Obligations of Operator. 5.1. Operator covenants and agrees to perform and carry out the following, in the name and for the account of Owner, and subject to Section 3.4: (a) To keep the Hotel Unit (at all times during the Term), and the Association Property, Common Elements and Limited Common Elements of the Condominium, as such terms are defined in the Declaration (but only for so long as Operator shall also be the manager of the Condominium Association), insured against damage or loss by fire, flood and casualties covered by the broad form, comprehensive perils (all risk subject to standard exclusions and limitations) on a replacement cost basis, in an amount equal to at least the full replacement value thereof (less any customary "deductible" amount), and to deliver certificates of such insurance to Owner and the Condominium Association (if applicable) promptly upon obtaining such insurance. Such policies and all other policies obtained by Operator pursuant to this Agreement shall be written to insure Owner and Operator, and (if applicable) the Condominium Association and Condominium Unit Owners, and such other parties as Owner may reasonably request, as their respective interests may appear; the proceeds thereof shall be payable in case of loss to Owner's mortgagee(s) or a commercial bank trustee and shall be released in accordance with the provisions of ARTICLE VIII. To the extent that Operator is not the manager of the Condominium Association, Operator shall, if requested by Owner, use reasonable diligence (recognizing that Operator may not have the legal authority to influence the Condominium Association's decisions) in causing the Condominium Association to obtain the coverages described herein on behalf of the Association. (b) To maintain a policy or policies of comprehensive general liability insurance, including primary and umbrella layers of coverage, indemnifying Owner and Operator against all claims and demands (less any customary "deductible" amounts), for any personal injuries to, or death of, any person(s) and for damage to or destruction or loss of property, which may have (or be claimed to have) occurred in, on or in connection with the operation of the Hotel, in amounts not less than Twenty-Five Million Dollars ($25,000,000.00) for injury to or death of one person and Twenty-Five Million Dollars ($25,000,000.00) for injury to or death of more than one person in any single occurrence, and for not less than Five Million Dollars ($5,000,000.00) for damage to or destruction or loss of property. Such limits shall be increased (or decreased) from time to time by Operator as prudence dictates or as Owner reasonably directs. (c) To maintain and keep current such of the following types of insurance, at such times and in such amounts as Operator shall deem necessary or advisable, or as Owner reasonably directs, if such insurance is available on usual terms and at customary rates consistent with industry standards: (i) Elevator liability insurance, and insurance against theft of or damage to guests' property; (ii) Worker's compensation, employer's liability or similar insurance; (iii) Rental value and use and occupancy insurance against loss or damage by fire and the hazards included in an extended coverage endorsement; (iv) Boiler and machinery insurance; (v) Comprehensive crime bond; (vi) Innkeeper's insurance (to the extent not otherwise covered); (vii) Automobile, bodily injury and property damage liability and physical damage insurance; (viii) Insurance as is carried by other hotels in the Sonesta Group, where the nature of the business and the geological and climatic nature of the area where the Hotel is located makes the same appropriate. (d) Operator shall cooperate in obtaining such additional insurance coverages as Owner may advise Operator in writing that Owner reasonably requires, pursuant to the Declaration or otherwise, provided, however, Operator shall not be obligated to obtain any such coverage if in the exercise of Operator's reasonable business judgment Operator does not believe such insurance is appropriate for the Hotel and Operator advises Owner of the same in writing. Owner or Operator may submit any disagreement regarding insurance coverage to arbitration in accordance with the terms of ARTICLE XII of this Agreement but Operator shall not be required to obtain or maintain any insurance coverage, the appropriateness of which has been submitted to arbitration, pending a determination of the arbitration proceeding provided that appropriateness of such insurance has been challenged in good faith. (e) Operator may maintain any insurance permitted or required by this Agreement under a blanket policy covering the Hotel and other properties in the Sonesta Group. The premiums for any insurance maintained under blanket policies shall be at least at market rate and may be allocated by Sonesta on a reasonable basis, among the various properties covered by said policies. Operator will deliver to Owner certificates of all such insurance promptly upon obtaining such insurance. Owner's mortgagees shall be reflected on such policies in accordance with the applicable loan documents, as requested by Owner in writing. All insurance policies permitted or required to be obtained by Operator pursuant to this Agreement shall be issued with insurers having an A.M. Best Rating of A- or better unless otherwise agreed to by Owner in its sole and absolute discretion. (f) Any dispute between Owner and Operator as to full replacement value shall be determined at the expense of the Hotel Unit by an appraiser selected by them jointly. The determination of the appraiser so selected shall be binding upon both parties until changed by subsequent appraisal, which may be required by either party within three (3) years after an appraisal has been made in accordance with this provision. If the parties are unable to agree upon an appraiser within thirty (30) days after the request by one of them for such agreement, the matter may be submitted for arbitration under the provisions of ARTICLE XII hereof. (g) Provided Operator maintains the insurance coverages required pursuant to the terms of this Agreement or as otherwise agreed to by Owner, and notwithstanding any provision in this Agreement to the contrary, Operator shall not be liable to Owner or any other party for damages in connection with its failure to obtain or maintain levels or types or classes of insurance coverage sufficient to satisfy the cost of any casualty, claim, award, judgment, etc. If Operator is unable to obtain or maintain the insurance coverages set forth in, or otherwise required pursuant to, this Agreement at commercially reasonable rates, Operator shall not be liable to Owner in connection with its failure to obtain or maintain such insurance coverages so long as Operator promptly notifies Owner of the same and no contrary determination with respect to such insurance has not been reached pursuant to an arbitration proceeding in accordance with ARTICLE XII of this Agreement. (h) Any insurance permitted or required by this Agreement to be obtained by the Operator may be obtained by the Owner in its discretion upon notice to the Operator prior to Operator obtaining such insurance or prior to Operator's renewal of the same, but only if Owner is able to obtain such insurance on the same or equivalent terms as Operator would have obtained and at a lower cost to the Hotel than otherwise obtainable by Operator. (a) To pay when and as the same are due and payable (with the right to pay the same in installments to the extent permitted by law subject to Owner's prior approval), all real estate taxes, personal property taxes and betterment assessments levied or assessed on or against the Hotel Unit or any portion thereof for any fiscal period of the taxing authority, all or any part of which period is included in the term of this Agreement. The unreimbursed portion of any such amount which is applicable to the term of this Agreement shall be an Expense. The portion not so applicable shall be repaid to Operator by Owner out of its separate funds upon demand, but if Owner does not pay such portion within fifteen (15) days of such demand, Operator shall be entitled to recover the same in accordance with the provisions of SECTION 3.4 hereof. (b) Owner, or Operator in Owner's name, may in good faith at any time contest the validity or the amount of any such tax or assessment, and any refund or rebate shall be a reduction of the Expenses for the year in which such refund or rebate was received. Expenditures in any contest hereunder shall be Expenses. 5.3. To keep and maintain the Hotel in good operating order and first class condition subject to reasonable use and wear, fire or casualty, and subject to the provisions of Section 5.5, and not to commit waste upon the Hotel. Notwithstanding anything in this Agreement to the contrary, if any "structural repairs, alterations or changes" (as such phrase is defined below) in or to the Hotel Unit shall be required by reason of any Structural Defects (as such term is defined below), such repairs, alterations or changes shall be made and such defects shall be cured by Owner (or, at Owner's request, by Operator as Owner's agent) and paid for out of the Capital Reserve Account (if such funds are available and not allocated for other purposes) or from funds charged or assessed to Condominium Unit Owners pursuant the terms of the Declaration as Hotel Shared Costs. To the extent that funds are to be furnished by Condominium Unit Owners pursuant to the Declaration as Hotel Shared Costs for payment of the items described in the preceding paragraph and such funds have not been received by Operator, the obligation of both Owner and Operator to perform the foregoing repairs, alterations or changes shall be delayed until such funds are received by Operator, unless the repairs, alterations or changes in question are of an emergency nature or are required for purposes of compliance with applicable law. In the event that the foregoing repairs, alterations or changes are required to be made prior to Operator's receipt of assessed funds from the Condominium Unit Owners as provided in the preceding sentence, Operator shall advance as a loan the funds otherwise not received from Condominium Unit Owners (other than Owner's portion of the Hotel Shared Costs as the owner of the Hotel Unit as provided in the Declaration, the "OWNER'S HOTEL SHARED COST PORTION") for purposes of performing such repairs, alterations or changes up to a total maximum outstanding amount of $300,000 at any one time (including any then outstanding amounts loaned by Operator in relation to Capital Refurbishing Programs pursuant to the first paragraph of SECTION 5.9(B) hereof). Any such loan by Operator shall bear interest (compounded annually) at a floating rate of interest equal to the prime or base rate of Citibank, N.A., New York, plus one percentage point, from the date that such funds are advanced by Operator until repaid from subsequent amounts collected by the Operator from Condominium Unit Owners pursuant to the enforcement of remedies contained in the Declaration or from amounts credited to the Capital Reserve Account for subsequent months pursuant to SECTION 5.7 hereof. Owner's Hotel Shared Cost Portion assessed by Operator for purposes of repairs, alterations or changes for the items described in the preceding paragraphs and any amounts not required to be loaned by Operator as provided above, shall be funded first out of the Hotel's Gross Revenues and treated as an Expense hereunder (to the extent of available Gross Revenues therefor), and thereafter through Owner's own funds. For purposes of this Agreement, the phrase "structural repairs, alterations or changes" shall be those which involve or affect the concrete and cement elements (functional and decorative), and any supporting steel or wooden elements of the Hotel Unit, including (without limitation) all pilings, columns, beams, joists, slabs, walls, roofs, decks, facades, balconies and planters. For purposes of this Agreement the term "STRUCTURAL DEFECTS" shall include, without limitation, cracking, heaving, buckling, abnormal movement and other signs of distress as well as inadequate anchorage, inability to withstand a computed load which the element was or should have been designed to withstand and, for the purposes hereof, ineffective waterproofing in any area of the Hotel Unit. 5.4. To use reasonable good faith efforts to comply with all federal, state and local laws and ordinances affecting the use of the Hotel; provided that Operator's obligation shall be subject to the limitations contained in Section 5.3 hereof. With respect to any alleged violation of any such laws or ordinances, Operator, after notice to Owner, shall have the right to contest the allegation in the name of Owner and postpone compliance pending the determination of such contest, if permitted by law. 5.5. Upon the expiration or earlier termination of this Agreement, or on the cessation of its operation of the Hotel, to yield up to Owner the Hotel Unit (including all replacements and additions thereto made after the commencement of this Agreement) in the same condition in which it was received, or may be put in, excepting reasonable wear and tear and damage by fire or casualty and subject to the provisions of Section 5.3. Operator shall, at that time, also turn over ▇▇▇▇▇ cash and other funds, accounts, books and records, combinations, computer records (and passwords), including hard copies and electronic media in a non-proprietary format to Owner. In connection with any such termination of this Agreement, Operator and Owner shall cooperate in effecting an orderly transition to new management. 5.6. Owner or its agents shall be welcome in and upon the Hotel to examine the condition thereof, at all reasonable times; provided, however, that such entry shall in no way interfere with the operation of the Hotel. 5.7. Operator shall create a separate book account ("Capital Reserve Account") and, monthly, shall credit to said account out of Gross Revenues attributable to the Hotel Unit an amount determined by Operator and reasonably approved by Owner, on a annual basis in conjunction with the Annual Plan (or more frequently as reasonably deemed necessary by Operator and approved by Owner pursuant to an amendment to the Annual Plan), which shall be sufficient to fund: (i) Condominium assessments allocated to the Hotel Unit for the cost of capital replacements or additions to the common elements of the Condominium as described in the Declaration, and (ii) the portion of capital additions and replacements in and to the Hotel Unit which are not funded pursuant to Section 12.1 of the Declaration, including, without limitation, those "structural repairs, alterations or changes" (as such phrase is defined in Section 5.3 hereof) in or to the Hotel Unit required whether by reason of ordinary use and wear, or by any laws, ordinances, rules, regulations or orders of any governmental or municipal authority, or otherwise. Any amount not expended for these purposes shall be carried forward to subsequent periods. Notwithstanding the foregoing provisions of this Section, the parties acknowledge the following: (a) The budget for capital additions and replacements for the Hotel Unit for each Calendar Year (or Fractional Year) is based on revenue projections made prior to the beginning of the year and actual revenues will be different; and (b) Capital additions are made during the year before the actual revenues for the Hotel Unit for the year are known; therefore, the parties agree that Operator shall be deemed to have properly performed its obligations hereunder if the amount actually spent for capital additions and replacements in and to the Hotel Unit in a Calendar Year (or Fractional Year) does not exceed the higher of (a) the applicable percentage of such originally forecasted revenues or (b) the applicable percentage of actual revenues achieved for capital additions and replacements. The amount actually spent or incurred by Operator for capital additions and replacements, in and to the Hotel Unit, either under (a) or (b) above or by agreement of the parties, for a Calendar Year (or Fractional Year) shall be deemed to be the amount
Appears in 1 contract
Sources: Management Agreement (Sonesta International Hotels Corp)
Obligations of Operator. 5.1. During the Option Period, the Operator covenants will:
i. conduct all Operations in a manner consistent with reasonable exploration, engineering and agrees mining practices, and in compliance with all Applicable Laws, as well as maintaining all licenses or permits required for Operations, except for a violation that is not reasonably expected to perform have a material adverse effect on the Property, Mineral Rights and carry out Permits or any interest in real property, whether freehold, leasehold, license, right of way, easement, any other surface, access or other right in relation to real property, and any right, license or permit in relation to the followinguse or diversion of water, but excluding any Mineral Rights (collectively “Other Rights”), or Optionor’s interest in the name Property, Mineral Rights or Other Rights;
ii. provide annual updates with representatives of Indigenous Governments who have certain rights in the Property, as required under law;
iii. keep the Property free and clear of all Encumbrances (except liens for taxes not yet due, other inchoate liens and liens contested in good faith by the account of Owner, Optionee or the Optionor) and proceed with all diligence to contest and discharge any such Encumbrance that is filed;
iv. subject to Section 3.4:11(d), permit any Personnel of the Optionor, at their own expense and risk, reasonable access to the Property upon being provided with reasonable advance notice;
(a) To keep the Hotel Unit (at all times v. during the Term), and the Association Property, Common Elements and Limited Common Elements of the Condominium, as such terms are defined in the Declaration (but only for so long as Operator shall also be the manager of the Condominium Association), insured against damage or loss by fire, flood and casualties covered by the broad form, comprehensive perils (all risk subject to standard exclusions and limitations) on a replacement cost basis, in an amount equal to at least the full replacement value thereof (less any customary "deductible" amount), and to deliver certificates of such insurance to Owner and the Condominium Association (if applicable) promptly upon obtaining such insurance. Such policies and all other policies obtained by Operator pursuant to this Agreement shall be written to insure Owner and Operator, and (if applicable) the Condominium Association and Condominium Unit Owners, and such other parties as Owner may reasonably request, as their respective interests may appear; the proceeds thereof shall be payable in case of loss to Owner's mortgagee(s) or a commercial bank trustee and shall be released in accordance with the provisions of ARTICLE VIII. To the extent that Operator is not the manager of the Condominium Association, Operator shall, if requested by Owner, use reasonable diligence (recognizing that Operator may not have the legal authority to influence the Condominium Association's decisions) in causing the Condominium Association to obtain the coverages described herein on behalf of the Association.
(b) To maintain a policy or policies of comprehensive general liability insurance, including primary and umbrella layers of coverage, indemnifying Owner and Operator against all claims and demands (less any customary "deductible" amounts), for any personal injuries to, or death of, any person(s) Option Period and for damage to a period of 1 year after the expiry or destruction or loss of property, which may have (or be claimed to have) occurred in, on or in connection with the operation of the Hotel, in amounts not less than Twenty-Five Million Dollars ($25,000,000.00) for injury to or death of one person and Twenty-Five Million Dollars ($25,000,000.00) for injury to or death of more than one person in any single occurrence, and for not less than Five Million Dollars ($5,000,000.00) for damage to or destruction or loss of property. Such limits shall be increased (or decreased) from time to time by Operator as prudence dictates or as Owner reasonably directs.
(c) To maintain and keep current such of the following types of insurance, at such times and in such amounts as Operator shall deem necessary or advisable, or as Owner reasonably directs, if such insurance is available on usual terms and at customary rates consistent with industry standards:
(i) Elevator liability insurance, and insurance against theft of or damage to guests' property;
(ii) Worker's compensation, employer's liability or similar insurance;
(iii) Rental value and use and occupancy insurance against loss or damage by fire and the hazards included in an extended coverage endorsement;
(iv) Boiler and machinery insurance;
(v) Comprehensive crime bond;
(vi) Innkeeper's insurance (to the extent not otherwise covered);
(vii) Automobile, bodily injury and property damage liability and physical damage insurance;
(viii) Insurance as is carried by other hotels in the Sonesta Group, where the nature of the business and the geological and climatic nature of the area where the Hotel is located makes the same appropriate.
(d) Operator shall cooperate in obtaining such additional insurance coverages as Owner may advise Operator in writing that Owner reasonably requires, pursuant to the Declaration or otherwise, provided, however, Operator shall not be obligated to obtain any such coverage if in the exercise of Operator's reasonable business judgment Operator does not believe such insurance is appropriate for the Hotel and Operator advises Owner of the same in writing. Owner or Operator may submit any disagreement regarding insurance coverage to arbitration in accordance with the terms of ARTICLE XII termination of this Agreement but Operator and as otherwise required by United States generally accepted accounting principles (“GAAP”), maintain true and correct books, accounts and records of Expenditures and Option Payments; and
vi. within forty-five (45) calendar days after the end of each fiscal quarter of Optionee, deliver a report to Optionor summarizing any significant Operations conducted on the Property, during the fiscal quarter, including any relevant technical findings, and providing a reasonable breakdown of Expenditures incurred in carrying out the Operations during the fiscal quarter.
vii. Any new Permits or changes to the permit surety bond required during the Option Period, shall not be required to obtain or maintain any insurance coverage, the appropriateness of which has been submitted to arbitration, pending a determination sole responsibility of the arbitration proceeding provided that appropriateness of such insurance has been challenged in good faith.
(e) Operator may maintain any insurance permitted or required by this Agreement under a blanket policy covering the Hotel and other properties in the Sonesta Group. The premiums for any insurance maintained under blanket policies shall be at least at market rate and may be allocated by Sonesta on a Optionee, with reasonable basis, among the various properties covered by said policies. Operator will deliver to Owner certificates of all such insurance promptly upon obtaining such insurance. Owner's mortgagees shall be reflected on such policies in accordance with the applicable loan documents, as requested by Owner in writing. All insurance policies permitted or required administrative support to be obtained provided by Operator pursuant to this Agreement shall be issued Optionor, with insurers having an A.M. Best Rating of A- or better unless otherwise agreed to by Owner in its sole and absolute discretion.
(f) Any dispute between Owner and Operator as to full replacement value shall be determined at the expense of the Hotel Unit by an appraiser selected by them jointly. The determination of the appraiser so selected shall be binding upon both parties until changed by subsequent appraisal, which may be required by either party within three (3) years after an appraisal has been made in accordance with this provision. If the parties are unable Parties to agree upon an appraiser within thirty (30) days after the request by one of them for such agreement, the matter may be submitted for arbitration under the provisions of ARTICLE XII hereof.
(g) Provided Operator maintains the insurance coverages required pursuant to the terms of this Agreement addition or as otherwise agreed to by Ownerchange, and notwithstanding any provision in this Agreement to the contrary, Operator shall with such consent not be liable to Owner or any other party for damages in connection with its failure to obtain or maintain levels or types or classes of insurance coverage sufficient to satisfy the cost of any casualty, claim, award, judgment, etc. If Operator is unable to obtain or maintain the insurance coverages set forth in, or otherwise required pursuant to, this Agreement at commercially reasonable rates, Operator shall not be liable to Owner in connection with its failure to obtain or maintain such insurance coverages so long as Operator promptly notifies Owner of the same and no contrary determination with respect to such insurance has not been reached pursuant to an arbitration proceeding in accordance with ARTICLE XII of this Agreement.
(h) Any insurance permitted or required by this Agreement to be obtained by the Operator may be obtained by the Owner in its discretion upon notice to the Operator prior to Operator obtaining such insurance or prior to Operator's renewal of the same, but only if Owner is able to obtain such insurance on the same or equivalent terms as Operator would have obtained and at a lower cost to the Hotel than otherwise obtainable by Operatorunreasonably withheld.
(a) To pay when and as the same are due and payable (with the right to pay the same in installments to the extent permitted by law subject to Owner's prior approval), all real estate taxes, personal property taxes and betterment assessments levied or assessed on or against the Hotel Unit or any portion thereof for any fiscal period of the taxing authority, all or any part of which period is included in the term of this Agreement. The unreimbursed portion of any such amount which is applicable to the term of this Agreement shall be an Expense. The portion not so applicable shall be repaid to Operator by Owner out of its separate funds upon demand, but if Owner does not pay such portion within fifteen (15) days of such demand, Operator shall be entitled to recover the same in accordance with the provisions of SECTION 3.4 hereof.
(b) Owner, or Operator in Owner's name, may in good faith at any time contest the validity or the amount of any such tax or assessment, and any refund or rebate shall be a reduction of the Expenses for the year in which such refund or rebate was received. Expenditures in any contest hereunder shall be Expenses.
5.3. To keep and maintain the Hotel in good operating order and first class condition subject to reasonable use and wear, fire or casualty, and subject to the provisions of Section 5.5, and not to commit waste upon the Hotel. Notwithstanding anything in this Agreement to the contrary, if any "structural repairs, alterations or changes" (as such phrase is defined below) in or to the Hotel Unit shall be required by reason of any Structural Defects (as such term is defined below), such repairs, alterations or changes shall be made and such defects shall be cured by Owner (or, at Owner's request, by Operator as Owner's agent) and paid for out of the Capital Reserve Account (if such funds are available and not allocated for other purposes) or from funds charged or assessed to Condominium Unit Owners pursuant the terms of the Declaration as Hotel Shared Costs. To the extent that funds are to be furnished by Condominium Unit Owners pursuant to the Declaration as Hotel Shared Costs for payment of the items described in the preceding paragraph and such funds have not been received by Operator, the obligation of both Owner and Operator to perform the foregoing repairs, alterations or changes shall be delayed until such funds are received by Operator, unless the repairs, alterations or changes in question are of an emergency nature or are required for purposes of compliance with applicable law. In the event that the foregoing repairs, alterations or changes are required to be made prior to Operator's receipt of assessed funds from the Condominium Unit Owners as provided in the preceding sentence, Operator shall advance as a loan the funds otherwise not received from Condominium Unit Owners (other than Owner's portion of the Hotel Shared Costs as the owner of the Hotel Unit as provided in the Declaration, the "OWNER'S HOTEL SHARED COST PORTION") for purposes of performing such repairs, alterations or changes up to a total maximum outstanding amount of $300,000 at any one time (including any then outstanding amounts loaned by Operator in relation to Capital Refurbishing Programs pursuant to the first paragraph of SECTION 5.9(B) hereof). Any such loan by Operator shall bear interest (compounded annually) at a floating rate of interest equal to the prime or base rate of Citibank, N.A., New York, plus one percentage point, from the date that such funds are advanced by Operator until repaid from subsequent amounts collected by the Operator from Condominium Unit Owners pursuant to the enforcement of remedies contained in the Declaration or from amounts credited to the Capital Reserve Account for subsequent months pursuant to SECTION 5.7 hereof. Owner's Hotel Shared Cost Portion assessed by Operator for purposes of repairs, alterations or changes for the items described in the preceding paragraphs and any amounts not required to be loaned by Operator as provided above, shall be funded first out of the Hotel's Gross Revenues and treated as an Expense hereunder (to the extent of available Gross Revenues therefor), and thereafter through Owner's own funds. For purposes of this Agreement, the phrase "structural repairs, alterations or changes" shall be those which involve or affect the concrete and cement elements (functional and decorative), and any supporting steel or wooden elements of the Hotel Unit, including (without limitation) all pilings, columns, beams, joists, slabs, walls, roofs, decks, facades, balconies and planters. For purposes of this Agreement the term "STRUCTURAL DEFECTS" shall include, without limitation, cracking, heaving, buckling, abnormal movement and other signs of distress as well as inadequate anchorage, inability to withstand a computed load which the element was or should have been designed to withstand and, for the purposes hereof, ineffective waterproofing in any area of the Hotel Unit.
5.4. To use reasonable good faith efforts to comply with all federal, state and local laws and ordinances affecting the use of the Hotel; provided that Operator's obligation shall be subject to the limitations contained in Section 5.3 hereof. With respect to any alleged violation of any such laws or ordinances, Operator, after notice to Owner, shall have the right to contest the allegation in the name of Owner and postpone compliance pending the determination of such contest, if permitted by law.
5.5. Upon the expiration or earlier termination of this Agreement, or on the cessation of its operation of the Hotel, to yield up to Owner the Hotel Unit (including all replacements and additions thereto made after the commencement of this Agreement) in the same condition in which it was received, or may be put in, excepting reasonable wear and tear and damage by fire or casualty and subject to the provisions of Section 5.3. Operator shall, at that time, also turn over ▇▇▇▇▇ cash and other funds, accounts, books and records, combinations, computer records (and passwords), including hard copies and electronic media in a non-proprietary format to Owner. In connection with any such termination of this Agreement, Operator and Owner shall cooperate in effecting an orderly transition to new management.
5.6. Owner or its agents shall be welcome in and upon the Hotel to examine the condition thereof, at all reasonable times; provided, however, that such entry shall in no way interfere with the operation of the Hotel.
5.7. Operator shall create a separate book account ("Capital Reserve Account") and, monthly, shall credit to said account out of Gross Revenues attributable to the Hotel Unit an amount determined by Operator and reasonably approved by Owner, on a annual basis in conjunction with the Annual Plan (or more frequently as reasonably deemed necessary by Operator and approved by Owner pursuant to an amendment to the Annual Plan), which shall be sufficient to fund: (i) Condominium assessments allocated to the Hotel Unit for the cost of capital replacements or additions to the common elements of the Condominium as described in the Declaration, and (ii) the portion of capital additions and replacements in and to the Hotel Unit which are not funded pursuant to Section 12.1 of the Declaration, including, without limitation, those "structural repairs, alterations or changes" (as such phrase is defined in Section 5.3 hereof) in or to the Hotel Unit required whether by reason of ordinary use and wear, or by any laws, ordinances, rules, regulations or orders of any governmental or municipal authority, or otherwise. Any amount not expended for these purposes shall be carried forward to subsequent periods. Notwithstanding the foregoing provisions of this Section, the parties acknowledge the following:
(a) The budget for capital additions and replacements for the Hotel Unit for each Calendar Year (or Fractional Year) is based on revenue projections made prior to the beginning of the year and actual revenues will be different; and
(b) Capital additions are made during the year before the actual revenues for the Hotel Unit for the year are known; therefore, the parties agree that Operator shall be deemed to have properly performed its obligations hereunder if the amount actually spent for capital additions and replacements in and to the Hotel Unit in a Calendar Year (or Fractional Year) does not exceed the higher of (a) the applicable percentage of such originally forecasted revenues or (b) the applicable percentage of actual revenues achieved for capital additions and replacements. The amount actually spent or incurred by Operator for capital additions and replacements, in and to the Hotel Unit, either under (a) or (b) above or by agreement of the parties, for a Calendar Year (or Fractional Year) shall be deemed to be the amount
Appears in 1 contract
Sources: Option Agreement