and Development
Legal Review:
Corporation reviewed and commented on the proposed request per the
City’s Procedure for Investment Consideration.
The City Attorney’s office prepared and reviewed the proposed agreement
between the City and Capital Grille Holdings, Inc.
Item 9C
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Strategic Link: C4 Attract & keep top-tier businesses to drive a dynamic & sustainable
economic environment.
There are also a number of elements of the City’s Comprehensive Plans
that support approval of this agreement.
Financial
Considerations: Following are financial aspects of the development and associated
agreement:
Sales Tax
Per the agreement, Capital Grill Holdings, Inc. has agreed to the following
pertaining to Sales Tax reimbursement:
• The City will reimburse Capital Grille Holdings, Inc. fifty percent (50%)
of the General Fund Sales Tax Paid provided that Capital Grille
Holdings complies with the following:
o Must generate a minimum of $60,000 in General Fund Sales
Tax (1%) for the corresponding calendar year and excludes
sales tax generated for any other City funding source or state-
generated sales tax.
o Maintain a minimum of fifty (50) total employees at the
restaurant at all times.
o Make a Capital Investment in the improvements of the space
in the amount of at least $5,149,000.
o The restaurant must open no later than June 1, 2024.
o The Improvements shall conform to the approved Site Plan,
unless amended and approved by the City Council, and all
building and construction materials identified therein.
Alternatives: Approve the agreement with amendments, direct staff to revise the
agreement and return for City Council consideration at a future meeting, or
deny the agreement.
Supporting
Documents: Economic Development Agreement
Staff Contact: Daniel Cortez (817) 748-8039
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CITY OF SOUTHLAKE, TEXAS AND
CAPITAL GRILLE HOLDINGS, INC., dba THE CAPITAL GRILLE
CHAPTER 380 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This CHAPTER 380 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT (this
“Agreement”) is made and entered into by and between the CITY OF SOUTHLAKE, TEXAS, a
Texas home rule municipality (the “City”), and CAPITAL GRILLE HOLDINGS, INC., a North
Carolina corporation, dba The Capital Grille (the “Company”), each of which may be singularly
referred to as a “Party” and jointly referred to as “Parties,” for the purposes and considerations
stated below.
WHEREAS, the Company is entering into a lease at 1201 E. State Highway 114, Suite
100, and desires to renovate the existing building shell; and
WHEREAS, the Company proposes to utilize the renovated approximate 9,306 s.f. of
floor space as the new location of a The Capital Grille (the “Restaurant”); and
WHEREAS, the Company proposes to make a significant private investment in a new
restaurant; and
WHEREAS, the City has the authority under Article 3, Section 52-a of the Texas
Constitution and Chapter 380 of the Texas Local Government Code (“Chapter 380”) to make
loans or grants of public funds for the purposes of promoting local economic development and
stimulating business and commercial activity within the City; and
WHEREAS, the City desires to provide, pursuant to Chapter 380, an incentive to the
Company to renovate 1201 E. State Highway 114, Suite 100 and locate the Restaurant; and
WHEREAS, the City has determined that a grant of funds to the Company will serve
the public purpose of promoting local economic development and stimulating business and
commercial activity within the City; and
WHEREAS, the City finds that a grant of funds would satisfy a fundamental objective of
the City’s strategy, which is to attract and keep top-tier businesses to drive a dynamic and
sustainable economic environment; and
WHEREAS, the City finds that a grant of funds will further City-identified goals,
including: (a) supporting comprehensive plan implementation; (b) adding to the identified
target industry inventory; (c) supporting identified workforce goals related to daytime
population; (d) incorporating preferred quality of life benefits quality dining destinations in
alignment with strategic objectives, city goals, and comprehensive plan recommendations;
and
WHEREAS, the City further finds that were it to provide the incentives, doing so will be
in alignment with the City’s comprehensive plan, including: (a) Vision, Goals, and Objectives;
(b) the Consolidated Future Land Use Plan; (c) the Economic Development Master Plan; and
(d) the Tourism Master Plan.
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NOW THEREFORE, for and in consideration of the agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
SECTION 1. FINDINGS INCORPORATED.
The foregoing recitals are hereby incorporated into the body of this Agreement and
shall be considered part of the mutual covenants, consideration and promises that bind the
Parties.
SECTION 2. PROGRAM APPROVED.
The City Council of the City hereby establishes a Chapter 380 economic development
program (the “Program”) to facilitate the renovation of an existing building for the placement
of the Restaurant and determines that this Agreement will effectuate the purposes of the
Program, and that the Company’s performance of its obligations herein will promote local
economic development and
SECTION 3. TERM.
This Agreement shall be effective as of the Effective Date and shall terminate when all
terms and conditions of this Agreement have been fulfilled, unless terminated earlier pursuant
to the terms of this Agreement.
SECTION 4. DEFINITIONS.
The following words shall have the following meanings when used in this Agreement:
“Agreement” means this Chapter 380 Economic Development Program Agreement,
together with all exhibits and schedules attached to this Agreement from time to time,
if any.
“Capital Investment” means the dollar value of money or other items of value
contributed towards the Improvements.
“City” means the City of Southlake, Texas, a Texas home-rule municipality, whose
address for the purposes of this Agreement is 1400 Main Street, Suite 460, Southlake,
Texas 76092.
“Company” means Capital Grille Holding, Inc., a North Carolina corporation, dba The
Capital Grille, whose address is 1000 Darden Center Dr., Orlando, FL 32837.
“Effective Date” means the last date this Agreement is signed by either Party.
“Event of Default” means and includes any of the Events of Default set forth below in
the Section 7.
“Force Majeure” means any act of God or the public enemy, war, riot, civil commotion,
fire, explosion or flood, and strikes or other act beyond the reasonable control of the
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Parties, but not including lack of funds.
“Certificate of Occupancy” means an approval issued by the City after final inspection
reflecting that construction of the Improvements has been completed in conformance
with all appropriate City codes and requirements. Separate Certificates of Occupancy
may be issued for the separate Improvements required hereunder.
“Improvements” means the renovation of approximately 9,306 square foot space at
1201 E. State Highway 114, Suite 100, Southlake, Texas 76092 as the new location of
the Restaurant.
“Open” means the date the Restaurant opens for business to the general public.
“Program Grant” or “Program Grant Payment” means the economic development grants
paid by the City to the Company in accordance with this Agreement.
“Property” means that real property known as, 1201 E. State Highway 114, Suite 100,
Southlake, Texas 76092, and being more particularly described as Lot 1R, Greenway-
Carroll Addition and as shown on the attached Exhibit A.
“Restaurant” means the approximately 9,306 square foot space at 1201 E. State
Highway 114, Suite 100, Southlake, Texas 76092 being operated as The Capital Grille.
“Sales Tax” means the City’s municipal General Fund sales and use tax, currently at
the rate of one percent (1.0%), pursuant to Section 321.103 of the Texas Tax Code, as
amended, generated from the Property and received by the City; provided, should the
Texas Legislature amend the applicable tax code provision to increase or decrease the
amount of allowed municipal sales and use tax, then in the event of a decrease, Sales
Tax shall mean the actual amount of sales and use tax received by the City, and in the
event of an increase, the General Fund Sales Tax shall mean one percent (1.0%).
Sales taxes specifically excluded from this definition include any present or future sales
tax that, on account of their designation or commission to a specific purpose or entity
pursuant to state or local law, are not retained by the City for general use.
“Sales Taxes Paid” means Sales Tax paid to and received by the City net of any fees
charged by the State Comptroller, generated by The Capital Grille (Restaurant) located
on the Property.
“Sales Tax Report” has the meaning set forth in Section 5(G).
SECTION 5. OBLIGATIONS OF THE COMPANY.
The Company covenants and agrees with the City that, while this Agreement is in
effect, it shall comply with the following terms and conditions:
(A) Completion of Improvements. The Company agrees that the Restaurant must Open
no later than June 1, 2024; provided, however, that if requested in writing by the
Company, the Southlake City Council will extend this deadline, if in the City’s
reasonable discretion the Southlake City Council determines that an extension is
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warranted because of: (a) an event of Force Majeure that delays or suspends
construction of the Improvements for a period of time such as to prevent the
Restaurant from Opening by June 1, 2024; or (b) disruption due to construction of off-
site infrastructure improvements by the City for a period of time such as to prevent
the Restaurant from Opening by June 1, 2024. The property shall be used only in
compliance with the City’s Comprehensive Zoning Ordinance.
(B) Design. The Improvements shall conform to the approved Site Plan, unless amended
and approved by the City Council, and all building and construction materials
identified therein.
(C) Capital Investment. The Company agrees to make a Capital Investment in the
amount of at least $5,149,000 into the Improvements, and further agrees to provide
proof, in a manner acceptable to the City, of such Capital Investment to the City within
fifteen (15) days of its Open date.
(D) Performance. The Company agrees to perform and comply with all terms, conditions,
and provisions set forth in this Agreement and in all other instruments and
agreements between the Company and the City.
(E) Minimum Number of Employees. The Company agrees to maintain a minimum of fifty
(50) total employees at the Restaurant at all times. The Company agrees to provide
proof of employee count, in a manner acceptable to the City, on an annual basis.
(F) Undocumented Workers. The Company certifies that the Company does not and will
not knowingly employ an undocumented worker in accordance with Chapter 2264 of
the Texas Government Code, as amended, in carrying out its obligations under this
Agreement. If during the Term of this Agreement the Company is convicted of a
violation under 8 U.S.C. § 1324a(f), the Company shall repay the amount of the
Program Grant provided under this Agreement received during the previous 12
months, plus interest at the rate of the prime rate published in the Wall Street Journal
plus two percent (2%) per annum, not later than the 120th day after the date the City
notifies the Company of the violation.
(G) Sales Tax Reports. The Company shall authorize the State Comptroller to issue
Sales Tax Reports to the City for the total taxable sales consummated at the Property
on an annual basis, but only to the extent that the City does not have access to such
Sales Tax Reports. The City’s obligations to make Prog ram Grant Payments are
contingent upon receipt of (or access to) the Sales Tax Reports or the tax information
contemplated in the next succeeding sentence. In the event such Sales Tax Reports
are not available from the State Comptroller, the Company shall use its reasonable
efforts to provide the City with information to verify taxable sales from the Property
before any Program Grant Payment will be made.
(H) Minimum Annual Sales Tax Generation. In order to be eligible for any annual Grant
Payment under Section 6(A), the Property must generate a minimum of $60,000 in
General Fund Sales Tax (1%) for the corresponding calendar year and excludes
sales tax generated for any other City funding source or state generated sales tax .
The $60,000 in General Fund Sales Tax can be pro-rated for the first and last year of
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this agreement if less than a full 12-month year.
(I) Taxes. During the term of this Agreement, the Company shall timely pay all ad
valorem and other charges due by the Company to the City (to the extent not being
contested in good faith) or the City’s obligations under this Agreement can be nullified
and this Agreement terminated by the City. Additionally, the Company, upon the
City’s request, will furnish evidence reasonably satisfactory to the City, on or before
the first March 1 following the Open date , and on or before March 1 of each calendar
year thereafter during the Term of this Agreement, that there are no delinquent Sales
Taxes, City utility charges or fees, or ad valorem taxes due and owing as to the
Property and that all such taxes for the preceding calendar year have been paid in
full (to the extent not being contested in good faith).
SECTION 6. OBLIGATIONS OF THE CITY.
Program Grant Payments of the Sales Tax Rebate shall be paid according to the
following terms:
(A) Program Grant Payment. Upon the satisfaction of the Company’s obligations under
Section 5, and so long as the Company remains in compliance with the provisions of
Section 5, the City agrees to pay the Company a Program Grant Payment equal to
fifty percent (50%) of the General Fund Sales Tax Paid, which payment shall be made
for a period beginning the first full calendar month for which the Company has filed its
Sales Tax Report with the State Comptroller, and continuing thereafter for one hundred
twenty (120) consecutive months.
(B) Grant Paid Annually. The City will pay the Program Grant Payment on an annual basis,
based on the Sales Tax Report from the State Comptroller received by the City during
each calendar year. The City will remit the Program Grant Payment to the Company
upon receiving written request by the Company. Such request will demonstrate
compliance with Section 5 of the Agreement, in a manner acceptable by the City, and
by March 31st of the year following such calendar year and receipt of all of the
following: (1) the Sales Tax Reports specified in Section 5(G) of this Agreement for
each month of the applicable calendar year; (2) the Area Reports or other information
establishing the amounts of received Sales and Use Tax from the Comptroller’s office
for each month in the applicable calendar year; and (3) the City’s receipt of the Sales
and Use Tax from the Comptroller’s office for each month of the applicable calendar
year.
SECTION 7. EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default under this Agreement:
(A) Default. Failure of the Company or the City to comply with or to perform any term,
obligation, covenant, or condition contained in this Agreement or in any related
documents, and the Company or the City fails to cure such failure within thirty (30)
days after written notice from the City or the Company, as the case may be,
describing such failure, or if such failure cannot be cured within such thirty (30) day
period in the exercise of all due diligence, then if the Company or the City fails to
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commence such cure within such thirty (30) day period or fails to continuously
thereafter diligently prosecute the cure of such failure.
(B) False Statements. Any written warranty, representation, or statement made or
furnished to the receiving Party under this Agreement or any document(s) related
hereto furnished to the receiving Party is/are false or misleading in any material
respect, either now or at the time made or furnished, and the furnishing Party fails to
cure same within thirty (30) days after written notice from the receiving Party
describing the violation, or if such violation cannot be cured within such thirty (30) day
period in the exercise of all due diligence, then if the furnishing Party fails to
commence such cure within such thirty (30) day period or fails to continuously
thereafter diligently prosecute the cure of such violation, or if the furnishing Party
obtains actual knowledge that any such warranty, representation or statement has
become false or misleading after the time that it was made, a nd the furnishing Party
fails to provide written notice to the receiving Party of the false or misleading nature
of such warranty, representation or statement within ten (10) days after the furnishing
Party learns of its false or misleading nature.
(C) Insolvency. The dissolution or termination of the Company’s existence as a going
business or concern, the Company’s insolvency, appointment of receiver for any part
of the Company’s property, any assignment of all or substantially all of the assets of
the Company for the benefit of creditors of the Company, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against the Company
unless, in the case of involuntary proceedings, such proceedings are discharged
within ninety (90) days after filing.
SECTION 8. EFFECT OF AN EVENT OF DEFAULT.
(A) Notice and Remedies. In the event of default under this Agreement, including, without
limitation, Section 7, the non-defaulting Party shall give written notice to the defaulting
Party of any default, and the defaulting Party shall have the period provided in Section
7 to cure said default. Should said default remain uncured as of the last day of the
applicable cure period and the non -defaulting Party is not otherwise in default, the
non-defaulting Party shall have the right to immediately terminate this Agreement. In
the event the City terminates this Agreement as a result of the foregoing, it will have
no further obligation to make any remaining Program Grant Payment. Additionally,
the Company will owe the City repayment of the previous year’s Program Grant
Payment made to the Company, plus interest at the rate of the prime rate per annum.
The Company shall pay such funds to the City within sixty (60) days of termination.
(B) Damage Limitation. Neither Party shall be liable to the other Party for indirect, special,
or consequential damages.
SECTION 9. ADDITIONAL SALES TAX PROVISIONS.
The following additional sales tax provisions are a part of this Agreement:
(A) Legislative or Judicial Changes. In the event of any legislative or judicial interpretation
that limits or restricts the City’s ability to pay the general Sales Tax Rebates herein
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provided or otherwise extracts or imposes any penalty or other restriction upon the
payment of same, such rebate will cease as of the effective date of such limitation or
restriction and be of no further force, effect or consequence in which event the City
shall be under no further obligation to the Company as of the effective date of such
limitation or restriction. However, the City and the Company agree to modify the
rebate provided for herein to the extent permitted by such legislative or judicial action
to the fullest extent then authorized without penalty or other restriction upon the City
for the payment of same.
(B) Erroneously Paid Sales Tax. In the event the State Comptroller determines, for any
reason, that any Sales Tax were erroneously paid to the City from the sales provided
for herein and the City shall be required to rebate or repay any portion of such taxes,
the amount of such rebate or repayment shall be deducted from the calculation of the
Sales Taxes Paid, and in the event the calculation of Sales Taxes Paid for a Program
Grant Payment shall reflect an overpayment by the City to the Company, the
Company agrees to reimburse the City the amount of such overpayment. If
reimbursement is not received, the City will deduct the overpayment amount at the
next program grant payment. Notification of any such required adjustment will be
provided to the Company at the earliest practical date.
SECTION 10. MISCELLANEOUS PROVISIONS.
The following miscellaneous provisions are a part of this Agreement:
(A) Amendments. At any time, the City and the Company may determine that this
Agreement should be amended for the mutual benefit of the Parties, or for any other
reason, including an amendment to induce the Company to continue development
and commercial activities in the City when this Agreement could otherwise be
terminated. The City and the Company agree to consider re asonable requests for
amendments to this Agreement which may be made by any of the Parties hereto,
lending institutions, bond counsel, or financial consultants. Any amendments to this
Agreement must be in writing and signed by the appropriate authorities o f both the
City and the Company.
(B) Applicable Law and Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, and all obligations of the Parties
created hereunder are performable in Tarrant County, Texas. Venue for any action
arising under this Agreement shall lie in the state district courts of Tarrant County,
Texas.
(C) Assignment. This Agreement may not be assigned without the written consent of the
other Party.
(D) Binding Obligation. This Agreement shall become a binding obligation on the Parties
upon execution by all signatories hereto. The City warrants and represents that the
individual executing this Agreement on behalf of the City has full authority to execute
this Agreement and bind the City to the same. The Company warrants and represents
that the individual executing this Agreement on the Company’s behalf has full
authority to execute this Agreement and bind it to the same.
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(E) Caption Headings. Caption headings in this Agreement are for convenience purposes
only and are not to be used to interpret or define the provisions of this Agreement.
(F) Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall constitute one and the
same document.
(G) Entire Agreement. This Agreement constitutes the entire understanding and
agreement of the Parties as to the matters set forth in this Agreement. No other
understanding, oral or otherwise, in direct conflict with this Agreement shall be
deemed to exist or to bind any of the Parties hereto. All prior written or oral offers,
counteroffers, memoranda of understanding, proposals and the like are superseded
by this Agreement. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the Party or Parties sought to be charged or
bound by the alteration or amendment. Neither Party is relying on any statement,
representation, nor warranty of the other Party not expressly set out in this
Agreement. Each of the undersigned authorized representatives of the Parties,
warrants and represents and does hereby state and represent that no promise or
agreement which is not herein expressed has been made to him or her in executing
this Agreement, and that neither of the signatories is relying upon any statement or
representation of any agent of the Parties. Each Party is relying on his or her own
judgment and each Party has been represented by independent couns el of its
choosing. This Agreement shall not be construed against the drafter hereof, but shall
be construed as if all Parties drafted the same.
(H) Force Majeure. It is expressly understood and agreed by the Parties to this
Agreement that if the performance of any obligations hereunder is delayed by reason
of Force Majeure, the Party so obligated or permitted shall be excused from doing or
performing the same during such period of delay, so that the time period applicable
to such obligation or requirement shall be extended for a period of time equal to the
period such Party was delayed. This section does not affect the Company’s
obligations or the City’s discretion described in Section 5(A).
(I) Further Acts and Releases. The City and the Company each agrees to take such
additional acts and execute such other documents as may be reasonable and
necessary in the performance of their obligations hereunder.
(J) Governmental Powers; Waiver of Immunity. By execution of this Agreement, the City
does not waive or surrender any of its governmental powers, immunities, or rights.
(K) No Third-Party Beneficiaries. The performance of the respective obligations of the
City and the Company under this Agreement are not intended to benefit any party
other than the City or the Company, except as expressly provided otherwise herein.
No person or entity not a signatory to this Agreement shall have any rights or causes
of action against any Party to this Agreement as a result of that Party’s performance
or non-performance under this Agreement, except as expressly provided otherwise
herein.
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(L) Notices. Any notice or other communication required or permitted by this Agreement
shall be in writing and shall be effective: (i) immediately when personally delivered
either by hand; or (ii) three (3) days after notice is deposited with the U.S. Postal
Service, postage prepaid, certified with return receipt requested, and addressed as
follows:
if to Company: Capital Grille Holdings, Inc.
1000 Darden Center Dr.
Orlando, Florida 32837.
ATTN: Marty Wilson
if to the City: City of Southlake
1400 Main Street, Suite 460
Southlake, Texas 76092
ATTN: Director of Economic Development & Tourism
With a copy to: Taylor, Olson, Adkins, Sralla & Elam, L.L.P.
6000 Western Place, Suite 200
1-30 at Bryant-Irvin Road
Fort Worth, Texas 76107
Attention: Allen Taylor
(M) Right of Offset. The City may at its option, after prior written notice to the Company,
offset any amounts due and payable under this Agreement against any debt
(including taxes) lawfully due and owing to the City from the Company, regardless of
whether the amount due arises pursuant to the terms of this Agreement or otherwise,
and regardless of whether or not the debt has been reduced to judgment by a court.
(N) Relationship of Parties. The Parties shall not be deemed in a relationship of partners
or joint ventures by virtue of this Agreement, nor shall either Party be an agent,
representative, trustee, or fiduciary of the other. Neither Party shall have any authority
to bind the other to any agreement.
(O) Severability. The City and the Company declare that the provisions of this Agreement
are severable. If it is determined by a court of competent jurisdiction that any term,
condition, or provision hereof is void, voidable, or unenforceable for any reason
whatsoever, then such term, condition, or provision shall be severed from this
Agreement and the remainder of this Agreement enforced in accordance with its
terms.
(P) Attorneys’ Fees. In the event that either Party hereto brings an action or other
proceeding to enforce or interpret the terms and provisions of this Agreement, the
prevailing Party in that action or proceeding shall be entitled to have and recover from
the non-prevailing Party all such fees, costs and expenses (including, without
limitation, all court costs and reasonable attorneys’ fees) as the prevailing Party may
suffer or incur in the pursuit or defense of such action or proceeding.
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CITY OF SOUTHLAKE, TEXAS
_____________________________________
By: John Huffman, Mayor
Date: _________________________________
CAPITAL GRILLE HOLDINGS, INC.
_____________________________________
By: Angela Simmons, President
Date: ____________________________________
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Exhibit A
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