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EXHIBIT 10.8
PERCENTAGE LEASES SCHEDULE
--------------------------
1. Melbourne Quality Suites: Percentage lease Agreement, dated as of
July 25, 1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and
▇▇▇▇▇▇ Management Company Limited Liability Company, as lessee.
2. Radisson Inn Sanibel Gateway: Percentage Lease Agreement, dated as of
July 25, 1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and
▇▇▇▇▇▇ Management Company Limited Liability Company, as lessee.
3. Lake ▇▇▇▇▇▇ Holiday Inn: Percentage Lease Agreement, dated as of July
31, 1996 between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇
Management Company Limited Liability Company, as lessee.
4. Lake ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Inn: Percentage Lease Agreement, dated as of July
25, 1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇
Management Company Limited Liability Company, as lessee.
5. Cleveland Airport Marriott: Percentage lease Agreement, dated as of
July 31, 1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and
▇▇▇▇▇▇ Management Company Limited Liability Company, as lessee.
6. Columbus North Marriott: Percentage Lease Agreement, dated as of July
31, 1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇
Management Company Limited Liability Company, as lessee.
7. Beachwood Marriott: Percentage Lease Agreement, dated as of July 31,
1996, between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇
Management Company Limited Liability Company, as lessee.
8. Buffalo Marriott: Percentage Lease Agreement dated as of July 25, 1996
between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇ Management
Company Limited Liability Company, as lessee.
9. Berkeley Marriott: Percentage Lease Agreement dated as of August 14,
1996 between ▇▇▇▇▇▇ Hotel Properties, L.P., as lessor, and ▇▇▇▇▇▇
Management Company Limited Liability Company, as lessee.
------------------------
Also see Schedule of Percentage Leases on page 57 of the S-11.
FORM
PERCENTAGE LEASE AGREEMENT
DATED AS OF _______________, 1996
BETWEEN
▇▇▇▇▇▇ HOTEL PROPERTIES, L.P.
AS LESSOR
AND ▇▇▇▇▇▇ MANAGEMENT COMPANY LIMITED LIABILITY COMPANY
AS LESSEE
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TABLE OF CONTENTS
Page
PERCENTAGE LEASE AGREEMENT........................................... 1
ARTICLE I............................................................ 1
1.1 Leased Property.................................... 1
1.2 Term............................................... 2
ARTICLE II........................................................... 2
ARTICLE III..........................................................13
3.1 Rent...............................................13
3.2 Payment of Percentage Rent.........................15
3.3 Confirmation of Percentage Rent....................16
3.4 Additional Charges.................................17
3.5 Conversion of Property.............................18
3.6 Annual Revenue Projections.........................18
3.7 Annual Capital Expenditures Budget.................18
3.8 Capital Expenditure Fund...........................19
3.9 Application of Capital Expenditure Fund............19
ARTICLE IV...........................................................22
4.1 Payment of Taxes and Impositions...................22
4.2 Utility Charges....................................23
4.3 Insurance Premiums.................................23
ARTICLE V............................................................24
No Termination, Abatement, Etc..............................24
ARTICLE VI...........................................................24
6.1 Ownership of the Leased Property...................24
6.2 Lessee's Personal Property.........................24
6.3 Lessor's Lien......................................25
ARTICLE VII..........................................................25
7.1 Condition of the Leased Property...................25
7.2 Use of the Leased Property.........................26
7.3 Lessor to Grant Easements, Etc.....................28
7.4 Compliance with Ground Lease.......................28
ARTICLE VIII.........................................................29
8.1 Compliance with Legal, Insurance Requirements,
Lessor's Insurance and Tax Obligations.............29
8.2 Legal Requirements Covenants.......................29
8.3 Environmental Covenants............................30
ARTICLE IX...........................................................32
9.1 Maintenance and Repair.............................32
9.2 Encroachments, Restrictions, Etc...................33
ARTICLE X............................................................34
10.1 Alterations...........................................34
10.2 Salvage...............................................34
10.3 Joint Use Agreements..................................34
ARTICLE XI...........................................................35
Liens ...................................................35
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ARTICLE XII............................................................ 35
Permitted Contests............................................ 35
ARTICLE XIII........................................................... 36
13.1 General Insurance Requirements.......................... 36
13.2 Full Replacement Cost................................... 38
13.3 Waiver of Subrogation................................... 38
13.4 Waiver of Coinsurance................................... 38
13.5 Form Satisfactory, Etc.................................. 39
13.6 Increase in Limits...................................... 39
13.7 Blanket Policy.......................................... 39
13.8 No Separate Insurance................................... 39
13.9 Reports of Insurance Claims............................. 40
13.10 Failure to Obtain Insurance............................ 40
ARTICLE XIV............................................................ 40
14.1 Insurance Proceeds...................................... 40
14.2 Reconstruction in the Event of Damage or
Destruction Covered by Insurance........................ 41
14.3 Reconstruction in the Event of Damage or
Destruction Not Covered by Insurance.................... 42
14.4 Lessee's Personal Property.............................. 42
14.5 Abatement of Rent....................................... 42
14.6 Damage Near End of Term................................. 42
14.7 Waiver.................................................. 42
ARTICLE XV............................................................. 42
15.1 Parties' Rights and Obligations......................... 42
15.2 Total Taking............................................ 43
15.3 Allocation of Award..................................... 43
15.4 Partial Taking.......................................... 43
15.5 Temporary Taking........................................ 44
ARTICLE XVI............................................................ 44
16.1 Events of Default....................................... 44
16.2 Remedies................................................ 46
16.3 Waiver.................................................. 49
16.4 Application of Funds.................................... 50
16.5 Surrender............................................... 50
16.6 Waiver.................................................. 50
ARTICLE XVII........................................................... 50
ARTICLE XVIII.......................................................... 51
ARTICLE XIX............................................................ 51
19.1 REIT Compliance......................................... 51
19.2 Sublease Lessee Limitation.............................. 52
19.3 Lessee Ownership Limitation............................. 52
19.4 Lessee Officer and Employee Limitation.................. 52
19.5 Payments to Affiliates of Lessee........................ 52
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19.6 Third-Party Management Activities..................... 53
ARTICLE XX............................................................... 53
Holding Over.................................................... 53
ARTICLE XXI.............................................................. 53
Risk of Loss.................................................... 53
ARTICLE XXII............................................................. 53
Indemnification................................................. 54
ARTICLE XXIII............................................................ 55
23.1 Subletting and Assignment................................. 55
23.2 Attornment................................................ 55
23.3 Management Agreement...................................... 55
ARTICLE XXIV............................................................. 56
24.1 Officers' Certificates; Financial Statements;
Lessor's Estoppel Certificates and Covenants........... 56
24.2 Lessee's Financial Covenants.............................. 57
ARTICLE XXV.............................................................. 57
Books and Records; Lessor's Right to Inspect.................... 57
ARTICLE XXVI............................................................. 58
No Waiver....................................................... 58
ARTICLE XXVII............................................................ 58
Remedies Cumulative............................................. 58
ARTICLE XXVIII........................................................... 58
Acceptance of Surrender......................................... 58
ARTICLE XXIX............................................................. 58
No Merger of Title.............................................. 58
ARTICLE XXX.............................................................. 58
Conveyance by Lessor............................................ 59
ARTICLE XXXI............................................................. 59
Quiet Enjoyment................................................. 59
ARTICLE XXXII............................................................ 59
Notices ....................................................... 59
ARTICLE XXXIII........................................................... 60
33.1 Lessor May Grant Liens, Subordination..................... 60
33.2 Lessee's Right to Cure.................................... 62
33.3 Breach by Lessor.......................................... 62
33.4 Lessee's Cooperation...................................... 62
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ARTICLE XXXIV................................................ 63
34.1 Miscellaneous................................. 63
34.2 Transition Procedures......................... 63
34.3 Change of Franchise........................... 64
34.4 Waiver of Presentment, Etc.................... 64
ARTICLE XXXV................................................. 64
Memorandum of Lease................................. 64
ARTICLE XXXVI................................................ 65
Lessor's Option to Purchase Assets of Lessee........ 65
ARTICLE XXXVII............................................... 65
Lessor's Option to Terminate Lease.................. 65
ARTICLE XXXVIII.............................................. 66
Compliance with Franchise Agreement................. 66
ARTICLE XXXIX................................................ 66
Lessor's Limitation on Liability.................... 66
[ARTICLE XXXX. . . . . . . . . . . . . . . . . . . . . . . . 66
Condition]
EXHIBIT A
Description of the Land [and the Ground Lease]
EXHIBIT B
All Space Leases
EXHIBIT C
Initial FF&E
EXHIBIT D
Description of Facility
EXHIBIT E
Capital Expenditures
EXHIBIT F
Exceptions to Ownership/Ownership Interests
EXHIBIT G
Other Hotels & Operations
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PERCENTAGE LEASE AGREEMENT
--------------------------
THIS PERCENTAGE LEASE AGREEMENT (this "Lease"), made as of the ____day
of ______________, 1996, by and between ▇▇▇▇▇▇ Hotel Properties, L.P., an Ohio
limited partnership ("Lessor"), and ▇▇▇▇▇▇ Management Company Limited Liability
Company, an Ohio limited liability company ("Lessee"), provides as follows:
W I T N E S S E T H:
--------------------
Lessor has acquired or will acquire the "Leased Property" (as
hereinafter defined) located at _________________ and 8 other hotel properties
and is entering into 8 similar leases with Lessee covering such other hotel
properties, together with such other similar leases which Lessor and Lessee
(and/or their affiliates) may hereafter enter into (the "Percentage Leases").
In furtherance of the consummation of such series of transactions,
Lessor and Lessee wish to enter into this Lease.
NOW, THEREFORE, Lessor, in consideration of the payment of rent by
Lessee to Lessor, the 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.
ARTICLE I
---------
1.1 LEASED PROPERTY. The "Leased Property" is comprised of
Lessor's interest in the following: [NOTE: EACH INDIVIDUAL LEASE WILL BE
TAILORED TO THE RELEVANT PROPERTY AND CIRCUMSTANCES.]
(a) the land [OR GROUND LEASEHOLD INTEREST] described in
Exhibit A attached hereto and incorporated herein by reference
(the "Land");
(b) 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 off-site), parking areas and
roadways appurtenant to such buildings, structures and other improvements
presently situated upon the Land (collectively, the "Leased Improvements"),
including the Facility;
(c) all easements, rights and appurtenances relating
to the Land and to the Leased Improvements;
(d) [NOTE: NONE OF THE FOLLOWING SHOULD BE INCLUDED
IN THE DEFINITION OF FF&E] all equipment, machinery, fixtures,
and other items of property required or incidental to the use of
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the Leased Improvements as a hotel, including all components thereof, now and
hereafter permanently affixed to or incorporated in 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 hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto (collectively,
the "Fixtures");
(e) all existing leases of space within the Leased Property
(including any security deposits or collateral held by Lessor pursuant thereto),
which space leases are listed on Exhibit B attached hereto and incorporated by
reference; and
(f) all contract rights, trade names, logos and other
intangible property of Lessor with respect to the operation of the existing
hotel business conducted on the Leased Property, including without limitation,
all rights relating to the Franchise Agreement.
(g) the furniture, fixtures and equipment listed or referred
to on Exhibit C attached hereto and incorporated by reference.
THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL CURRENT
AND FUTURE COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS (NOT
LIMITED TO ITEMS 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. The term of the Lease (the "Term") shall commence on the date
that Lessor acquires the Leased Premises (the "Commencement Date") and shall end
on , unless sooner terminated in accordance with the provisions hereof.
ARTICLE II
----------
DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined
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herein have the meanings assigned to them in accordance with generally accepted
accounting principles as are at the time applicable, (c) all references in this
Lease to designated "Articles," "Sections" and other subdivisions are to the
designated Articles, 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 Article, Section or other
subdivision:
ADDITIONAL CHARGES. As defined in Section 3.4.
AFFILIATE. 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 (5%) or more of the
outstanding capital stock, shares or equity interests of such Person, or (c) 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). 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.
ALIGNMENT OF INTEREST AGREEMENT. As defined in Section
24.2.
AUDITED CONSOLIDATED FINANCIALS. Consolidated Financials
audited by a firm of independent certified public accountants
acceptable to Lessor in its sole discretion.
AWARD. Compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation.
BASE RATE. The rate of interest announced publicly by National City
Bank, in Cleveland, Ohio, from time to time, as such bank's base rate. If no
such rate is announced or if such rate is discontinued, then such other rate as
Lessor may reasonably designate.
BASE RENT. The annual sum of $ ______________, payable in advance in
equal, consecutive monthly installments, on or before the tenth (10th) day of
each calendar month of the Term; provided however, that the first monthly
payment of Base Rent shall be payable on the Commencement Date and that the
first and last monthly payments of Base Rent shall be prorated as to any partial
month (subject to adjustment as provided in Sections 14.5, 15.2, 15.4, and
15.5).
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BUSINESS DAY. Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which national banks in the City of Cleveland, Ohio, or in the
municipality wherein the Leased Property is located, are closed.
CAPITAL EXPENDITURES. As defined in Section 3.7.
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.
CONDEMNATION. 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.
CONDEMNOR. Any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
CONSOLIDATED FINANCIALS. For any fiscal year (or other period for which
such statements are prepared) for Lessee and its consolidated subsidiaries, a
statement of financial position as of such fiscal year (or other period) end
date and statements of operations, cash flows and retained earnings for the
fiscal year (or other period) then ended, all in comparative form, together with
notes thereto, prepared in accordance with generally accepted accounting
principles.
CONSOLIDATED NET WORTH. The sum of consolidated
shareholders' equity of Lessee and any consolidated subsidiaries
as shown on the most recent Audited Consolidated Financials.
CONSUMER PRICE INDEX. The "U.S. City Average, All Items" Consumer Price
Index for All Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor (Base: 1982-1984=100), or any successor index
thereto. If (i) a significant change is made in the number or nature (or both)
of items used in determining the Consumer Price Index, or (ii) the Consumer
Price Index shall be discontinued for any reason, the Lessor shall request that
the Bureau of Labor Statistics furnish a new index comparable to the Consumer
Price Index, together with information which will make possible a conversion to
the new index in computing the adjusted Base Rent hereunder. If for any reason
the Bureau of Labor Statistics does not furnish an index and such information,
the parties will instead mutually select, accept and use such other index or
comparable statistic on the cost of living in Washington, D.C. that is computed
and published by an agency of the United States or a responsible financial
periodical of recognized authority.
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DATE OF TAKING. The date the Condemnor has the right to
possession of the property being condemned.
ENCUMBRANCE. As defined in Article XXXIV.
ENVIRONMENTAL AUTHORITY. Any federal, state, local or foreign
department, agency or other body or component of any Government that
administers, oversees or enforces any Environmental Laws.
ENVIRONMENTAL LAWS. All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees, injunctions and duties under the common law relating to occupational
health and safety, the protection of human health, and pollution of the indoor
and outdoor 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, EPCRA, FIFRA, RCRA, ▇▇▇▇ and TSCA.
ENVIRONMENTAL LIABILITY. Either of an Identified
Environmental Liability or an Unidentified Environmental
Liability.
EPCRA. The Emergency Planning and Community Right to Know
Act, as amended.
EVENT OF DEFAULT. As defined in Section 16.1.
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 which shall be included in the Leased Improvements. The Facility is
more particularly described on Exhibit D attached hereto and incorporated by
reference.
FIFRA. The Federal Insecticide, Fungicide, and Rodenticide
Act, as amended.
FISCAL YEAR. The 12-month period from January 1 to
December 31.
FIXTURES. As defined in Section 1.1.
FOOD AND BEVERAGE REVENUES. Gross revenues, receipts and income of any
kind (whether on a cash or credit basis) paid, collected or accrued and derived
directly or indirectly by Lessee from: (i) the sale, for on-site consumption at
the Leased Property or through off-site catering services, of food and
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nonalcoholic beverages, including sales attributable to guest rooms, banquet
rooms, meeting rooms, the restaurant, the lounge, the bar and other similar
rooms; (ii) the sale of wine, beer, liquor or other alcoholic beverages,
including sales attributable to the restaurant, the bar, the lounge, guest
rooms, meeting rooms, banquet rooms, off-site catering or any location at the
Leased Property; (iii) cover charges and audio-visual rental charges related to
banquet, ballroom or meeting room events; and (iv) banquet and meeting room
revenues, including room rental charges from such banquet and meeting rooms.
Such revenues shall not include the following:
(a) Room and Other Revenues as defined below;
(b) Any gratuities or service charges added to a
customer's ▇▇▇▇ or statement in lieu of a gratuity, which gratuity or
charge Lessee is obligated to pay to or which was paid directly to an
employee;
(c) Customary and reasonable credits, rebates, refunds
or negative adjustments to guests;
(d) Sales taxes and any additional taxes imposed on
the sale of alcoholic beverages;
(e) Amounts attributable to customary and reasonable
allowances, give aways and promotions; and
(f) Sales transactions related to a lounge provided
for the use of guests staying in rooms located on the
concierge level of the Facility.
FRANCHISE AGREEMENT. The franchise agreement or license agreement
currently in effect with Franchisor, and any amendments, replacements or
extensions thereof or other agreements relating thereto hereafter implemented
with the prior approval of Lessor, under which the Facility is operated.
FRANCHISOR. [ ] or such other national hotel
franchisor approved by Lessor in accordance with Section 34.3.
GOVERNMENT. The United States of America, any state, county,
municipality, local government, district or territory thereof, any foreign
nation, any state, district, department, territory or other political division
thereof, or any administrative agency, board, commission, bureau or political
subdivision of any of the foregoing.
GROUND LEASE. The ground lease between Lessor and
_____________________, executed with respect to the Land.
GROUND RENT. All rent payable by Lessor as sublessee with
respect to the Ground Lease.
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HAZARDOUS MATERIALS. All chemicals, pollutants,
contaminants, wastes and toxic substances, including without
limitation:
(a) Solid or hazardous waste, as defined in RCRA or in
any Environmental 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, radon and
urea formaldehyde.
IDENTIFIED 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 attorney's fees, fees for
witnesses, consultants 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 any of the matters
disclosed in the report of Law Environmental, dated , 19 , a copy of
which has been delivered and examined by Lessee prior to the execution of
this Lease.
IMPOSITIONS. Collectively, all taxes (including, without limitation,
all personal property, sales and use (including sales, rent or occupancy taxes
on Rent), single business, gross receipts, transaction, privilege, rent or
similar taxes as the same relate to or are imposed upon Lessee, its personal
property 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 and
whether or not to be completed within the Term), 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
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thereon caused by any failure in payment by Lessee), which at any time prior to,
during or with respect to the Term 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, Impositions shall not include (1) any
Real Estate Taxes on the Leased Property, (2) any personal property taxes on
Lessor's personal property, (3) any tax based on net income (whether denominated
as an income, franchise or capital stock or other tax) imposed on Lessor or any
other Person other than Lessee and Affiliates of Lessee, (4) any net revenue tax
of Lessor or any other Person (other than Lessee or an Affiliate of Lessee), (5)
any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any Leased Property or the proceeds thereof, or (6) any single
business, gross receipts (other than a 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 any time during the Term hereof, is totally or
partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) through (6) is levied, assessed or imposed expressly in lieu thereof.
INDEMNIFIED ENVIRONMENTAL LIABILITY. As defined in Section
8.3.
INDEMNIFIED PARTY; INDEMNITEE. Either of a Lessee
Indemnified Party or a Lessor Indemnified Party.
INDEMNIFYING PARTY. Any party obligated to indemnify an
Indemnified Party pursuant to Section 8.3 or Article XXII.
INSURANCE REQUIREMENTS. All terms of any insurance policy required by
this Lease, any Franchisor or any Legal Requirement, and all requirements of the
issuer of any such policy as to such policy and/or the Leased Property.
INVENTORY. All inventories, supplies, guest supplies, food and beverage
inventory, and consumable merchandise used in connection with the operation of
the Facility, but excluding all such items to the extent owned by
concessionaires, tenants, subtenants, licensees or other Persons occupying all
or a portion of the Leased Property as permitted by this Lease.
LAND. As defined in Section 1.1(a).
LEASE. This Lease.
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LEASED IMPROVEMENTS; LEASED PROPERTY. Each as defined in
Section 1.1.
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 Environmental
Laws, 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 hereafter created by Lessor without the
consent of Lessee), at any time in force affecting the Leased Property.
LENDING INSTITUTION. Any insurance company, investment banking company,
credit company, federally insured commercial or savings bank, national banking
association, savings and loan association, employees welfare, pension or
retirement fund or system, corporate profit sharing or pension trust, college or
university, or real estate investment trust, including any corporation qualified
to be treated for federal tax purposes as a real estate investment trust, such
trust having a net worth of at least $10,000,000 and REMIC conduit lenders.
LESSEE. The Lessee designated on this Lease and its
permitted successors and assigns.
LESSEE INDEMNIFIED PARTY. Lessee and (i) any Affiliate of Lessee, (ii)
any Person against whom any liability may be asserted as a result of a direct or
indirect ownership interest (including a shareholder's interest) in Lessee;
(iii) the officers, directors, shareholders, employees, agents and
representatives of Lessee; and (iv) the respective heirs, personal
representatives, successors and assigns of any of the foregoing Persons.
LESSEE'S PERSONAL PROPERTY. As defined in Section 6.2.
LESSOR. The Lessor designated on this Lease and its
successors and assigns.
LESSOR INDEMNIFIED PARTY. Lessor and (i) any Affiliate of Lessor; (ii)
any Person against whom any liability may be asserted as a result of a direct or
indirect ownership interest (including an interest as a partner) in Lessor;
(iii) the employees, agents and representatives of Lessor; (iv) ▇▇▇▇▇▇ Lodging
Trust, Inc., its officers, directors, shareholders,
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employees and agents; and (v) the respective heirs, personal representatives,
successors and assigns of any of the foregoing Persons.
NOTICE. A notice given pursuant to Article XXXII.
OFFICER'S CERTIFICATE. A certificate of Lessee in form and substance
reasonably acceptable to Lessor signed by the chief operating officer and 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 5% per
annum, but in no event greater than the maximum rate then permitted under
applicable law.
PARTIAL FISCAL YEAR. Any portion of a Fiscal Year which
falls during the Term hereof.
PAYMENT DATE. Any due date for the payment of any
installment of Rent.
PERCENTAGE RENT. As defined in Section 3.1(b).
PERSON. Any individual, corporation, general or limited partnership,
limited liability company, limited liability partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, or other entity and government and agency and
political subdivision thereof.
PREDECESSOR. Any Person whose liabilities arising under any
Environmental Law relating to the Leased Property have or may
have been retained or assumed by Lessee, either contractually or
by operation of law
PRIMARY INTENDED USE. As defined in Section 7.2(b).
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.
RCRA. The Resource Conservation and Recovery Act, as
amended.
REAL ESTATE TAXES. All real estate taxes (including any
applicable interest and penalties thereon), including general and
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special assessments, if any, and possessory interest taxes which are imposed
upon the Land and/or the Leased Property.
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.
ROOM AND OTHER REVENUES: All gross revenues, receipts and income of any
kind (whether on a cash or credit basis) paid, collected or accrued and derived
directly or indirectly by Lessee from: (i) the rental of guest rooms; (ii) gift
shop operations; (iii) fees collected from telephone, game room and guest
laundry services; and (iv) guaranteed no show reservations, space rentals
(excluding banquet and meeting room space rentals), discounts earned, vending
machines, valet services, movie services, commissions earned, and swim club
memberships, and (v) all other revenues in connection with the use or operation
of the Leased Property and all services or activities provided thereon,
including revenue derived from subtenants, concessionaires, and licensees, all
as determined in accordance with generally accepted accounting principles.
Notwithstanding the previous sentence, Room and Other Revenues shall not
include:
(a) Food and Beverage Revenues as defined above;
(b) The amount of any credits, rebates, refunds or
adjustments to customers, guests or patrons;
(c) Sales or use taxes;
(d) Interest income;
(e) Gratuities paid or payable to Persons other than
Lessee or its Affiliate; and
(f) Gains from the sale of assets out of the ordinary
course of business.
▇▇▇▇: The Superfund Amendments and Reauthorization Act of
1985, as amended.
STATE: The State or Commonwealth of the United States in
which the Leased Property is located.
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SUBSIDIARIES: Corporations in which Lessee owns, directly
or indirectly, more than fifty percent (50%) of the voting stock
or control, as applicable.
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.
TSCA: The Toxic Substances Control Act, as amended.
UNAVOIDABLE DELAY: A delay due to strikes, lock-outs, labor unrest,
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party under
this Lease.
UNECONOMIC FOR ITS PRIMARY INTENDED USE: A state or condition of the
Facility such that in the good faith judgment of Lessor it is uneconomic to
operate the Facility for its Primary Intended Use, taking into account, among
other relevant factors, the number of usable rooms and projected revenues.
UNIDENTIFIED 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 fine or
criminal fine, and any court costs and reasonable amounts for attorney's fees,
fees for witnesses, consultants 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, 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 or in any way affecting the Leased
Property or any off-site property or facility;
(d) Identification of Lessee, 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
off-site property 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;
but
excluding those arising out of:
(g) Identified Environmental Liabilities.
UNIFORM SYSTEM: 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 Lessor, due to casualty damage
or loss through Condemnation, the Facility cannot be operated or cannot function
as an integrated hotel facility consistent with standards applicable to a well
maintained and operated hotel.
ARTICLE III
-----------
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
Article XXXII hereof or at such other place or to such other Person, as Lessor
from time to time may designate in a Notice, (A) the higher of (i) Base Rent or
(ii) Percentage Rent and (B) Additional Charges, during the Term, as follows:
(A) BASE RENT: The annual sum of $ ______________, payable in
advance in equal, consecutive monthly installments, on or before the tenth
(10th) day of each calendar month of the Term ("Base Rent"); provided, however,
that the first monthly payment of Base Rent shall be payable on the Commencement
Date and that the first and last monthly payments of Base Rent shall be prorated
as to any partial month (subject to adjustment as provided in Sections 14.5,
15.2, 15.4, and 15.5); and provided,
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further, that Base Rent shall be increased by increases in CPI as set forth in
Subsection (c) below.
(b) PERCENTAGE RENT: For each Fiscal Year and Partial Fiscal
Year during the Term commencing with the Fiscal Year or Partial Fiscal Year
ending December 31, 1996, Lessee shall pay percentage rent ("Percentage Rent"),
if such Percentage Rent is in excess of Base Rent for such Fiscal Year or
Partial Fiscal Year, in an amount calculated by the following formula:
The amount equal to the sum of (i) the Room and Other Revenues
Computation for such Fiscal Year or Partial Fiscal Year plus
(ii) the Food and Beverage Revenues Computation for such
Fiscal Year or Partial Fiscal Year (each as defined below and
collectively, the "Revenue Computations").
For the purpose of this formula:
(1) The Room and Other Revenues Computation for the
applicable Fiscal Year (or Partial Fiscal Year) is equal to
the sum of (A) __% of the first $_________ in Room and Other
Revenues for such Fiscal Year or Partial Fiscal Year, (B) __%
of all amounts above $______ up to $______ in Room and Other
Revenues for such Fiscal Year or Partial Fiscal Year, and (C)
__% of all Room and Other Revenues in excess of $______ for
such Fiscal Year or Partial Fiscal Year (the preceding dollar
figures being referred to hereinafter as the "Threshold
Amounts", such Threshold Amounts to be prorated on a per diem
basis for any Partial Fiscal Year); and
(2) The Food and Beverage Revenues Computation is
equal to six percent (6%) of all Food and Beverage Revenues
for the applicable Fiscal Year or portion thereof.
(c) CPI ADJUSTMENTS TO THE THRESHOLD AMOUNTS AND BASE RENT:
For each Fiscal Year of the Term beginning on or after January 1, 1997, the
Threshold Amounts and Base Rent shall be adjusted from time to time as follows:
If the most recently published Consumer Price Index as of the
last day of the last month (the "Comparison Month") of any
Fiscal Year is different than the average Consumer Price Index
for the twelve (12) month period prior thereto, each of Base
Rent and the Threshold Amount for the next Fiscal Year shall
be adjusted by the percentage change in the Consumer Price
Index calculated by multiplying the Base Rent and each
Threshold
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Amount by the quotient obtained by dividing the Consumer Price
Index for the most recent Comparison Month by the Consumer
Price Index for the month which is exactly twelve (12)
months prior thereto.
Adjustments in the Threshold Amounts and Base Rent shall be effective
on the first day of the first calendar month of the Fiscal Year to which such
adjusted Threshold Amounts apply. In the event of casualty and corresponding
payment of rent out of the proceeds of rental interruption insurance provided
pursuant to Section 13.1(c), the Percentage Rent shall be based upon the higher
of (i) actual revenues, (ii) revenues for the same period in the previous Fiscal
Year (whether or not during the Term), or (iii) projected revenues used in
computing the final insurance settlement.
3.2 PAYMENT OF PERCENTAGE RENT. Percentage Rent shall be due and
payable quarterly on or before the thirtieth (30th) day after the last day of
each quarter during the Term. Additionally, an Officer's Certificate, setting
forth the calculation of such rent payment for such quarter, shall be delivered
to Lessor quarterly, together with such quarterly Percentage Rent payment after
each quarter of each Fiscal Year (or part thereof) during the Term. Such
quarterly payment shall be based on the formula set forth in Section 3.1(b),
but, in calculating the Revenue Computations for each quarter, gross revenues
for the year to date shall be annualized by dividing such sum by the number of
months which have passed year to date (including the current month) and
multiplying the result by 12. The resulting Percentage Rent amount shall be
multiplied by the number of months that have passed year-to-date (including the
current month) and divided by twelve (12). Payments of Base Rent and Percentage
Rent for the year to date shall be subtracted from the result to arrive at the
Percentage Rent payment due for that quarter. The Revenue Computations shall be
appropriately adjusted to calculate Percentage Rent for partial years. There
shall be no reduction in the Base Rent regardless of the result of the Revenue
Computations.
In addition, on or before March 1 of each year, commencing with March
1, 1997, Lessee shall deliver to Lessor an Officer's Certificate reasonably
acceptable to Lessor setting forth the computation (based on audited financial
statements of Lessee) 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 to Lessor, with the delivery of the Officer's Certificate, the
amount of Percentage Rent due and payable for the Fiscal Year then ended as
shown in the Officer's Certificate, if any, that exceeds the amount actually
paid as Percentage Rent by Lessee for such Fiscal Year. 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
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the applicable Fiscal Year, Lessor, at its option, shall reimburse such amount
to Lessee or credit such amount against the next quarter's Percentage Rent
payments; provided, however, that no Event of Default exists.
Any difference between the annual Percentage Rent due and payable for
any Fiscal Year (as shown in the applicable Officer's Certificate) and the total
amount of quarterly payments for such Fiscal Year actually paid by Lessee (i)
shall bear interest at the Overdue Rate in the case of an underpayment or (ii)
shall bear interest at the Base Rate in the case of an overpayment, which
interest shall accrue from the close of such Fiscal Year until the amount of
such difference shall be paid or otherwise discharged by credit to Lessee. Any
such interest payable to Lessor shall be deemed to be and shall be payable as
Additional Charges.
The obligation to pay Percentage Rent shall survive the expiration or
earlier termination of the Term. 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 computation of Percentage Rent due
and payable, shall be made not later than ninety (90) days after such expiration
or termination date. Within such ninety (90) day period, Lessee shall deliver to
Lessor an Officer's Certificate setting forth the final Percentage Rent amount
payable to Lessor and payment of the amount due, if any.
3.3 CONFIRMATION OF PERCENTAGE RENT. Lessee shall utilize, or cause to
be utilized, an accounting system for the Leased Property in accordance with
generally accepted accounting principles consistently applied 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
3.2 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. In the event of a conflict between generally
accepted accounting principles and the Uniform System, the Uniform System shall
prevail. Lessor (or its accountants or representatives), at its expense (except
as provided herein), shall have the right from time to time to audit the
information that formed the basis for the data set forth in any Officer's
Certificate provided under Section 3.2 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
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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, together with interest calculated at the Overdue Rate from
the due date for the last quarterly payment of Percentage Rent for the Fiscal
Year to the date of payment thereof; provided, however, that as to any audit
that is commenced more than two (2) years after the date Percentage Rent for any
Fiscal Year is reported by Lessee to Lessor, the deficiency, if any, with
respect to such Percentage Rent, shall bear interest at the Overdue Rate only
from the date such determination of deficiency is made unless such deficiency is
the result of gross negligence or willful misconduct on the part of Lessee. 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 two percent (2%),
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 or purchasers, their respective attorneys, accountants and other
representatives, or pursuant to any Legal Requirements. The obligations of
Lessee contained in this Section shall survive the expiration or earlier
termination of this Lease.
3.4 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, costs and expenses necessary to perform
its obligations hereunder and under the Franchise Agreement, and (b) in the
event of any failure on the part of Lessee to timely pay any of those items
referred to in clause (a) of this Section 3.4, 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 3.4 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. 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 (which charges are not payable to
Lessor), Lessee shall be relieved of its obligation to pay such Additional
Charges to the
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entity to which they would otherwise be due and Lessor shall pay same from
monies received from Lessee.
3.5 CONVERSION OF PROPERTY. If, during the Term, Lessee wishes to cease
food and beverage operations at the Facility, Lessee shall give notice of such
desire to Lessor, which shall require the approval of Lessor which Lessor may
grant or withhold in its sole and absolute discretion. Lessor and Lessee shall,
if such cessation is to occur, commence negotiations to adjust Rent to reflect
the proposed change to the operation of the Facility, each acting reasonably and
in good faith; provided, however, that any such adjustment shall conform with
normal business practice and shall not result in the creation of a Rent formula
based on the income or profits of Lessee. All other terms of this Lease will
remain substantially the same. During negotiations, which shall not extend
beyond 60 days, Lessee shall not "convert" the Facility and shall continue
fulfilling its obligations under the existing terms of this Lease. If no
agreement is reached after such 60-day period, Lessee shall withdraw such notice
and this Lease shall continue in full force.
3.6 ANNUAL REVENUE PROJECTIONS. No later than thirty (30) days prior to
the commencement of each Fiscal Year, Lessee shall submit Annual Revenue
Projections for such Fiscal Year to Lessor. The Annual Revenue Projections shall
be subject to Lessor's prior approval as to form and content and shall be in
such form and shall contain such information as Lessee included in its annual
revenue projections in accordance with its past practice, and shall, in any
event, include the following:
(a) Lessee's reasonable estimate of Room and Other Revenues
and Food and Beverage Revenues for the Fiscal Year itemized on a
monthly basis, as such estimates may be revised or replaced from time
to time by Lessee; and
(b) A projection of the Percentage Rent payable for
such Fiscal Year.
3.7 ANNUAL CAPITAL EXPENDITURES BUDGET. Subject to the provisions of
Sections 8.1, 9.2 and 19.1(a), Lessor, at its sole expense, shall be responsible
for all Capital Expenditures as defined in this Section 3.7 and in accordance
with Exhibit E attached hereto and incorporated herein by reference, provided,
however, Lessor shall not be obligated to make any Capital Expenditure the need
for which Lessor disputes or objects to in good faith. Not later than forty-five
(45) days prior to the commencement of each Fiscal Year or Partial Fiscal Year,
Lessee shall submit to Lessor for Lessor's approval, Lessee's proposed Annual
Capital Expenditures Budget. The Annual Capital Expenditures Budget (the
"Capital Expenditures Budget") shall be subject to Lessor's approval and shall
contain the following:
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(a) Lessee's estimate of the amounts to be expended during the
upcoming Fiscal Year to renew, replace or refurbish FF&E, and a
reasonably detailed description of the expenses to be incurred, and
Lessee's estimate of the amount that will be expended during the
upcoming Fiscal Year on capital repairs, replacements and improvements
to the Leased Improvements, together with a reasonably detailed
description of the capital repairs, replacements and improvements that
will be undertaken. The expenditures referred to in this Section 3.7
are referred to in this Lease as "Capital Expenditures".
(b) A capital renewal program showing the major anticipated
Capital Expenditures and that will be incurred over the ensuing three
(3) year and five (5) year periods. If Lessor shall not give its
approval to the Annual Capital Expenditures Budget, Lessee shall revise
the Annual Capital Expenditures Budget, as may be required to obtain
Lessor's consent thereto.
The Capital Expenditures Budget shall be consistent with Lessee's policies as to
Capital Expenditures as set forth on Exhibit E.
3.8 CAPITAL EXPENDITURE FUND. Lessor shall establish and maintain an
account to provide a reserve for the Capital Expenditures costs at the Facility
and each other facility covered by a Percentage Lease. Such Account shall be
funded with an initial balance of $3,500,000 upon or prior to the execution of
this Percentage Lease Agreement. In addition, Lessor shall deposit in such
account a quarterly amount equal to four per cent (4%) of the sum of (i) the
Room and Other Revenues plus (ii) the Food and Beverage Revenues for each such
Facility. Subject to the provisions of Section 19.1(a), such account shall be
used to defer the costs of Capital Expenditures at all such Facilities; provided
that Lessor, in its reasonable discretion, shall be entitled to use such funds
for other purposes if adequate reserves remain for the purpose of Capital
Expenditures at all such Facilities.
3.9 APPLICATION OF CAPITAL EXPENDITURE FUND. When amounts are budgeted
and agreed to be spent for Capital Expenditures, Lessee shall be responsible for
the implementation of the Capital Expenditure program and shall make periodic
draws on the Capital Expenditure Fund by the presentation to Lessor of
appropriate documentation establishing the amounts to be paid in accordance with
the Capital Expenditure Budget, and including such supporting documentation as
Lessor may reasonably require. Lessor and Lessee shall cooperate in good faith
to accomplish such implementation as quickly as practicable in accordance with
sound business practices.
3.10 UNBUDGETED CAPITAL EXPENDITURES. No disbursements shall be made
from the Capital Expenditure Fund which are not in
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accordance with the Capital Expenditure Budget. However, Lessor and lessee
recognize that, in certain circumstances, Capital Expenditures which were not
budgeted may be necessary. In the following circumstances, disbursements shall
be made for Capital Expenditures from the Capital Expenditures Fund even though
such expenditures were not included in the Capital Expenditure Budget:
(i) When Lessor and Lessee agree to an addition to
the Capital Expenditure Budget;
(ii) When, due to circumstances beyond the control
of Lessee or Lessor, expenditures for a project exceed the
budgeted amount;
(iii) When the Capital Expenditure is necessary on an
emergency basis for any reason including the comfort and
safety of guests or employees; and
(iv) For deminimus Capital Expenditures not in
excess of $10,000 per item.
3.11 AGENT METHOD FOR PURCHASES OF CAPITAL EXPENDITURES.
(a) Lessor hereby retains Lessee as an independent contractor
on the terms contained in this Agreement to act for and on behalf of
Lessor as Lessor's agent in connection with the implementation of the
Capital Expenditure program for the Facility. Lessee's cost analysis
shall be based upon the plans and furnishings set forth in the
specifications and other written information agreed to be implemented
under the Capital Expenditure Budget. Lessee will be responsible for
negotiating purchases of Capital Expenditures on Lessor's behalf. All
purchases will be based on Lessee's actual cost, net of trade discounts
(including cash discounts, where applicable).
(b) Lessor acknowledges and agrees that purchase orders
relating to any Capital Expenditure for the Project will be executed by
Lessee as agent for and on behalf of Lessor. Lessor further
acknowledges and agrees that Lessee shall have no liability under this
Agreement or otherwise for payment of the Capital Expenditure or for
freight or storage related to the Capital Expenditure provided that no
expenditures shall be made except in accordance with the Budget and as
provided above. All down payments as well as payment of all vendor
invoices are the responsibility and obligation of Lessor. Lessor
acknowledges that a delay on the part of Lessor relating to any
required deposits or payments can result in delivery delays of the
Capital Expenditure. The timing of the making of all purchase orders
and delivery schedules will be established by mutual agreement of
Lessor and Lessee.
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(c) Lessee shall not be obligated under any circumstances to
(but in its discretion may) use its own funds for the purpose of making
down payments (either at the time purchase orders are processed or
otherwise) or making progress or final payments to Capital Expenditure
vendors. Taxes, warehouse, delivery, redelivery, restocking,
installation and similar charge, including, but not limited to delivery
and storage costs, shall be obligations of Lessor and Lessor agrees to
perform such obligations in a timely manner. All vendor invoices shall
be addressed to and issued directly to Lessor.
(d) Lessor shall designate a representative authorized to act
on its behalf with respect to the Leased Property.
(e) Lessor agrees to reimburse Lessee for all out-of-pocket
expenses (including long distance and messenger fees) incurred by
Lessee on behalf of or in connection with the Capital Expenditures for
the Facility. All such reimbursements shall be paid monthly as incurred
upon receipt of bills or other evidence reasonably satisfactory to
Lessor.
(f) Lessor shall furnish to Lessee from time to time all
information, take such actions and process such draws as may be
reasonably requested by Lessee or otherwise required under this
Agreement in a timely manner as reasonably necessary for the orderly
progress of work under this Agreement. Lessee shall have no
responsibility or be liable in any manner whatsoever for any delay
caused by information to be supplied or actions to be taken by Lessor,
its agents or other independent contractors working on or at the
Facility or caused by Lessor's failure to timely pay vendors.
(g) If Lessor desires to change, modify or alter the quantity
or specifications of any Capital Expenditure purchased by Lessee in
writing, Lessee will endeavor to satisfy any such request. Lessor
acknowledges and understands that Lessee's ability to comply with
requested changes, modifications or alterations is subject to
acceptance and performance on the part of the vendors and supplier with
whom Lessee has entered into agreements for and on behalf of Lessor.
Lessee assumes no liability or responsibility for its inability to
comply with Lessor's request for changes, modifications or alterations
under this paragraph.
(h) Lessor acknowledges and agrees that Lessee shall not be
responsible or liable to Lessor for any losses incurred or damages
suffered by Lessor due to delays, failures or omissions of third party
vendors in delivery of Capital Expenditure. Lessor agrees to hold
Lessee harmless
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for any such losses or damages. Lessor assumes ownership of Capital
Expenditure at the time of shipment of Capital Expenditure from any
third party vendor or manufacturer and any claims Lessor may have
against any freight company in connection with the delivery or shipment
of the Capital Expenditure are the responsibility of Lessor.
(i) LESSOR ACKNOWLEDGES AND AGREES THAT LESSEE MAKES NO
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, RELATING TO QUALITY, FITNESS
OR CAPACITY OF THE WORK DONE PURSUANT TO CAPITAL EXPENDITURES. Lessor,
as purchaser of the Capital Expenditure, shall have the benefit of any
guarantees and warranties, either express or implied, from vendors and
suppliers of the Capital Expenditure, but Lessee shall have no
liability for any such third party guarantees or warranties. Lessee
will use its best efforts on Lessor's behalf to obtain proper service
for the replacement or correction of unsatisfactory Capital
Expenditure, but Lessee does not warrant its ability to obtain such
service and Lessee shall have no obligation or responsibility to
replace or correct any such unsatisfactory Capital Expenditure.
(j) Except with respect to matters arising from Lessee's
misconduct or Lessee's negligence, Lessor agrees to indemnify and hold
Lessee, its directors and officers harmless from and against any and
all claims, suits, costs, liabilities, obligations, losses and damages
whatsoever arising out of or in connection with the work done pursuant
to Capital Expenditures, the use of results of Capital Expenditures in
or at the Project and the payment of any and all sales, use or other
taxes (excepting federal, state and local income taxes relating to
Lessee's business).
(k) Lessor shall be responsible for and shall pay all
applicable sales and use taxes arising as a result of the purchase or
use of the Capital Expenditure or Lessor shall deliver appropriate
exemption certificates.
(l) Lessee agrees that for so long as it maintains interior
design and purchasing operations, it will perform the above services
without charge to Lessor.
ARTICLE IV
----------
4.1 PAYMENT OF TAXES AND IMPOSITIONS. Lessor shall pay all property
taxes (including the items in clauses (1) through (6) of the definition of
"Impositions" set forth in Article II. Subject to Article XII relating to
permitted contests, each party will pay, or cause to be paid, all Impositions
imposed on each of them, respectively, 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
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promptly furnish to the other party copies of official receipts or other
satisfactory proof evidencing such payments; provided, however, Lessee shall pay
all Impositions in respect of the Leased Property and this Lease (other than
fees, property taxes and taxes imposed on Lessor's income from the Leased
Property). 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.
Lessee shall file all personal property tax returns in such jurisdictions where
it is legally required to so file. Lessor, to the extent it possesses the same,
and Lessee, to the extent it possesses the same, will provide the other party,
upon request, with 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.
Lessee may, upon notice to Lessor, at Lessee's option and at Lessee's sole
expense, protest, appeal, or institute such other proceedings (in its or
Lessor's name) as Lessee may deem appropriate to effect a reduction of real
estate or personal property assessments for those Impositions to be paid by
Lessee, and Lessor, at Lessee's expense as aforesaid, shall fully cooperate with
Lessee in such protest, appeal, or other action. Lessee hereby agrees to
indemnify, defend, and hold harmless Lessor from and against any claims,
obligations, and liabilities against or incurred by Lessor in connection with
such cooperation, although Lessee is not liable for the amount of any (i) Real
Estate Taxes or (ii) personal property taxes attributable to personal property
owned by Lessor. Lessor, however, reserves the right to effect any such protest,
appeal or other action and, upon notice to Lessee, shall control any such
activity, which shall then go forward at Lessor's sole expense. Upon such
notice, Lessee, at Lessor's expense, shall cooperate fully with such activities.
4.2 UTILITY CHARGES. Lessee will be solely responsible for obtaining
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 attributable
to, or used on, under or in the Leased Property during the Term as such charges
become due.
4.3 INSURANCE PREMIUMS. Lessee will pay or cause to be paid all
premiums for the insurance coverages required to be maintained by it under
Article XIII. Lessor shall pay or cause to be paid all premiums for the
insurance coverages required to be maintained by it under Article VIII.
ARTICLE V
---------
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NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Lease, 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 setoff against the Rent, nor shall the obligations of
Lessee be otherwise affected by reason of (a) any damage to, or destruction of,
any Leased Property or any portion thereof from whatever cause or any Taking of
the Leased Property or any portion thereof, (b) any claim which Lessee has or
might have against Lessor by reason of any default or breach of any warranty by
Lessor under this Lease or any other agreement between Lessor and Lessee, or to
which Lessor and Lessee are parties, (c) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor,
(d) any lawful or unlawful prohibition of, or restriction upon, Lessee's use of
Leased Property, or interference with such use, or (e) for any other cause
whether similar or dissimilar to any of the foregoing. Lessee hereby
specifically waives all rights, arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law to (1) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (2) ▇▇▇▇▇, reduce, suspend or defer Rent or other sums payable by
Lessee hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessee hereunder shall be separate and independent covenants and
agreements and the Rent and all other sums payable by Lessee hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.
ARTICLE VI
----------
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the
Leased Property is 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. Throughout the Term, Lessee will
acquire, own, maintain and replace such personal property (other than Capital
Expenditures) and Inventory as is required to operate the Leased Property as a
hotel and, otherwise, in the manner contemplated by this Lease. At all times
during the Term Lessee shall maintain an adequate and customary supply of
inventory. Lessee may (and shall as provided herein below), 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
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Inventory) owned by Lessee (collectively, the "Lessee's Personal Property").
Lessee, at the commencement of the Term, and from time to time thereafter, shall
provide Lessor with an accurate list of all such items of the Lessee's Personal
Property. Lessee may, subject to the conditions set forth in this Section 6.2
and Section 6.3, 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 not removed by Lessee within ten
(10) 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(d), including repair of all damage to the Leased
Property caused by the removal of Lessee's Personal Property, whether effected
by Lessee or Lessor. 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 may assume Lessee's obligations and
rights under such arrangement.
6.3 LESSOR'S LIEN. To the fullest extent permitted by applicable law,
Lessor is granted a lien and security interest on all of Lessee's Personal
Property now or hereinafter placed in or upon the Leased Property, and such lien
and security interest shall remain attached to 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 any purchase money security interest of any non-Affiliate of Lessee
which finances such Lessee's Personal Property 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, estoppel certificates and other
documents or instruments reasonably requested by Lessor to perfect the lien and
security interests herein granted.
ARTICLE VII
-----------
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. Lessee is leasing the Leased
Property "as is," "where is" and with "all faults," in its present condition.
Lessee waives any claim or action against Lessor in respect of the condition of
the Leased Property. THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION
WITHOUT
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REPRESENTATION OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE
RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING
ALL CURRENT AND FUTURE COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER
MATTERS (NOT LIMITED TO ITEMS 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. LESSOR MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED
PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Notwithstanding
the foregoing, however, to the extent permitted by law, Lessor hereby assigns to
Lessee all of Lessor's rights to proceed against any predecessor in title other
than Lessee (or an Affiliate of Lessee which conveyed the Leased Property to
Lessor) 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, all at Lessee's sole cost and
expense. Lessee hereby agrees to indemnify, defend and hold harmless Lessor from
and against any claims, obligations and liabilities against or incurred by
Lessor in connection with such cooperation. All amounts recovered that are
attributable to the period after the Term shall belong to Lessor.
7.2 USE OF THE LEASED PROPERTY.
(a) Lessee covenants that it will proceed with all due
diligence and will exercise its best efforts to obtain and to maintain all
approvals needed to use and operate the Leased Property and the Facility under
applicable local, state and federal law.
(b) Lessee shall use or cause to be used the Leased Property
only as a hotel facility (including food and beverage operations) of a caliber
consistent with its present use, 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 of the Leased Property, and no acts
shall be done, 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
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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.
(c) Subject to the provisions of Articles XIV and XV Lessee
covenants and agrees that during the Term it will (1) maintain, operate
continuously the Leased Property as a hotel facility of the class currently
operated at the Leased Property, (2) keep in full force and effect and comply
with all the provisions of the Franchise Agreement, (3) not terminate or amend
the Franchise Agreement without the consent of Lessor, (4) maintain appropriate
certifications and licenses for such use and otherwise comply with all Legal
Requirements and (5) seek to maximize the gross revenues generated therefrom
consistent with sound business practices.
(d) 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.
(e) Lessee shall neither suffer nor permit the Leased Property
or any portion thereof, or Lessee's Personal Property, to be used in such a
manner as (1) might reasonably tend to impair Lessor's (or Lessee's, as the case
may be) 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,
subject to Lessor's prior consent.
(f) Except as set forth on Exhibit F attached hereto and
incorporated by reference, Lessee or an Affiliate of Lessee shall not own, or
have any ownership interest in, any hotel or motel property in which Lessor or
an Affiliate of Lessor does not have an interest. Neither Lessee nor an
Affiliate of Lessee shall operate or manage any hotel or motel that is within a
ten (10) mile radius of any hotel or motel property in which Lessor or an
Affiliate of Lessor has an interest on the date Lessee or its Affiliate would
otherwise commence operating or managing such property, other than pursuant to
this Lease or another lease, agreement or arrangement with Lessor or an
Affiliate of Lessor. Lessor agrees to notify Lessee promptly of the location of
any hotel or motel property in which Lessor or an Affiliate of Lessor has an
interest.
(g) Lessee shall not use, generate, handle, dispose or store
Hazardous Materials on the Leased Property, except in the normal course of
operations of the Leased Property as a hotel and in compliance with all
Environmental Laws.
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(h) Lessee shall not enter into any collective bargaining
agreements with respect to any of the employees at the Leased Property without
the prior consent of Lessor, which shall not be unreasonably withheld or
delayed, unless required by law.
(i) Lessee hereby assumes and agrees to perform all of the
obligations of Lessor under all leases in effect at the Leased Property as of
the date of commencement of the Term.
(j) Lessee represents that, as of the date hereof, its sole
business activity consists of, and Lessee covenants that, during the Term
hereof, its sole business activity shall consist of the lease and operation of
the Leased Property, the Other Hotels and the operations described in Exhibit G
attached hereto and incorporated by reference, all of which shall be performed
by subsidiaries of Lessee and not by Lessee directly. Except as provided in the
foregoing sentence, and on Exhibit F, Lessee agrees that neither it nor any of
its Affiliates shall own, lease, operate, manage or franchise, directly or
indirectly, any hotel not owned by Lessor or any Affiliate of Lessor during the
Term of this Lease. Notwithstanding the foregoing, Lessor acknowledges that
Lessee, through its subsidiaries, may engage in third party hotel management,
purchasing services interior design services and other business activities.
7.3 LESSOR TO GRANT EASEMENTS, ETC. 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, (c)
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 or additions 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 interests 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 beneficial to the proper
conduct of the business of Lessee on the Leased Property and does not materially
reduce the value of the Leased Property.
7.4 COMPLIANCE WITH GROUND LEASE. [Lessee shall comply with the
provisions of the Ground Lease and shall take no action, or omit to take any
action, that would cause or result in any default thereunder]. [IF APPLICABLE]
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ARTICLE VIII
------------
8.1 COMPLIANCE WITH LEGAL, INSURANCE REQUIREMENTS, LESSOR'S INSURANCE
AND TAX OBLIGATIONS. Subject to Article XII relating to permitted contests,
Lessee, at its expense, will promptly (a) comply and cause the Leased Property
to comply with all applicable Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property; provided, however, that Lessor shall be responsible for the cost of
compliance with Insurance Requirements presented to Lessor in writing including
Franchisor requirements which are related to the leased real and personal
property, as more fully set forth in Article XIII, and shall be responsible for
all Capital Expenditures and the items in clauses (1) through (6) of the
definition of "Impositions" set forth in Article II, unless the need for such
Capital Expenditure is the result of Lessee's negligence, misconduct or an
Alteration made by or commenced by Lessee other than Alterations contained in
the Capital Expenditure Budget, 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 REQUIREMENTS COVENANTS. 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 needed 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
subtenants, invitees or others to so comply with all Legal Requirements). Lessee
may, however, upon prior Notice to Lessor, and subject to the provisions of
Article XII, 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
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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 to Lessor by reason of such
contest or delay and (b) prosecutes the contest with due diligence and in good
faith.
8.3 ENVIRONMENTAL COVENANTS. In addition to, and not in diminution of,
Lessee's covenants and undertakings in Sections 8.1 and 8.2 hereof, Lessee
covenants and undertakes with Lessor as follows:
(a) 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, subject to
Lessor's obligation to pay for Capital Expenditures, Lessee agrees to give
Lessor prompt written notice of (1) all Environmental Liabilities; (2) all
pending, threatened 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 or near the Leased Property;
and (4) all facts, events or conditions that could reasonably lead to the
occurrence of any of the above-referenced matters.
(b) Lessor hereby agrees to defend, indemnify and save
harmless any and all Lessee Indemnified Parties from and against any and all
Identified Environmental Liabilities and Unidentified Environmental Liabilities,
in all cases, which were caused by the acts or negligent failures to act of
Lessor.
(c) Lessee hereby agrees to defend, indemnify and save
harmless any and all Lessor Indemnified Parties from and against any and all
Unidentified Environmental Liabilities caused by the acts or negligent failures
to act of Lessee. Lessee's responsibility to indemnify Lessor shall survive the
termination of this Lease.
(d) 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(b) or (c) (an
"Indemnified Environmental Liability"), the Indemnifying Party, upon request,
shall at its sole expense resist and defend such Proceeding, or cause the same
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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 adversarial
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.
For purposes of this Section 8.3, all amounts for which any
Indemnitee seeks indemnification shall be computed net of (a) any actual income
tax benefit resulting therefrom to such Indemnitee, (b) any insurance proceeds
received (net of tax effects) with respect thereto, and (c) any amounts
recovered (net of tax effects) from any third parties based on claims the
Indemnitee 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 Indemnitee agrees to use its reasonable efforts to pursue, or
assign to Lessee, any claims or rights it may have against any third party which
would materially reduce the amount of damages otherwise incurred by such
Indemnitee.
Notwithstanding anything to the contrary contained in this
Lease, if Lessor shall become entitled to the possession of the Leased Property
by virtue of the termination of this Lease or repossession of the Leased
Property, then Lessor may assign its indemnification rights under Section 8.3 of
this Lease (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
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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 Indemnified 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.
(e) At any time any Indemnitee has reason to believe
circumstances exist which could reasonably result in an Indemnified
Environmental Liability, upon reasonable prior written notice to Lessee stating
such Indemnitee's basis for such belief, an Indemnitee 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 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 Legal
Requirements and the safety of personnel and facilities or to protect
confidential or privileged information. All Indemnitees 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.
ARTICLE IX
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9.1 MAINTENANCE AND REPAIR.
(a) Subject to Lessor's obligation to make Capital
Expenditures and performance of Lessor's obligations under Subsection 9.1(c),
Lessee, at its sole expense, shall keep the Leased Property in good order and
repair, except for ordinary wear and tear (whether or not the need for such
repairs occurred as a result of Lessee's use, any prior use, the elements or the
age of the Leased Property, or any portion thereof). Except as otherwise
provided in Section 9.1(b), Article XIV or Article XV, and subject to Lessor's
obligation to make Capital Expenditures, Lessee shall, 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
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agency having jurisdiction over the Leased Property. Lessee, however, shall be
permitted upon prior written notice to Lessor to prosecute claims against
Lessor's predecessors 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 or elects to diligently pursue 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.
(b) Lessee shall, upon the expiration or prior termination of
the Term, vacate and surrender the Leased Property to Lessor in the 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 the Lease and except for ordinary wear and tear (subject to the
obligation of Lessee to maintain the Leased Property in good order and repair,
as provided in Subsection 9.1(a), damage by casualty or Condemnation, and
Lessor's obligations with respect to Capital Expenditures.
(c) Lessor shall be responsible for and pay for items of a
capital nature as defined in Exhibit E and to make Capital Expenditures, all as
required by and provided in Section 3.7
9.2 ENCROACHMENTS, RESTRICTIONS, ETC. If, as a result of any act or
omission by Lessee, 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 (each of the foregoing conditions being
referred to herein as an "Encroachment"), then promptly upon the request of
Lessor or at the behest of any person affected by any such encroachment,
violation or impairment, Lessee 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
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substantially in the manner and to the extent of the Leased Improvements were
operated prior to the assertion of such violation, impairment or encroachment.
If any such alteration is required for any reason other than Lessee's willful
misconduct or gross negligence, the cost of such alterations shall be treated as
Capital Expenditures and be performed pursuant to Section 3.7. Any such
alteration shall be made in conformity with the applicable requirements of
Article X. Nothing contained herein shall be construed as imposing on Lessee any
liability for, or responsibility for remedying the effects of, any Encroachment
occurring other than as a result of any willful misconduct or gross negligence
of Lessee. 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 Lessor.
ARTICLE X
---------
10.1 ALTERATIONS. Lessee shall have the right, but not the obligation,
with the prior approval of Lessor (which approval may not be unreasonably
withheld) to make additions, modifications or improvements to the Leased
Property in connection with the Primary Intended Use (collectively,
"Alterations"), provided that such action shall not significantly alter the
character or purposes or significantly detract from the value or operating
efficiency thereof and will not impair the revenue-producing capability of the
Leased Property or adversely affect the ability of Lessee to comply with the
provisions of this Lease. As a condition of its approval, Lessor may retain the
right to separately approve all plans and specifications related to any
additions, modifications or improvements. Lessor may further require Lessee to
obtain appropriate completion bonds and to provide for the removal of any
improvements upon the termination of this Lease. The cost of such Alterations
shall, subject to Lessor's obligations to make Capital Expenditures, be paid by
Lessee, and all such Alterations shall be included under the terms of this Lease
and upon expiration or earlier termination of the Lease shall pass to and become
the property of Lessor.
10.2 SALVAGE. All materials which are scrapped or removed in connection
with the making of repairs or alterations required or permitted by Article IX or
X shall be or become the property of Lessor or Lessee depending on which party
is paying for or providing the financing for such work.
10.3 JOINT USE AGREEMENTS. If Lessee constructs additional improvements
that are connected to the Leased Property or share maintenance facilities, HVAC
(as defined in Section 13.1(b)), 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
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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.
ARTICLE XI
----------
LIENS. Subject to the provision of Article XII 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, (c) 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 Impositions upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Article XXIII 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
Article XII, (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 sixty (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 Article XII hereof,
and (h) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXIV of this Lease, or result from Lessor's wrongful
failure to pay for Capital Expenditures.
ARTICLE XII
-----------
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 Article XI, 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 Article 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
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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. Upon the request of Lessor, Lessee
shall either (a) provide a bond or other assurance reasonably satisfactory to
Lessor that all Claims which may be assessed against the Leased Property
together with interest and penalties, if any, thereon will be paid, or (b)
deposit within the time otherwise required for payment with a bank or trust
company as trustee upon terms reasonably satisfactory to Lessor, as security for
the payment of such Claims, money in an amount sufficient to pay the same,
together with interest and penalties in connection therewith, as to all Claims
which may be assessed against or become a Claim on the Leased Property, or any
part thereof, in said legal proceedings. Lessee shall furnish Lessor and any
lender of Lessor with reasonable evidence of such deposit within five days of
the same. Lessor agrees to join in any such proceedings if the same be required
to legally prosecute such contest of the validity of such Claims; 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 save 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.
ARTICLE XIII
------------
13.1 GENERAL INSURANCE REQUIREMENTS. Lessee shall at all times keep the
Leased Property and the Facility (including all personal property) insured with
the kinds and amounts of insurance described below and in compliance with any
Franchise requirements; provided, however, that as to both Lessor's and Lessee's
insurance requirements, the kinds and amounts of insurance required are
reasonably available for purchase from insurance companies (i) authorized to
write insurance in the State and (ii) with a minimum financial stability rating
(A.M. Bests Rating) of "A minus 7" (or as otherwise reasonably
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acceptable to Lessor). The insurance shall be maintained in the amounts set
forth below with deductibles in amounts reasonably acceptable to Lessor. The
policies shall name Lessor and Lessee as insureds or as additional named
insureds, as the case may be. Losses shall be payable to Lessor and/or its
lenders except that Lessee's Business Interruption Insurance and Personal
Property Insurance shall name Lessor as loss payee. Any loss adjustment shall
require the written mutual consent of Lessor and Lessee, each acting reasonably
and in good faith. Evidence of insurance shall be provided to each party on the
date hereof, and evidence of renewal shall be provided, no later than thirty
(30) days prior to expiration of any policy required hereunder. The policies on
the Leased Property, including the Leased Improvements, Fixtures and all
personal property shall include:
(a) Lessor shall provide building insurance on the "Special
Form" (formerly "All Risk" form) in an amount and carry such risks as are
reasonably acceptable to Lessor, and personal property insurance on its property
as is reasonably acceptable to it;
(b) Lessor shall provide insurance on the "Comprehensive
Coverage Form" for loss or damage (direct and indirect) from steam boilers,
pressure vessels, electrical and mechanical systems, heating, ventilation and
air conditioning ("HVAC") systems or similar apparatus, now or hereafter
installed in the Facility, in an amount reasonably determined by Lessor from
time to time;
(c) Lessee shall provide loss of income/business interruption
insurance/rent insurance on the "Special Form", with proceeds to be in an amount
not less than one year of gross rent and other charges hereunder;
(d) Lessee shall provide commercial general liability
insurance, with amounts not less than $10,000,000, together with excess
liability coverage of not less than $50,000,000, covering each of the following:
bodily injury, death, or property damage liability per occurrence, personal and
advertising injury, general aggregate, products and completed operations, and
"all risk legal liability" (including, but not limited to, liquor law or "dram
shop" liability), all with respect to Lessor, Lessee and the Leased Property;
(e) Except to the extent Lessee is required to pay for the
same, or otherwise required to be provided by Lessor hereunder, Lessor shall
provide insurance covering such other hazards and in such amounts as may be
customary for comparable properties in the vicinity of the Leased Property and
reasonably acceptable to Lessor and is available from insurance companies,
insurance pools or other appropriate companies authorized to do business in the
State, and each with a minimum financial stability rating (A.M. Bests Rating) of
"A minus 7," at rates
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which are economically practicable in relation to the risks
covered as may be reasonably requested by Lessee;
(f) Lessee shall provide fidelity bonds with limits and
deductibles as may be reasonably requested by Lessor, covering Lessee's
employees and other crime insurance as may be reasonably required by Lessor;
(g) Lessee shall provide workmen's compensation insurance to
the extent required by law;
(h) Lessee shall provide vehicle liability and physical
damage insurance for owned, non-owned, and hired vehicles, in the amount of
$10,000,000; and
(i) Lessee shall provide such other insurance as Lessor may
reasonably request for facilities such as the Leased Property and the operation
thereof, consistent with Lessee's and Lessor's obligations hereunder.
13.2 FULL REPLACEMENT COST. The term "full replacement cost" as used
herein shall mean the actual replacement cost of the Leased Property requiring
replacement from time to time including an increased cost of construction
endorsement in the amount of $5,000,000, if available, and the cost of debris
removal in an amount not to exceed twenty-five percent (25%) of the cost of
construction. In the event either party believes that full replacement cost has
increased or decreased at any time during the Lease Term, it shall have the
right to have such full replacement cost redetermined. Lessee shall obtain such
additional insurance as may be required as a result of such redetermination as
full replacement cost.
13.3 WAIVER OF SUBROGATION. All insurance policies covering the Leased
Property, the Fixtures, the Facility or any personal property, including,
without limitation, contents, fire, property and "special perils" insurance,
shall expressly waive any right of subrogation on the part of the insurer
against the other party. Such policies will include such waiver clause or
endorsement so long as the same are obtainable without unreasonable extra cost,
and in the event of such an extra charge the other party, at its election, may
pay the same, but shall not be obligated to do so.
13.4 WAIVER OF COINSURANCE. All insurance policies covering the Leased
Property, the Fixtures, the Facility or any personal property, and all insurance
covering loss of income and business interruption, shall expressly waive any
coinsurance penalty and resulting reduction in insurance proceeds, provided that
a waiver of coinsurance is applicable with respect to a given insurance policy.
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13.5 FORM SATISFACTORY, ETC. All of the policies of insurance referred
to in this Article XIII shall be written in a form satisfactory to Lessor and
Lessee and by insurance companies satisfactory to Lessor and Lessee. Each party
agrees that it will not unreasonably withhold its approval as to the form of the
policies of insurance or as to the insurance companies selected. All premiums
therefor, shall be paid and such policies or binders delivered and followed with
duplicate policies as issued thereof to the other party prior to their effective
date (and, with respect to any renewal policy, thirty (30) days prior to the
expiration of the existing policy), and in the event of the failure of the party
required to provide such insurance either to effect such insurance as herein
called for or to pay the premiums therefor, or to deliver such policies or
certificates thereof at the times required, the other party shall be entitled,
but shall have no obligation, to effect such insurance and pay the premiums
therefor, which premiums shall be repayable upon written demand therefor. Each
insurer mentioned in this Article XIII shall agree, by endorsement to the policy
or policies issued by it, or by independent instrument, that it will give thirty
(30) days' written notice before the policy or policies in question shall be
materially altered, not renewed or cancelled.
13.6 INCREASE IN LIMITS. If either Lessor or Lessee at any time deems
the limits of bodily injury or property damage under the comprehensive public
liability insurance then carried to be either excessive or insufficient, Lessor
or Lessee shall endeavor in good faith to agree on the proper and reasonable
limits for such insurance to be carried; provided, however, that such limits
shall not be reduced below a minimum limit of $10,000,000. Thereafter, such
insurance shall be carried with the limits thus agreed on until further change
pursuant to the provisions of this Section.
13.7 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this Article XIII, Lessee's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance; provided, however, that the coverage afforded will not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all other requirements of this Lease by reason
of the use of such blanket policy of insurance, and provided further that the
requirements of this Article XIII are otherwise satisfied.
13.8 NO SEPARATE INSURANCE. Neither Lessee nor Lessor on its own
initiative, or pursuant to the request or requirement of any third party, shall
(i) take out separate insurance concurrent in form or contributing in the event
of loss, with that required in this Article, or (ii) increase the amount of any
then existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, are included therein as
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additional insureds, and the loss is payable under such additional separate
insurance in the same manner as losses are payable under this Lease. The party
obtaining such separate insurance shall immediately notify the other party of
the obtaining of any such separate insurance or of the increasing of any of the
amounts of the then existing insurance.
13.9 REPORTS OF INSURANCE CLAIMS. Lessee shall promptly investigate and
make a written report to the appropriate insurance company as to all accidents,
claims for damage relating to the ownership, operation, and maintenance of the
Leased Improvements, any damage or destruction to the Leased Improvements and
the estimated cost of repair thereof and shall prepare any and all reports
required by any insurance company in connection therewith. Lessee shall submit
such proposed filings and reports relating to such claims to Lessor for its
review and approval, which approval shall not be unreasonably withheld or
delayed, prior to submitting same to the appropriate insurance company. All
other adjustments, settlements and compromises shall be made only with the prior
written consent of Lessor.
13.10 FAILURE TO OBTAIN INSURANCE. In the event that Lessee shall fail
to obtain or maintain any such insurance, Lessor shall have the right but not
the obligation, to obtain such insurance and to charge the Premium cost of such
to Lessee as Additional Changes.
ARTICLE XIV
-----------
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid by the
payor to Lessor. If for any reason such proceeds are paid to any Person other
than Lessor, the recipient shall surrender all proceeds to Lessor to be held in
trust by Lessor in an interest-bearing account (subject to the provisions of
Section 14.6). The net proceeds shall be made available for reconstruction or
repair, as the case may be, of any damage to or destruction of the Leased
Property, or any portion thereof, and shall be paid out by Lessor from time to
time for the reasonable costs of such reconstruction or repair upon satisfaction
of reasonable terms and conditions. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased Property
shall be paid to Lessor. If Lessor is not required to, and elects not to, repair
and restore, and the Lease is terminated as described in Section 14.2(a), all
such insurance proceeds shall be retained by Lessor. All salvage resulting from
any risk covered by insurance shall belong to Lessor.
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14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
COVERED BY INSURANCE.
(a) If during the Term the Leased Property is totally or
partially damaged or destroyed by a risk covered by the insurance described in
Article XIII and the Facility thereby is rendered Unsuitable for its Primary
Intended Use or following such casualty the Facility is uneconomic for its
Primary Intended Use, Lessor shall, at Lessor's option, either (1) 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,
or (2) terminate this Lease by Notice to Lessee given within ninety (90) days of
the date of such damage or destruction. If Lessor determines to terminate this
Lease, the Lease will terminate as of the date specified in Lessor's notice not
later than sixty (60) after such notice without further liability hereunder
(other than liability stated to survive the expiration or termination hereof)
and Lessor shall be entitled to retain all insurance proceeds.
(b) Except as provided in Section 14.6, if during the Term the
Leased Property is partially damaged or destroyed by a risk covered by the
insurance described in Article XIII, but the Facility is not thereby rendered
Unsuitable for its Primary Intended Use, provided the Facility is not unecomonic
for its Primary Intended Use, Lessor 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 this Lease to the extent it can
reasonably do so with the net insurance proceeds actually received in respect to
such damage or destruction. Such damage or destruction shall not terminate this
Lease; provided, however, that if Lessor cannot within a reasonable time, obtain
all necessary government approvals, including building permits, licenses and
conditional use permits, after diligent efforts to do so, in order to be able to
perform all required repair and restoration work and to 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 this Lease, this Lease shall terminate on the date which is thirty
(30) days after Lessor shall have notified the Lessee of the passage in such
Lessor's reasonable determination of such reasonable period of time.
(c) If Lessor elects to repair or restore the Leased Property,
and the cost of the repair or restoration exceeds the net amount of proceeds
received by Lessor from the insurance required under Article XIII, Lessor shall
be obligated to contribute any excess amounts needed to restore the Leased
Property.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
NOT COVERED BY INSURANCE. Except as provided in Section 14.6
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below, if during the Term the Facility is totally or materially destroyed by a
risk not covered by the insurance described in Article XIII (whether or not
actually obtained or in full force), whether or not such damage or destruction
renders the Facility Unsuitable for its Primary Intended Use, Lessor at its
option shall either (a) repair, rebuild or restore the Facility at Lessor's sole
expense 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) terminate this Lease by Notice to Lessee given within ninety (90)
days of the date of such destruction and this Lease will terminate as of the
date specified in Lessor's notice not later than 60 days after such notice. If
such damage or destruction is not material, Lessor 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.
14.4 LESSEE'S PERSONAL 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.
14.5 ABATEMENT OF RENT. In the event of a casualty, except as otherwise
provided herein, this Lease shall remain in full force and effect and Lessee's
obligation to make rental payments and to pay all other charges required by this
Lease (whether through the payment of insurance proceeds to Lessor or otherwise)
shall remain unabated.
14.6 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
14.2 or 14.3 to the contrary, if damage to or destruction of the Facility occurs
during the last twenty-four (24) months of the Term, and such damage or
destruction cannot be repaired or restored within the earlier of (i) twelve (12)
months, or (ii) the expiration of the Term, then Lessee shall have the right to
terminate this Lease by giving written notice to Lessor within 60 days after the
date of damage or destruction, whereupon all accrued Rent shall be paid
immediately.
14.7 WAIVER. Lessee hereby waives any statutory rights of termination
that may arise by reason of any damage or destruction of the Facility that
Lessor is obligated to restore or may restore under any of the provisions of
this Lease.
ARTICLE XV
----------
15.1 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 Article XV.
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15.2 TOTAL TAKING. If (i) title to the fee of the whole of the Leased
Property or [(ii) THE ENTIRE GROUND LEASE IS CONDEMNED BY ANY CONDEMNOR], this
Lease shall cease and terminate as of the Date of Taking by the Condemnor. 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 that is 30 days
after the Date of Taking, to terminate this Lease as of the Date of Taking. Upon
such date, if such Notice has been given, this Lease shall thereupon cease and
terminate. All Rent 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 15.6 shall apply.
15.3 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 of this Lease, shall be solely the property of and payable to Lessor. Any
Award made 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, Lessee shall not initiate, prosecute or acquiesce in any
proceedings that may result in a diminution of any Award payable to Lessor.
15.4 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 each fails to timely elect to terminate this Lease as
provided in Section 15.3 hereof, Lessor at its cost (not to exceed the net
Condemnation Award) shall with all reasonable dispatch after the payment of such
award to Lessor 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. During and after the restoration of the untaken portion of the
Leased Property, 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, and the revenues affected by such partial Taking. In
the event Base Rent is abated, the Threshold Amounts shall also be reduced
accordingly. If Lessor and Lessee are unable to agree upon the amount of such
abatement and for reduction within thirty (30) days after such partial Taking,
the matter may be submitted by either party to a court of competent jurisdiction
for resolution.
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15.5 TEMPORARY TAKING. If the whole or any part of the Leased Property
or of Lessee's interest under this Lease is condemned by any Condemnor for its
temporary use or occupancy, this Lease shall not terminate by reason thereof,
and Lessee shall continue to pay, in the manner and at the terms herein
specified, the full amounts of Rent and Additional Charges, but, if the entire
Leased Property is so condemned, only to the extent of net proceeds of
condemnation awards. Except only to the extent that Lessee may be prevented from
so doing pursuant to the terms of the order of the Condemnor, Lessee shall
continue to perform and observe all of the other terms, covenants, conditions
and obligations hereof on the part of the Lessee to be performed and observed,
as though such Condemnation had not occurred. In the event of any Condemnation
as in this Section 15.5 described, the entire amount of any Award made for such
Condemnation allocable to the Term, whether paid by way of damages, rent or
otherwise, shall be paid to Lessee. Lessor covenants that upon the termination
of any such period of temporary use or occupancy it will, at its sole expense,
restore the Leased Property as nearly as may be reasonably possible to the
condition in which the same was immediately prior to such Condemnation, unless
such period of temporary use or occupancy extends beyond the expiration of the
Term, in which case Lessor shall not be required to make such restoration.
ARTICLE XVI
-----------
16.1 EVENTS OF DEFAULT. If any one or more of the
following events (individually, an "Event of Default") occurs:
(a) Lessee fails to make payment of the Base Rent when the
same becomes due and payable and such condition continues for a period of ten
(10) days; or
(b) Lessee fails to make payment of Percentage Rent when the
same becomes due and payable and such condition continues for a period of ten
(10) days; or
(c) Lessee fails to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within a period of thirty (30) days after receipt by the Lessee of Notice
thereof from Lessor, unless such failure cannot with due diligence be cured
within a period of thirty (30) days, in which case it shall not be deemed an
Event of Default if Lessee 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 one hundred eighty (180) days after
such Notice; or
(d) Lessee 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
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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 the
Lessee 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 the Lessee shall be adjudicated a bankrupt and such adjudication shall not
be vacated or set aside or stayed within sixty (60) days after the entry of an
order in respect thereof, or if a receiver of the Lessee or of the whole or
substantially all of the assets of the Lessee shall be appointed in any
proceeding brought by the Lessee or if any such receiver, trustee or liquidator
shall be appointed in any proceeding brought against the Lessee and shall not be
vacated or set aside or stayed within sixty (60) days after such appointment; or
(e) without Lessor's consent, Lessee 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
(f) the estate or interest of Lessee in the Leased Property or
any part thereof is voluntarily or involuntarily transferred, assigned,
conveyed, levied upon or attached in an proceeding (unless Lessee is contesting
such lien or attachment in good faith in accordance with Article XII hereof); or
(g) except as a result of damage, destruction or a partial or
complete Condemnation, Lessee voluntarily ceases operation of the Leased
Property for a period in excess of ten (10) days;
(h) the Franchise Agreement with respect to the Facility on
the Leased Premises is terminated by the franchisor as a result of any action or
failure to act by the Lessee or any Person with whom the Lessee contracts for
management services at the Facility; or
(i) an Event of Default shall occur under any
Percentage Lease (other than this Lease) between Lessor and
Lessee; or
(j) ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and their heirs shall at any
time cease to own directly not less than a collective 51% interest in Lessee or
shall fail to collectively control Lessee unless Lessor shall, in its sole and
absolute discretion, have granted its prior written consent thereto; or
(k) Lessee shall breach the terms of Section 7.2(f),
Article 19, Section 23.1, or Section 24.2; or
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(l) a breach or default shall occur under the Alignment of
Interests Agreement, which breach or default shall continue beyond any
applicable notice or grace period;
then, and in any such event, Lessor may, so long as such Event of Default
continues, 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 Lessee the shortest Notice of such termination permitted by law.
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.
No Event of Default (other than a failure to make a payment of money)
shall be deemed to exist under clause (c) during any time the curing thereof is
prevented by an Unavoidable Delay, provided that upon the cessation of such
Unavoidable Delay, Lessee remedies such default or Event of Default without
further delay.
16.2 REMEDIES.
(a) If any one or more Events of Default shall occur and be
continuing, then Lessor shall have the right, in addition to all other rights or
remedies available at law or in equity, at its election:
(i) To give Lessee written notice of Lessor's intention to
terminate this Lease on the earliest date permitted by law or on any later date
specified in such notice, in which case Lessee's right to possession of the
Leased Property shall cease and this Lease will be terminated on such date,
except as to liability of Lessee expressly, stated herein to survive the
termination of this Lease, including, without limitation, liability pursuant to
Section 16.2(d); or
(ii) Without further demand or notice, to reenter and take
possession of the Leased Property or any part of the Leased Property, repossess
the same, expel Lessee and those claiming through or under Lessee, and remove
the effects of both or either, using such force for such purposes as may be
lawful and necessary, without being liable for prosecution, without being deemed
guilty of any manner of trespass, and without prejudice to any remedies for
arrears or future payments of Base Rent, Percentage Rent, Additional Charges or
other amounts payable under this Lease or as a result of any preceding breach of
covenants or conditions; or
(iii) To cure any Event of Default and to charge Lessee
for the cost of effecting such cure, including, without
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limitation, reasonable attorneys, fees and interest on the amount so advanced at
the Overdue Rate, provided that Lessor shall have no obligation to cure any such
Event of Default.
(b) Should Lessor elect to reenter as provided in Section
16.2(a)(ii), or should Lessor take possession pursuant to legal proceedings or
pursuant to any notice provided by law while an Event of Default is continuing,
Lessor may, from time to time, without terminating this Lease, relet the Leased
Property or any part of the Leased Property in Lessor's or Lessee's name, but
for the account of Lessee, for such term or terms (which may be greater or less
than the period which would otherwise have constituted the balance of the Term
of this Lease) and on such conditions and upon such other terms (which may
include concessions of free rent and alteration and repair of the Leased
Improvements) as Lessor, in its reasonable discretion, may determine and Lessor
may collect and receive the rent. No such reentry or taking possession of the
Leased Property by Lessor will be construed as an election on Lessor's part to
terminate this Lease unless a written notice of such intention is given to
Lessee. No notice from Lessor under this Article 16 or under a forcible or
unlawful entry and detainer statute or similar law will constitute an election
by Lessor to terminate this Lease unless such notice specifically so states.
Lessor reserves the right following any such reentry or reletting to exercise
its right to terminate this Lease by giving Lessee such written notice, in which
event this Lease will terminate as specified in such notice.
(c) In the event that Lessor does not elect to terminate this
Lease as permitted in Section 16.2(a)(i), but elects instead to take possession
as provided in Section 16.2(a)(ii), Lessee shall pay to Lessor Base Rent,
Percentage Rent, Additional Charges and other sums as provided in this Lease
which would be payable under this Lease if such repossession had not occurred,
less the net proceeds, if any, of any reletting of the Leased Property, after
deducting all of Lessor's expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, attorneys,
fees, expenses of employees, alteration and repair costs and expenses of
preparation for such reletting. If, in connection with any reletting, the new
lease term extends beyond the existing Term of this Lease, or the premises
covered by such new lease include other premises not part of the Leased
Property, a fair apportionment of the rent received from such reletting and the
expenses incurred in connection with such reletting as provided in this
Paragraph will be made in determining the net proceeds from such reletting, and
any rent concessions will be equally apportioned over the term of the new lease.
Lessee shall pay such rent and other sums to Lessor monthly on the date on which
the Base Rent and Additional Charges, and, in the case of Percentage Rent,
quarterly on the day on which Percentage Rent, would have been payable under
this Lease if possession had not
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been retaken, and Lessor shall be entitled to receive such rent and other sums
from Lessee on each such day.
(d) If an Event of Default has occurred and this Lease is
terminated by Lessor, Lessee shall remain liable to Lessor for damages in an
amount equal to Base Rent, Percentage Rent, Additional Charges and other amounts
which would have been owing by Lessee for the balance of the Term of this Lease
had this Lease not been terminated, less the net proceeds, if any, of any
reletting of the Leased Property by Lessor subsequent to such termination, after
deducting all of Lessor's expenses in connection with such reletting, including,
but without limitation, the expenses enumerated in Section 16.2(c) (which
expenses, if the reletting is for a term that will extend beyond the existing
Term, will be apportioned as described in Section 16.2(c)). Lessor shall be
entitled to collect such damages from Lessee monthly on the day on which Base
Rent or Additional Changes, and quarterly on the day on which Percentage Rent,
would have been payable under this Lease if this Lease had not been terminated,
and Lessor shall be entitled to receive such Base Rent and other amounts from
Lessee on each such day. Alternatively, at the option of Lessor, in the event
this Lease is so terminated, Lessor shall be entitled to recover against Lessee
as damages for loss of the bargain and not as a penalty:
(i) The worth at the time of award of the unpaid Base
Rent and Percentage Rent which had been earned at the time of
termination;
(ii) The worth at the time of award of the amount, if any, by
which the unpaid Base Rent, Percentage Rent and all Additional Charges which
would have been earned after termination until the time of award exceeds the
amount of rental loss that Lessee proves could have been reasonable avoided;
(iii) The worth at the time of award of the amount, if any, by
which the unpaid Base Rent, Percentage Rent and Additional Charges for the
balance of the Term (had the same not been so terminated by Lessor) after the
time of award exceeds the amount of such rental loss during such period that
Lessee proves could be reasonably avoided; and
(iv) Any other amount necessary to compensate Lessor for all
the detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in clauses (i) and
(ii) above shall be computed by adding interest from the date of termination
until the time of the award computed at the Overdue Rate on the date on which
this Lease is terminated. The worth at the time of award of the amount referred
to in clause (iii) above shall be computed by using a
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discount rate of the Federal Reserve Bank of New York at the time of the award
plus one percent (1%).
(e) Percentage Rent for the purposes of this Section 16.2
shall be a sum equal to (i) the average of the annual amounts of the Percentage
Rent for the three (3) Fiscal Years immediately preceding the Fiscal Year in
which the termination, re-entry or repossession takes place, or (ii) if three
(3) Fiscal Years shall not have elapsed, the average of the Percentage Rent
during the preceding Fiscal Years during which the Lease was in effect, or (iii)
if one (1) Fiscal Year has not elapsed, the amount derived by analyzing the
Percentage Rent from the effective date of this Lease.
(f) Any suit or suits for the recovery of the amounts and
damages set forth in Sections 16.2(c) or (d) may be brought by, Lessor, from
time to time, at Lessor, a election, and nothing in this Lease will be deemed to
require Lessor to await the date upon which this Lease or the Term of this Lease
would have expired had there occurred no Event of Default. Each right and remedy
provided for in this Lease as a result of the occurrence of a default is
cumulative and is in addition to every other right or remedy provided for in
this Lease or now or after the date of the commencement of the Term existing at
law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Lessor of any one or more of the rights or remedies provided for
in this Lease or now or after the date of the commencement of the Term existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by Lessor of any or all other rights or remedies
provided for in this Lease or now or after the date of the commencement of the
Term existing at law or in equity or by statute or otherwise. All costs incurred
by Lessor in collecting any amounts and damages owing by Lessee pursuant to the
provisions of this Lease or to enforce any provision of this Lease, including,
but not limited to, reasonable attorneys' fees and related costs, whether or not
one or more actions are commenced by Lessor, shall also be recoverable by Lessor
from Lessee.
(g) Lessor shall have no obligation to mitigate damage
following the occurrence of an Event of Default.
16.3 WAIVER. Lessee hereby waives, to the extent permitted by
applicable law, (a) any right to a trial by jury in the event of summary
proceedings to enforce the remedies set forth in this Article 16; (b) the
benefit of any laws now or hereafter in any force exempting property from
liability for rent or for debt; (c) any equity of redemption; and (d) except as
provided herein, any presentations, demands for payment or for performance, or
notice of non-performance.
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16.4 APPLICATION OF FUNDS. Any payments received by Lessor under any of
the provisions of this Lease during the existence or continuance of any Event of
Default shall, to the extent permitted by applicable law, be applied to Lessee's
obligations in the order that Lessor may determine, in Lessor's discretion.
16.5 SURRENDER. If an Event of Default occurs (and the event giving
rise to such Event of Default has not been cured within the curative period
relating thereto as set forth in Section 16.1) and is continuing, whether or not
this Lease has been terminated pursuant to Section 16.1, Lessee shall, if
requested by Lessor to do so, 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. Lessee hereby waives any and all
requirements of applicable law for service of notice to reenter the Leased
Property. Lessor shall be under no obligation to, but may if it so chooses,
relet the Leased Property or otherwise mitigate Lessor's damages.
16.6 WAIVER. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (a) any right to a
trial by jury in the event of summary proceedings to enforce the remedies set
forth in this Article XVI, and (B) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt and Lessor waives
any right to "▇▇▇▇▇▇ the corporate veil" (included limited liability resulting
from LLC status) of Lessee other than to the extent funds shall have been
inappropriately paid any Affiliate of Lessee following a default resulting in an
Event of Default.
ARTICLE XVII
------------
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 the
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,
subject to Section 16.2, take all such action thereon as, in Lessor's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction
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of Lessee. All sums so paid by Lessor and all costs and expenses (including,
without limitation, reasonable attorney's 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.
ARTICLE XVIII
-------------
EXCULPATION. In the event of (a) a sale or transfer of all or any part
of the Leased Property (by operation of law or otherwise), (b) the making of a
lease of all or substantially all of the Leased Property or (c) a sale or
transfer (by operation of law or otherwise) of the leasehold estate under any
such lease, (i) the seller, transferor or lessor, as the case may be, shall be
and hereby is automatically and entirely released and discharged, from and after
the date of such sale, transfer or lease, of all liability in respect of the
performance of any of the terms of this Lease on the part of Lessor thereafter
to be performed and (ii) the term "Lessor" shall thereafter mean only the
purchaser, transferee or lessee, as the case may be, and the covenants and
agreements of Lessor shall thereafter be binding upon such purchaser, transferee
or lessee.
Lessee shall look solely to Lessor's estate and interest in
the Leased Property for the satisfaction of any right of Lessee for the
collection of a judgment or other judicial process or arbitration award
requiring the payment of money by Lessor, and no other property or assets of
Lessor. Lessor's agents, incorporators, subscribers, shareholders, officers,
directors, members, partners, principals (disclosed or undisclosed) an
affiliates, whether directly or through Lessor or through any receiver,
assignee, trustee in bankruptcy or through anyone else, shall not be subject to
levy, lien, execution, attachment, or other enforcement procedure for the
satisfaction of Lessee's rights and remedies under of with respect to or arising
from or in connection with this Lease.
ARTICLE XIX
-----------
19.1 REIT COMPLIANCE. Lessee acknowledges that the general partner of
Lessor intends to qualify as a real estate investment trust under the Code, and
that pursuant to Lessor's limited partnership agreement, Lessor may not take or
omit to take any action, or engage in any business or business transaction or
relationship, that would or could result in the REIT being disqualified from
treatment as a real estate investment trust. As a material inducement to Lessor
to enter into this Lease,
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Lessee hereby agrees that it shall not take or omit to take any action, or
engage in any business or business transaction or relationship, that would or
could result in the REIT being disqualified from treatment as a real estate
investment trust under the Code. Without limiting the generality of the
foregoing, Lessee agrees that:
(A) 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 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 19.1(a) 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.
(B) 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 paid by the sublessee thereunder would be
based, in whole or in part, on either (i) the income or profits derived by the
business activities of the sublessee, or (ii) any other formula such that 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.
19.2 SUBLEASE LESSEE LIMITATION. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublease the Leased Property to
any Person in which ▇▇▇▇▇▇ Lodging Trust, Inc., owns, directly or indirectly a
ten percent (10%) or more interest, within the meaning of Section 856(d)(2)(B)
of the Code, or any similar or successor provisions thereto.
19.3 LESSEE OWNERSHIP LIMITATION. Anything contained in this Lease to
the contrary notwithstanding, neither Lessee or an Affiliate of Lessee shall
acquire, directly or indirectly, a 10% or more interest in ▇▇▇▇▇▇ Lodging Trust,
Inc., within the meaning of Section 856(d)(2)(B) of the Code, or any similar or
successor provision thereto.
19.4 LESSEE OFFICER AND EMPLOYEE LIMITATION. Anything contained in this
Lease to the contrary notwithstanding, without the prior written consent of
Lessor, no officer or employee of Lessee (or any Person who furnishes or renders
services to the tenants of the Leased Property, or manages or operates the
Leased Property) shall at the same time be an officer of Lessor.
19.5 PAYMENTS TO AFFILIATES OF LESSEE. Except for (i)
payments made pursuant to a Management Agreement as permitted in
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Section 23.3 hereof, and (ii) payments made to acquire insurance as required by
Article XIII, Lessee shall not pay any fees to any Affiliate of Lessee during
the Term in connection with the Facility.
19.6 THIRD-PARTY MANAGEMENT ACTIVITIES. Notwithstanding any provision
of this Lease to the contrary, a subsidiary of Lessee may provide property
management services with respect to properties other than the Leased Property
pursuant to management contracts entered into with Persons other than Lessor;
provided, however, that Lessee may not provide such services with respect to any
hotel facility located within a ten (10) mile radius of any hotel facility owned
by Lessor as of the date hereof unless Lessee obtains the prior written consent
of each of Lessor's independent directors.
ARTICLE XX
----------
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 the aggregate of 105% 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
(c) 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
tenants at sufferance, to continued occupancy and use of the Leased Property.
Nothing contained 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.
ARTICLE XXI
-----------
RISK OF LOSS. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequences of the
damage or destruction thereof by fire, the elements, casualties, thefts, riots,
wars or otherwise, or in consequences of foreclosures, attachments, levies or
executions is retained by Lessor, and, in the absence of negligence, misconduct
or breach of this Lease by Lessee, Lessee shall in no event be answerable or
accountable therefore.
ARTICLE XXII
------------
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INDEMNIFICATION. Notwithstanding the existence of any insurance
provided for in Article XIII, and without regard to the policy limits of any
such insurance, Lessee will protect, indemnify, hold harmless and defend any
Lessor Indemnified Party from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses), to the extent permitted by
law, imposed upon or incurred by or asserted against any Lessor Indemnified
Party by reason of: (a) any accident, injury to or death of persons or loss of
or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including without limitation any claims under liquor liability, "dram
shop" or similar laws, (b) any past, present or future use, misuse, non-use,
condition, management, maintenance or repair or negligence by Lessee, its
agents, invitees, employees or guests, or any other person other than Lessor, of
the Leased Property or Lessee's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Lessor is made
a party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee, including Lessee's failure
to perform obligations (other than Condemnation proceedings), (c) any
Impositions that are the obligations of Lessee pursuant to the applicable
provisions of this Lease, (d) any failure on the part of Lessee to perform or
comply with any of the terms of this Lease, (e) the nonperformance of any of the
terms and provisions of any and all existing and future subleases of the Leased
Property to be performed by the landlord thereunder, and (f) the sale of or
consumption of alcoholic beverages on or in the Leased Property, (g) claims of
Franchisor and Managers. Any amounts that become payable by Lessee under this
Article shall be paid within ten days after demand therefor by Lessor, and if
not timely paid, shall bear a late charge (to the extent permitted by law) at
the Overdue Rate from the expiration of such ten (10) day period date of such
determination to the date of payment. Lessee, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against any Lessor Indemnified Party or may compromise or otherwise dispose of
the same as Lessee sees fit. Nothing herein shall be construed as indemnifying
any Lessor Indemnified Party against its own grossly negligent acts or omissions
or willful misconduct.
Lessor shall indemnify and hold any Lessee Indemnified Party
from and against any and all liabilities, losses, interest, damages, costs or
expenses (including, without limitation, reasonable attorneys' fees) assessed
against, levied upon or collected from any Lessee Indemnified Party arising out
of the negligence, misconduct or breach of this Lease by Lessor.
Lessee's and Lessor's liability under the provisions of this
Article shall survive any termination of this Lease.
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ARTICLE XXIII
-------------
23.1 SUBLETTING AND ASSIGNMENT. Except as expressly permitted herein,
Lessee shall not mortgage, assign, sublet, or otherwise transfer its interest in
the Facility and, subject to the provisions of Article XIX and Section 23.2 and
any other express conditions or limitations set forth herein, Lessee may, but
only with the prior written consent of Lessor, which may be granted or withheld
in Lessor's sole and absolute discretion, (a) assign this Lease, (b) sublet all
or any part of the Leased Property, or (c) 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 Rent payable under this Lease. In
the case of a subletting, the sublessee shall comply with the provisions of
Section 23.2, 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. 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. 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.
23.2 ATTORNMENT. Lessee shall insert in each sublease permitted under
Section 23.1 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.
23.3 MANAGEMENT AGREEMENT. Notwithstanding anything contained in this
Article XXIII to the contrary, Lessee may, with the prior written consent of
Lessor (which consent may be
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withheld in the sole and absolute direction of Lessor), enter into an agreement
(a "Management Agreement") with any third party to assign responsibility for the
management and/or operation of all or any part of the Leased Property, including
any retail or restaurant portion of the Leased Improvements, provided, however,
that Lessee shall not enter into any Management Agreement which will materially
diminish the actual or potential Rent payable under this Lease. Notwithstanding
the above, 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.
ARTICLE XXIV
------------
24.1 OFFICERS' CERTIFICATES; FINANCIAL STATEMENTS; LESSOR'S
ESTOPPEL CERTIFICATES AND COVENANTS.
(a) At any time and from time to time upon not less than
twenty (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
thereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor or Lessor's lender. Any such certificate furnished pursuant
to this Article may be relied upon by Lessor, any lender and any prospective
purchaser of the Leased Property.
(b) Lessee will furnish the following statements to
Lessor:
(1) on or before the twentieth (20th) day of each
month, a detailed profit and loss statement for the Leased
Property for the preceding month, a balance sheet for the
Leased Property as of the end of the preceding month, and a
detailed accounting of revenues for the Leased Property for
the preceding month, and such other information as may be
requested by Lessor or required by Lessor's lender, each in
form acceptable to Lessor; and
(2) the most recent Consolidated Financials of Lessee
within forty-five (45) days after each quarter of any Fiscal
Year (or, in the case of the final quarter in any Fiscal Year,
the most recent Audited Consolidated Financials of Lessee
within ninety (90) days) after such final quarter; and
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(3) with reasonable promptness, such information
respecting the financial condition and affairs of
Lessee as may be requested by Lessor.
(c) At any time and from time to time upon not less than
twenty (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.
24.2 LESSEE'S FINANCIAL COVENANTS. Lessee shall not pay any dividends
to its shareholders, except in the amount necessary for such shareholders to pay
their respective federal, state and local income taxes to the extent such taxes
are allocable to Lessee's taxable income and reportable as such on such
shareholders' tax returns, until such time as Lessee has fully complied with the
terms and provisions of the "Alignment of Interests Agreement" dated , (the
"Alignment of Interests Agreement"). Lessee shall not incur any indebtedness
(other than ordinary trade payables) unless required (i) to pay rent, (ii) to
maintain and repair the Leased Property in accordance with Article IX, or (iii)
to make Alterations in accordance with Article X, provided that Lessee shall
thereafter retire such indebtedness prior to making any dividend payments to its
shareholders except to the extent needed to pay federal, state or local income
tax on their respective shares of Lessee's taxable income.
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ARTICLE XXV
-----------
BOOKS AND RECORDS; LESSOR'S RIGHT TO INSPECT. Lessee shall keep full
and adequate books of account and other records reflecting the results of
operation of the Facility on an accrual basis, all in accordance with the
Uniform System and generally accepted accounting principles. The books of
account and all other records relating to or reflecting the operation of the
Facility shall be kept either at the Facility or at Lessee's offices in
Cleveland, Ohio, 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
Facility including, without limitation, books of account, guest records and
front office records, at all times shall be the property of Lessee, (subject to
the terms of Section 35.2) but shall not be removed from the Facility or
Lessee's offices by Lessee without Lessor approval.
Lessee shall permit Lessor and its authorized representatives
as frequently as reasonably requested by Lessor to inspect the Leased Property
and Lessee's accounts 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.
ARTICLE XXVI
------------
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.
ARTICLE XXVII
-------------
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.
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ARTICLE XXVIII
--------------
ACCEPTANCE OF SURRENDER. No surrender to Lessor of this Lease or 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.
ARTICLE XXIX
------------
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.
ARTICLE XXX
-----------
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 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.
ARTICLE XXXI
------------
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.
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ARTICLE XXXII
-------------
NOTICES. All notices, demands, requests, consents, approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served, mailed (by registered or certified mail, return receipt
requested and postage prepaid) or sent by facsimile transmission, addressed to
Lessor at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, and addressed to Lessee at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, or to such other address or addresses as
either party may hereafter designate, Notice by personal delivery or facsimile
transmission 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.
ARTICLE XXXIII
--------------
33.1 LESSOR MAY GRANT LIENS, SUBORDINATION. Without the consent of
Lessee, Lessor may, from time to time, directly or indirectly, create or
otherwise cause to exist, modify or extend any lien, encumbrance, superior lease
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. This Lease and Lessee's interest herein shall
be subordinate to each and every Encumbrance unless the holder thereof elects
otherwise.
(a) The subordination provisions herein contained shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Lessee shall execute and deliver promptly
any certificate that Lessor or its successors in interest may request. Lessee
hereby constitutes and appoints Lessor or its successors in interest as Lessee's
attorney-in-fact to execute and deliver any such certificate or certificates for
and on behalf of Lessee. Notwithstanding any provision in this Lease or any
separate agreement with Lessee, Lessee covenants and agrees that Lessee shall
not do any act, or refrain from doing any act, if doing such act, or refraining
from doing such act, would constitute a default or breach of any Encumbrance.
(b) This Lease has been, or may be, assigned as collateral
security. After Lessee receives notice of such assignment and so long as the
obligations secured by such assignment remain outstanding, Lessee (i) will not
pay any Rent under this Lease more than thirty (30) days in advance of its due
date without the prior written consent of the holder of any such
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assignment (the "Assignee"), (ii) will not surrender or consent to the
modification of any of the terms of the Lease nor to the termination hereof by
Lessor without the Assignee's prior written consent, (iii) will continue to pay
Rent under this Lease to the Lessor or as directed by Lessor in accordance with
the terms of this Lease (unless and until notified otherwise in writing by the
Assignee in case of an event of default under the Assignee's mortgage or other
Encumbrance, in which event Lessee will pay the rent due under this Lease
directly to the Assignee or the Assignee's designee) and (iv) will not seek to
terminate this Lease or seek or assert any set-off or counterclaim against Rent
by reason of any act or omission of the Lessor, until Lessee shall have given
written notice of such act or omission to the Assignee (at the Assignee's last
address furnished to Lessee) and until a reasonable period of time shall have
elapsed following the giving of such notice, during which period the Assignee
shall have the right, but shall not be obligated, to remedy such act or
omission. Any payments made to the Assignee by Lessee shall not affect or impair
the other rights and remedies the Assignee may have under said mortgage or
Encumbrance or otherwise against the Lessor.
(c) Lessee agrees, at the election of the holder of any
interest superior to this Lease pursuant to the terms hereof ("Holder") to fully
and completely attorn to, from time to time, and to recognize Holder or any
person, or such person's successors or assigns, who acquires the interest of
Lessor under the Lease as Lessee's lessor under this Lease (collectively,
"Successor Landlord") upon the then executory terms of this Lease. The foregoing
provisions of this paragraph shall inure to the benefit of any such Successor
Landlord, shall apply notwithstanding that, as a matter of law, the Lease may
automatically terminate, shall be self-operative upon any such demand, and no
further instrument shall be required to give effect to said provisions. Lessee
however, upon demand of any such Successor Landlord agrees to execute, from time
to time, lessor or any instruments to evidence and confirm the provisions of
this paragraph, satisfactory to lessor or any such Successor Landlord. Upon such
attornment and the acceptance thereof in writing by such Successor Landlord,
this Lease shall continue in full force and effect as a direct lease between
such Successor Landlord and Lessee upon all of the then executory terms of the
Lease, except that such Successor Landlord shall not be:
(i) liable for any act or omission of any prior
lessor (including Lessor); or
(ii) liable for the return of any security deposit
(unless actually received by such Successor Lessor); or
(iii) bound by any waiver or forbearance of any prior
lessor (including Lessor); or
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(iv) be liable for any damages or other relief
attributable to any latent or patent defects in
construction; or
(v) bound by any covenant to perform or complete
any construction or to pay any sum to Lessee; or
(vi) subject to any offsets or defenses which might
have against any prior Lessor (including Lessor); or
(vii) bound by any Rent which Lessee might have paid for more
than the current quarter to any prior lessor (including Lessor); or
(viii) bound by any amendment or modification of the
Lease made without its consent.
(d) If a lender or prospective lender shall request
modifications to this Lease, Lessee shall not unreasonably withhold, delay or
defer Lessee consent thereto.
(e) Lessor shall request of each Holder that such Holder enter
into a so-called "non-disturbance agreement" with Lessee on such Holder's
standard form, and Lessor shall make good faith reasonable efforts to obtain
such non-disturbance agreement.
33.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Section 33.3,
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 34.2 shall survive the termination of this Lease
with respect to the Leased Property.
33.3 BREACH BY LESSOR. It shall be a breach of this Lease if Lessor:
[(i)] fails to observe or perform any term, covenant or condition of this Lease
on its part to be performed and such failure continues for a period of thirty
(30) days after Notice thereof from Lessee, unless such failure cannot with due
diligence be cured without a period of thirty (30) days, in which case such
failure shall not be deemed to continue if Lessor,
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within such thirty (30) day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof, or [(ii) defaults
under the Ground Lease if such default is not cured within thirty (30) days
after Notice thereof from the ground lessor of the Ground Lease.] The time
within which Lessor shall be obligated to cure any such failure also shall be
subject to extension of time due to the occurrence of any Unavoidable Delay.
33.4 LESSEE'S COOPERATION. In connection with the termination of this
Lease due to the expiration of the Term or otherwise, Lessee shall cooperate
with Lessor in transferring possession of the Leased Property to a new tenant,
including, without limitation, cooperating with the transfer of any licenses or
permits necessary for the operation of the Facility.
ARTICLE XXXIV
-------------
34.1 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.
34.2 TRANSITION PROCEDURES. Upon the expiration or termination of the
Term of this Lease, for whatever reason, Lessor and Lessee shall do the
following (and the provisions of this Section 35.2 shall survive the expiration
or termination of this Lease until they have been fully performed) and, in
general, shall cooperate in good faith to effect an orderly transition of the
management of the Facility.
(a) TRANSFER OF LICENSES. Upon the expiration or
earlier termination of the Term, Lessee shall use its reasonable
efforts (i) to transfer to Lessor or Lessor's nominee, to the
extent assignable or transferable, the Franchise Agreement, any
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liquor licenses, and all other licenses, operating permits and other
governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental entities, that may be necessary for the
operation of the Facility (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 of Lessor's nominee
of any applications for, all Licenses; provided, in either case, except in the
case of a termination resulting from an Event of Default by Lessee, 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.
(b) LEASES AND CONCESSIONS. Lessee shall assign to Lessor or
Lessor's nominee simultaneously with the termination of this Lease, and the
assignee shall assume any and all subleases and concession agreements in effect
with respect to the Facility which Lessor elects to have assigned and to assume.
(c) BOOKS AND RECORDS. Any and all books, records files and
keys for the Facility kept by Lessee pursuant to this Lease or otherwise shall
be delivered promptly to Lessor or Lessor's nominee, simultaneously with the
termination of this Agreement, but such books and records shall thereafter be
available to Lessee at all reasonable times for inspection, audit, examination,
and transcription for a period of three (3) years and Lessee may retain (on a
confidential basis) copies or computer records thereof.
(d) TRANSITION ADJUSTMENTS. Lessee shall pay all accounts
payable and accrued expenses relating to the Leased Property as of the date of
termination of this Lease, to the extent such accounts payable and accrued
expenses are required to be paid by Lessee under this Lease, and Lessee shall be
entitled to receive and retain all accounts receivable, and an amount equal to
all prepaid expenses paid by Lessee, as of the date of this termination. All
advance bookings deposits and credits shall be paid to Lessor.
(e) The provisions of this Section 34.2 shall survive the
termination or expiration of this Lease.
34.3 CHANGE OF FRANCHISE. Lessee may change the existing franchise
covering the Leased Property with the prior written consent of Lessor, which
consent may be withheld in sole and absolute discretion of Lessor.
34.4 WAIVER OF PRESENTMENT, ETC. Lessee waives all presentments,
demands 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.
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ARTICLE XXXV
------------
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 in which reference to this Lease, and all
options contained herein, shall be made. Lessee shall pay all costs and expenses
of recording such memorandum of this Lease.
ARTICLE XXXVI
-------------
LESSOR'S OPTION TO PURCHASE ASSETS OF LESSEE. Effective on not less
than ninety (90) days' prior Notice given at any time within one hundred eighty
(180) days before the expiration of the Term, but not later than ninety (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 have the option to purchase some or all of the assets of Lessee, tangible
and intangible, relating to the Leased Property (other than this Lease and those
matters covered by Section 35.2), at the expiration or earlier termination of
this Lease for an amount (payable in cash on the expiration or earlier
termination date of this Lease) equal to the then book value thereof.
Notwithstanding any such purchase, Lessor shall obtain no rights to any trade
name or logo used in connection with the Franchise Agreement unless separate
agreement as to such use is reached with the applicable franchisor.
ARTICLE XXXVII
--------------
LESSOR'S OPTION TO TERMINATE LEASE. In the event Lessor enters into a
bona fide contract to sell the Leased Property to a non-Affiliate, Lessor may
terminate the Lease by giving not less than thirty (30) days' prior Notice to
Lessee of Lessor's election to terminate this Lease effective upon the closing
under such contract. In the event a closing under such contract does not occur,
this Lease shall continue to be in full force and effect. Effective upon such
closing, this Lease shall terminate and be of no further force and effect except
as to any obligations of the parties existing as of such date that survive
termination of this Lease. As compensation for the early termination of its
leasehold estate under this Article XXXVIII, Lessor shall within ninety (90)
days of such closing pay to Lessee the fair market value of Lessee's leasehold
estate hereunder as of the closing of the sale of the Leased Property. In the
event Lessor and Lessee are unable to agree upon the fair market value of the
original leasehold estate, it shall be determined by appraisal using the
appraisal procedure set forth in Article XXXIII.
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For the purposes of this Article, fair market value of the leasehold
estate means, as applicable, an amount equal to the price that a willing buyer
not compelled to buy would pay a willing seller not compelled to sell for
Lessee's leasehold estate under this Lease.
ARTICLE XXXVIII
---------------
COMPLIANCE WITH FRANCHISE AGREEMENT. To the extent any of the
provisions of the Franchise Agreement impose a greater obligation on Lessee than
the corresponding provisions of this Lease, then Lessee shall be obligated to
comply with, and the provisions of this Lease are deemed modified to the extent
necessary to comply with, the provisions of the Franchise Agreement, it being
the intent of the parties hereto that Lessee comply in every respect with the
provisions of the Franchise Agreement so as to avoid any default thereunder. In
addition, and notwithstanding any other provisions to the contrary contained in
this Lease, in the event that Franchisor terminates the Franchise Agreement for
any reason, Lessor shall have the right to terminate this lease in which case
neither party shall thereafter have any liability to the other.
ARTICLE XXXIX
-------------
LESSOR'S LIMITATION ON LIABILITY. To the extent Lessor's obligations
hereunder are covered by the obligations or are the subject of the obligations
of parties to Contribution Agreements other than Lessor under the Contribution
Agreements, Lessor's liability shall be limited to amounts received under such
Contribution Agreements at the sole cost and expense of Lessee.
[ARTICLE XXXX]
--------------
CONDITION. THIS LEASE IS CONDITIONAL UPON LESSOR HAVING ACQUIRED THE
LEASED PREMISES AND THE OTHER 8 HOTEL PROPERTIES THROUGH AN INITIAL PUBLIC
OFFERING OF STOCK IN LESSOR. IN THE EVENT THAT THE INTITIAL PUBLIC OFFERING DOES
NOT OCCUR AND LESSOR DOES NOT ACQUIRE THE LEASED PREMISES AND THE OTHER 8 HOTEL
PROPERTIES, THEN THIS LEASE SHALL BE VOID AB INITIO, OF NO FURTHER FORCE AND
EFFECT AND THE PARTIES SHALL THEREAFTER HAVE NO LIABILITY TO THE OTHER
HEREUNDER.
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IN WITNESS WHEREOF, the parties have executed this Lease under
seal by their duly authorized officers as of the date first above written.
"LESSOR"
▇▇▇▇▇▇ HOTEL PROPERTIES, L.P.
By:___________________________
Title:________________________
"LESSEE"
▇▇▇▇▇▇ MANAGEMENT COMPANY
LIMITED LIABILITY COMPANY
By:___________________________
Title:________________________
[CORPORATE SEAL]
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
The foregoing instrument was acknowledged before me this _____
day of ____________, 1996, by _________________ as _______________ of ▇▇▇▇▇▇
Hotel Properties, L.P., an Ohio limited partnership.
My commission expires: ______________________.
------------------------------
Notary Public
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STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
The foregoing instrument was acknowledged before me this _____
day of ____________, 1996, by _________________ as _______________ of ▇▇▇▇▇▇
Management Company Limited Liability
Company, an Ohio limited liability company.
My commission expires: ______________________.
------------------------------
Notary Public
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Master Lease
Exhibit A
PROPERTY DESCRIPTION
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