LEASE AGREEMENT
(SUPER 8, Flagstaff, Arizona)
between
HOST VENTURES, INC.
and
CROSSROADS HOSPITALITY TENANT COMPANY, L. L. C.
March 14th, 1997
LEASE AGREEMENT
(SUPER 8, FLAGSTAFF, ARIZONA)
THIS LEASE AGREEMENT (hereinafter called this "Lease"), made as of the_____
day of March, 1997, by and between HOST VENTURES, INC., a Maryland corporation
(hereinafter called "Lessor") and CROSSROADS HOSPITALITY TENANT COMPANY,
L. L. C., a Delaware limited liability company (hereinafter called "Lessee"),
provides as follows.
WITNESSETH:
Lessor will hold and own clear and marketable title to a hotel commonly
known as the Super 8, Flagstaff, Arizona ("Leased Property", as more fully
described in Section 1.1 hereof).
NOW, THEREFORE, Lessor, in consideration of the payment of rent by Lessee
and the other covenants and agreements to be performed by Lessee, and upon the
terms and conditions hereinafter stated, does hereby rent and lease unto Lessee,
and Lessee does hereby rent and lease from Lessor, the Leased Property.
SECTION 1.
1.1 LEASED PROPERTY. The Leased Property is comprised of Lessor's
interest in the following:
1.1.1 the land described in Exhibit "A" attached hereto and by
reference incorporated herein (the "Land");
1.1.2 all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and offsite), parking areas and
roadways appurtenant to such buildings and structures presently situated upon
the Land (collectively, the "Leased Improvements");
1.1.3 all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
1.1.4 all equipment, machinery, fixtures, and other items of
property required or incidental to the use of the Leased Improvements as a
hotel, including all components thereof, now and hereafter permanently affixed
to or incorporated into the Leased Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which to the
greatest extent permitted by law are hereby deemed by the parties
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hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto (collectively, the
"Fixtures"); and
1.1.5 all furniture and furnishings, Inventory and all other items
of personal property (excluding Inventory and other personal property owned by
Lessee) located on, and used in connection, with the operation of the Leased
Improvements as a hotel, together with all replacements, modifications,
alterations and additions thereto.
EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THE LEASED PROPERTY IS DEMISED IN
ITS PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY BY LESSOR AND SUBJECT
TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE
INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS
OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, THE LIEN OF FINANCING
INSTRUMENTS, MORTGAGES, DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER
MATTERS WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY
AN ACCURATE SURVEY THEREOF.
1.2 TERM.
(A) The term of the Lease (the "Term") shall commence (the "Commencement
Date") on the date of closing of that certain Agreement to Purchase Motel, as
from time to time amended, by and between Teachers' Retirement System of the
State of Illinois, as Seller, and Host Funding, Inc., a Maryland corporation,
and/or assigns, as Purchaser, and covering the sale to Lessor of the Leased
Property (said Agreement to Purchase Motel, as assigned by Host Funding, Inc. to
Lessor, herein called the "Contract of Purchase and Sale"), and shall end on the
fifteenth annual anniversary of the last day of the month in which the
Commencement Date occurs, unless sooner terminated in accordance with the
provisions hereof. Because of the lack of certainty of the actual date of the
Commencement Date, the Lessor shall provide to Lessee at least five (5) days
prior written notice of the Commencement Date.
(B) In addition to the other termination provisions contained in this
Lease, this Lease shall terminate if: (a) the Lessor shall have sold the
Leased Property to a third party that is not an Affiliate, (b) the Lessor shall
have provided to the Lessee Notice as set forth in Section 44 hereof of
termination, if the obligations of the Lessor shall not have been expressly
assumed by a purchaser approved by the Lessee and, the Lessor shall have paid
to the Lessee a lease cancellation fee (the " Lease Cancellation Fee") or
accrued but unpaid Negative Base Rent, as applicable all as more fully described
on EXHIBIT "B" attached hereto and made a part hereof.
SECTION 2 - DEFINITIONS.
For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Section
have the meanings assigned to them in this
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Section and include the plural as well as the singular, (b) all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles and the Uniform
System as are at the time applicable, all references in this Lease to
designated "Sections" and other subdivisions are to the designated Sections
and other subdivisions of this Lease, and (d) the words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Lease as a
whole and not to any particular Section or other subdivision:
ADDITIONAL CHARGES: As defined in Section 3.5 of this Lease.
AFFILIATES: As used in this Lease the term "Affiliate" of a person shall
mean (a) any person that, directly or indirectly, controls or is controlled by
or is under common control with such person, (b) any other person that owns,
beneficially, directly or indirectly, five percent or more of the outstanding
capital stock, shares or equity interests of such person, or any officer,
director, employee, partner or trustee of such person or any person controlling,
controlled by or under common control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
person). The term "person" means and includes individuals, corporations,
general and limited partnerships, stock companies or associations, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, or other entities and governments and agencies and political
subdivisions thereof. For the purposes of this definition, "control" (including
the correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, through the ownership of voting securities,
partnership interests or other equity interests.
AWARD: As defined in Section 15.1.3 of this Lease.
BASE MANAGEMENT FEE: An amount equal to five percent (5%) of Gross
Revenues (as defined in the Uniform System) which shall be an imputed amount
retained by Lessee as a management fee and charged as a Gross Operating Expense
of the Hotel.
BASE RATE: The rate of interest announced publicly by Bank of America in
San Francisco, California from time to time, as such bank's base rate. If no
such rate is announced or becomes discontinued, then such other rate as Lessor
may reasonably designate.
BASE RENT: As defined in Section 3.1(A) of this Lease.
BREAK-EVEN THRESHOLD: Such amount of Gross Revenues for the Leased
Property as set forth on Exhibit E attached hereto and made a part hereof.
CAPITAL EXPENDITURE BUDGET: As defined in Section 40 of this Lease.
CAPITAL EXPENDITURE RESERVE ACCOUNT: As defined in Section 40 of this
Lease.
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CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
CODE: The Internal Revenue Code of 1986, as amended.
COMMENCEMENT DATE: As defined in Section 1.2(A) of the Lease.
CONDEMNATION, CONDEMNOR: As defined in Section 15.1 of this Lease.
DATE OF TAKING: As defined in Section 15.1(2) of this Lease.
ENCUMBRANCE: As defined in Section 35.1 of this Lease.
ENVIRONMENTAL AUTHORITY: Any department, agency or other body or component
of any Government that exercises any form of jurisdiction or authority under any
Environmental Law.
ENVIRONMENTAL AUTHORIZATION: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.
ENVIRONMENTAL LAWS: All applicable federal, state, local and foreign laws
and regulations relating to pollution of the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), including without limitation laws and regulations relating to
emissions, discharges, Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials. Environmental
Laws include, but are not limited to CERCLA, FIFRA, RCRA, ▇▇▇▇ and TSCA.
ENVIRONMENTAL LIABILITIES: Any and all obligations to pay the amount of
any judgment or settlement, the cost of complying with any settlement, judgment
or order for injunctive or other equitable relief, the cost of compliance or
corrective action in response to any notice, demand or request from an
Environmental Authority, the amount of any civil penalty or criminal fine, and
any court costs and reasonable amounts for attorneys' fees, fees for witnesses
and experts, and costs of investigation and preparation for defense of any claim
or any Proceeding, regardless of whether such Proceeding is threatened, pending
or completed, that may be or have been asserted against or imposed upon Lessor,
Lessee, any Predecessor, the Leased Property or any property used therein and
arising out of:
(a) Failure of Lessee, Lessor, any Predecessor or the Leased Property to
comply at any time with all Environmental Laws;
(b) Presence of any Hazardous Materials on, in, under, at or in any way
affecting the Leased Property;
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(c) A Release at any time of any Hazardous Materials on, in, at, under in
any way affecting the Leased Property;
(d) Identification of Lessee, Lessor or any Predecessor as a potentially
responsible party under CERCLA or under any Environmental Law similar to CERCLA;
(e) Presence at any time of any above-ground and/or underground storage
tanks, as defined in RCRA or in any applicable Environmental Law on, in, at or
under the Leased Property or any adjacent site or facility; or
(f) Any and all claims for injury or damage to persons or property arising
out of exposure to Hazardous Materials originating or located at the Leased
Property, or resulting from operation thereof or any adjoining property.
EVENT OF DEFAULT: As defined in Section 16.1 of this Lease.
FACILITY: The hotel and/or other facility offering lodging and other
services or amenities being operated or proposed to be operated on the Leased
Property.
FAIR MARKET RENTAL: The fair market rental of the Leased Property means
the rental which a willing tenant not compelled to rent would pay a willing
landlord not compelled to lease for the use and occupancy of such Leased
Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder, and (b) determined in accordance with the
appraisal procedures set forth in Section 34 or in such other manner as shall be
mutually acceptable to Lessor and Lessee.
FAIR MARKET VALUE: The fair market value of the Leased Property means an
amount equal to the price that a willing buyer not compelled to buy would pay a
willing seller not compelled to sell for such Leased Property, (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Section 34 or in such other manner as shall be
mutually acceptable to Lessor and Lessee, assuming that such seller must pay
customary closing costs and title premiums, and (d) taking into account the
positive or negative effect on the value of the Leased Property attributable to
the interest rate, amortization schedule, maturity date, prepayment penalty and
other terms and conditions of any encumbrance that is assumed by the transferee.
In addition, in determining the Fair Market Value with respect to damaged or
destroyed Leased Property, such value shall be determined as if such Leased
Property had not been so damaged or destroyed.
FIFRA: The Federal Insecticide, Fungicide, and Rodenticide Act, as
amended.
FINANCIALS: For any Fiscal Year or other accounting period for Lessee,
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
Fiscal Year to the end of such period and the related balance sheet
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as at the end of such period, together with the notes thereto, all in
reasonable detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding Fiscal Year, and
prepared in accordance with generally accepted accounting principles and
audited by independent certified public accountants acceptable to Lessor in
its sole discretion.
FISCAL YEAR: The 12-month period from January 1 to December 31.
FIXTURES: As defined in Section 1.1.4 of this Lease.
FRANCHISE AGREEMENT: Any franchise agreement or license agreement with a
franchisor under which the Facility is operated.
FF&E: All furniture, fixtures, equipment, wall coverings, and hotel
systems located at, or used in connection with the Leased Property, together
with all replacements therefor and additions thereto, including, without
limitation, (i) all equipment and systems required for the operation of
kitchens and bars, if any, laundry and dry cleaning facilities, (ii) office
equipment, (iii) dining room wagons, materials handling equipment, cleaning
and engineering equipment, (iv) telephone and computerized accounting systems
and (v) vehicles.
GOVERNING STATE LAW: The laws of the State in which the Leased Property
is situated shall govern this Agreement.
GOVERNMENT: The United States of America, any state, district or
territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any political subdivision
of any of the foregoing.
GROSS OPERATING EXPENSES: All expenses incurred in the ordinary course
of operating the Leased Property as defined in the Uniform System.
GROSS OPERATING PROFIT: The amount by which Gross Revenues exceeds Gross
Operating Expenses as such calculation is more fully described in the Uniform
System.
GROSS REVENUES: All receipts, revenues, income and proceeds of sales of
every kind received by Tenant directly or indirectly from the operation of
the Leased Property as more fully described in the Uniform System.
GROSS ROOM REVENUES: All revenues derived from the rental, sale, use or
occupancy of guest rooms or meeting rooms within the Leased Property,
including cash and credit transactions, but excluding sales taxes or other
taxes collected from guests, or in conjunction with the rental of guest rooms
or meeting rooms.
HAZARDOUS MATERIALS: All chemicals, pollutants, contaminants, wastes and
toxic substances, including without limitation:
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(a) Solid or hazardous waste, as defined in RCRA or in any Environmenta
Law;
(b) Hazardous substances, as defined in CERCLA or in any Environmental
Law;
(c) Toxic substances, as defined in TSCA or in any Environmental Law;
(d) Insecticides, fungicides, or rodenticides, as defined in FIFRA or in
any Environmental Law; and
(e) Gasoline or any other petroleum product or byproduct, polychlorinated
biphenols, asbestos and urea formaldehyde.
IMPOSITIONS: Collectively, all taxes (including, without limitation, all
ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessee or its business conducted upon the Leased Property) assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof
provided that said improvements are completed within the Term and whether or
not to be completed within the Term), ground rents, water, sewer or other
rents and charges, excises, tax inspection, authorization and similar fees
and all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the Leased Property or the business conducted thereon by Lessee,
(including all interest and penalties thereon caused by any failure in
payment by Lessee), which at any time prior to, during or with respect to the
Term hereof may be assessed or imposed on or with respect to or be a lien
upon (a) Lessor's interest in the Leased Property, (b) the Leased Property,
or any part thereof or any rent therefrom or any estate, right, title or
interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on or in connection with the Leased
Property, or the leasing or use of the Leased Property or any part thereof by
Lessee. Notwithstanding the foregoing or anything otherwise contained in this
definition of Impositions or elsewhere in this Lease shall be construed to
require Lessee to prepare tax returns or reports for, or pay (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Lessor or any other person, or (2) any net revenue tax
of Lessor or any other person, or (3) any tax imposed with respect to the
sale, exchange or other disposition by Lessor of any Leased Property or the
proceeds thereof, (4) any real estate or personal property taxes imposed upon
the Lessor's property including but not limited to the Leased Property or (5)
any single business, gross receipts (including any tax on any rent received
by Lessor from Lessee), transaction, privilege or similar taxes as the same
relate to or are imposed upon Lessor, except to the extent that any tax,
assessment, tax levy or charge that Lessee is obligated to pay pursuant to
the first sentence of this definition and that is in effect at any time
during the Term hereof is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (1) or (2) is levied,
assessed or imposed expressly in lieu thereof.
INDEMNIFIED PARTY: Either a Lessee Indemnified Party or a Lessor
Indemnified Party.
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INDEMNIFYING PARTY: Any party obligated to indemnify an Indemnified Party
pursuant to Sections 8.3 or 23.1 of this Lease.
INSURANCE REQUIREMENTS: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy.
INVENTORY: All "Inventories of Merchandise" and "Inventories of Supplies"
as defined in the Uniform System of Accounts for Hotels (8th Revised Edition,
1986) as published by the Hotel Association of New York City, Inc., as same may
hereafter be revised.
LAND: As defined in Section 1 of this Lease.
LEASE: This Lease.
LEASED IMPROVEMENTS: LEASED PROPERTY: Each as defined in Section 1 of this
Lease.
LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting either the Leased Property or
the maintenance, construction, use or alteration thereof (whether by Lessee
or otherwise), whether or not hereafter enacted and in force, including (a)
all laws, rules or regulations pertaining to the environment, occupational
health and safety and public health, safety or welfare, and (b) any laws,
rules or regulations that may (1) require repairs, modifications or
alterations in or to the Leased Property, or (2) in any way adversely affect
the use and enjoyment thereof; and all permits, licenses and authorizations
and regulations relating thereto and all covenants, agreements, restrictions
and encumbrances contained in any instruments, either of record or known to
Lessee (other than encumbrances created by Lessor without the consent of
Lessee), at any time in force affecting the Leased Property.
LESSEE: The Lessee designated on this Lease and its permitted successors
and assigns.
LESSEE INDEMNIFIED PARTY: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's
interest or partnership interest) in Lessee, the officers, directors,
stockholders, employees, agents and representatives of Lessee and any partner,
corporate stockholder, agent, or representative of Lessee, and the respective
heirs, personal representatives, successors and assigns of any such officer,
director, partner, stockholder, employee, agent or representative.
LESSOR: The Lessor designated on this Lease and its successors and
assigns.
LESSOR INDEMNIFIED PARTY: Lessor, any Affiliate of Lessor, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's or
partnership interest) in Lessor, the officers, directors,
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stockholders, employees, agents and representatives of the general partner of
Lessor and any partner, agent, or representative of Lessor, and the
respective heirs, personal representatives, successors and assigns of any
such officer, director, partner, stockholder, employee, agent or
representative.
MINIMUM PRICE: The sum of (a) the equity in the Leased Property at the
time of acquisition of the Leased Property by Lessor (i.e., that portion of the
acquisition price of the Leased Property paid by Lessor in cash and/or the
original exchange value of its common shares) as more fully described on Exhibit
I attached hereto and made a part hereof, plus (b) other capital expenditures on
the Leased Property by Lessor after the date hereof, plus the unpaid principal
balance of all encumbrances against the Leased Property at the time of purchase
of the Leased Property by Lessee, less (x) all proceeds received by Lessor from
any financing or refinancing of the Leased Property after the date hereof (after
payment of any debt refinanced and net of any costs and expenses incurred in
connection with such financing or refinancing, including, without limitation,
loan points, commitment fees and commissions and legal fees) and (y) the net
amount (after deduction of all reasonable legal fees and other costs and
expenses, including without limitation expert witness fees, incurred by Lessor
in connection with obtaining any such proceeds or award) of all insurance
proceeds received by Lessor and Awards received by Lessor from any Partial
Taking of the Leased Property that are not applied to restoration.
NEGATIVE BASE RENT. To the extent that at any time during the first four
(4) years after the Commencement Date the Property Cash Flow from the Leased
Property is less than the Base Rent, then Lessee will be allowed to accrue the
difference as Negative Base Rent. The Negative Base Rent shall be cumulative
but shall not bear interest.
NOTICE: A notice given pursuant to Section 33 of this Lease.
OFFICER'S CERTIFICATE: A certificate of Lessee signed by the chief
financial officer or another officer authorized so to sign by the board of
directors or by-laws of Lessee, or any other person whose power and authority to
act has been authorized by delegation in writing by any such officer.
OVERDUE RATE: On any date, a rate equal to the Base Rate plus 2% per
annum, but in no event greater than the maximum rate then permitted under
applicable law.
PAYMENT DATE: Any due date for the payment of any installment of Rent.
PERCENTAGE RENT: As defined in Section 3.1(B) of this Lease.
PERSON: Any Government, natural person, corporation, partnership or other
legal entity.
PREDECESSOR: Any Person whose liabilities arising under any Environmental
Law have or may have been retained or assumed by Lessee, either contractually or
by operation of law, relating to the Leased Property.
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PRIMARY INTENDED USE: As defined in Section 7.2.2 of this Lease.
PROCEEDING: Any judicial action, suit or proceeding (whether civil or
criminal), any administrative proceeding (whether formal or informal), any
investigation by a governmental authority or entity (including a grand jury),
and any arbitration, mediation or other non-judicial process for dispute
resolution.
PROPERTY CASH FLOW: Gross Operating Profit less capital expenditures,
the amount of the imputed Base Management Fee and property insurance required
pursuant to Section 13 hereof.
RCRA: The Resource Conservation and Recovery Act, as amended.
REAL ESTATE TAXES: All real estate taxes, including general and special
assessments, if any, which are imposed upon the Land, and any improvements
thereon.
REJECTABLE OFFER PRICE: An amount equal to the greater of (a) the Fair
Market Value, determined as of the applicable purchase date, or (b) the Minimum
Price.
RELEASE: A "Release" as defined in CERCLA or in any Environmental Law,
unless such Release has been properly authorized and permitted in writing by all
applicable Environmental Authorities or is allowed by such Environmental Law
without authorizations or permits.
RENT: Collectively, the Base Rent, Percentage Rent, and Additional
Charges.
▇▇▇▇: The Superfund Amendments and Reauthorization Act of 1986, as
amended.
SECURITY DEPOSIT: As defined in Section 47 of this Lease.
STATE: The State or Commonwealth of the United States in which the Leased
Property is located.
TAKING: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or NOT the same
shall have actually been commenced.
TERM: As defined in Section 1.2(A) of this Lease.
TSCA: The Toxic Substances Control Act, as amended.
UNECONOMIC FOR ITS PRIMARY INTENDED USE: A state or condition of the
Facility such that in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board
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of directors or other governing body of Lessee, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, among other relevant factors, the number of usable rooms
and projected revenues, such that Lessee intends to, and shall, complete the
cessation of operations from the Leased Facility.
UNIFORM SYSTEM: Shall mean the Uniform System of Accounts for Hotels (8th
Revised Edition, 1986) as published by the Hotel Association of New York City,
Inc., as same may hereafter be revised.
UNSUITABLE FOR ITS PRIMARY INTENDED USE: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, due to casualty damage or loss through Condemnation, the
Facility cannot function as an integrated hotel facility consistent with
standards applicable to a well maintained and operated hotel.
SECTION 3.
3.1 RENT. Lessee will pay to Lessor in lawful money of the United States
of America which shall be legal tender for the payment of public and private
debts, in immediately available funds, at Lessor's address set forth in Section
33 hereof or at such other place or to such other Person, as Lessor from time to
time may designate in a Notice, all Base Rent, Percentage Rent and Additional
Charges, during the Term, as follows:
(A) BASE RENT: Beginning with March 31, 1997, in consecutive
monthly installments, on or before the last day of each calendar month of the
Term ("Base Rent") an amount corresponding to the amounts set forth on
EXHIBIT D attached hereto and made a part hereof, provided, however, that the
first and last monthly payments of Base Rent shall be pro-rated as to any
partial month (subject to adjustment as provided in Sections 5.2, 14.5, 15.3,
15.5, and 15.6). If required by any mortgagee of Lessor and at the request of
Lessor, Base Rent payments shall in a timely fashion be wired or mailed to an
account designated by any such mortgagee for such Base Rent payments.
(B) PERCENTAGE RENT: For each Fiscal Year during the Term (and
commencing with the second quarter of the Fiscal Year beginning January 1,
1997), Tenant shall pay percentage rent ("Percentage Rent")on a quarterly
basis within twenty (20) days after the end of each calendar quarter and in
an amount calculated in accordance with the formula set forth on EXHIBIT E
attached hereto and made a part hereof (and with the first such quarterly
Percentage Rent payment due within twenty (20) days after June 30, 1997). If
required by any mortgagee of Lessor and at the request of Lessor, Percentage
Rent payments shall in a timely fashion be wired or mailed to an account
designated by any such mortgagee for such Percentage Rent payments.
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(C) OFFICER'S CERTIFICATES: Additionally, an Officer's Certificate
shall be delivered to Lessor quarterly, together with such quarterly
Percentage Rent payment, setting forth the calculation of such rent payment
for such quarter within 20 days after each of the first three quarters of
each Fiscal Year (or part thereof) in the Term. Such quarterly payments
shall be based on the formula set forth on EXHIBIT E.
In addition, on or before March 31 of each year, commencing with March
31, 1998, Lessee shall deliver to Lessor an Officer's Certificate reasonably
acceptable to Lessor setting forth the computation of the actual Percentage
Rent that accrued for each quarter of the Fiscal Year that ended on the
immediately preceding December 31 and shall pay Percentage Rent to Lessor, if
due and payable, for the last quarter of the applicable Fiscal Year.
Additionally, if the annual Percentage Rent due and payable for any Fiscal
Year (as shown in the applicable Officer's Certificate) exceeds the amount
actually paid as Percentage Rent by Lessee for such year, Lessee also shall
pay such excess to Lessor at the time such certificate is delivered. If the
Percentage Rent actually due and payable for such Fiscal Year is shown by
such certificate to be less than the amount actually paid as Percentage Rent
for the applicable Fiscal Year, Lessor shall reimburse such amount to Lessee.
The obligation to pay Percentage Rent shall survive the expiration or
earlier termination of the Term, and a final reconciliation, taking into
account, among other relevant adjustments, any adjustments which are accrued
after such expiration or termination date but which related to Percentage
Rent accrued prior to such termination date, and Lessee's good faith best
estimate of the amount of any unresolved contractual allowances, shall be
made not later than two years after such expiration or termination date, but
Lessee shall advise Lessor within 60 days after such expiration or
termination date of Lessee's best estimate at that time of the approximate
amount of such adjustments, which estimate shall not be binding on Lessee or
have any legal effect whatsoever.
3.2 CONFIRMATION OF PERCENTAGE RENT. Lessee shall utilize, or cause to
be utilized, an accounting system for the Leased Property in accordance with
its usual and customary practices, and in accordance with generally accepted
accounting principles and the Uniform System, that will accurately record all
data necessary to compute Percentage Rent, and Lessee shall retain, for at
least four years after the expiration of each Fiscal Year (and in any event
until the reconciliation described in Section 3.1 for such Fiscal Year has
been made), reasonably adequate records conforming to such accounting system
showing all data necessary to compute Percentage Rent for the applicable
Fiscal Years. Lessor, at its expense (except as provided hereinbelow), shall
have the right from time to time by its accountants or representatives to
audit the information that formed the basis for the data set forth in any
Officer's Certificate provided under Section 3.1 and, in connection with such
audits, to examine all Lessee's records (including supporting data and sales
and excise tax returns) reasonably required to verify Percentage Rent,
subject to any prohibitions or limitations on disclosure of any such data
under Legal Requirements. If any such audit discloses a deficiency in the
payment of Percentage Rent, and either Lessee agrees with the result of such
audit or the matter is otherwise determined or compromised, Lessee shall
forthwith pay to Lessor the amount of the deficiency, as finally agreed or
determined. If any such audit discloses that the Percentage Rent actually
due from Lessee for any Fiscal Year exceed those reported by Lessee by more
than 10%,
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Lessee shall pay the cost of such audit and examination. Any proprietary
information obtained by Lessor pursuant to the provisions of this Section
shall be treated as confidential, except that such information may be used,
subject to appropriate confidentiality safeguards, in any litigation between
the parties and except further that Lessor may disclose such information to
prospective lenders for the Leased Property. The obligations of Lessee
contained in this Section shall survive the expiration or earlier termination
of this Lease.
3.3 ANNUAL BUDGET. The Lessee shall, on or before the Commencement Date,
submit the Annual Budget for 1997 (or the remainder thereof) to the Lessor for
Lessor's approval within thirty (30) days of its receipt of such Annual Budget.
For all Fiscal Years thereafter, not later than October 31 of each Fiscal Year,
Lessee shall submit the Annual Budget for the next fiscal year to Lessor for
Lessor's approval. The Annual Budget for 1997 and all Fiscal Years thereafter
shall by month and quarter contain the following:
(a) Lessee's reasonable estimate of Gross Revenues (including room
rates), Gross Operating Expenses, and Gross Operating Profits for the
forthcoming Fiscal Year itemized on schedules prepared by Lessee, as same may be
revised or replaced from time to time by Lessee and approved by Lessor, together
with the assumptions, in narrative form, forming the basis of such schedules.
(b) The Capital Expenditure Budget described in Section 40 hereof.
(c) A cash flow projection.
(d) A narrative description of the program for advertising and
marketing the Leased Property for the forthcoming Fiscal Year containing a
detailed budget itemization of the proposed advertising expenditures by category
and the assumptions, in narrative form forming the basis of such budget
itemization.
Notwithstanding the foregoing, if Lessor and Lessee are unable to agree
upon the Annual Budget or any details thereof, the final Annual Budget shall be
determined by arbitration in accordance with the provisions of SECTION 43
hereof, it being understood that only those details, line items or portions of
the Annual Budget which are in dispute shall be the subject of such arbitration.
Pending the conclusion of any such arbitration proceeding, the Annual Budget for
all purposes under this Lease shall be the Annual Budget for the prior Fiscal
Year, modified by increasing the Lease expenses by a factor of ten percent
(10%). Lessor and Lessee agree that arbitration shall be the sole procedure for
resolving any dispute regarding the Annual Budget. Lessee shall diligently
pursue all feasible measures to enable the Leased Property to adhere to the
Annual Budget, provided, however, Lessor acknowledges and agrees that Lessee
will not be responsible for any variances from the Annual Budget.
3.4 BOOKS AND RECORDS. Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Leased
Property (including those relating to
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Negative Base Rent) on an accrual basis, all in accordance with the Uniform
System and generally accepted accounting principles and the obligations of
Lessee under this Lease Agreement. The books of account and all other
records relating to or reflecting the operation of the Leased Property shall
be kept either at the Leased Property or at Lessee's offices in Orlando,
Florida and/or Pittsburgh, Pennsylvania and shall be available to Lessor and
its representatives and its auditors or accountants, at all reasonable times
for examination, audit, inspection, and transcription. All of such books and
records pertaining to the Leased Property including, without limitation,
books of account, guest records and front office records, at all times shall
be the property of Lessor and shall not be removed from the Leased Property
or Lessor's offices by Lessee without Lessor's Approval. For at least seven
(7) years after the termination of this Lease upon the prior written approval
of Lessor which shall not be unreasonably withheld or delayed, the Lessor
shall provide to Lessee access to all such books and records during
reasonable business hours and upon reasonable notice.
3.5 ADDITIONAL CHARGES. In addition to the Base Rent and Percentage
Rent, (a) Lessee also will pay and discharge as and when due and payable all
other amounts, liabilities, obligations and Impositions that Lessee agrees to
pay under this Lease, and (b) in the event of any failure on the part of
Lessee to pay any of those items referred to in clause (a) of this Section
3.5, Lessee also will promptly pay and discharge every fine, penalty,
interest and cost that may be added for non-payment or late payment of such
items (the items referred to in clauses (a) and (b) of this Section 3.5 being
additional rent hereunder and being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of non-payment of the Additional Charges as
in the case of non-payment of the Base Rent and Percentage Rent. Subject to
the other terms and conditions of this Lease, if any installment of Base
Rent, Percentage Rent or Additional Charges (but only as to those Additional
Charges that are payable directly to Lessor) shall not be paid on its due
date, Lessee will pay Lessor on demand, as Additional Charges, a late charge
(to the extent permitted by law) computed at the Overdue Rate on the amount
of such installment, from the due date of such installment to the date of
payment thereof. To the extent that Lessee pays any Additional Charges to
Lessor pursuant to any requirement of this Lease, Lessee shall be relieved of
its obligation to pay such Additional Charges to the entity to which they
would otherwise be due and Lessor shall pay same from monies received from
Lessee.
3.6 NET LEASE PROVISION. Subject to the other provisions contained
within this Lease and the Lessee's express rights to abatement of Rent, the
Rent shall be paid absolutely net to Lessor, so that this Lease shall yield
to Lessor the full amount of the installments of Rent throughout the Term,
all as more fully set forth in Section 5, but subject to any other provisions
of this Lease that expressly provide for adjustment or abatement of Rent or
other charges or expressly provide that certain expenses or maintenance shall
be paid or performed by Lessor.
SECTION 4
4.1 PAYMENT OF IMPOSITIONS. Subject to Section 12 relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions (excluding
Real Estate Taxes and personal property
15
taxes imposed upon the Leased Property and all of the Lessor's other
property) before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing or other
authorities where feasible, and will promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments.
Lessee's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof. If any such Imposition may, at the option of the taxpayer,
lawfully be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), Lessee may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in
installments and in such event, shall pay such installments during the Term
hereof (subject to Lessee's right of contest pursuant to the provisions of
Section 12) as the same respectively become due and before any fine, penalty,
premium, further interest or cost may be added thereto. Lessor, at its
expense, shall, to the extent required or permitted by applicable law,
prepare and file all tax returns in respect of Lessor's net income, gross
receipts, sales and use, single business, transaction privilege, rent, ad
valorem, franchise taxes, Real Estate Taxes and taxes on its capital stock,
and Lessee, at its expense, shall, to the extent required or permitted by
applicable laws and regulations, prepare and file all other tax returns and
reports in respect of any Imposition as may be required by governmental
authorities and pay all amounts due pursuant to such filings and reports. If
any refund shall be due from any taxing authority in respect of any
Imposition paid by Lessee, the same shall be paid over to or retained by
Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have occurred and be continuing,
any such refund shall be paid over to or retained by Lessor. Any such funds
retained by Lessor due to an Event of Default shall be applied as provided in
Section 16. Lessor and Lessee shall, upon request of the other, provide such
data as is maintained by the party to whom the request is made with respect
to the Leased Property as may be necessary to prepare any required returns
and reports. Lessor shall file all personal property tax returns, including
tax payments, in such jurisdictions where it is legally required to so file.
Lessor will maintain and prepare all cost and depreciation records necessary
for filing returns for any property so classified as personal property.
Where Lessor is legally required to file personal property tax returns,
Lessor shall provide Lessee with copies of assessment notices in sufficient
time for Lessee to file a protest.
4.2 NOTICE OF IMPOSITIONS. Lessor shall give prompt Notice to Lessee of
all Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, provided that Lessor's failure to give any such Notice shall in no
way diminish Lessee's obligations hereunder to pay such Impositions, but such
failure shall obviate any default hereunder for a reasonable time after
Lessee receives Notice of any Imposition which it is obligated to pay during
the first taxing period applicable thereto.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.
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4.4 UTILITY CHARGES. After the Commencement Date, Lessee will be solely
responsible for maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property after the Commencement Date and
during the Term; provided, however, Lessor shall provide to Lessee any and all
amounts necessary as security deposits to obtain such utility service.
4.5 INSURANCE PREMIUMS. Lessee will pay or cause to be paid all premiums
for the insurance coverages required to be maintained by it under Section 13.
4.6 FRANCHISE FEES. Lessee will pay or cause to be paid all franchise
fees due and owing in accordance with the terms and conditions of the Franchise
Agreement.
SECTION 5.
5.1 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Lease, and except for loss of the Franchise Agreement solely by
reason of any action or inaction by Lessor, Lessee, to the extent permitted by
law, shall remain bound by this Lease in accordance with its terms and shall
neither take any action without the written consent of Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of the Rent, or set off against the Rent.
5.2 ABATEMENT PROCEDURES. In the event of a Partial Taking as described
in Section 15.5 and/or a Temporary Taking as described in Section 15.6, the
Lease shall not terminate, but the Base Rent shall be abated in the manner and
to the extent that is fair, just and equitable to both Lessee and Lessor, taking
into consideration, among other relevant factors, the number of usable rooms,
the amount of square footage, or the revenues affected by such Partial Taking
and/or a Temporary Taking and the allocation to the parties of any Award. If
Lessor and Lessee are unable to agree upon the amount of such abatement within
30 days after such Partial Taking and/or Temporary Taking, the matter may be
submitted by either party to arbitration in accordance with the provisions of
Section 43 hereof for resolution.
SECTION 6
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property will, subject to the closing of the Contract of Purchase and Sale, be
the property of Lessor and that Lessee has only the right to the possession and
use of the Leased Property upon the terms and conditions of this Lease.
6.2 LESSEE'S PERSONAL PROPERTY. Lessee will acquire and maintain
throughout the Term such Inventory as is required to operate the Leased Property
in the manner contemplated by this Lease. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of personal property
(including Inventory) owned by Lessee. Lessee, at the commencement of the Term,
and
17
from time to time thereafter, shall provide Lessor with an accurate list of
all such items of Lessee's personal property (collectively, the "Lessee's
Personal Property"). Lessee may, subject to the first sentence of this
Section 6.2 and the conditions set forth below, remove any of Lessee's
Personal Property set forth on such list at any time during the Term or upon
the expiration or any prior termination of the Term. All of Lessee's
Personal Property, other than Inventory, not removed by Lessee within sixty
(60) days following the expiration or earlier termination of the Term shall
be considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving Notice thereof to
Lessee, without any payment to Lessee and without any obligation to account
therefor. Lessee will, at its expense, restore the Leased Property to the
condition required by Section 9.1.3, including repair of all damage to the
Property caused by the removal of Lessee's Personal Property, whether
effected by Lessee or Lessor. Notwithstanding the foregoing, upon the
expiration or earlier termination of the Term, Lessee shall sell and Lessor,
or its designee, shall purchase all Inventory on hand at the Leased Property
at the time of such expiration or termination for a sale price equal to the
fair market value of such Inventory, as evidenced by invoices, receipts, or
other reasonable documentation. Lessee may make such financing arrangements,
title retention agreements, leases or other agreements with respect to the
Lessee's Personal Property as it sees fit provided that Lessee first advises
Lessor of any such arrangement and such arrangement expressly provides that
in the event of Lessee's default thereunder, Lessor (or its designee) may
assume Lessee's obligations and rights under such arrangement.
6.3 LESSOR'S REPRESENTATIONS. Lessor represents and warrants that (a)
Lessor will, subject to the closing of the Contract of Purchase and Sale,
have good, clear and marketable title to the Leased Property, (b) Lessor has
full authority to grant to the Lessee the leasehold interest described in
this Lease, (c) the Leased Property is free from any material defects and (d)
the Leased Property is zoned, and all governmental approvals have been
obtained, for the current uses of the Leased Property as a hotel. In
addition, Lessor agrees to deliver to Lessee a current title report on the
Leased Property verifying the accuracy of the representations contained in
this Section 6.3.
6.4 BALANCE SHEET ON COMMENCEMENT AND TERMINATION OF LEASE. Upon the
Commencement Date, the Lessor shall deliver possession of the Leased Property
along with Twenty-Five Thousand ($25,000) cash (such cash amount to be
designated for "start-up expenses", including utility deposits, operating
expenses and linens), and inventory at levels no less than those set forth on
EXHIBIT J attached hereto and made a part hereof. Upon the termination of the
Lease, the Lessee shall assign to the Lessor all assets and liabilities
(including but not limited to all liabilities pursuant to service contracts
and leases) and Lessor shall execute instruments, reasonably requested by
Lessee, evidencing such assumption of liabilities by the Lessor.
6.5 LESSEE'S REPRESENTATIONS. Lessee represents and warrants that (a)
Lessee is a validly existing limited liability company organized under the laws
of the State of Delaware and is qualified to do business in all states in which
it is required to so qualify due to the nature of its business activities and
(b) Lessee has the requisite power and authority to enter into this Lease.
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6.6 LESSOR'S LIEN. Lessor is granted a lien and security interest on
all Lessee's Personal Property now or hereinafter placed in or upon the
Leased Property, and such lien and security interest shall remain attached to
such Lessee's Personal Property until payment in full of all Rent and
satisfaction of all of Lessee's obligations hereunder; provided, however,
Lessor shall subordinate its lien and security interest to that of any
non-Affiliate of Lessee which finances such Lessee's Personal Property or any
non-affiliate conditional seller of such Lessee's Personal Property, the
terms and conditions of such subordination to be satisfactory to Lessor in
the exercise of reasonable discretion. Lessee shall, upon the request of
Lessor, execute such financing statements or other documents or instruments
reasonably requested by Lessor to perfect the lien and security interest
herein granted.
SECTION 7.
7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property. Lessee has examined and
otherwise has knowledge of the condition of the Leased Property and has found
the same to be satisfactory for its purposes hereunder. In addition, to the
extent permitted by law, Lessor hereby grants to Lessee the right to proceed
against any Predecessor in title for breaches of warranties or
representations or for latent defects in the Leased Property. Lessor shall
fully cooperate with Lessee in the prosecution of any such claim, in Lessor's
or Lessee's name. Without limiting the Lessor's representations and
warranties contained in this Lease, the Lessor reiterates its disclaimer of
warranty contained in Section 1.1.6 hereof.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 Lessee covenants that it will proceed with all due
diligence and will exercise its diligent efforts to maintain all approvals
needed to use and operate the Leased Property and the Facility under
applicable local, state and federal law.
7.2.2 Lessee shall use or cause to be used the Leased Property
only as a hotel facility, and for such other uses as may be necessary or
incidental to such use or such other use as otherwise approved by Lessor (the
"Primary Intended Use"). Lessee shall not use the Leased Property or any
portion thereof for any other use without the prior written consent of Lessor
which consent may be granted, denied or conditioned in Lessor's sole
discretion. No use shall be made or permitted to be made and no act shall be
done or permitted to be done of, or on, the Leased Property, which will cause
the cancellation or increase the premium of any insurance policy covering the
Leased Property or any part thereof (unless another adequate policy
satisfactory to Lessor is available and Lessee pays any premium increase),
nor shall Lessee sell or permit to be kept, used or sold in or about the
Leased Property any article which may be prohibited by law or fire
underwriter's regulations. Lessee shall, at its sole cost, comply with all
of the requirements pertaining to the Leased Property of any insurance board,
association, organization or company necessary for the maintenance of
insurance, as herein provided, covering the Leased Property and Lessee's
Personal Property.
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7.2.3 Subject to the provisions of Sections 14, 15, 21 and 22,
Lessee covenants and agrees that during the Term it will (1) operate
continuously the Leased Property as a hotel facility, (2) keep in full force
and effect and comply with all the provisions of Franchise Agreements, if any
(3) not terminate or amend Franchise Agreements, if any, without the prior
written consent of Lessor which shall not be unreasonably withheld or
delayed, and (4) maintain appropriate certifications and licenses for such
use.
7.2.4 Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Lessee cause or
permit any nuisance thereon.
7.2.5 Lessee shall neither suffer nor permit the Leased Property
or any portion thereof, to be used in such a manner as (1) might reasonably
tend to impair Lessor's title thereto or to any portion thereof, or (2) may
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of the Leased
Property or any portion thereof, except as necessary in the ordinary and
prudent operation of the Facility on the Leased Property.
7.2.6 Except as may be agreed upon in writing in advance by the
parties, neither the Lessor nor any of its Affiliates shall own, or have any
interest in, any hotel or motel property that is within a five mile radius of
the Leased Property. In addition, neither the Lessor nor any of its
Affiliates shall operate or manage any hotel or motel property that is within
a five mile radius of any hotel or motel property in which Lessee or an
Affiliate of Lessee has an interest on the date Lessor would otherwise
commence owning, possessing an interest in, operating or managing such
property. Other than hotels or motels owned, managed, operated or in which
Lessee has an interest as of the Commencement Date, the Lessee agrees that it
shall not manage, operate or own any interest in any hotel or motel property
that is within a five (5) mile radius of the Leased Property.
7.3 LESSOR TO GRANT EASEMENTS Lessor will, from time to time, so long
as no Event of Default has occurred and is continuing, at the request of
Lessee and at Lessee's cost and expense (but subject to the approval of
Lessor, which approval shall not be unreasonably withheld or delayed), (a)
grant easements and other rights in the nature of easements with respect to
the Leased Property to third parties, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, dedicate or transfer unimproved portions of the Leased Property for
road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property, and (f) execute and deliver to any person any instrument
appropriate to confirm or effect such grants, releases, dedications,
transfers, petitions and amendments (to the extent of its interest in the
Leased Property), but only upon delivery to Lessor of an Officer's
Certificate stating that such grant, release, dedication, transfer, petition
or amendment is not detrimental to the proper conduct of the business of
Lessee on the Leased Property and does not materially reduce the value of the
Leased Property.
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SECTION 8.
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, ETC. Subject to
8.3.2 below and Section 12 relating to permitted contests, Lessee, at its
expense, will promptly (a) materially comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property, and (b) procure,
maintain and comply with all appropriate licenses and other authorizations
required for any use of the Leased Property and Lessee's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.
8.2 LEGAL REQUIREMENT COVENANTS. Subject to Section 8.3.2 below, Lessee
covenants and agrees that the Leased Property and Lessee's Personal Property
shall not be used for any unlawful purpose, and that Lessee shall not permit
or suffer to exist any unlawful use of the Leased Property by others. Lessee
shall acquire and maintain all appropriate licenses, certifications, permits
and other authorizations and approvals required to operate the Leased
Property in its customary manner for the Primary Intended Use, and any other
lawful use conducted on the Leased Property as may be permitted from time to
time hereunder. Lessee further covenants and agrees that Lessee's use of the
Leased Property and maintenance, alteration, and operation of the same, and
all parts thereof, shall at all times conform to all Legal Requirements,
unless the same are finally determined by a court of competent jurisdiction
to be unlawful (and Lessee shall cause all such sub-tenants, invitees or
others so to comply with all Legal Requirements). Lessee may, however, upon
prior Notice to Lessor, contest the legality or applicability of any such
Legal Requirement or any licensure or certification decision if Lessee
maintains such action in good faith, with due diligence, without prejudice to
Lessor's rights hereunder, and at Lessee's sole expense. If by the terms of
any such Legal Requirement compliance therewith pending the prosecution of
any such Proceeding may legally be delayed without the incurrence of any
lien, charge or liability of any kind against the Facility or Lessee's
leasehold interest therein and without subjecting Lessee or Lessor to any
liability, civil or criminal, for failure so to comply therewith, Lessee may
delay compliance therewith until the final determination of such Proceeding.
If any lien, charge or civil or criminal liability would be incurred by
reason of any such delay, Lessee, on the prior written consent of Lessor,
which consent shall not be unreasonably withheld, may nonetheless contest as
aforesaid and delay as aforesaid provided that such delay would not subject
Lessor to criminal liability and Lessee both (a) furnishes to Lessor security
reasonably satisfactory to Lessor against any loss or injury by reason of
such contest or delay, and (b) prosecutes the contest with due diligence and
in good faith.
8.3 ENVIRONMENTAL COVENANTS. Lessor and Lessee (in addition to, and not
in diminution of, Lessee's covenants and undertakings in Sections 8.1 and 8.2
hereof) covenant and agree as follows:
8.3.1 At all times hereafter until such time as all liabilities,
duties or obligations of Lessee to the Lessor under the Lease have been
satisfied in full, Lessee shall fully comply with all Environmental Laws
applicable to the Leased Property and the operations thereon. Lessee agrees to
give Lessor prompt written notice of (1) all Environmental Liabilities; (2) all
pending, threatened
21
or anticipated Proceedings, and all notices, demands, requests or
investigations, relating to any Environmental Liability or relating to the
issuance, revocation or change in any Environmental Authorization required
for operation of the Leased Property; (3) all Releases at, on, in, under or
in any way affecting the Leased Property, or any Release known by Lessee at,
on, in or under any property adjacent to the Leased Property; and (4) all
facts, events or conditions that could reasonably lead to the occurrence of
any of the above-referenced matters.
8.3.2 Lessor hereby agrees to defend, indemnify and hold
harmless any and all Lessee Indemnified Parties from and against any and all
Environmental Liabilities other than Environmental Liabilities which were
caused by the grossly negligent acts or grossly negligent failures to act of
Lessee. As a condition precedent to the effectiveness of this Lease, the
Lessor shall deliver to the Lessee Phase I environmental studies regarding
the Leased Property performed by an engineering firm acceptable to Lessee and
stating that the Leased Property is in compliance with all applicable
Environmental Laws to the satisfaction of Lessee.
8.3.3 Lessee hereby agrees to defend, indemnify and hold
harmless any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities caused by the acts or grossly negligent failures to
act of Lessee.
8.3.4 If any Proceeding is brought against any Indemnified Party
in respect of an Environmental Liability with respect to which such
Indemnified Party may claim indemnification under either Section 8.3.2 or
8.3.3, the Indemnifying Party, upon request, shall at its sole expense resist
and defend such Proceeding, or cause the same to be resisted and defended by
counsel designated by the Indemnified Party and approved by the Indemnifying
Party, which approval shall not be unreasonably withheld; provided, however,
that such approval shall not be required in the case of defense by counsel
designated by any insurance company undertaking such defense pursuant to any
applicable policy of insurance. Each Indemnified Party shall have the right
to employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel will be at the
sole expense of such Indemnified Party unless such counsel has been approved
by the Indemnifying Party, which approval shall not be unreasonably withheld.
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding made without its consent, which shall not be unreasonably
withheld, but if settled with the consent of the Indemnifying Party, or if
settled without its consent if its consent shall be unreasonably withheld, or
if there be a final, nonappealable judgment for an adversary party in any
such Proceeding, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Parties from and against any liabilities incurred by such
Indemnified Parties by reason of such settlement or judgment.
8.3.5 At any time any Indemnified Party has reason to believe
circumstances exist which could reasonably result in an Environmental
Liability, upon reasonable prior written notice to Lessee stating such
Indemnified Party's basis for such belief, an Indemnified Party shall be
given immediate access to the Leased Property (including, but not limited to,
the right to enter upon, investigate, drill ▇▇▇▇▇, take soil borings,
excavate, monitor, test, cap and use available land for the testing of
remedial technologies), Lessee's employees, and to all relevant documents and
records
22
regarding the matter as to which a responsibility, liability or obligation is
asserted or which is the subject of any Proceeding; provided that such access
may be conditioned or restricted as may be reasonably necessary to ensure
compliance with law and the safety of personnel and facilities or to protect
confidential or privileged information. All Indemnified Parties requesting
such immediate access and cooperation shall endeavor to coordinate such
efforts to result in as minimal interruption of the operation of the Leased
Property as practicable.
8.3.6 The indemnification rights and obligations provided for in
this Section 8 shall be in addition to any indemnification rights and
obligations provided for elsewhere in this Lease.
8.3.7 The indemnification rights and obligations provided for in
this Section 8 shall survive the termination of this Agreement.
For purposes of this Section 8.3, all amounts for which any Indemnified
Party seeks indemnification shall be computed net of (a) any actual income
tax benefit resulting therefrom to such Indemnified Party, (b) any insurance
proceeds received (net of tax effects) with respect thereto, and any amounts
recovered (net of tax effects) from any third parties based on claims the
Indemnified Party has against such third parties which reduce the damages
that would otherwise be sustained; provided that in all cases, the timing of
the receipt or realization of insurance proceeds or income tax benefits or
recoveries from third parties shall be taken into account in determining the
amount of reduction of damages. Each Indemnified Party agrees to use its
reasonable efforts to pursue, or assign to Lessee or Lessor, as the case may
be, any claims or rights it may have against any third party which would
materially reduce the amount of damages otherwise incurred by such
Indemnified Party.
Notwithstanding anything to the contrary contained in this Agreement, if
Lessor shall become entitled to the possession of the Leased Property by
virtue of the termination of the Lease or repossession of the Leased
Property, then Lessor may assign its indemnification rights under Section 8.3
of this Agreement (but not any other rights hereunder) to any Person to whom
the Lessor subsequently transfers the Leased Property, subject to the
following conditions and limitations, each of which shall be deemed to be
incorporated into the terms of such assignment, whether or not specifically
referred to therein:
(1) The indemnification rights referred to in this Section may be
assigned only if a known Environmental Liability then exists or if a Proceeding
is then pending or, to the knowledge of Lessee or Lessor, then threatened with
respect to the Leased Property;
(2) Such indemnification rights shall be limited to Environmental
Liabilities relating to or specifically affecting the Leased Property; and
(3) Any assignment of such indemnification rights shall be limited to
the immediate transferee of Lessor, and shall not extend to any such
transferee's successors or assigns.
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SECTION 9.
9.1 MAINTENANCE AND REPAIR.
9.1.1 Lessee will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto that are under Lessee's
control, including windows and plate glass, parking lots, mechanical,
electrical and plumbing systems and equipment (including conduit and
ductware), and non-load bearing interior walls, in good order and repair,
except for ordinary wear and tear, and, except as otherwise provided in
Section 9.1.2, Section 14, Section 15 or Section 40, with reasonable
promptness, make all necessary and appropriate repairs, replacements, and
improvements thereto of every kind and nature, whether interior or exterior,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term of this Lease
(concealed or otherwise), or required by any governmental agency having
jurisdiction over the Leased Property, except as to the structural elements
of the Leased Improvements. Lessee, however, shall be permitted to prosecute
claims against Lessor's Predecessor(s) in title for breach of any
representation or warranty or for any latent defects in the Leased Property
to be maintained by Lessee unless Lessor is already diligently pursuing such
a claim. All repairs shall, to the extent reasonably achievable, be at least
equivalent in quality to the original work. Lessee will not take or omit to
take any action, the taking or omission of which might materially impair the
value or the usefulness of the Leased Property or any part thereof for its
Primary Intended Use.
9.1.2 In addition, Lessor shall be required to bear the cost of
maintaining any underground utilities and the structural elements of the
Leased Improvements, including the roof of the Facility unless caused by the
negligent acts or willful misconduct of Lessee.
9.1.3 Nothing contained in this Lease and no action or inaction
by Lessor shall be construed as (1) constituting the request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman
or vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or
any part thereof, or (2) giving Lessee any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Lessor in respect thereof or to make any
agreement that may create, or in any way be the basis for any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Property, or any portion thereof.
9.1.4 Lessee will, upon the expiration or prior termination of
the Term, vacate and surrender the Leased Property to Lessor in the
substantially same condition in which the Leased Property was originally
received from Lessor, except as repaired, rebuilt, restored, altered or added
to as permitted or required by the provisions of this Lease and except for
ordinary wear and tear (subject to the obligation of Lessee under Section
9.1.1 hereof to maintain the Leased Property in good order and repair, as
would a prudent owner, during the entire Term of the Lease), or damage
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by casualty or Condemnation (subject to the obligations of Lessee to restore
or repair as set forth in the Lease.)
9.2 ENCROACHMENTS, RESTRICTIONS, ETC. If any of the Leased
Improvements, at any time, materially encroach upon any property, street or
right-of-way adjacent to the Leased Property, or violate the agreements or
conditions contained in any lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or impair the rights of
others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor or at the behest of any
person affected by any such encroachment, violation or impairment, provided
that Lessee was not responsible for such encroachment violations or
impairments then Lessor shall, at its expense, subject to its right to
contest the existence of any encroachment, violation or impairment and in
such case, in the event of an adverse final determination, either (a) obtain
valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, or impairment,
whether the same shall affect Lessor or Lessee, or (b) make such changes in
the Leased Improvements, and take such other actions as Lessee in the good
faith exercise of its judgment deems reasonably practicable to remove such
encroachment, and to end such violation or impairment, including, if
necessary, the alteration, of any of the Leased Improvements, and in any
event take all such actions as may be necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended
Use substantially in the manner and to the extent the Leased Improvements
were operated prior to the assertion of such violation, impairment or
encroachment. Any such alteration shall be made in conformity with the
applicable requirements of Section 10. Lessee's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance
held by Lessor. Should Lessee be responsible for said encroachment violation
or impairment then the requirements of (a) and (b) as specified above shall
apply to Lessee, and not Lessor.
SECTION 10.
10.1 ALTERATIONS. Using funds in the Capital Expenditure Reserve Account
or such other funds provided by Lessor pursuant to Section 40 hereof, Lessee
shall have the right to make additions, modifications or improvements to the
Leased Property from time to time as Lessee, in its discretion, may deem to
be desirable for its permitted uses and purposes, provided that such action
will not significantly alter the character or purposes or significantly
detract from the value or operating efficiency thereof and will not
significantly impair the revenue-producing capability of the Leased Property
or adversely affect the ability of the Lessee to comply with the provisions
of this Lease. Lessee agrees not to make any material alterations to the
Leased Property without the prior written consent of the Lessor, which
consent shall not be unreasonably withheld or delayed.
10.2 SALVAGE. All materials which are scrapped or removed in connection
with the making of repairs required by Section 9 or 10 shall be or become the
property of Lessor.
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10.3 JOINT USE AGREEMENTS. If Lessee constructs additional improvements
that are connected to the Leased Property or share maintenance facilities, HVAC,
electrical, plumbing or other systems, utilities, parking or other amenities,
the parties shall enter into a mutually agreeable cross-easement or joint use
agreement to make available necessary services and facilities in connection with
such additional improvements, to protect each of their respective interests in
the properties affected, and to provide for separate ownership, use, and/or
financing of such improvements.
SECTION 11.
11.1 LIENS. Subject to the provision of Section 12 relating to permitted
contests, Lessee will not directly or indirectly create or allow to remain and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, included as exceptions in the title policy
insuring Lessor's interest in the Leased Property, restrictions, liens and other
encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for
those taxes upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Section 24 hereof, (f) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet payable or are payable without the addition of any fine or penalty, or
(2) such liens are in the process of being contested as permitted by Section 12,
(g) liens of mechanics, laborers, materialmen, suppliers or vendors for sums
either disputed or not yet due provided that (1) the payment of such sums shall
not be postponed under any related contract for more than 60 days after the
completion of the action giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor, or (2) any such liens are
in the process of being contested as permitted by Section 12 hereof, (h) any
liens which are the responsibility of Lessor pursuant to the provisions of
Section 35 of this Lease and (I) any liens created or allowed, directly or
indirectly, by the actions or inactions of Lessor.
SECTION 12.
12.1 PERMITTED CONTESTS. Lessee shall have the right to contest the amount
or validity of any Imposition to be paid by Lessee or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, charge or
claim ("Claims") not otherwise permitted by Section 11, by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Lessee's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Section provided), on condition, however, that such legal
proceedings shall not operate to relieve Lessee from its obligations hereunder
and shall not cause the sale or risk the loss of the Leased Property, or any
part thereof, or cause Lessor or Lessee to be in default under any mortgage,
deed of trust or security deed encumbering the Leased Property or any interest
therein. Lessor agrees to join in any such proceedings if the same be required
to legally prosecute such contest of the validity of such Claims;
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provided, however, that Lessor shall not thereby be subjected to any
liability for the payment of any costs or expenses in connection with any
proceedings brought by Lessee; and Lessee covenants to indemnify and hold
harmless Lessor from any such costs or expenses. Lessee shall be entitled to
any refund of any Claims and such charges and penalties or interest thereon
which have been paid by Lessee or paid by Lessor and for which Lessor has
been fully reimbursed. In the event that Lessee fails to pay any Claims when
due or to provide the security therefor as provided in this paragraph and to
diligently prosecute any contest of the same, Lessor may, upon ten days
advance Notice to Lessee, pay such charges together with any interest and
penalties and the same shall be repayable by Lessee to Lessor as Additional
Charges at the next Payment Date provided for in this Lease. Provided,
however, that should Lessor reasonably determine that the giving of such
Notice would risk loss to the Leased Property or cause damage to Lessor, then
Lessor shall give such Notice as is practical under the circumstances.
Lessor reserves the right to contest any of the Claims at its expense not
pursued by Lessee. Lessor and Lessee agree to cooperate in coordinating the
contest of any claims.
SECTION 13.
13.1 INSURANCE COVERAGE. Lessee shall provide and maintain insurance
sufficient to furnish to Lessor and Lessee reasonable and adequate protection in
the management and operation of the Leased Property. Such insurance shall
provide coverage for fire and extended coverage, worker's compensation, general
liability and business interruption (for such length of time as would be
required with the exercise of due diligence and dispatch to rebuild, repair or
replace such part of the Leased Property as has been destroyed or damaged), all
as more particularly set forth on the attached EXHIBIT F. All insurance shall
be in the name of Lessor and Lessee as the insureds and shall contain riders and
endorsements adequately protecting the interests of Lessee and Lessor as they
may appear including, without limitation, provisions for at least twenty (20)
days' notice to Lessee and Lessor of cancellation or of any material change
therein. Prior to the Commencement Date and the commencement of each Fiscal
Year thereafter, Lessee shall furnish Lessor with certificates evidencing the
insurance coverages required pursuant to EXHIBIT F and with evidence of the
payment of premiums therefor.
13.2 WAIVER OF SUBROGATION - LESSOR ASSUMES RISK OF ADEQUACY. Lessee shall
have all policies of insurance provide that the insurance company will have no
right of subrogation against either party hereto, their agents or employees.
Other than insurance coverages required to be provided by Lessee pursuant to
this Lease, Lessor assumes all risks in connection with the adequacy of any
insurance or self-insurance program, and subject to the provisions of SECTION 23
hereof, waives any claim against Lessee for any liability, costs or expenses
arising out of any uninsured claim, in part or in full, of any nature
whatsoever.
SECTION 14.
14.1 INSURANCE PROCEEDS. Subject to the provisions of Section 14.6, all
proceeds payable by reason of any loss or damage to the Leased Property, or any
portion thereof, and insured under
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any policy of insurance required by Section 13 of this Lease shall be paid to
Lessor and held in trust by Lessor in an interest-bearing account, shall be
made available, if applicable, for reconstruction or repair, as the case may
be, of any damage to or destruction of the Leased Property, or any portion
thereof, and, if applicable, shall be paid out by Lessor from time to time
for the reasonable costs of such reconstruction or repair upon satisfaction
of the reasonable terms and conditions specified by Lessor. Any excess
proceeds of insurance remaining after the completion of the restoration or
reconstruction of the Leased Property shall be paid to Lessee. If neither
Lessor nor Lessee is required or elects to repair and restore, and the Lease
is terminated without purchase by Lessee as described in Sections 14.2, 14.3,
14.5 and 14.7 hereof, all such insurance proceeds shall be retained by
Lessor. If this Lease terminates in accordance with this Section 14.1,
Lessor shall have no obligation to pay the Lease Cancellation Fee so long as
the Lessee receives payment of the full amount of outstanding Negative Base
Rent out of the insurance proceeds. All salvage resulting from any risk
covered by insurance shall belong to Lessor.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
Except as provided in Section 14.6, if during the Term the Leased
Property is totally or partially destroyed by a risk covered by the insurance
described in Section 13 and the Facility thereby is rendered Unsuitable for its
Primary Intended Use, Lessee shall, at Lessee's option, either (a) restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of the Lease,
(b) offer to acquire the Leased Property from Lessor for a purchase price equal
to the Rejectable Offer Price of the Leased Property determined without regard
to such damage or destruction, or give Lessor written notice of a termination of
the Lease. If Lessee restores the Facility, the insurance proceeds shall be
paid out by Lessor from time to time for the reasonable costs of such
restoration and any excess proceeds remaining after such restoration shall be
paid to Lessee. If Lessee acquires the Leased Property, Lessee shall receive
the insurance proceeds. If Lessor does not accept Lessee's offer so to purchase
the Leased Property within 90 days, Lessee shall withdraw its offer to purchase
the Leased Property and, if so withdrawn, Lessee may terminate the Lease with
respect to the Leased Property without further liability hereunder and Lessor
shall be entitled to retain all insurance proceeds. Likewise, if Lessee gives
Lessor written notice of a termination, as set forth in clause above, then
Lessee may terminate the Lease with respect to the Leased Property without
further liability hereunder and Lessor shall be entitled to retain all insurance
proceeds. If this Lease terminates pursuant to this Section 14.2, the Lessee
shall pay all Rent due through the date of such termination.
14.3 Except as provided in Section 14.6, if during the Term the Leased
Property is partially destroyed by a risk covered by the insurance described in
Section 13, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall, using such insurance proceeds, restore the Facility
to substantially the same condition as existed immediately before the damage or
destruction and otherwise in accordance with the terms of the Lease. Such
damage or destruction shall not terminate this Lease; provided, however, that if
Lessee cannot within a reasonable time obtain all necessary government
approvals, including building permits, licenses and conditional use permits,
after diligent efforts to do so, to perform all required repair and restoration
work and to
28
operate the Facility for its Primary Intended Use in substantially the same
manner as that existing immediately prior to such damage or destruction and
otherwise in accordance with the terms of the Lease, Lessee may (a) give
lessor written Notice of termination of the Lease or (b) offer to purchase
the Leased Property for a purchase price equal to the Rejectable Offer Price
of the Leased Property determined without regard to such damage or
destruction. If Lessee makes such offer and Lessor does not accept the same
within ninety (90) days, Lessee shall withdraw such offer to purchase the
Leased Property and, if so withdrawn, Lessee may terminate the Lease with
respect to the Leased Property without further liability hereunder and Lessor
shall be entitled to retain all insurance proceeds. If Lessee restores the
Facility, the insurance proceeds shall be paid out by Lessor from time to
time for the reasonable costs of such restoration, and any excess proceeds
remaining after such restoration shall be paid to Lessee. If this Lease
terminates pursuant to this Section 14.3, the Lessee shall pay all Rent due
through the date of such termination.
14.4 If Lessor accepts Lessee's offer to purchase the Leased Property under
this Section, this Lease shall terminate as to the Leased Property upon payment
of the purchase price, and Lessor shall remit to Lessee all insurance proceeds
pertaining to the Leased Property being held in trust by Lessor.
14.5 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE
Except as provided in Section 14.6, if during the Term the Facility is
totally or materially destroyed by a risk not covered by the insurance described
in Section 13, whether or not such damage or destruction renders the Facility
Unsuitable for its Primary Intended Use, Lessee at its option shall either (a)
using the funds in the Capital Expenditure Reserve Account or funds provided by
Lessor pursuant to Section 40 hereof without any obligation on the part of
Lessor to provide funds in excess of those in the Capital Expenditure Reserve
Account, restore the Facility to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction
shall not terminate this Lease, or (b) offer to purchase the Leased Property for
a purchase price equal to the Rejectable Offer Price of the Leased Property
without regard to such damage or destruction; provided, however, the term and
conditions contained in Section 43 hereof shall supersede this Section 14.5(b)
if applicable, or give Lessor written notice of a termination of the Lease. If
such damage or destruction is not material, Lessee shall restore the Facility to
substantially the same condition as existed immediately before the damage or
destruction and otherwise in accordance with the terms of the Lease using the
Capital Expenditure Reserve Account or funds provided by Lessor pursuant to
Section 40 hereof without any obligation on the part of Lessor to provide funds
in excess of those in the Capital Expenditure Reserve Account. If Lessor does
not accept Lessee's offer so to purchase the Leased Property within 90 days,
Lessee may withdraw its offer to purchase the Leased Property and, if so
withdrawn, Lessee may terminate the Lease with respect to the Leased Property
without further liability hereunder. Likewise, if Lessee gives Lessor written
notice of a termination, as set forth in clause above, then Lessee may terminate
the Lease with respect to the Leased Property without further liability
hereunder and Lessor shall be entitled to retain all insurance proceeds. If
this Lease terminates pursuant to this Section 14.5, the Lessee shall pay all
Rent due through the date of such termination.
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14.6 LESSEE'S PROPERTY. All insurance proceeds payable by reason of any
loss of or damage to any of Lessee's Personal Property shall be paid to Lessee;
provided, however, no such payments shall diminish or reduce the insurance
payments otherwise payable to or for the benefit of Lessor hereunder.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
14.2, 14.3 or 14.5 appearing to the contrary, if damage to or destruction of
the Facility rendering the Facility Unsuitable for its Primary Intended Use
occurs during the last 24 months of the Term, then Lessee shall have the right
to terminate this Lease by giving written notice to Lessor within 30 days after
the date of damage or destruction, whereupon all accrued Rent shall be paid
immediately, and this Lease shall automatically terminate five days after the
date of such notice. In such event, Lessor shall be entitled to retain all
insurance proceeds paid pursuant to such damage excluding business interruption
insurance.
SECTION 15.
15.1 DEFINITIONS.
15.1.1 "Condemnation" means a Taking resulting from (1) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.
15.1.2 "Date of Taking" means the date the Condemnor has the right
to possession of the property being condemned.
15.1.3 "Award" means all compensation, sums or anything of value
awarded, paid or received on a total, partial or temporary Condemnation.
15.1.4 "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Condemnation of all or any part of the Leased Property or any interest in this
Lease, the rights and obligations of Lessor and Lessee shall be determined by
this Section 15.
15.3 TOTAL TAKING. If title to the fee of the whole of the Leased Property
is condemned by any Condemnor, subject to the provisions of Section 15.7, this
Lease shall cease and terminate as of the Date of Taking by the Condemner. If
title to the fee of less than the whole of the Leased Property is so taken or
condemned, which nevertheless renders the Leased Property Unsuitable or
Uneconomic for its Primary Intended Use, Lessee and Lessor shall each have the
option, by Notice to the other, at any time prior to the Date of Taking, to
terminate this Lease as of the Date of Taking. If this Lease terminates in
accordance with this Section 15.3, Lessor shall have no obligation to pay
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the Lease Cancellation Fee so long as the Lessee receives payment of the full
amount of outstanding Negative Base Rent out of the Award. Upon such date, if
such Notice has been given, this Lease shall thereupon cease and terminate.
All Base Rent, Percentage Rent and Additional Charges paid or payable by
Lessee hereunder shall be apportioned as of the Date of Taking, and Lessee
shall promptly pay Lessor such amounts. In the event of any such
termination, the provisions of Section 15.7 shall apply.
15.4 ALLOCATION OF AWARD. The total Award made with respect to the Leased
Property or for loss of rent, or for Lessor's loss of business beyond the Term,
shall be solely the property of and payable to Lessor. Any Award made for loss
of business during the remaining Term, if any, for the taking of Lessee's
Personal Property, or for removal and relocation expenses of Lessee in any such
proceedings shall be the sole property of and payable to Lessee. In any
Condemnation proceedings Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective expense; provided, however, neither party
shall initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to the other party.
15.5 PARTIAL TAKING. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is still suitable for its Primary
Intended Use, and not Uneconomic for its Primary Intended Use, or if Lessee or
Lessor is entitled but elects not to terminate this Lease as provided in Section
15.3, Lessee at its cost shall with all reasonable dispatch restore the untaken
portion of any Leased Improvements so that such Leased Improvements constitute a
complete architectural unit of the same general character and condition (as
nearly as may be possible under the circumstances) as the Leased Improvements
existing immediately prior to the Condemnation. Lessor shall contribute to the
cost of restoration that part of its Award specifically allocated to such
restoration, if any, together with severance and other damages awarded for the
taken Leased Improvements; provided, however, that the amount of such
contribution shall not exceed such Award.
15.6 TEMPORARY TAKING. If the whole or any part of the Leased Property or
of Lessee's interest under this Lease is condemned by any Condemner for its
temporary use or occupancy and is rendered Unsuitable for its Primary Intended
Use , and Lessee shall either (a) using the Capital Expenditure Reserve
Account or funds provided by Lessor pursuant to Section 40 hereof without any
obligation on the part of Lessor to provide funds in excess of those in the
Capital Expenditure Reserve Account, restore the Facility to substantially the
same condition it was in immediately before such Taking and such Taking shall
not terminate this Lease, or (b) offer to purchase the Leased Property for a
purchase price equal to the Rejectable Offer Price of the Leased Property
without regard to such Taking, or give Lessor written notice of termination of
the Lease. If such Taking does not render the Leased Property Unsuitable for
its Primary Intended Use, Lessee shall restore the Facility to substantially the
same condition as existed immediately preceding the Taking and otherwise in
accordance with the terms of this Lease using the Capital Expenditure Reserve
Account or funds provided by Lessor pursuant to Section 40 hereof. If
restoration is required hereunder, Lessor shall contribute to the cost of such
restoration that portion of its entire Award that is specifically allocated to
such restoration in the judgment or order of the court, if any, and Lessee
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shall fund the balance of such costs (out of the Capital Expenditure Reserve
Account or other funds provided by Lessor pursuant to Section 40 hereof)
without any obligation on the part of Lessor to provide funds in excess of
those in the Capital Expenditure Reserve Account.
15.7 LESSEE'S OFFER. In the event of the termination of this Lease as
provided in Section 15.3, Lessee may offer to acquire the Leased Property from
Lessor for a purchase price equal to the Rejectable Offer Price of the Leased
Property without regard to such Taking and, if accepted, Lessee shall receive
the entire Award. If Lessor does not accept Lessee's offer to purchase the
Leased Property within ninety (90) days, Lessee shall withdraw its offer to
purchase the Leased Property and, if so withdrawn, Lessee may terminate the
Lease with respect to the Leased Property without further liability hereunder,
except for payment of Rent as provided in the penultimate sentence of Section
15.3 or for matters which by their express terms survive termination of this
Lease and Lessor shall be entitled to retain the Award except as provided in
Section 15.4 of this Lease.
SECTION 16.
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") occurs:
16.1.1 if Lessee fails to make payment of the Base Rent when the
same becomes due and payable for a period of ten days after receipt by the
Lessee of Notice from the Lessor thereof;
16.1.2 if Lessee fails to make payment of quarterly Percentage
Rent when the same becomes due and payable and such condition continues for a
period of thirty (30) days after the end of the applicable quarter;
16.1.3 except as set forth in Sections 16.1.1 or 16.1.2, if either
party fails to observe or perform any term, covenant or condition of this Lease
and such failure is not cured by such party within a period of 30 days after
receipt by such party of Notice thereof from the other party, unless such
failure cannot with due diligence be cured within a period of 30 days, in which
case it shall not be deemed an Event of Default if such party proceeds promptly
and with due diligence to cure the failure and diligently completes the curing
thereof provided, however, in no event shall such cure period extend beyond 90
days after such Notice; or
16.1.4 if either party shall file a petition in bankruptcy or
reorganization for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
shall make an assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due, or if a petition or
answer proposing the adjudication of either party as a bankrupt or its
reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and such party shall be
adjudicated a bankrupt and such adjudication shall not be vacated or set aside
or stayed within 60 days after the entry of an order in respect thereof, or if a
receiver of such party or of the whole or substantially all of the assets of
such party shall be appointed in any proceeding brought
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by either party or if any such receiver, trustee or liquidator shall be
appointed in any proceeding brought against such party and shall not be
vacated or set aside or stayed within 60 days after such appointment; or
16.1.5 if either party is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, in any manner, permits
the sale or divestiture of substantially all of its assets; or
16.1.6 if the estate or interest of either party in the Leased
Property or any part thereof is voluntarily or involuntarily transferred,
assigned, conveyed, levied upon or attached in any proceeding (unless such party
is contesting such lien or attachment in good faith in accordance with Section
12 hereof); or
16.1.7 if, except as a result of damage, destruction or a partial,
total or temporary Condemnation, Lessee voluntarily ceases operations on the
Leased Property for a period in excess of 30 days; or
16.1.8 if, an event of default has been declared by the franchisor
under any Franchise Agreement with respect to the Facility on the Leased
Premises as a result of any action or failure to act by Lessee or any Person
with whom Lessee contracts for management services at the Facility and such
event of default does not arise as a result of a default by Lessor under this
Lease.
then, and in any such event, the other party may exercise one or more
remedies available to it herein or at law or in equity, including but not
limited to its right to terminate this Lease by giving the other party not less
than ten days' Notice of such termination.
If litigation is commenced with respect to any alleged default under
this Lease, the prevailing party in such litigation shall receive, in addition
to its damages incurred, such sum as the court shall determine as its reasonable
attorneys' fees, and all costs and expenses incurred in connection therewith.
16.2 SURRENDER. If an Event of Default by the Lessee occurs and is
continuing, whether or not this Lease has been terminated pursuant to Section
16.1, Lessee shall, if requested by Lessor so to do, immediately surrender to
Lessor the Leased Property including, without limitation, any and all books,
records, files, licenses, permits and keys relating thereto, and quit the same
and Lessor may enter upon and repossess the Leased Property by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Lessee and all other
persons and any and all personal property from the Leased Property, subject to
rights of any hotel guests and to any requirement of law.
16.3 DAMAGES. Lessee shall forthwith pay to Lessor, as and for liquidated
and agreed current damages for Lessee's default or early termination of the
Lease, the Termination Fee defined in the Master Agreement, any and all accrued
and unpaid Rent through the date of termination of
33
this Lease and such other sums due to Lessor pursuant to Lease as a result of
such termination expressly required by this Lease unless otherwise superseded
by the Master Agreement.
SECTION 17. INTENTIONALLY DELETED.
SECTION 18.
LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease
including, without limitation, Lessee's failure to comply with the terms of any
Franchise Agreement, and fails to cure the same within the relevant time periods
provided in Section 16.1, Lessor, without waiving or releasing any obligation of
Lessee, and without waiving or releasing any obligation or default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of Lessee, and may, to the
extent permitted by law, enter upon the Leased Property for such purpose and
take all such action as, in Lessor's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Lessee. All sums so
paid by Lessor and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, in each case to the extent permitted by
law) so incurred, together with a late charge thereon (to the extent permitted
by law) at the Overdue Rate from the date on which such sums or expenses are
paid or incurred by Lessor, shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease.
SECTION 19.
PROVISIONS RELATING TO PURCHASE OF THE LEASED PROPERTY. If Lessee
purchases the Leased Property from Lessor pursuant to the terms and conditions
of this Lease, Lessor and Lessee shall have first entered into a purchase and
sale agreement mutually agreed upon by Lessor and Lessee.
SECTION 20.
20.1 PERSONAL PROPERTY LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, the average of the adjusted tax bases of the items of
personal property that are leased to the Lessee under this Lease at the
beginning and at the end of any Fiscal Year shall not exceed 15% of the average
of the aggregate adjusted tax bases of the Leased Property at the beginning and
at the end of such Fiscal Year. This Section 20.1 is intended to ensure that
the Rent qualifies as "rents from real property", within the meaning of Section
856(d) of the Code, or any similar or successor provisions thereto, and shall be
interpreted in a manner consistent with such intent
20.2 SUBLEASE RENT LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublet the Leased Property on any
basis such that the rental to be
34
paid by the sublessee thereunder would be based, in whole or in part, on
either (a) the income or profits derived by the business activities of the
sublessee, or (b) any other formula (if as a result of such a sublease based
on (a) and/or (b) above, any portion of the Rent would fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto).
20.3 SUBLEASE TENANT LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublease the Leased Property to any
Person in which Lessor, owns, directly or indirectly, a 10% or more interest,
within the meaning of Section 856(d)(2)(B) of the Code, or any similar or
successor provisions thereto.
20.4 LESSEE OWNERSHIP LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, neither Lessee nor an Affiliate of the Lessee shall
acquire, directly or indirectly, a 10% or more interest in Lessor, within the
meaning of Section 856(d)(2)(B) of the Code, or any similar or successor
provision thereto.
20.5 LESSEE OFFICER AND EMPLOYEE LIMITATION. Anything contained in this
Lease to the contrary notwithstanding, none of the officers or employees of the
Lessee (or any Person who furnishes or renders services to the tenants of the
Leased Property, or manages or operates the Leased Property) shall be officers
or employees of Lessor, (or any Person who serves as an advisor of Lessor). In
addition, if a Person serves as both (a) a director of the Lessee (or any Person
who furnishes or renders services to the tenants of the Leased Property, or
manages or operates the Leased Property), and (b) a director and officer (or
employee) of Lessor, (or any Person who serves as an advisor of Lessor) that
Person shall not receive any compensation for serving as a director of the
Lessee (or any Person who furnishes or renders services to the tenants of the
Leased Property, or manages or operates the Leased Property).
20.6 PAYMENTS TO AFFILIATES. Notwithstanding anything contained in this
Lease to the contrary, the Lessee shall make no payments to Affiliates as Gross
Operating Expenses unless set forth in the Annual Budget or otherwise agreed to
by Lessor.
SECTION 21.
21.1 HOLDING OVER. If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such
possession shall be as a tenant at sufferance during which time Lessee shall pay
as rental each month two times the aggregate of (a) one-twelfth of the aggregate
Base Rent and Percentage Rent payable with respect to the last Fiscal Year of
the Term, (b) all Additional Charges accruing during the applicable month, and
all other sums, if any, payable by Lessee under this Lease with respect to the
Leased Property. During such period, Lessee shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by law to
tenancies at sufferance, to continue its occupancy and use of the Leased
Property. Nothing contained
35
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.
SECTION 22.
22.1. RISK OF LOSS. During the Term, except as otherwise specified
herein, the risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than those caused by
Lessee and those claiming from, through or under Lessee) is assumed by Lessor,
and, in the absence of gross negligence, willful misconduct or breach of this
Lease by Lessee, Lessee shall in no event be answerable or accountable therefor;
provided, however, nothing contained in this Section 22.1 shall entitle the
Lessee to any abatement of Rent unless expressly provided for in this Lease.
SECTION 23.
23.1 LESSOR INDEMNIFICATION. Notwithstanding the existence of any
insurance, and without regard to the policy limits of any such insurance or
self-insurance, but subject to Section 8, Lessor will protect, indemnify, hold
harmless and defend Lessee from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against Lessee Indemnified Parties by reason of: (a)
any Impositions that are the obligations of Lessor pursuant to the applicable
provisions of this Lease, (b) any failure on the part of Lessor to perform or
comply with any of the terms of this Lease, any liability, action, claim,
damage, cost or expense arising prior to the Commencement Date of this Lease,
and (d) the gross negligence, willful misconduct or fraud by Lessor in
connection with this Lease.
23.2 LESSEE INDEMNIFICATION. Lessee shall, indemnify, hold harmless and
defend Lessor Indemnified Parties from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses imposed upon or
incurred by or asserted against Lessor Indemnified Parties as a result of (a)
the gross negligence, willful misconduct or fraud by Lessee arising in
connection with this Lease, (b) any failure on the part of Lessee to perform or
comply with any of the terms of this Lease, any Impositions that are the
obligations of Lessee pursuant to the applicable provisions of this Lease, and
(d) any liability, action, claim, damage, cost or expense arising after to the
Commencement Date of this Lease.
23.3 NON-INDEMNIFIABLE CLAIMS. To the extent that neither Section 23.1 nor
Section 23.2 applies to any liability, action, claim, damage, cost or expense
arising out of the operation of the Leased Property, such liability, action,
claim, damage, cost or expense shall be paid as a Gross Operating Expense
deducted from Gross Revenues for purposes of calculating the Break-Even
Threshold.
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23.4 INDEMNIFICATION PROCEDURE. Any amounts that become payable by an
Indemnifying Party under this Section shall be paid within ten days after
liability therefor on the part of the Indemnifying Party is determined by
litigation or otherwise, and if not timely paid, shall bear a late charge (to
the extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. An Indemnifying Party, at its expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against the Indemnified Party. The Indemnified Party, at its
expense, shall be entitled to participate in any such claim, action, or
proceeding, and the Indemnifying Party may not compromise or otherwise dispose
of the same without the consent of the Indemnified Party, which may not be
unreasonably withheld.
23.5 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. Lessee's or Lessor's
liability for a breach of the provisions of this Section shall survive any
termination of this Lease.
SECTION 24.
24.1 SUBLETTING AND ASSIGNMENT BY LESSEE. Except as expressly set forth
herein, Lessee may not assign this Lease or sublet all or any part of the Leased
Property without the prior written consent of Lessor (and such consent can be
withheld on a reasonable or unreasonable basis). Notwithstanding the above, and
subject to the provisions of Section 20 and Section 24.2 so long as a Default
does not exist on the part of the Lessee and subject to any other express
conditions or limitations set forth herein, Lessee may, in its sole discretion
(a) assign this Lease or sublet all or any part of the Leased Property to an
Affiliate of Lessee or any person or entity with, or into whom, Lessee merges or
consolidates, or (b) sublet any retail or restaurant portion of the Leased
Improvements in the normal course of the Primary Intended Use; provided that any
subletting to any party other than an Affiliate of Lessee shall not individually
as to any one such subletting, or in the aggregate, materially diminish the
actual or potential Percentage Rent payable under this Lease. In the case of a
subletting, the sublessee shall comply with the provisions of Section 24.2, and
in the case of an assignment, the assignee shall assume in writing and agree to
keep and perform all of the terms of this Lease on the part of Lessee to be kept
and performed and shall be, and become, jointly and severally liable with Lessee
for the performance thereof. Notwithstanding the above, Lessee may assign the
Lease to an Affiliate without the consent of Lessor; provided that any such
assignee assumes in writing and agrees to keep and perform all of the terms of
the Lease on the part of Lessee to be kept and performed and shall be and become
jointly and severally liable with Lessee for the performance thereof. In case
of either an assignment or subletting made during the Term, Lessee shall remain
primarily liable, as principal rather than as surety, for the prompt payment of
the Rent and for the performance and observance of all of the covenants and
conditions to be performed by Lessee hereunder. An original counterpart of each
such sublease and assignment and assumption, duly executed by Lessee and such
sublessee or assignee, as the case may be, in form and substance satisfactory to
Lessor, shall be delivered promptly to Lessor. Additionally, so long as an
Event of Default does not exist on the part of the Lessee, the Lessee shall have
the right to assign this Lease to an unaffiliated third party transferee if such
transferee has a net worth in excess of one million dollars ($1,000,000);
provided, however, that (i) the Lessee must give Lessor forty five (45) days
written notice of such assignment; (ii) such unaffiliated third party transferee
shall assume all the
37
Lessee's obligations and rights under this Lease;(iii) the Lessee and/or the
unaffiliated third party transferee must pay any and all outstanding Rent
owed to Lessor; and (iv) such unaffiliated third party transferee must
acknowledge in writing that any and all references to Negative Base Rent
shall be deemed deleted herefrom.
24.2 ATTORNMENT. Lessee shall insert in each sublease permitted under
Section 24.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) if this Lease terminates before the expiration of such
sublease, the sublessee thereunder will, at Lessor's option, attorn to Lessor
and waive any right the sublessee may have to terminate the sublease or to
surrender possession thereunder as a result of the termination of this Lease,
and (c) if the sublessee receives a written Notice from Lessor or Lessor's
assignees, if any, stating that an uncured Event of Default exists under this
Lease, the sublessee shall thereafter be obligated to pay all rentals accruing
under said sublease directly to the party giving such Notice, or as such party
may direct. All rentals received from the sublessee by Lessor or Lessor's
assignees, if any, as the case may be, shall be credited against the amounts
owing by Lessee under this Lease.
24.3 SUBLETTING AND ASSIGNMENT BY LESSOR. Other than in accordance with
Section 1.2(B), Lessor shall not assign this Lease to any other person or entity
without the prior written approval of Lessee.
SECTION 25.
OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS: LESSOR'S ESTOPPEL
CERTIFICATES AND COVENANTS.
(a) At any time and from time to time upon not less than 20 days
Notice by Lessor, Lessee will furnish to Lessor an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, whether to the
knowledge of Lessee there is any existing default or Event of Default exists
thereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this Section
may be relied upon by Lessor, any lender and any prospective purchaser of the
Leased Property.
(b) Lessee will furnish the following to Lessor:
(1) with reasonable promptness, such information respecting the
financial condition and affairs of Lessee including audited financial statements
prepared by Coopers & ▇▇▇▇▇▇▇, L.L.C. or such other certified independent
accounting firm as may be approved by Lessor, as Lessor may reasonably request
from time to time, provided, however that in the absence of special and/or
nonrecurring circumstances Lessee shall only be required to furnish audited
financial information to Lessor no more than once per Fiscal Year; and
38
(2) the most recent Financials of Lessee within 25 days after
each quarter of any Fiscal Year (or, in the case of the final quarter in
any Fiscal Year, the most recent audited Financials of Lessee within 60
days); and
(3) on or about the 15th day of each month, a true, complete and
correct cash flow statement with respect to the Leased Property in the form
attached hereto as EXHIBIT K and incorporated herein by reference,
reflecting (a) a detailed accounting of Gross Revenues, Gross Room Revenues
(and other cash receipts of any kind whatsoever) and all Operating Expenses
(as defined in Section 48 hereof), and other cash payments and
disbursements (of any kind whatsoever), and (b) year-to-date summaries of
same, together with an Officer's Certificate stating that such cash flow
statement is true, complete and correct; and
(4) on or about the 15th day of each month, an Officer's
Certificate stating that all Operating Expenses (as defined in Section 48
hereof) with respect to the Leased Property which have accrued as of the
last day of the month preceding the delivery of the cash flow statement
referred to in (3) above have been fully paid or otherwise reserved or
provided for by Lessee; and
(5) within seventy-five (75) days after the end of each Fiscal
Year, with a report setting forth (a) the Net Operating Income (as defined
in Section 48 hereof) for such Fiscal Year, (b) the average occupancy rate
of the Leased Property during such Fiscal Year, and (c) the capital
repairs, replacements and improvements performed at the Leased Property
during such Fiscal Year and the cost of same; and
(6) on an annual basis, copies of all reports submitted to
governmental authorities and agencies (including, but not limited to,
reports relating to sales, use and occupancy taxes) and any franchisor.
At any time and from time to time upon not less than 20 days notice by
Lessee, Lessor will furnish to Lessee or to any person designated by Lessee an
estoppel certificate certifying that this Lease is unmodified and in full force
and effect (or that this Lease is in full force and effect as modified and
setting forth the modifications), the date to which Rent has been paid, whether
to the knowledge of Lessor there is any existing default or Event of Default on
Lessee's part hereunder, and such other information as may be reasonably
requested by Lessee.
Notwithstanding the foregoing, the costs of such audit shall be paid for as
a Gross Operating Expense and deducted from Gross Revenues except as otherwise
stated herein.
SECTION 26.
LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and its authorized
representatives as frequently as reasonably requested by Lessor to inspect the
Leased Property and Lessee's accounts
39
and records pertaining thereto and make copies thereof, during usual
business hours upon reasonable advance notice, subject only to any business
confidentiality requirements reasonably requested by Lessee.
SECTION 27.
NO WAIVER. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial
payment of Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term. To the extent permitted by
law, no waiver of any breach shall affect or alter this Lease, which shall
continue in full force and effect with respect to any other then existing or
subsequent breach.
SECTION 28.
REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right,
power and remedy and the exercise or beginning of the exercise by Lessor or
Lessee of any one or more of such rights, powers and remedies shall not
preclude the simultaneous or subsequent exercise by Lessor or Lessee of any
or all of such other rights, powers and remedies.
SECTION 29.
ACCEPTANCE OF SURRENDER. No surrender to Lessor of the Leased Property
or any part thereof, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Lessor and no act by Lessor or
any representative or agent of Lessor, other than such a written acceptance
by Lessor, shall constitute an acceptance of any such surrender.
SECTION 30.
NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person or
entity may acquire, own or hold, directly or indirectly: (a) this Lease or
the leasehold estate created hereby or any interest in this Lease or such
leasehold estate, and (b) the fee estate in the Leased Property.
SECTION 31.
CONVEYANCE BY LESSOR. If Lessor or any successor owner of the Leased
Property conveys the Leased Property in accordance with the terms hereof
other than as security for a debt, and the grantee or transferee of the
Leased Property expressly assumes all obligations of Lessor hereunder arising
or accruing from and after the date of such conveyance or transfer, Lessor or
such successor owner, as the case may be, shall thereupon be released from
all future liabilities and obligations of
40
Lessor under this Lease arising or accruing from and after the date of such
conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner;
provided, however, that in the event of such a conveyance by Lessor, Lessee
may offset against the Base Rent otherwise due hereunder an amount equal to
the annual increases in property taxes incurred by Lessee solely by reason of
said conveyance from Lessor to successor owner.
SECTION 32.
QUIET ENJOYMENT. So long as Lessee pays all Rent as the same becomes due
and complies with all of the terms of this Lease and performs its obligations
hereunder, in each case within the applicable grace periods, if any, Lessee
shall peaceably and quietly have, hold and enjoy the Leased Property for the
Term hereof, free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor, but subject to all liens and encumbrances
subject to which the Leased Property was conveyed to Lessor or hereafter
consented to by Lessee or provided for herein. Notwithstanding the
foregoing, Lessee shall have the right by separate and independent action to
pursue any claim it may have against Lessor as a result of a breach by Lessor
of the covenant of quiet enjoyment contained in this Section.
SECTION 33.
NOTICES. All notices, demands, requests, consents, approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to Lessor at its principal office,
as indicated in the signature page hereof, Attention: President, and
addressed to Lessee as indicated in the signature page hereof, or to such
other address or addresses as either party may hereafter designate.
Personally delivered Notice shall be effective upon receipt, and Notice given
by mail shall be complete at the time of deposit in the U.S. Mail system, but
any prescribed period of Notice and any right or duty to do any act or make
any response within any prescribed period or on a date certain after the
service of such Notice given by mail shall be extended five days.
SECTION 34.
APPRAISERS. If it becomes necessary to determine the Fair Market Value
or Fair Market Rental of the Leased Property for any purpose of this Lease,
the party required or permitted to give Notice of such required determination
shall include in the Notice the name of a person selected to act as appraiser
on its behalf. Within 10 days after Notice, Lessor (or Lessee, as the case
may be) shall by Notice to Lessee (or Lessor, as the case may be) appoint a
second person as appraiser on its behalf. The appraisers thus appointed, each
of whom must be a member of the American Institute of Real Estate Appraisers
(or any successor organization thereto) with at least five years experience
in the State appraising property similar to the Leased Property, shall,
within 45 days after the date of the Notice appointing the first appraiser,
proceed to appraise the Leased Property to determine the Fair Market Value or
Fair Market Rental thereof as of the relevant date (giving effect to the
impact,
41
if any, of inflation from the date of their decision to the relevant date);
provided, however, that if only one appraiser shall have been so appointed,
then the determination of such appraiser shall be final and binding upon the
parties. To the extent consistent with sound appraisal practice as then
existing at the time of any such appraisal, such appraisal shall be made on a
basis consistent with the basis on which the Leased Property was appraised
for purposes of determining its Fair Market Value at the time the Leased
Property was acquired by Lessor. If two appraisers are appointed and if the
difference between the amounts so determined does not exceed 5%, then the
Fair Market Value or Fair Market Rental shall be an amount equal to 50% of
the sum of the amounts so determined. If the difference between the amounts
so determined exceeds 5%, then such two appraisers shall have 20 days to
appoint a third appraiser. If no such appraiser shall have been appointed
within such 20 days or within 90 days of the original request for a
determination of Fair Market Value or Fair Market Rental, whichever is
earlier, either Lessor or Lessee may apply to any court having jurisdiction
to have such appointment made by such court. Any appraiser appointed by the
original appraisers or by such court shall be instructed to determine the
Fair Market Value or Fair Market Rental within 45 days after appointment of
such appraiser. Thereafter, the three (3) appraisals shall be reviewed and
the determination of the appraiser which differs most in the terms of dollar
amount from the determinations of the other two appraisers shall be excluded,
and 50% of the sum of the remaining two determinations shall be final and
binding upon Lessor and Lessee as the Fair Market Value or Fair Market Rental
of the Leased Property, as the case may be. This provision for determining
by appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be
final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal. In the event that the Lessor and the Lessee
agree upon a single appraiser, the Lessee and the Lessor shall each pay
one-half of the fees and expenses of such appraiser.
SECTION 35.
35.1 LESSOR MAY GRANT LIENS. Without the consent of Lessee, Lessor may,
subject to the terms and conditions set forth below in these Sections 16,
16.1 and 35.1, from time to time, directly or indirectly, create or otherwise
cause to exist any lien, encumbrance or title retention agreement
("Encumbrance") upon the Leased Property, or any portion thereof or interest
therein, whether to secure any borrowing or other means of financing or
refinancing. Any such Encumbrance shall (a) contain the right to prepay
(whether or not subject to a prepayment penalty); (b) provide that it is
subject to the rights of Lessee under this Lease; contain the Agreement by
the holder of the Encumbrance that it will (1) give Lessee the same notice,
if any, given to of Lessor of any default or acceleration of any obligation
underlying any such Encumbrance or any sale in foreclosure under such
Encumbrance, (2) permit Lessee to cure any such default on Lessor's behalf
within any applicable cure period, and Lessee shall be reimbursed by Lessor
for any and all costs incurred in effecting such cure, including without
limitation out-of-pocket costs incurred to effect any such cure (including
reasonable attorneys' fees) and (3) permit Lessee to appear by its
representative and to bid at any sale in foreclosure made with respect to any
such Encumbrance. Upon the request of Lessor,
42
Lessee shall subordinate this Lease to the lien of a new mortgage on the
Leased Property (including its rights with respect to the Base Management
Fee), on the condition that the proposed mortgagee executes a non-disturbance
and attornment agreement recognizing this Lease, and agreeing, for itself and
its successors and assigns, to comply with the provisions of this Section 35.
35.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Sections 16,
16.1 and 35.3, if Lessor breaches any covenant to be performed by it under
this Lease, Lessee, after Notice to and demand upon Lessor, without waiving
or releasing any obligation hereunder, and in addition to all other remedies
available to Lessee, may (but shall be under no obligation at any time
thereafter to) make such payment or perform such act for the account and at
the expense of Lessor. All sums so paid by Lessee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) so incurred,
together with interest thereon at the Overdue Rate from the date on which
such sums or expenses are paid or incurred by Lessee, shall be paid by Lessor
to Lessee on demand or, following entry of a final, nonappealable judgment
against Lessor for such sums, may be offset by Lessee against the Base Rent
payments next accruing or coming due. The rights of Lessee hereunder to cure
and to secure payment from Lessor in accordance with this Section 35.2 shall
survive the termination of this Lease with respect to the Leased Property.
35.3 BREACH BY LESSOR. If an Event of Default exists on the part
of Lessor, Lessee, without waiving or releasing any obligations hereunder,
and in addition to all other remedies available to Lessee at law or in
equity, may purchase the Leased Property from Lessor for a purchase price
equal to the then Fair Market Value. If Lessee elects to purchase the
Property it shall deliver a Notice thereof to Lessor specifying a settlement
date to occur not less than 90 days subsequent to the date of such Notice on
which it shall purchase the Leased Property, and the same shall be thereupon
conveyed in accordance with the provisions of Section 19.
SECTION 36.
36.1 MISCELLANEOUS. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application
thereof is invalid or unenforceable, the remainder of this Lease and any
other application of such term or provisions shall not be affected thereby.
If any late charges or any interest rate provided for in any provision of
this Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by a written instrument in
recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. The headings in this
Lease are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Lease shall be governed by and construed in
accordance with the laws of the State, but not including its conflicts of
laws rules.
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36.2 TRANSFER OF LICENSES. Upon the expiration or earlier termination of
the Term, Lessee shall use diligent and good faith efforts (i) to transfer to
Lessor or Lessor's nominee all licenses, equipment leases, operating permits
and other governmental authorizations and all service contracts, including
contracts with governmental or quasi-governmental entities, that may be
necessary for the operation of the Facilities (collectively, "Licenses"), or
(ii) if such transfer is prohibited by law or Lessor otherwise elects, to
cooperate with Lessor or Lessor's nominee in connection with the processing
by Lessor or Lessor's nominee of any applications for, all Licenses;
provided, in either case, that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Lessor or Lessor's
nominee. In addition, Lessee agrees to use diligent and good faith efforts
to, if applicable, assist Lessor in obtaining any consents necessary for the
assignment of the Franchise Agreement. Lessor and Lessee agree to execute
whatever instruments are necessary to effect the assumption by the Lessor or
Lessor's nominee of all such licenses, equipment leases, operating permits
and service contracts.
36.3 WAIVER OF PRESENTMENT, ETC.. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance and waives
all notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein, and except as expressly
provided in Section 16 herein.
SECTION 37.
MEMORANDUM OF LEASE. Lessor and Lessee shall promptly upon the request
of either enter into a short form memorandum of this Lease, in form suitable
for recording under the laws of the State. Lessee shall pay all costs and
expenses of recording such memorandum of this Lease.
SECTION 38.
LESSOR'S OBLIGATION TO PURCHASE ASSETS OF LESSEE. Effective on not less
than 90 days prior Notice given at any time within 180 days before the
expiration of the Term, but not later than 90 days prior to such expiration,
or upon such shorter Notice period as shall be appropriate if this Lease is
terminated prior to its expiration date, Lessor shall purchase and/or assume
all (but not less than all) of the assets and liabilities of Lessee, tangible
and intangible, relating to the Leased Property (other than this Lease), at
the expiration or termination of this Lease for an amount (payable in cash on
the expiration date of this Lease) equal to the fair market value thereof as
appraised in conformity with Section 34, except that the appraisers need not
be members of the American Institute of Real Estate Appraisers, but rather
shall be appraisers having at least ten years experience in valuing similar
assets. Notwithstanding any such purchase, Lessor shall obtain no rights to
any trade name or logo owned, licensed or used by the Lessee in connection
with the Leased Property or the Franchise Agreement unless a separate
agreement as to such use is executed by the applicable parties.
SECTION 39.
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COMPLIANCE WITH FRANCHISE AGREEMENT. On or before the Commencement Date,
the Lessor shall deliver to the Lessee any existing Franchise Agreement
applicable to the Leased Property along with an estoppel certificate from the
franchisor certifying, among other things, that no default exists under the
Franchise Agreement, the current physical condition of the Leased Property
satisfies the current quality standards of the franchisor and that all
franchise fees and other payments or obligations of the current franchisee
under the Franchise Agreement are current. It is the intent of the parties
hereto that Lessee shall comply in every respect with the provisions of the
Franchise Agreement so as to avoid any default thereunder during the term of
this Agreement. Lessor and Lessee agree to cooperate fully with each other in
the event it becomes necessary to obtain a Franchise Agreement extension or
modification or a new franchise for the property.
SECTION 40.
CAPITAL EXPENDITURES AND RESERVES
(A) Subject to the last sentence of this subparagraph (A), not later
than October 31 of each Fiscal Year, Lessee shall submit to Lessor for
Lessor's approval pursuant to the provisions of Section 3.3 hereof, a Capital
Expenditure Budget for the next Fiscal Year as part of Lessee's submission to
Lessor of the Annual Budget. The purpose for the Capital Expenditure Budget
shall be to keep the Leased Property competitive with any hotel or hotels
similar in nature and type to the Leased Property in the area and to keep the
Leased Property in compliance with the applicable provisions of the Franchise
Agreement. The Capital Expenditure Budget shall include without limitation,
the expenditures required, necessary and/or anticipated for the repair,
replacement or refurbishment of carpet, soft goods, FF&E and structural and
mechanical items, alterations to the Leased Property (but only in accordance
with Section 10.1 hereof), reconstruction in the event of damages or
destruction of the Leased Property (but only in accordance with Section 14
hereof), restoration pursuant to a Taking (but only in accordance with
Section 15 of this Lease), other required or desirable capital improvements
to the Leased Property or any of the components, other required or desired
working capital, and such other items characterized as capital expenditures
under the Uniform System (excluding, however, items required to be maintained
at Lessor's cost pursuant to Section 9.1.2 of this Lease). Lessor shall
maintain a separate interest bearing account referred to as the Capital
Expenditure Reserve Account from which all costs and expenses reflected in an
approved Capital Expenditure Budget should be paid; provided, however, Lessee
shall be an authorized signatory on such account. Lessor shall, on or before
the Commencement Date, fund into the Capital Expenditure Reserve Account (or
if required by its mortgagee, into a similar account designated by such
mortgagee) an amount equal to at least one hundred percent (100%) of the
deferred maintenance costs relating to the Leased Property and required by
Super 8 Motels, Inc., the engineering report prepared by ▇▇▇▇▇ & ▇▇▇▇▇▇,
and/or Lessor's mortgagee. Lessee will contract for and cause the
completion of any such deferred maintenance work within either six (6) months
or one (1) year after the date hereof, as designated on a case by case basis
by Lessor. Lessor shall also, within five (5) days of its receipt of the
monthly profit and loss statement described in Section 25 (b)(3) hereof, fund
into the Capital Expenditure Reserve Account (or if required by its
mortgagee, into a similar account designated by such mortgagee), an amount
equal to five percent (5%) of the
45
Gross Room Revenues for the preceding month (pro-rated for any partial
calendar month). Lessee understands and agrees that after the approval by
Lessor of any annual Capital Expenditure Budget, no monies can be expended
from the Capital Expenditure Reserve Account for the applicable year which
were not reflected in that year's annual Capital Expenditure Budget (or if
such expenditures were reflected on the applicable budget, but were
underestimated) without the prior written consent of Lessor, which will not
be unreasonably withheld or delayed; provided, that in the event of an
emergency necessitating expenditures for the protection of life or health or
the protection of the Leased Property (a) Lessee shall immediately pay or
incur the costs and expenses in its reasonable judgment necessary to insure
such protection and irrespective of whether such sums are reflected on the
applicable Capital Expenditure Budget, and (b) Lessor shall fund additional
monies into the Capital Expenditure Revenue Account with regard to same if
monies in said account are insufficient to pay the costs and expenses
associated with such emergency. In addition to those statements required by
Section 25 hereof, Lessee agrees during the Term hereof to provide to Lessor
monthly reports and invoices as to the expenditures made from the Capital
Expenditure Reserve Account for the operations of the Leased Property for the
immediately preceding month. Lessor and Lessee hereby agree that the Lessee
shall submit to Lessor for Lessor's approval pursuant to the provisions of
Section 3.3 hereof, the Capital Expenditure Budget for the Fiscal Year 1997
on or before the Commencement Date.
(B) Lessor represents and warrants, to the best of its knowledge, that
the Leased Property is in full compliance with the Americans With
Disabilities Act and all rules and regulations promulgated thereunder or in
connection therewith (the "ADA Act") and has received no notice from any
governmental authority, or complaint for allegation from any third party
asserting that the Leased Property is not in full compliance with the ADA Act.
SECTION 41.
FORCE MAJEURE. Notwithstanding anything contained herein to the
contrary, both the Lessor and the Lessee shall be excused from performance of
all terms and conditions under this Lease (including the Lessee's obligation
to pay Base Rent) in the event of any act of God, acts of war, acts of
terrorism, civil disturbance, labor strikes, governmental action (including
condemnation proceedings), or other causes beyond the reasonable control of
Lessor or Lessee which have a significant adverse effect upon the financial
performance of the Leased Property. Lessee agrees to make good faith efforts
to provide to Lessor as much advance Notice of such events as practical if
Lessee has actual knowledge that such an event likely will occur. If such a
force majeure event occurs, the Lessor and Lessee shall negotiate in good
faith to agree upon a new rental structure to reflect the potential adverse
effect upon the financial performance of the Leased Property. If the Lessor
and the Lessee cannot agree upon a new rental structure within thirty (30)
days after the occurrence of a force majeure event, the Lessee shall have the
option to terminate the Lease without the payment of any termination fee;
provided, however, the Lessee shall be obligated to pay all Rent due through
the date of termination. Notwithstanding anything contained herein to the
contrary, the termination by the Lessee of the Lease pursuant to a force
majeure event described in this Section
46
41 shall not be deemed to be a termination without cause by the Lessee
pursuant to the terms of the Master Agreement.
SECTION 42 INTENTIONALLY OMITTED.
SECTION 43
ARBITRATION. Except as otherwise set forth in Section 42 hereof, in
the event a dispute should arise concerning the interpretation or application
of any of the provisions of this Agreement, the parties agree the dispute
shall be submitted to arbitration of the American Arbitration Association,
except as modified by this SECTION 43. The Arbitration Tribunal shall be
formed of three (3) Arbitrators each of which shall have at least five (5)
years' experience in hotel operation, management or ownership, one (1) to be
appointed by each party and the third (3rd) to be appointed by the American
Arbitration Association. The arbitration shall take place in Pittsburgh,
Pennsylvania, and shall be conducted in the English language. The
arbitration award shall be final and binding upon the parties hereto and
subject to no appeal, and shall deal with the question of costs of
arbitration and all matters related thereto. Judgment upon the award rendered
may be entered into any court having jurisdiction, or applications may be
made to such court for an order of enforcement.
SECTION 44
RIGHT OF FIRST REFUSAL. If Lessor shall have received a bona fide offer
to purchase the Leased Property, and Lessor desires to sell the Leased
Property pursuant to the terms of such offer, Lessor shall give Notice
thereof to Lessee, stating the name and full identity of the prospective
purchaser, including the names and addresses of the owners of the capital
stock, partnership interests or other proprietary interests of such
prospective purchaser, if such information is reasonably available to Lessor,
the price, and all other terms and conditions of such proposed sale, together
with all other information with respect thereto which is requested by Lessee
and reasonably available to Lessor. Within thirty (30) days after receipt by
Lessee of such Notice from Lessor, Lessee shall elect by written notice to
Lessor one of the following alternatives:
(A) To purchase the Leased Property or to purchase the stock at the
same price and upon the same terms and conditions as those set forth in the
Notice from Lessor to Lessee. In such event, Lessor and Lessee shall
promptly enter into an agreement for sale at the price and on terms
consistent with such Notice from Lessor to Lessee.
(B) To consent to such sale and to the assignment of this Lease to such
purchaser, if such sale is in fact consummated; provided, however, that
concurrently with the consummation of such sale, the purchaser shall in
writing under an assumption agreement in form and substance reasonably
satisfactory to Lessee assume and agree to perform and comply in accordance
with the terms of this Lease. An executed copy of said assumption agreement
shall be promptly delivered by Lessor to Lessee. Lessor shall give to Lessee
not less than thirty (30) days Notice of the date on which such sale is to
be consummated in order to give Lessee an opportunity to be present.
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(C) To refuse consent to such offer to purchase; provided, however, such
consent shall not be unreasonably withheld if such prospective purchaser is,
in Lessee's judgment, financially capable and sufficiently reputable to
enable such prospective purchaser to perform the terms and conditions of this
Lease. If Lessee shall withhold its consent to any such purchase and Lessor
shall nonetheless consummate such transaction, Lessee shall be entitled to
immediately terminate the Lease and all obligations of Lessee shall
immediately cease.
SECTION 45
As conditions precedent to the effectiveness of this Lease, Lessor shall
have closed the transaction contemplated in the Contract of Purchase and Sale.
SECTION 46
Unless otherwise expressly stated herein, any reference to a required
consent or approval by either the Lessor or the Lessee shall be deemed to
refer to an approval or consent which shall not be unreasonably withheld or
delayed.
SECTION 47
Lessee shall on or before the Commencement Date, deposit with Lessor the
sum of $300,000.00 (as from time to time reduced, as set forth hereinbelow,
the "Security Deposit") to be held by Lessor as security for the performance
by Lessee of Lessee's covenants and obligations under this Lease. Upon the
occurrence of an Event of Default by Lessee, Lessor may, from time to time
without prejudice to any other remedy provided herein, use the proceeds of
such Security Deposit to the extent necessary to cure such Event of Default,
and Lessee shall pay to Lessor on demand the amount so applied or used in
order to restore the Security Deposit to its then required amount. Unless an
Event of Default on the part of Lessee then exists, any remaining balance of
the Security Deposit shall be returned to Lessee upon expiration or earlier
termination of this Lease. Notwithstanding anything contained herein to the
contrary, unless at such time there then exists an Event of Default on the
part of Lessee, Lessor shall (a) upon the third (3rd) anniversary date of the
Term, reduce the Security Deposit to $180,000.00 and, incident thereto,
return $120,000.00 of the Security Deposit to Lessee, and (b) upon the fifth
(5th) anniversary date of the Term, reduce the Security Deposit to
$120,000.00 and, incident thereto, refund $60,000.00 of the Security Deposit
to Lessee. Lessor acknowledges and agrees that if Lessor fails to perform
its covenants set forth in the immediately preceding sentence of this Section
47, Lessee may offset an amount equal to the applicable sums to be so
returned and refunded to Lessee from any receivables at such time or times
owed to Lessor or an Affiliate of Lessor pursuant to Section 6.4 hereof or
Section 6.4 of any of the other operating leases between Lessee and Lessor
(or an Affiliate of Lessor) whereby Lessee leases and operates various hotel
properties owned by Lessor or an Affiliate of Lessor (but not from the Rent
or other charges next becoming due hereunder or under any such other
operating leases). Notwithstanding anything contained in this Lease to the
contrary, Lessee shall, upon provision to Lessor of at least ninety (90) days
Notice, have the right to terminate this Lease without cause at any
48
time after the first (1st) anniversary of the Commencement Date; provided,
however, in the event of such a termination without cause, Lessee
acknowledges and agrees that the Security Deposit shall be forfeited to
Lessor and that Lessee shall additionally be obligated to pay Lessor all Rent
and other sums due to Lessor with respect to this Lease through the date of
such termination. Notwithstanding anything contained in this Lease to the
contrary, Lessee shall, upon provision to Lessor of at least one hundred
eighty (180) days Notice, also have the one-time right to terminate this
Lease without cause effective as of the fifth (5th) anniversary of the
Commencement Date; provided, however, in the event of such termination
without cause, (i) Lessor acknowledges and agrees that the Security Deposit
shall be returned to Lessee, and (ii) Lessee acknowledges and agrees that
Lessee shall be obligated to pay Lessor all Rent and other sums due to Lessor
with respect to this Lease through the date of such termination.
[SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LESSOR
HOST VENTURES, INC.,
a Maryland corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
LESSEE
CROSSROADS HOSPITALITY
TENANT COMPANY, L. L. C.,
a Delaware limited liability company
▇▇▇▇▇▇ Plaza 10, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
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