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EXHIBIT 10.1
CONSOLIDATED LEASE AMENDMENT
THIS CONSOLIDATED LEASE AMENDMENT (hereinafter called "Lease"), made
as of the 15th day of November, 1996, by and between EQUITY INNS PARTNERSHIP,
L.P., a Tennessee limited partnership (hereinafter called "Lessor"), and
CROSSROADS/MEMPHIS PARTNERSHIP, L.P., a Delaware limited partnership
(hereinafter called "Lessee"), provides as follows:
W I T N E S S E T H:
WHEREAS, pursuant to that certain Contribution Agreement, dated as of
October 4, 1996 (the "Contribution Agreement") among Crossroads Hospitality
Company L.L.C. ("Crossroads"), Trust Leasing, Inc. ("Prior Lessee"), Trust
Management, Inc. ("TM") and Xxxxxxx X. XxXxxxx, Xx. ("XxXxxxx"), Prior Lessee
has assigned to Lessee all of its right, title and interest in forty-eight (48)
Separate Lease Agreements listed on Exhibit A attached hereto (the "Existing
Leases").
WHEREAS, notwithstanding the foregoing, the Existing Lease for the
State College, Pennsylvania site, dated January 3, 1995, is by and between
Lessor and State College BBQ/Concord Joint Venture ("State College Lessee"), a
joint venture between State College BBQ Limited Partnership and Prior Lessee;
WHEREAS, Prior Lessee's joint venture interest in State College Lessee
has been transferred to Lessee and as a result, for purposes of this Lease,
Lessee (with respect to the State College, Pennsylvania site) shall mean State
College Lessee, which is joining in the execution hereof solely as to the State
College, Pennsylvania site;
WHEREAS, Lessee is an Affiliate (as hereinafter defined) of IHC and,
as such, is uniquely experienced in the management and operations of facilities
substantially similar to the Facility (as hereinafter defined);
WHEREAS, pursuant to that certain Master Agreement, dated as of
November 4, 1996 among Lessor, Lessee, Equity Inns, Inc. ("Equity Inns"),
Interstate Hotels Corporation ("IHC") and Crossroads Future Company, L.L.C.
(the "Master Agreement"), Lessor (in consideration of the foregoing recital)
has consented to the assignment of the Existing Leases from Prior Lessee to
Lessee, and Lessor and Lessee have agreed that the Existing Leases should be
amended and restated and, as a matter of convenience, have agreed upon the
terms of a single instrument (i.e., this Consolidated Lease Amendment) that
will embody the mutual agreements of Lessor and Lessee in each of the Existing
Leases and supersede the terms thereof.
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NOW, THEREFORE, intending to be legally bound, Lessor and Lessee agree
that (a) the Existing Leases shall remain in full force and effect as
forty-eight (48) separate leases, as amended hereby, (b) this Agreement shall
not be deemed to be a novation or release of any of the Existing Leases, but
only an amendment and restatement thereof, and (c) henceforth the terms of each
of the Existing Leases shall be governed by this Consolidated Lease Amendment,
with the same force and effect as if the terms set forth below had been
restated in their entirety in forty-eight (48) separate lease restatements;
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:
(a) the various parcels of land or ground leasehold
interests which are subject to the Existing Leases listed on Exhibit A attached
hereto and by reference incorporated herein and more particularly described in
each of the Existing Leases (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 offsite), parking
areas and roadways appurtenant to such buildings and structures presently
situated upon the Land (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to
the Land and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items
of property required for or incidental to the use of the Leased Improvements as
a hotel, including all components thereof, now and hereafter permanently
affixed to or incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, all of
which to the greatest extent permitted by law are hereby deemed by the parties
hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto (collectively, the
"Fixtures");
(e) all furniture and furnishings and all other items of
personal property (excluding Inventory and personal property owned by Lessee)
located on, and used in
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connection with, the operation of the Leased Improvements as a hotel, together
with all replacements, modifications, alterations and additions thereto; and
(f) all existing leases of space within the Leased
Property (including any security deposits or collateral held by Lessor pursuant
thereto).
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
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, 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 Individual Leased Property. The intent of the parties is that
each of the Existing Leases, as amended and restated by this Consolidated Lease
Amendment, shall constitute a separate lease for each of the forty-eight (48)
Leased Properties described in the forth-eight (48) Existing Leases,
notwithstanding the fact that this Consolidated Lease Amendment restates the
terms of each of the forty-eight (48) Existing Leases. Therefore, the term
"this Lease" contained in this Consolidated Lease Amendment shall mean the
terms hereof as they apply to each individual Leased Property and not all of
the Leased Properties collectively or any combination of two or more of the
Leased Properties. Unless the context otherwise requires, "Leased Property"
shall mean any individual hotel property listed in Exhibit A and shall not mean
all of the hotels collectively or any combination of two (2) or more hotels.
1.3 Separate Lease Agreements. At the request of either Party,
the other Party shall enter into an individual lease agreement, in form and
substance substantially similar to this Consolidated Lease Amendment, as to any
one or more of the hotel properties listed on Exhibit A providing for Rent
attributable to such hotel properties under this Agreement, and Lessee shall
cause Interstate Hotels Company ("IH Company") and IHC to execute an amended
and restated lease guaranty, in form and substance substantially similar to the
lease guaranty for this Agreement, for such individual lease agreements and
shall cause a Subordination Agreement to be executed with respect to any
management agreements affecting any hotels subject to such individual leases
except those managed by Promus.
1.4 Term. The term of the Lease (the "Term") shall commence on
the date hereof (the "Commencement Date") and shall end on the fifteenth (15th)
anniversary of the last day of the month in which the Commencement Date occurs,
unless sooner terminated or later renewed and extended in accordance with the
provisions hereof.
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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 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 3.3.
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, more than fifty percent (50%)
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). The term "person" means and includes
individuals, corporations, general and limited partnerships, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.
Annual Budgets: As used in this Lease, the term "Annual Budgets"
shall mean the Operating Budget and Capital Budget prepared, delivered and
approved in accordance with Section 3.6.
Annual Revenue Computation: As defined in Exhibit D.
Award: As defined in Section 15.1(c).
Base Rate: The rate of interest announced publicly by Citibank, N.A.,
in New York, New York, from time to time, as such bank's base rate. If no such
rate is announced or becomes discontinued, then such other rate as Lessor may
reasonably designate.
Base Rent: As defined in Article III.
Beverage Sales: Gross revenue from (i) the sale of wine, beer, liquor
or other alcoholic beverages, whether sold in the bar or lounge, delivered to a
guest room, sold at meetings or banquets or at any other location at the Leased
Property or from (ii) non-alcoholic beverages sold in the bar or lounge. Such
revenues shall not include the following:
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(a) Any gratuity or service charge added to a customer's
xxxx or statement in lieu of a gratuity which is paid
to an employee;
(b) Any revenues that are subsequently credited, rebated
or refunded in the ordinary course of business; and
(c) Sales taxes or taxes of any other kind imposed on the
sale of alcoholic or other beverages.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which national banks in the City of New York, New York, or
in the municipality wherein the Leased Property is located are closed.
Capital Budget: As defined in Section 3.6(b).
Capital Expenditures: Amounts advanced to pay the costs of Capital
Improvements.
Capital Improvements: Improvements to (A) the external walls and
internal load-bearing walls (other than windows and plate glass) of the
Facility; (B) the roof of the Facility; (C) private roadways, parking areas,
sidewalks and curbs appurtenant thereto (other than cleaning, patching and
striping); (D) mechanical, electrical and plumbing systems that service common
areas, entire wings of the Facility or the entire Facility, including conduit
and ductware connected thereto; and (E) items of the types described on Exhibit
C attached hereto as "Capital items" of the Facility.
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 1.4 of the Lease.
Condemnation, Condemnor: As defined in Section 15.1.
Consumer Price Index: The "Consumer Price Index" published by the
Bureau of Labor Statistics of the United States Department of Labor, U.S. City
Average, All Items for Urban Wage Earners and Clerical Workers (1982-1984 =
100).
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.
Date of Taking: As defined in Section 15.1(b).
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Environmental Authority: Any department, agency or other body or
component of any Government that exercises any form of jurisdiction or
authority under any Environmental Law.
Environmental Authorization: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.
Environmental Laws: All applicable federal, state, local and foreign
laws and regulations relating to pollution of the environment (including
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including without limitation laws and regulations relating
to emissions, discharges, Releases or threatened Releases of Hazardous
Materials or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials. Environmental Laws include but are not limited to CERCLA, FIFRA,
RCRA, XXXX and TSCA.
Environmental Liabilities: Any and all obligations to pay the amount
of any judgment or settlement, the cost of complying with any settlement,
judgment or order for injunctive or other equitable relief, the cost of
compliance or corrective action in response to any notice, demand or request
from an Environmental Authority, the amount of any civil penalty or criminal
fine, and any court costs and reasonable amounts for attorney's fees, fees for
witnesses and experts, and costs of investigation and preparation for defense
of any claim or any Proceeding, regardless of whether such Proceeding is
threatened, pending or completed, that may be or have been asserted against or
imposed upon Lessor, Lessee, any Predecessor, the Leased Property or any
property used therein and arising out of:
(a) Failure of Lessee, Lessor, any Predecessor or the
Leased Property to comply at any time with all
Environmental Laws;
(b) Presence of any Hazardous Materials on, in, under, at
or in any way affecting the Leased Property;
(c) A Release at any time of any Hazardous Materials on,
in, at, under or in any way affecting the Leased
Property;
(d) Identification of Lessee, Lessor or any Predecessor
as a potentially responsible party under CERCLA or
under any Environmental Law similar to CERCLA;
(e) Presence at any time of any above-ground and/or
underground storage tanks, as defined in RCRA or in
any applicable Environmental Law on, in, at or under
the Leased Property or any adjacent site or facility;
or
(f) Any and all claims for injury or damage to persons or
property arising out of exposure to Hazardous
Materials originating or located at the Leased
Property, or resulting from operation thereof or any
adjoining property.
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Equity Inns: Equity Inns, Inc., a Tennessee corporation.
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.
Fair Market Rental: The fair market rental of the Leased Property
means the rental which a willing tenant not compelled to rent would pay a
willing landlord not compelled to lease for the use and occupancy of such Leased
Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder and (b) determined in accordance with the
appraisal procedures set forth in Article XXXIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee.
Fair Market Value: The fair market value of the Leased Property means
an amount equal to the price that a willing buyer not compelled to buy would
pay a willing seller not compelled to sell for such Leased Property, (a)
assuming the same is unencumbered by this Lease, (b) determined in accordance
with the appraisal procedures set forth in Article XXXIII or in such other
manner as shall be mutually acceptable to Lessor and Lessee, (c) assuming that
such seller must pay customary closing costs and title premiums, and (d) taking
into account the positive or negative effect on the value of the Leased
Property attributable to the interest rate, amortization schedule, maturity
date, prepayment penalty and other terms and conditions of any encumbrance that
is assumed by the transferee. In addition, in determining the Fair Market
Value with respect to damaged or destroyed Lease Property such value shall be
determined as if such Leased Property has not been so damaged or destroyed.
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 Sales: Gross revenue from the sale, for on-site consumption, of
food and non-alcoholic beverages sold at the Leased Property, including in
respect to guest rooms, banquet rooms, meeting rooms and other similar rooms.
Such revenues shall not include the following:
(a) Vending machine sales;
(b) Any gratuity or service charges added to a customer's
xxxx or statement in lieu of a gratuity which is paid
to an employee;
(c) Non-alcoholic beverages sold from the bar or lounge;
(d) Sales taxes or taxes of any other kind imposed on the
sale of food or non-alcoholic beverages; and
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(e) Any revenues that are subsequently credited, refunded
or rebated in the ordinary course of business.
Franchise Agreement: Any franchise agreement or license agreement
with a franchisor under which the Facility is operated.
Furniture and Equipment: For purposes of this Lease, the terms
"furniture and equipment" shall mean collectively all furniture, furnishings,
wall coverings, fixtures and hotel equipment and systems located at, or used in
connection with, the Facility, together with all replacements therefor and
additions thereto, including, without limitation, (i) all equipment and systems
required for the operation of kitchens and bars, if any, laundry and dry
cleaning facilities, (ii) office equipment, (iii) dining room wagons, materials
handling equipment, cleaning and engineering equipment, (iv) telephone and
computerized accounting systems, and (v) vehicles.
Government: The United States of America, any state, district or
territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any political subdivision of
any of the foregoing.
Gross Operating Expenses: For purposes of this Lease, the term
"Gross Operating Expenses" shall mean all salaries and employee expense and
payroll taxes (including salaries, wages, bonuses and other compensation of all
employees at the Facility, and benefits including life, medical and disability
insurance and retirement benefits), expenditures described in Section 9.1,
operational supplies, utilities, insurance to be provided by Lessee under the
terms of this Agreement, governmental fees and assessments, food, beverages,
laundry service expense, the cost of Inventories and fixed asset supplies,
license fees, advertising, marketing, reservation systems and any and all other
operating expenses as are reasonably necessary for the proper and efficient
operation of the Facility incurred by Lessee in accordance with the provisions
hereof (excluding, however, (i) federal, state and municipal excise, sales and
use taxes collected directly from patrons and guests or as a part of the sales
price of any goods, services or displays, such as gross receipts, admissions,
cabaret or similar or equivalent taxes paid over to federal, state or municipal
governments, (ii) expenditures by Lessor pursuant to Article XIII and (iii)
payments on any Mortgage or other mortgage or security instrument on the Leased
Property); all determined in accordance with generally accepted accounting
principles and the Uniform System. No part of Lessee's central office overhead
or general or administrative expense (as opposed to that of the Facility) shall
be deemed to be a part of Gross Operating Expenses, as herein provided; provided
that accounting services provided to the Leased Property but performed at
Lessee's central office shall be included in Gross Operating Expenses.
Reasonable out-of-pocket expenses of Lessee incurred for the account of or in
connection with the Hotel operations, including but not limited to postage,
telephone charges and reasonable travel expenses of employees, officers and
other representatives and consultants of Lessee and its Affiliates, shall be
deemed to be a part of Gross Operating Expenses and such persons shall be
afforded reasonable accommodations, food, beverages, laundry, valet and other
such services by and at the Hotel without charge to such persons or Lessee.
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Gross Operating Profit shall mean, for any Fiscal Year, the excess of
Gross Revenues for such Fiscal Year over Gross Operating Expenses for such
Fiscal Year.
Gross Revenues: All revenues, receipts, and income of any kind
derived directly or indirectly by Lessee from or in connection with the
Facility (including rentals or other payments from tenants, lessees, licensees
or concessionaires but not including their gross receipts) whether on a cash
basis or credit, paid or collected, determined in accordance with generally
accepted accounting principles and the Uniform System, excluding, however: (i)
funds furnished by Lessor, (ii) federal, state and municipal excise, sales, and
use taxes collected directly from patrons and guests or as a part of the sales
price of any goods, services or displays, such as gross receipts, admissions,
cabaret or similar or equivalent taxes and paid over to federal, state or
municipal governments, (iii) gratuities, (iv) proceeds of insurance and
condemnation, (v) proceeds from sales other than sales in the ordinary course
of business, (vi) all loan proceeds from financing or refinancings of the Hotel
or interests therein or components thereof, (vii) judgments and awards, except
any portion thereof arising from normal business operations of the hotel, and
(viii) items constituting "allowances" under the Uniform System.
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 and urea
formaldehyde.
IHC: As defined in the preamble to this Lease.
IH Company: Interstate Hotels Company, a Pennsylvania corporation and
sole shareholder of IHC.
Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessee or its business conducted upon the Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term), water, sewer or other rents and
charges, excises, tax inspection,
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authorization and similar fees and all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property or the
business conducted thereon by Lessee (including all interest and penalties
thereon caused by any failure in payment by Lessee), which at any time prior
to, during or with respect to the Term hereof may be assessed or imposed on or
with respect to or be a lien upon (a) Lessor's interest in the Leased Property,
(b) the Leased Property, or any part thereof or any rent therefrom or any
estate, right, title or interest therein, or (c) any occupancy, operation, use
or possession of, or sales from, or activity conducted on or in connection with
the Leased Property, or the leasing or use of the Leased Property or any part
thereof by Lessee. Nothing contained in this definition of Impositions shall
be construed to require Lessee to pay (1) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Lessor or
any other person, or (2) any net revenue tax of Lessor or any other person, or
(3) any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any Leased Property or the proceeds thereof, or (4) 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 at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
Indemnified Party: Either 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.
Initial Period: The period ending on the tenth (10th) anniversary of
the last day of the month in which the Commencement Date occurs.
Insurance Requirements: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
Inventory: All "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System, including, but not limited to,
linens and other non-depreciable personal property, and including any property
of the type described in Section 1221(1) of the Code.
Land: As defined in Article I.
Lease: This Lease, as it relates to each Leased Property or all of
the Leased Property as the context may require.
Leased Improvements; Leased Property: Each as defined in Article I.
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Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the
maintenance, construction, use or alteration thereof (whether by Lessee or
otherwise), whether or not hereafter enacted and in force, including (a) all
laws, rules or regulations pertaining to the environment, occupational health
and safety and public health, safety or welfare, and (b) any laws, rules or
regulations that may (1) require repairs, modifications or alterations in or to
the Leased Property or (2) in any way adversely affect the use and enjoyment
thereof; and all permits, licenses and authorizations and regulations relating
thereto and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at any time in
force affecting the Leased Property.
Lending Institution: Any insurance 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.
Lessee: The Lessee designated on this Lease and its permitted
successors and assigns.
Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's
interest) in Lessee, the officers, directors, stockholders, employees, agents
and representatives of Lessee and any corporate stockholder, agent, or
representative of Lessee, and the respective heirs, personal representatives,
successors and assigns of any such officer, director, stockholder, employee,
agent or representative.
Lessee's Personal Property : As defined in Section 6.2.
Lessor: The Lessor designated on this Lease and its respective
successors and assigns.
Lessor Indemnified Party: Lessor, any Affiliate of Lessor, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's or
partnership interest) in Lessor, the officers, directors, stockholder,
employees, agents and representatives of the general partner of Lessor and any
partner, agent, or representative of Lessor, and the respective heirs, personal
representatives, successors and assigns of any such officer, director, partner,
stockholder, employee, agent or representative.
Management Agreement: As defined in Section 19.7.
Manager: As defined in Section 19.7.
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Master Agreement: As defined in the preamble to this Lease.
Minimum Price. The sum of (a) the equity in the Leased Property at
the time of acquisition of the Leased Property by Lessor (i.e., that portion of
the purchase price of the Leased Property paid by Lessor in cash) plus (b)
other capital expenditures on the Leased Property by Lessor after the date of
acquisition by Lessor plus (c) the unpaid principal balance of all encumbrances
against the Leased Property at the time of purchase of the Leased Property by
Lessee, less (x) all proceeds received by Lessor from any financing or
refinancing of the Leased Property after the date of acquisition by Lessor
(after payment of any debt refinanced and net of any costs and expenses
incurred in connection with such financing or refinancing, including, without
limitation, loan points, commitment fees and commissions and legal fees) and
(y) the net amount (after deduction of all reasonable legal fees and other
costs and expenses, including without limitation expert witness fees, incurred
by Lessor in connection with obtaining any such proceeds or award) of all
insurance proceeds received by Lessor and awards received by Lessor from any
partial Taking of the Leased Property that are not applied to restoration.
Mortgage: As defined in Section 30.2.
Notice: A notice given pursuant to Article XXXII.
Officer's Certificate: A certificate of Lessee reasonably acceptable
to Lessor, signed by the chief financial officer or another officer of Lessee's
general partner authorized so to sign by the board of directors or by-laws of
such general partner, or any other person whose power and authority to act has
been authorized by delegation in writing by any such officer.
Operating Budget: As defined in Section 3.6(a).
Other Income: All revenues, receipts and income of any kind derived
directly or indirectly from or in connection with the Facility and included in
Gross Revenues, other than Room Revenues, Food Sales and Beverage Sales.
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.
Payment Date: Any due date for the payment of any installment of
Base Rent or Percentage Rent.
Percentage Rent: As defined in Section 3.1(b).
Person: Any Government, natural person, corporation, partnership or
other legal entity.
Personal Property Taxes: All personal property taxes imposed on the
furniture, furnishings or other items of personal property located on, and used
in connection with, the operation of the Leased Improvements as a hotel (other
than Inventory and other personal
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property owned by the Lessee), together with all replacement, modifications,
alterations and additions thereto.
Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by the Lessee,
either contractually or by operation of law, relating to the Leased Property.
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.
Quarterly Revenues Computation: As defined in Exhibit D.
RCRA: The Resource Conservation and Recovery Act, as amended.
Real Estate Taxes: All real estate taxes, including general and
special assessments, if any, which are imposed upon the Land, and any
improvements thereon.
Rejectable Offer Price: An amount equal to the greater of (a) the
Fair Market Value, determined as of the applicable purchase date, or (b) the
Minimum Price.
Release: A "Release" as defined in CERCLA or in any Environmental
Law, unless such Release has been properly authorized and permitted in writing
by all applicable Environmental Authorities or is allowed by such Environmental
Law without authorizations or permits.
Rent: Collectively, the Base Rent, Percentage Rent, and Additional
Charges.
Revenues Computations: Shall mean, collectively, the Quarterly
Revenues Computation, and the Annual Revenues Computation.
Room Revenues: Gross revenue from the rental of guest rooms, whether
to individuals, groups or transients, at the Facility, excluding the following:
(a) the amount of all credits, rebates or refunds to
customers, guests or patrons; and
(b) all sales taxes or any other taxes imposed on the
rental of such guest rooms; and
(c) any fees collected for amenities including, but not
limited to, telephone, laundry, movies or
concessions.
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XXXX: The Superfund Amendments and Reauthorization Act of 1986, as
amended.
State: The State or Commonwealth of the United States in which the
Leased Property is located.
Subsidiaries: Corporations in which Lessee owns, directly or
indirectly, more than 50% of the voting stock or control, as applicable
(individually, a "Subsidiary").
Substitute Leases: As defined in Section 42.3.
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 1.4.
TSCA: The Toxic Substances Control Act, as amended.
Unavoidable Delays: Delays 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 or any guaranty of this Lease.
Uneconomic for its Primary Intended Use: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of the general partner of Lessee, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, among other relevant factors, the number of usable rooms and projected
revenues, such that Lessee intends to, and shall, complete the cessation of
operations from the Leased Facility.
Uniform System: Shall mean the Uniform System of Accounts for Hotels
(8th Revised Edition, 1986) as published by the Hotel Association of New York
City, Inc., as same may hereafter be revised.
Unsuitable for its Primary Intended Use: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of the general partner of Lessee, due to casualty damage or loss through
Condemnation, the Facility cannot function as an integrated hotel facility
consistent with standards applicable to a well maintained and operated hotel.
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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 on
the signature page or at such other place or to such other Person, as Lessor
from time to time may designate in a Notice, all Base Rent, Percentage Rent and
Additional Charges, during the Term, as follows:
(a) Base Rent: During the period commencing on the
Commencement Date and ending at the end of the first month-end
following the tenth (10th) anniversary thereof (the "Initial Period"),
the annual sum in the amount set forth on Exhibit D hereto (as
adjusted under Section 3.1(e)) as the "Base Rent" for the Leased
Property, payable in advance in equal, consecutive monthly
installments, on or before the tenth day of each calendar month of the
Term ("Base Rent"); provided, however, that the first and last monthly
payments of Base Rent shall be pro rated as to any partial month
(subject to adjustment as provided in Sections 5.2, 14.5 and 15.3);
and
(b) Percentage Rent: For each Fiscal Year during the
Term commencing with the Fiscal Year beginning January 1, 1996, Tenant
shall pay percentage rent ("Percentage Rent") quarterly, with respect
to the four calendar quarters of each Fiscal Year, in an amount
calculated by the following formula:
The amount equal to the Quarterly Revenues
Computation (as defined on Exhibit D attached hereto)
less
an amount equal to the Base Rent paid year to date
for the applicable Fiscal Year
less
an amount equal to Percentage Rent paid year to date
for the applicable Fiscal Year
equals
Percentage Rent for the applicable quarter.
Notwithstanding the amounts of Percentage Rent paid quarterly
pursuant to the formula set forth above, for any Fiscal Year during the Initial
Term commencing with the Fiscal Year in which the Commencement Date Occurs, the
Percentage Rent payable under this Lease shall be no less than or greater than
the amount calculated by the following formula:
The amount equal to the Annual Revenue Computation
(as defined on Exhibit D attached hereto)
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less
an amount equal to Base Rent paid year to date for
the applicable Fiscal Year
equals
Percentage Rent for the applicable Fiscal Year.
(c) At least one hundred twenty (120) days prior to the
expiration of the Initial Period, Lessor and Lessee shall negotiate in
good faith modifications to the Rent for the final five (5) years of
the Lease Term to adjust such Rent to market rates for hotel REIT
leases for similar hotel/motel properties at that time. In the event
Lessor and Lessee are unable to agree upon Rent terms for the final
five (5) years of the term of the Lease, at least ninety (90) days
prior to the expiration of the Initial Period, the Rent terms for the
final five (5) years of that Lease shall be determined by a panel of
three (3) parties having generally recognized expertise in evaluating
hotel REIT leases. Lessee and the Lessor each shall have the right to
designate one panel member and the two (2) panel members so designated
will designate the third panel member. Rent terms approved by at
least two (2) of the three (3) panel members will be binding on Lessee
and Lessor for the final five (5) years of the Lease Term. In
determining the market rates for the final five (5) years of the Lease
term, the panel members shall be instructed to consider hotel REIT
lease terms with respect to similar hotel/motel property types.
(d) Officer's Certificates. Within 30 days after the
last day of each quarter of each Fiscal Year (or part thereof) in the
Term, Lessee shall deliver to Lessor an Officer's Certificate
reasonably acceptable to Lessor, together with the applicable
quarterly Percentage Rent payment, setting forth the calculation of
Percentage Rent accrued and paid for such quarter including the
quarterly Revenues Computation. Such quarterly payments shall be
based on the formulas set forth in Section 3.1(b). There shall be no
reduction in the Base Rent regardless of the result of the Revenue
Computation.
In addition, on or before March 31 of each year, commencing with March
31, 1997, Lessee shall deliver to Lessor an Officer's Certificate reasonably
acceptable to Lessor setting forth the computation of the actual Percentage
Rent that accrued for each quarter of the Fiscal Year that ended on the
immediately preceding December 31. Additionally, if the annual Percentage Rent
due and payable for any Fiscal Year (as shown in the applicable Officer's
Certificate) exceeds the amount actually paid as Percentage Rent by Lessee for
such year, Lessee shall pay such excess to Lessor at the time such certificate
is delivered. If the Percentage Rent actually due and payable for such Fiscal
Year is shown by such certificate to be less than the amount actually paid as
Percentage Rent for the applicable Fiscal Year, Lessor, at its option, shall
reimburse such amount to Lessee or credit such amount against subsequent
months' Base Rent and, to the extent necessary, subsequent quarters' Percentage
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Rent payments. Any such credit to Base Rent shall not be applied for purposes
of calculating Percentage Rent payable for any subsequent quarter.
Any difference between the annual Percentage Rent due and payable for
any Fiscal Year (as shown in the applicable Officer's Certificate or as
adjusted pursuant to Section 3.1(e)) and the total amount of quarterly payments
for such Fiscal Year actually paid by Lessee as Percentage Rent, whether in
favor of Lessor or Lessee, shall bear interest at the Overdue Rate, which
interest shall accrue from the due date of the last quarterly payment for the
Fiscal Year until the amount of such difference shall be paid or otherwise
discharged. Any such interest payable to Lessor shall be deemed to be and
shall be payable as Additional Charges.
The obligation to pay Percentage Rent due through the date of
termination of this Lease shall survive the expiration or earlier termination
of the Term, and a final reconciliation, taking into account, among other
relevant adjustments, any adjustments which are accrued after such expiration
or termination date but which related to Percentage Rent accrued prior to such
termination date, and Lessee's good faith best estimate of the amount of any
unresolved contractual allowances, shall be made not later than two years after
such expiration or termination date, but Lessee shall advise Lessor within 60
days after such expiration or termination date of Lessee's best estimate at
that time of the approximate amount of such adjustments, which estimate shall
not be binding on Lessee or have any legal effect whatsoever.
(e) CPI Adjustments. For each Fiscal Year during the
Term beginning with the Fiscal Year identified as the "CPI Adjustment
Date" for each Leased Property as shown on Exhibit D, the Base Rent
then in effect, and the threshold dollar amounts of Room Revenues then
included in the Revenues Computations set forth in Section 3.1(b),
shall be adjusted as follows:
(1) The average Consumer Price Index for the
twelve months ended on September 30 of the most recently
completed Fiscal Year shall be divided by the average Consumer
Price Index for the twelve months ended on September 30 of the
prior Fiscal Year;
(2) The new Base Rent for the then current
Fiscal Year shall be equal to the product of the Base Rent in
effect in the most recently ended Fiscal Year and the quotient
obtained under subparagraph (1) above;
(3) The new threshold dollar amounts in the
applicable Revenues Computations described in Section 3.1(b)
above for the then current Fiscal Year shall be the product of
the threshold dollar amounts of Room Revenues in effect in the
most recently ended Fiscal Year and the quotient obtained in
subparagraph (1) above.
The amount of any adjustment under paragraphs (e)(1)-(3) to
Base Rent and the threshold dollar amounts of Room Revenues for any Fiscal Year
shall not exceed 7% of the
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Base Rent and threshold dollar amounts of Room Revenues applicable for the
prior Fiscal Year.
By way of example, for Leases with a CPI Adjustment Date of
January 1, 1998 or earlier, the amount of Base Rent and the threshold dollar
amounts of Room Revenues amounts in the Revenues Computations for the Fiscal
Year commencing January 1, 1998 shall be adjusted to reflect any change in the
average Consumer Price Index for the twelve months ended September 30, 1997 as
compared to the twelve months ended September 30, 1996.
Lessor shall calculate the annual Consumer Price Index
adjustments as soon as reasonably possible after the Consumer Price Index
becomes available and shall notify Lessee in writing of the amount of the
annual adjustment, together with a copy of the computation showing the
adjustment amount.
Adjustments calculated as set forth above in the Base Rent and
threshold Room Revenues amounts shall be effective on the CPI Adjustment Date
set forth on Exhibit D. If Rent is paid in any Fiscal Year prior to
determination of the amount of any adjustment to Base Rent or the threshold
dollar amounts of Room Revenues applicable for such Fiscal Year, payment
adjustments for any shortfall in or overpayment of Rent paid shall be made with
the first Base Rent payment due after the amount of the adjustments is
determined.
The "average Consumer Price Index" for any period shall be the
average of the Consumer Price Index for all months during the period.
(4) If (1) a significant change is made in the
number or nature (or both) of items used in determining the Consumer
Price Index, or (2) the Consumer Price Index shall be discontinued for
any reason, the Bureau of Labor Statistics shall be requested to
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 and threshold dollar amounts
of Room Revenues hereunder. If for any reason the Bureau of Labor
Statistics does not furnish such an index and such information, the
parties will instead mutually select, accept and use such other index
or comparable statistics 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.
3.2 Confirmation of Percentage Rent. Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices, and in accordance with
generally accepted accounting principles and the Uniform System, that will
accurately record all data necessary to compute Percentage Rent, and Lessee
shall retain, for at least five years after the expiration of each Fiscal Year
(and in any event until the reconciliation described in Section 3.1(c) for such
Fiscal Year has been made), reasonably adequate records conforming to such
accounting system showing all data necessary to compute Percentage Rent for the
applicable Fiscal Years. Lessor, at its expense (except as provided
hereinbelow), shall have the right from time to time by its accountants or
representatives to audit the information that formed the basis for the data set
forth in any
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Officer's Certificate provided under Section 3.1(c) and, in connection with
such audits, to examine all Lessee's records (including supporting data, sales
and excise tax returns and franchise reports) reasonably required to verify
Percentage Rent, subject to any prohibitions or limitations on disclosure of
any such data under Legal Requirements. If any such audit discloses a
deficiency in the payment of Percentage Rent, and either Lessee agrees with the
result of such audit or the matter is otherwise determined or compromised,
Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally
agreed or determined, together with interest at the Overdue Rate from the date
when said payment should have been made to the date of payment thereof;
provided, however, that as to any audit that is commenced more than two 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, in which case interest at the Overdue
Rate will accrue from the date such payment should have been made to the date
of payment thereof. 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 3%, 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. The obligations of Lessee contained in
this Section shall survive the expiration or earlier termination of this Lease.
3.3 Additional Charges. In addition to the Base Rent and
Percentage Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions (other than
Impositions which are Lessor's obligations hereunder) and (b) in the event of
any failure on the part of Lessee to pay any of those items referred to in
clause (a) of this Section 3.3, 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 3.3 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 including, but not
limited to, the right to pay such Additional Charges on behalf of Lessee and to
require reimbursement thereof by Lessee, together with interest thereon at the
Overdue Rate. If any installment of Base Rent, Percentage Rent or Additional
Charges (but only as to those Additional Charges that are payable directly to
Lessor) shall not be paid on its due date, Lessee will pay Lessor on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Overdue Rate on the amount of such installment, from the due date of such
installment to the date of payment thereof. To the extent that Lessee pays any
Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee
shall be relieved of its obligation to pay such Additional Charges to the
entity to which they would otherwise be due and Lessor shall pay same from
monies received from Lessee.
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3.4 Rent Payable Without Deduction. The Rent shall be paid to
Lessor so that this Lease shall yield to Lessor the full amount of the
installments of Base Rent, Percentage Rent and Additional Charges throughout
the Term, all as more fully set forth in Article V, but subject to any other
provisions of this Lease that expressly provide for adjustment or abatement of
Rent or other charges or expressly provide that certain expenses or maintenance
shall be paid or performed by Lessor.
3.5 Conversion of Property. If, during the Term, Lessee desires
to provide food and beverage operations at the Facility (other than
complimentary continental breakfast), Lessee shall give notice of such desire
to Lessor. Lessor and Lessee shall then commence negotiations to adjust Rent
to reflect the proposed change to the operation of the Facility, each acting
reasonably and in good faith. 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 Budgets. Not later than sixty (60) days prior to the
commencement of each Fiscal Year, Lessee shall submit the following Budgets to
Lessor:
(a) An operating budget ("Operating Budget") prepared in
accordance with this Section 3.6(a), in substantially the form of Exhibit E.
The Operating Budget shall be prepared in good faith and otherwise in
accordance with the Uniform System to the extent applicable and shall show by
month and quarter and for the full Fiscal Year in the degree of detail
specified by the Uniform System, the following:
(i) Lessee's reasonable estimate of Gross Revenues
(including room rates and Room Revenues), Gross Operating Expenses,
and Gross Operating Profits for the forthcoming Fiscal Year itemized
on schedules on a quarterly basis as approved by Lessor and Lessee, as
same may be revised or replaced from time to time by Lessee and
approved by Lessor, together with the assumptions, in narrative form,
forming the basis of such schedules.
(ii) An estimate of the amounts to be dedicated to
routine, non-capital repair and maintenance; and
(iii) A cash flow projection.
(iv) Lessee's reasonable estimate of Percentage
Rent by quarter for the Fiscal Year, and
(v) A narrative description of the program for
advertising and marketing the Hotel for the forthcoming Fiscal Year
containing a detailed budget itemization of the proposed advertising
expenditures by category and the assumptions, in narrative form,
forming the basis of such budget itemizations.
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(b) A capital budget ("Capital Budget") in substantially
the form of Exhibit F hereto, containing a description in reasonable detail of
the proposed Capital Improvements and an estimate of all amounts Lessor will be
requested to provide for Capital Improvements to the Facility or any of its
components for the Fiscal Year. The Capital Budget shall be prepared in
accordance with the Uniform System to the extent applicable.
3.7 Approval of Capital Budget. Within thirty (30) days following
submission of the Capital Budget to Lessor, Lessor shall give Lessee written
notice either (a) that Lessor approves the Capital Budget or (b) indicating
with reasonable specificity the respects in which Lessor objects to the Capital
Budget. In the latter event, Lessor and Lessee shall act promptly, reasonably
and in good faith to seek to resolve Lessor's objections. In the event that
Lessor and Lessee fail to reach agreement with respect to the Capital Budget
within thirty (30) days after receipt of Lessor's written notice, Lessee and
Lessor shall refer any disputed Capital Budget matter to arbitration using
procedures set forth in Article XLI hereto and each party shall endeavor to
cause such arbitration to be completed as quickly as possible, but in any event
not later than six (6) months following referral to arbitration. In the event
Lessor fails to deliver the notice set forth in this section, within the
required time period, the Capital Budget shall be deemed approved. Lessor
shall be obligated to make all Capital Expenditures which are pursuant to a
Capital Budget which has been approved or deemed approved in accordance with
the procedures set forth above.
3.8 Capital Projects.
(a) The selection of all design professionals and
contractors for capital projects shall be made by Lessor, after consultation
with Lessee.
(b) Lessor may require that all contracts in connection
with capital projects be subject to competitive bidding procedures reasonably
acceptable to Lessor. Lessor shall also have the right to review and approve
all contract bids, whether competitively bid or not. Lessor may also retain,
at its sole cost and expense, an inspecting architect or engineer to monitor
costs, time, quality and performance for all capital projects.
3.9 Books and Records. 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 and the obligations of Lessee under
this Lease Facility. 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 Pittsburgh, Pennsylvania or Orlando, Florida 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 Lessor and shall not be removed
from the Facility or Lessee's offices without Lessor Approval.
ARTICLE IV
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4.1 Payment of Impositions. Subject to Article XII relating to
permitted contests, Lessee will pay, or cause to be paid, all Impositions
(other than Real Estate Taxes and Personal Property Taxes, which shall be paid
by Lessor) before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing or other
authorities where feasible, and will promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments.
Lessee's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof. If any such Imposition may, at the option of the taxpayer,
lawfully be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), Lessee may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in
installments and in such event, shall pay such installments during the Term
hereof (subject to Lessee's right of contest pursuant to the provisions of
Article XII) as the same respectively become due and before any fine, penalty,
premium, further interest or cost may be added thereto. Lessor, at its
expense, shall, to the extent required or permitted by applicable law, prepare
and file all tax returns in respect of Lessor's net income, gross receipts,
sales and use, single business, transaction privilege, rent, ad valorem,
franchise taxes, Real Estate Taxes, Personal Property Taxes and taxes on its
capital stock, and Lessee, at its expense, shall, to the extent required or
permitted by applicable laws and regulations, prepare and file all other tax
returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have occurred and be continuing, any
such refund shall be paid over to or retained by Lessor. Any such funds
retained by Lessor due to an Event of Default shall be applied as provided in
Article XVI. 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 classified as personal property.
Where Lessor is legally required to file Personal Property Tax returns, Lessee
shall provide Lessor with copies of assessment notices in sufficient time for
Lessor to file a protest. Lessor may, upon notice to Lessee, at Lessor's
option and at Lessor's sole expense, protest, appeal, or institute such other
proceedings (in its or Lessee's name) as Lessor may deem appropriate to effect
a reduction of real estate or personal property assessments for those
Impositions to be paid by Lessor, and Lessee, at Lessor's expense as aforesaid,
shall fully cooperate with Lessor in such protest, appeal, or other action.
Lessor hereby agrees to indemnify, defend, and hold harmless Lessee from and
against any claims, obligations, and liabilities against or incurred by Lessee
in connection with such cooperation. Xxxxxxxx for reimbursement of Personal
Property Taxes by Lessee to Lessor shall be accompanied by copies of a xxxx
therefor and payment thereof which identify the personal property with respect
to which such payments are made. 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.
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4.2 Notice of Impositions. To the extent Lessor is notified of
any Impositions, Lessor shall give prompt Notice to Lessee of such Impositions
payable by Lessee hereunder, provided that Lessor's failure to give any such
Notice shall in no way diminish Lessee's obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Lessee receives Notice of any Imposition which it is
obligated to pay during the first taxing period applicable thereto.
4.3 Adjustment of Impositions. Impositions imposed in respect of
the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.
4.4 Utility Charges. Lessee will be solely responsible for
obtaining and maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property during the Term.
4.5 Insurance Premiums. Lessee will pay or cause to be paid all
premiums for the insurance coverages required to be maintained by it under
Article XIII.
4.6 Ground Rent. In the event that Lessor's interest in the Land
is pursuant to a ground lease, Lessor shall be solely responsible for payment
of any ground rent due with respect to the Leased Property, and shall promptly
deliver to Lessee any default notice received by Lessor pursuant to the ground
lease.
4.7 Franchise Fees. Lessee will pay or cause to be paid all
franchise fees due and owing in accordance with the terms and conditions of the
Franchise Agreement.
ARTICLE V
5.1 No Termination, Abatement, etc. Except as otherwise
specifically provided in this Lease, and except for loss of the Franchise
Agreement solely by reason of any action or inaction by Lessor, Lessee, to the
extent permitted by law, shall remain bound by this Lease in accordance with
its terms and shall neither take any action without the written consent of
Lessor to modify, surrender or terminate the same, nor seek nor be entitled to
any abatement, deduction, deferment or reduction of the Rent, or 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) the lawful or unlawful prohibition of, or restriction upon,
Lessee's use of the Leased Property, or any portion thereof, or the
interference with such use by any Person, corporation, partnership or other
entity, or by reason of eviction by paramount title, (c) 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, (d) any bankruptcy,
insolvency,
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reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor,
or (e) for any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now 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) entitle Lessee to any abatement, reduction,
suspension or deferment of the 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.
5.2 Abatement Procedures. In the event of a partial Taking as
described in Section 15.5, the Lease shall not terminate, but the Base Rent
shall be abated in the manner and to the extent that is fair, just and
equitable to both Lessee and Lessor, taking into consideration, among other
relevant factors, the number of usable rooms, the amount of square footage, or
the revenues affected by such partial Taking. If Lessor and Lessee are unable
to agree upon the amount of such abatement within 30 days after such partial
Taking, the matter may be submitted by either party to arbitration in
accordance with the provisions of Article XLI hereof for resolution.
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. Lessee will acquire and maintain
through the Term such Inventory as is required to operate the Leased Property
in the manner contemplated by this Lease. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any
parcels of the Land or in any of the Leased Improvements, any items of personal
property (including Inventory) owned by Lessee. Lessee, at the commencement of
the Term, and from time to time thereafter, shall provide Lessor with an
accurate list of all such items of Lessee's personal property (collectively,
the "Lessee's Personal Property"). Lessee may, subject to the first sentence
of this Section 6.2 and the conditions set forth below, remove any of Lessee's
Personal Property set forth on such list at any time during the Term or upon
the expiration or any prior termination of the Term. All of Lessee's Personal
Property, other than Inventory, not removed by Lessee within ten 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
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Lessee's Personal Property, whether effected by Lessee or Lessor. Upon the
expiration or earlier termination of the Term, Lessor or its designee shall
have the option to purchase all Inventory on hand at the Leased Property at the
time of such expiration or termination for a sale price equal to the fair
market value of such Inventory. Lessee may make such financing arrangements,
title retention agreements, leases or other agreements with respect to the
Lessee's Personal Property as it sees fit provided that Lessee first advises
Lessor of any such arrangement and such arrangement expressly provides that in
the event of Lessee's default thereunder, Lessor (or its designee) may assume
Lessee's obligations and rights under such arrangement.
6.3 Lessor's Representations. Lessor represents and warrants that
(a) Lessor has full partnership authority to grant to the Lessee the leasehold
interest described in this Lease, and (b) that this Lease has been duly
authorized by all necessary partnership action on behalf of Lessor and by all
necessary trust action on behalf of the general partner of Lessor.
6.4 Lessee's Representations. Lessee represents and warrants that
(a) Lessee is a validly existing limited partnership organized under the laws
of the State of Delaware and is qualified to do business in all states in which
it is required to so qualify due to the nature of its business activities, (b)
Lessee has the requisite power and authority to enter into this Lease and (c)
this Lease has been duly authorized by all necessary partnership action on
behalf of Lessee and by all necessary corporate, partnership or limited
liability company action on behalf of the general partner of Lessee.
6.5 Lessor's Lien. To the fullest extent permitted by applicable
law, Lessor is granted a lien and security interest on all Lessee's personal
property now or hereinafter placed in or upon the Leased Property, and such
lien and security interest shall remain attached to such Lessee's personal
property until payment in full of all Rent and satisfaction of all of Lessee's
obligations hereunder; provided, however, Lessor shall subordinate its lien and
security interest to that of any non-Affiliate of Lessee which finances such
Lessee's personal property or any non-Affiliate conditional seller of such
Lessee's personal property, the terms and conditions of such subordination to
be satisfactory to Lessor in the exercise of reasonable discretion. Lessee
shall, upon the request of Lessor, execute such financing statements or other
documents or instruments reasonably requested by Lessor to perfect the lien and
security 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" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property.
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
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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.
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, 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 upon 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 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) operate
continuously the Leased Property as a hotel facility, (2) keep in full force
and effect and comply with all the provisions of the Franchise Agreement
(except that Lessee shall have no obligation to complete any capital
improvements to the Leased Property required by the franchisor unless the
Lessor funds the costs thereof), (3) not terminate or amend the Franchise
Agreement without the consent of Lessor, (4) maintain appropriate
certifications and licenses for such use and (5) will 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, except as necessary in the ordinary and prudent operation of the
Facility on the Leased Property.
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(f) Lessee agrees to deliver to Lessor upon request by
Lessor from time to time a list of hotels and motels (and locations) owned or
managed by Lessee and its Affiliates.
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 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 does not interfere
with the proper conduct of the business of Lessee on the Leased Property and
does not materially reduce the value of the Leased Property.
ARTICLE VIII
8.1 Compliance with Legal and Insurance Requirements, etc.
Subject to Section 8.3(b) below and Article XII relating to permitted contests,
Lessee, at its expense, will promptly (a) comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property, and (b) procure,
maintain and comply with all appropriate licenses and other authorizations
required for any use of the Leased Property and Lessee's Personal Property then
being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.
8.2 Legal Requirement Covenants. Subject to Section 8.3(b) below,
Lessee covenants and agrees that the Leased Property and Lessee's Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not
permit or suffer to exist any unlawful use of the Leased Property by others.
Lessee shall acquire and maintain all appropriate licenses, certifications,
permits and other authorizations and approvals 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 sub-tenants, invitees or others to so comply
with all Legal Requirements). Lessee may, however, upon prior Notice to
Lessor, contest the legality or applicability of any such Legal Requirement or
any licensure or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights hereunder, and
at Lessee's sole expense. If by the terms of any
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such Legal Requirement compliance therewith pending the prosecution of any such
proceeding may legally be delayed without the incurrence of any lien, charge or
liability of any kind against the Facility or Lessee's leasehold interest
therein and without subjecting Lessee or Lessor to any liability, civil or
criminal, for failure so to comply therewith, Lessee may delay compliance
therewith until the final determination of such proceeding. If any lien,
charge or civil or criminal liability would be Incurred by reason of any such
delay, Lessee, on the prior written consent of Lessor, which consent shall not
be unreasonably withheld, may nonetheless contest as aforesaid and delay as
aforesaid provided that such delay would not subject Lessor to criminal
liability and Lessee both (a) furnishes to Lessor security reasonably
satisfactory to Lessor against any loss or injury by reason of such contest or
delay and b) prosecutes the contest with due diligence and in good faith.
8.3 Environmental Covenants. Lessor and Lessee (in addition to,
and not in diminution of, Lessee's covenants and undertakings in Sections 8.1
and 8.2 hereof) covenant and agree as follows:
(a) At all times hereafter until the later of (i) such
time as all liabilities, duties or obligations of Lessee to the Lessor under
the Lease have been satisfied in full and (ii) such time as Lessee completely
vacates the Leased Property and surrenders possession of the same to Lessor,
Lessee shall fully comply with all Environmental Laws applicable to the Leased
Property and the operations thereon. Lessee agrees to give Lessor prompt
written notice of (i) 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 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
Environmental Liabilities other than Environmental Liabilities which were
caused by the acts or grossly negligent failures to act of Lessee.
(c) Lessee hereby agrees to defend, indemnify and save
harmless any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities which were caused by the acts or grossly negligent
failures to act of Lessee.
(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),
the Indemnifying Party, upon request, shall at its sole expense resist and
defend such Proceedings, or cause the same to be resisted and defended by
counsel designated by the Indemnified Party and approved by the Indemnifying
party, which approval shall not be unreasonably withheld; provided, however,
that such approval shall not be required in the case of defense by counsel
designated by any insurance company undertaking such defense pursuant to any
applicable policy of insurance. Each
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Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel will be at the sole expense of such Indemnified Party unless
such counsel has been approved by the indemnifying Party, which approval shall
not be unreasonably withheld. The Indemnifying Party shall not be liable for
any settlement of any such Proceeding made without its consent, which shall not
be unreasonably withheld, but if settled with the consent of the Indemnifying
Party, or if settled without its consent (if its consent shall be unreasonably
withheld), or if there be a final nonappealable judgment for an adversary party
in any such Proceeding, the Indemnifying Party shall indemnify and hold
harmless the Indemnified Parties from and against any liabilities incurred by
such Indemnified Parties by reason of such settlement or judgment.
(e) At any time any Indemnified Party has reason to
believe circumstances exist which could reasonably result in an Environmental
Liability, upon reasonable prior written notice to Lessee stating such
Indemnified Party's basis for such belief, an Indemnified Party shall be given
immediate access to the Leased Property (including, but not limited to, the
right to enter upon, investigate, drill xxxxx, 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 law and the safety of personnel and facilities or to protect
confidential or privileged information. All Indemnified Parties requesting
such immediate access and cooperation shall endeavor to coordinate such efforts
to result in as minimal interruption of the operation of the Leased Property as
practicable.
(f) The indemnification rights and obligations provided
for in this Article VIII shall be in addition to any indemnification rights and
obligations provided for elsewhere in this Lease.
(g) The indemnification rights and obligations provided
for in this Article VIII shall survive the termination of this Agreement.
For purposes of this Section 8.3, all amounts for which any
Indemnified Party seeks indemnification shall be computed net of (a) any actual
income tax benefit resulting therefrom to such Indemnified Party, (b) any
insurance proceeds received (net of tax effects) with respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on
claims the Indemnified Party has against such third parties which reduce the
damages that would otherwise be sustained; provided that in all cases, the
timing of the receipt or realization of insurance proceeds or income tax
benefits or recoveries from third parties shall be taken into account in
determining the amount of reduction of damages. Each Indemnified Party agrees
to use its reasonable efforts to pursue, or assign to Lessee or Lessor, as the
case may be, any claims or rights it may have against any third party which
would materially reduce the amount of damages otherwise incurred by such
Indemnified Party.
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Notwithstanding anything to the contrary contained in this
Agreement, if Lessor shall become entitled to the possession of the Leased
Property by virtue of the termination of the Lease or repossession of the
Leased Property, then Lessor may assign its indemnification rights under
Section 8.3 of this Agreement (but not any other rights hereunder) to any
Person to whom the Lessor subsequently transfers the Leased Property, subject
to the following conditions and limitations, each of which shall be deemed to
be incorporated into the terms of such assignment, whether or not specifically
referred to therein:
(1) The indemnification rights referred to in
this section may be assigned only if a known Environmental
Liability then exists or if a Proceeding is then pending or,
to the knowledge of Lessee or Lessor,then threatened with
respect to the Leased Property;
(2) Such indemnification rights shall be
limited to Environmental Liabilities relating to or
specifically affecting the Leased Property; and
(3) Any assignment of such indemnification
rights shall be limited to the immediate transferee of Lessor,
and shall not extend to any such transferee's successors or
assigns.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Unless caused by Lessee's negligence or willful
misconduct or that of its employees or agents, Lessee shall not be required to
bear the cost of any Capital Improvements, including (without limitation)
Capital Improvements required by the Franchisor under the Franchise Agreement.
Lessor shall be responsible for all Capital Expenditures, subject to (i)
Lessor's right to approve all Capital Expenditures, in connection with Lessor's
approval or deemed approval of the Capital Budget pursuant to Section 3.7 and
(ii) Lessor's right in its sole discretion to refuse to make any Capital
Expenditure required by the Franchisor; provided that, if such refusal results
in a default under or termination of the Franchise Agreement, Lessor shall be
responsible for all damages, termination payments payable by Lessee under the
terms of the Franchise Agreement, application fees for a new franchise license
approved by Lessor, increased royalty fees and other costs arising out of such
refusal or out of the resulting need to apply for and enter into a substitute
franchise license agreement. Except as set forth in the preceding sentence,
nothing herein shall be construed to require Lessor to build or rebuild any
improvement on the Leased Property, or to fund any repairs, replacements,
alterations, restorations or renewals of any nature or description to the
Leased Property, whether ordinary or extraordinary, foreseen or unforeseen, or
to make any expenditure whatsoever with respect thereto, in connection with
this Lease, or to maintain the Leased Property in any way. Lessee hereby
waives, to the extent permitted by law, the right to make repairs at the
expense of Lessor pursuant to any law in effect at the time of the execution of
this Lease or hereafter enacted. Lessor shall have the right to give, record
and
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post, as appropriate, notices of nonresponsibility under any mechanic's lien
laws now or hereafter existing.
(b) Lessee will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto that are under Lessee's
control, including windows and plate glass, parking lots, mechanical,
electrical and plumbing systems and equipment (including conduit and ductware),
and non-load bearing interior walls, in good order and repair, except for
ordinary wear and tear (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), and, except as otherwise provided in
Articles XIV or XV, with reasonable promptness, make all necessary and
appropriate repairs, replacements, and improvements thereto of every kind and
nature, whether interior or exterior ordinary or extraordinary, foreseen or
unforeseen or arising by reason of a condition existing prior to the
commencement of the Term of this Lease (concealed or otherwise), or required by
any governmental agency having jurisdiction over the Leased Property, except as
to the structural elements of the Leased Improvements. Lessee, however, shall
be permitted to prosecute claims against Lessor's 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 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. Notwithstanding any other provision of this
Lease, however, other than under Articles XIV and XV on the conditions set
forth therein, Lessee shall not be required to bear the costs of complying with
this section with respect to items classified as capital items under U.S.
generally accepted accounting principles, but shall be required to comply with
this section as to such items if and to the extent that amounts made available
therefor by Lessor from the reserve required to be established by Lessor under
Article XXXIX or are otherwise provided by Lessor.
(c) Nothing contained in this Lease and no action or
inaction by Lessor shall be construed as (i) constituting the request of
Lessor, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property or any part
thereof, or (2) giving Lessee any right, power or permission to contract for or
permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Lessor in respect thereof or to make any agreement that may
create, or in any way be the basis for any right, title, interest, lien, claim
or other encumbrance upon the estate of Lessor in the Leased Property, or any
portion thereof.
(d) Lessee will, 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 this Lease and except for ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased Property in
accordance with Section
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9.1(b) above during the entire Term of the Lease, or damage by casualty or
Condemnation (subject to the obligations of Lessee to restore or repair as set
forth herein).
9.2 Encroachments, Restrictions, Etc.. If any of the Leased
Improvements, at any time, materially encroach upon any property, street or
right-of-way adjacent to the Leased Property, or violate the agreements or
conditions contained in any lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or impair the rights of
others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor or at the behest of any
person affected by any such encroachment, violation or impairment, Lessee
shall, at its expense, subject to its right to contest the existence of any
encroachment, violation or impairment and n 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 alternation of any of the Leased
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased Improvements for the
Primary Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation, impairment
or encroachment. Any such alteration shall be made in conformity with the
applicable requirements of Article X. Lessee's obligations under this Section
9.2 shall be in addition to and shall in no way discharge or diminish any
obligation of any insurer under any policy of title or other insurance held by
Lessor.
ARTICLE X
10.1 Alterations. After receiving approval of Lessor, which
approval shall not be unreasonably withheld, Lessee shall have the right to
make such additions, modifications or improvements to the Leased Property from
time to time as Lessee deems desirable for its permitted uses and purposes,
provided that such action will not significantly alter the character or
purposes or significantly detract from the value or operating efficiency
thereof and will not significantly impair the revenue-producing capability of
the Leased Property or adversely affect the ability of the Lessee to comply
with the provisions of this Lease. The cost of such additions, modifications
or improvements to the Leased Property shall be paid by Lessee, and all such
additions, modifications and improvements shall, without payment by Lessor at
any time, be included under the terms of this Lease and upon expiration of
earlier termination of this Lease shall pass to and become the property of
Lessor. Nothing set forth in this Section 10.1 is intended to abrogate or
limit Lessor's obligations to make Capital Expenditures set forth in the
approved Capital Budget pursuant to Section 3.7.
10.2 Salvage. All materials which are scrapped or removed in
connection with the making of repairs required by Articles 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.
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10.3 Joint Use Agreements. If Lessee constructs additional
improvements that are connected to the Leased Property or share maintenance
facilities, HVAC, electrical, plumbing or other systems, utilities, parking or
other amenities, the parties shall enter into a mutually agreeable
cross-easement or joint use agreement, the form of which has been approved in
advance by Lessor, to make available necessary services and facilities in
connection with such additional improvements, to protect each of their
respective interests in the properties affected, and to provide for separate
ownership, use, and/or financing of such improvements.
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 taxes 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 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.
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 loss of any portion of the Leased
Property, or any part thereof, or cause Lessor or Lessee to be in default under
any mortgage, deed of trust, security deed or other agreement 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
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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 subject 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 (10) 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.
During the Term of this Lease, Lessee shall at all times keep the
Leased Property insured with the kinds and amounts of insurance described
below. This insurance shall be written by qualified, solvent companies which
can legally write insurance in the State. The policies must name Lessor as the
insured or as an additional named insured, as the case may be. Losses shall be
payable to Lessor or Lessee as provided in this Lease. Subject to Section
13.10, any loss adjustment with respect to the insurance coverages set forth in
items (a), (b) and (c), below shall require the written consent of Lessor and
Lessee, each acting reasonably and in good faith. Evidence of insurance shall
be deposited with Lessor. The policies on the Leased Property, including the
Leased Improvements, Fixtures and Lessee's Personal Property, shall include:
(a) Building insurance of risks on the "Special Form" or
"All Risk Form" in an amount not less than 100% of the then full replacement
cost thereof (as defined in Section 13.3) or such other amount which is
acceptable to Lessor, and personal property insurance on the "Special Form" or
"All Risk Form" in the full amount of the replacement cost thereof;
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(b) Earthquake and flood insurance in reasonable and adequate
amounts as mutually agreed by Lessor and Lessee.
(c) Insurance for loss or damage (direct and indirect)
from steam boilers, pressure vessels or similar apparatus, now or hereafter
installed in the Facility, in the minimum amount of $5,000,000 or in such
greater amounts as are then customary or as may be reasonably requested by
Lessor from time to time;
(d) Loss of income insurance on the "Special Form" or
"All Risk Form", in the amount of the greater of (i) one year of Base Rent or
(ii) the prior Fiscal Year's Base Rent plus Percentage Rent for the benefit of
Lessor, and business income or business interruption insurance on the "Special
Form" or "All Risk Form" in amounts not less than one year of gross profit, for
the benefit of Lessee;
(e) Commercial general liability insurance, with amounts
not less than $10,000,000 covering each of the following: bodily injury,
death, or property damage liability per occurrence, personal and advertising
injury, general aggregate, products and completed operations, with respect to
Lessor, and liquor law or "dram shop" liability, if liquor or alcoholic
beverages are served on the Leased Property, with respect to Lessor and Lessee;
(f) Insurance covering such other hazards and in such
amounts as may be customary for comparable properties in the area of the Leased
Property and is available from insurance companies, insurance pools or other
appropriate companies authorized to do business in the State at rates which are
economically practicable in relation to the risks covered as may be reasonably
requested by Lessor;
(g) Fidelity bonds with limits and deductibles as may be
reasonably requested by Lessor, covering Lessee's employees in job
classifications normally bonded under prudent hotel management practices in the
United States or otherwise required by law;
(h) Worker's compensation insurance to the extent
necessary to protect Lessor and the Leased Property against Lessee's worker's
compensation claims;
(i) Vehicle liability insurance for owned, non-owned, and
hired vehicles, in the amount of $1,000,000; and
(j) Such other insurance as Lessor may reasonably request
for facilities such as the Leased Property and the operation thereof.
13.2 Responsibility for Premiums. Lessee shall keep in force the
foregoing insurance coverage at its expense.
13.3 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, if available, and the cost of debris removal. In the event either
party believes that full replacement cost (the then-replacement
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cost less such exclusions) has increased or decreased at any time during the
Lease Term, it shall have the right to have such full replacement cost
re-determined.
13.4 Workers' Compensation. Lessee, at its sole cost, shall at all
times maintain adequate workers' compensation insurance coverage for all
persons employed by Lessee on the Leased Property. Such workers' compensation
insurance shall be in accordance with the requirements of applicable local,
state and federal law.
13.5 Waiver of Subrogation. All insurance policies carried by
Lessor or Lessee covering the Leased Property, the Fixtures, the Facility or
Lessee's Personal Property, including, without limitation, contents, fire and
casualty insurance, shall expressly waive any right of subrogation on the part
of the insurer against the other party. The parties hereto agree that their
policies will include such waiver clause or endorsement so long as the same are
obtainable without 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.
13.6 Form Satisfactory, etc. All of the policies of insurance
referred to in this Article XIII shall be written in a form, with deductibles
and by insurance companies reasonably satisfactory to Lessor. Lessee shall be
permitted to acquire insurance through insurance companies which are Affiliates
of Lessee and which otherwise satisfy the requirements of this Article XIII,
provided that the terms of such insurance shall be no more favorable to such
Affiliates than would the same insurance if purchased from an independent third
party. Lessee shall pay all of the premiums therefor, and deliver such
policies or certificates thereof to Lessor prior to their effective date (and,
with respect to any renewal policy, 30 days prior to the expiration of the
existing policy), and in the event of the failure of Lessee either to effect
such insurance as herein called for or to pay the premiums therefor, or to
deliver such policies or certificates thereof to Lessor at the times required,
Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums thereon, and Lessee shall reimburse Lessor for
any premium or premiums paid by Lessor for the coverages required under this
Section upon written demand therefor, and Lessee's failure to repay the same
within thirty (30) days after Notice of such failure from Lessor shall
constitute an Event of Default within the meaning of Section 16.1(b). Each
insurer mentioned in this Article XIII shall agree, by endorsement to the
policy or policies issued by it, or by independent instrument furnished to
Lessor, that it will give to Lessor 30 days' written notice before the policy
or policies in question shall be materially altered, allowed to expire or
canceled.
13.7 Increase in Limits. If either Lessor or Lessee at any time
deems the limits of the personal injury or property damage under the
comprehensive public liability insurance then carried to be either excessive or
insufficient, Lessor and Lessee shall endeavor in good faith to agree on the
proper and reasonable limits for such insurance to be carried and such
insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section.
13.8 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article XIII, Lessee may bring the insurance provided for
herein within the coverage of a so-
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called blanket policy or policies of insurance carried and maintained by
Lessee; provided, however, that the coverage afforded to Lessor and Lessee 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.
13.9 Separate Insurance. Lessee shall not on Lessee's own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished, or increase the amount of
any then existing insurance by securing an additional policy or additional
policies, unless all parties have an insurable interest in the subject matter
of the insurance, including in all cases Lessor, are included therein as
additional insured, and the loss is payable under such additional separate
insurance in the same manner as losses are payable under this Lease. Lessee
shall immediately notify Lessor that Lessee has obtained any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance.
13.10 Reports On Insurance Claims. Lessee shall promptly investigate
and make a complete and timely written report to the appropriate insurance
company as to all accidents, claims for damage relating to the ownership,
operation, and maintenance of the Leased Property, any damage or destruction to
the Leased Property and the estimated cost of repair thereof and shall prepare
any and all reports required by any insurance company in connection therewith.
All such reports shall be timely filed with the insurance company as required
under the terms of the insurance policy involved, and a final copy of such
report shall be furnished to Lessor. Lessee shall not adjust, settle, or
compromise any insurance loss, or execute proofs of such loss, with respect to
the insurance coverages set forth in Subsections 13.1(a), 13.1(b) or 13.1(c), in
the aggregate amount of $10,000 or more, with respect to any single casualty or
other event without the prior written consent of Lessor, which consent shall not
be unreasonably withheld, delayed or conditioned.
ARTICLE XIV
14.1 Insurance Proceeds. Subject to the provisions of Section
14.6, all proceeds payable by reason of any loss or damage to the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article XIII of this Lease shall be paid to Lessor and held in
trust by Lessor in an interest-bearing account, shall be made available, if
applicable, for reconstruction or repair, as the case may be, of any damage to
or destruction of the Leased Property, or any portion thereof, and, if
applicable, shall be paid out by Lessor from time to time for the reasonable
costs of such reconstruction or repair upon satisfaction of reasonable terms
and conditions specified by Lessor. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased
Property shall be paid to Lessee. If neither Lessor nor Lessee is required or
elects to repair and restore, and the Lease is terminated without purchase by
Lessee as described in Section 14.2, 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) Except as provided in Section 14.6, if during the
Term the Leased Property is totally or partially destroyed by a risk covered by
the insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for its Primary Intended Use, Lessee shall, at Lessee'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 (subject to the provisions of Section 14.2(c)), or (2)
offer to acquire the Leased Property from Lessor for a purchase price equal to
the Rejectable Offer Price of the Leased Property. If Lessee restores the
Facility, the insurance proceeds shall be paid out by Lessor from time to time
for the reasonable costs of such restoration upon satisfaction of reasonable
terms and conditions, and any excess proceeds remaining after such restoration
shall be paid to Lessee. If Lessee acquires the Leased Property, Lessee shall
receive the insurance proceeds. If Lessor does not accept Lessee's offer so to
purchase the Leased Property within 90 days, Lessee may withdraw its offer to
purchase the Leased Property and, if so withdrawn, Lessee may terminate the
Lease with respect to the Leased Property without further liability hereunder
and Lessor shall be entitled to retain all insurance proceeds. If this Lease
terminates pursuant to this Section 14.2(a), the Lessee shall pay all Rent due
through the date of such termination.
(b) Except as provided in Section 14.6, if during the
Term the Leased Property is partially destroyed by a risk covered by the
insurance described in Article XIII, but the Facility is not thereby rendered
Unsuitable for its Primary Intended Use, Lessee shall restore the Facility to
substantially the same condition as existed immediately before the damage or
destruction and otherwise in accordance with the terms of the Lease, subject to
the provisions of Section 14.2(c). Such damage or destruction shall not
terminate this Lease; provided, however, that if Lessee cannot within a
reasonable time obtain all necessary government approvals, including building
permits, licenses and conditional use permits, after diligent efforts to do so,
to perform all required repair and restoration work and to operate the Facility
for its Primary Intended Use in substantially the same manner as that existing
immediately prior to such damage or destruction and otherwise in accordance
with the terms of the Lease, Lessee may (a) give Lessor written notice of
termination of the Lease (without affecting any other Leases then in effect
between Lessor and Lessee) or (b) make a written offer to Lessor to purchase
the Leased Property for a purchase price equal to the Rejectable Offer Price of
the Leased Property determined without regard to such damage or destruction.
If Lessee makes such offer and Lessor does not accept the same within ninety
(90) days after Lessee delivers its offer to Lessor, Lessee shall withdraw such
offer and, if so terminated or withdrawn, Lessee may terminate this Lease with
respect to the Leased Property without further liability hereunder other than
for accrued obligations hereunder and any other obligations which survive the
termination of this Lease and Lessor shall be entitled to retain all insurance
proceeds. If Lessee restores the Facility, the insurance proceeds shall be
paid out by Lessor from time to time for the reasonable costs of such
restoration upon satisfaction of reasonable terms and conditions specified by
Lessor, and any excess proceeds remaining after such restoration shall be paid
to Lessee.
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(c) If the estimated cost of the repair or restoration
exceeds the amount of proceeds received by Lessor and Lessee from the insurance
required under Article XIII (other than as a result of Lessee's failure to
maintain the types and amounts of insurance coverage required by Article XIII),
and Lessee indicates a desire to restore the Facility if adequate funds were
made available, then if Lessor elects to direct Lessee to make such repairs or
restoration, Lessor shall be obligated to contribute any excess amounts needed
to restore the Facility prior to the commencement of work thereon. Such
difference to be held in trust, together with any other insurance proceeds, for
application to the cost of repair and restoration, shall be paid by Lessor to
Lessee promptly after Lessor receives Lessee's written invoice therefor. In
the event Lessee indicates a desire to restore the Facility but Lessor declines
to provide the additional funds necessary to do so, each of Lessor or Lessee
shall have the right to terminate this Lease as to the Facility in question,
without in any way affecting this Lease with respect to any other Leased
Property, by giving notice to the other. Upon such termination all insurance
proceeds with respect to the Leased Property in question shall be retained by
Lessor.
(d) If Lessor accepts Lessee's offer to purchase the
Leased Property under this Article, this Lease shall terminate as to the Leased
Property upon payment of the purchase price, and Lessor shall remit to Lessee
all insurance proceeds pertaining to the Leased Property being held in trust by
Lessor.
14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance. Except as provided in Section 14.6, if during the Term
the Facility is totally or substantially destroyed by a risk not covered by the
insurance described in Article XIII, whether or not such damage or destruction
renders the Facility Unsuitable for its Primary Intended Use, Lessee at its
option shall either (a) restore the Facility to substantially the same
condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease (subject to the provisions
of Section 14.2(c)), or (b) make a written offer to purchase the Leased
Property for a purchase price equal to the Rejectable Offer Price of the Leased
Property without regard to such damage or destruction. If Lessor does not
accept Lessee's offer so to purchase the Leased Property within ninety (90)
days after Lessee delivers its offer to Lessor, Lessee may withdraw its offer
to purchase the Leased Property and, if so withdrawn, Lessee may terminate the
Lease with respect to the Leased Property without further liability hereunder.
If such damage or destruction is not material, Lessee shall restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of the Lease,
and such damage or destruction shall not terminate the Lease.
14.4 Lessee's Property. All insurance proceeds payable by
reason of any loss of or damage to any of Lessee's Personal Property shall be
paid to Lessee; provided, however, no such payments shall diminish or reduce
the insurance payments otherwise payable to or for the benefit of Lessor
hereunder.
14.5 Abatement of Rent. Any damage or destruction due to
casualty notwithstanding, this Lease shall remain in full force and effect
provided that Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall not xxxxx during the period required for
the applicable repair and restoration; provided that the
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Lessee shall receive a credit against such rental payments and other charges in
an amount equal to any loss of income insurance proceeds actually received by
Lessor pursuant to any loss of income insurance pursuant to Section 13.1(d).
14.6 Damage near End of Term. Notwithstanding any
provisions of Section 14.2 or 14.3 appearing to the contrary, if damage to or
destruction of the Facility rendering it unsuitable for its Primary Intended
Use occurs during the last 24 months of the Term, then Lessee shall have the
right to terminate this Lease by giving written notice to Lessee within thirty
(30) days after the date of damage or destruction, whereupon all accrued Rent
shall be paid immediately, and this Lease shall automatically terminate five
days after the date of such notice, without any further liability by Lessee to
Lessor other than liabilities that expressly survive a termination of this
Lease.
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 Definitions.
(a) "Condemnation" means a Taking resulting from (1) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any
Condemnor, either under threat of condemnation or while legal proceedings for
condemnation are pending.
(b) "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
Condemnation.
15.2 Parties' Rights and Obligations. If during the Term there is
any Condemnation of all or any part of the Leased Property or any interest in
this Lease, the rights and obligations of Lessor and Lessee shall be determined
by this Article XV.
15.3 Total Taking. If title to the fee of the whole of the Leased
Property 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 of Taking, to terminate this Lease as of the Date of
Taking.
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Upon such date, if such Notice has been given, this Lease shall thereupon cease
and terminate and the provisions of Section 42.3 shall not apply. All Base
Rent, Percentage Rent and Additional Charges paid or payable by Lessee
hereunder shall be apportioned as of the Date of Taking, and Lessee shall
promptly pay Lessor such amounts.
15.4 Allocation of Award. The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor's loss of business beyond
the Term, shall be solely the property of and payable to Lessor. Any Award
made for loss of Lessee's business during the remaining Term, if any, for the
taking of Lessee's Personal Property, or for removal and relocation expenses of
Lessee in any such proceedings shall be the sole property of and payable to
Lessee. In any Condemnation proceedings Lessor and Lessee shall each seek its
Award in conformity herewith, at its respective expense; provided, however,
neither party shall initiate, prosecute or acquiesce in any proceedings that
may result in a diminution of any Award payable to the other party.
15.5 Partial Taking. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is still suitable for its
Primary Intended Use, and not Uneconomic for its Primary Intended Use, or if
Lessee or Lessor is entitled but neither elects to terminate this Lease as
provided in Section 15.3, Lessee at its cost shall with all reasonable
dispatch, but only to the extent of any condemnation awards made available to
Lessee and any other sums advanced by Lessor pursuant to the next sentence,
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. If
the condemnation awards are not adequate to restore the Facility to that
condition, each of Lessor and Lessee shall have the right to terminate this
Lease, without in any way affecting any other leases in effect between Lessor
and Lessee, by giving Notice to the other; provided, however that, if such
termination is by Lessee, Lessor shall have the right, in its sole discretion,
to nullify the termination and keep this Lease in full force by providing,
within thirty (30) days after Lessee's Notice of termination, a Notice to
Lessee of Lessor's unconditional, legally binding obligation to be responsible
for all restoration costs in excess of the condemnation awards. If this Lease
is not terminated and Lessee restores the Facility, the condemnation awards,
and any other sums made available by Lessor as aforesaid, shall be held in
trust by Lessor and paid out by Lessor from time to time for the reasonable
costs of such restoration upon satisfaction of reasonable terms and conditions,
and any excess awards remaining after such restoration shall be retained by
Lessor unless the partial condemnation materially impairs the operations or
financial performance of the Facility, in which latter event the award shall be
equitably apportioned between Lessor and Lessee in proportion to the then fair
market values of the respective estates and interests of Lessor and Lessee in
and to the Leased Property and under this Lease.
15.6 Temporary Taking. If the whole or any part of the Leased
Property or of Lessee's interest under this Lease is condemned by any 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 Base Rent and Additional Charges. In
addition, Lessee shall pay Percentage Rent at a rate equal to the average
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Percentage Rent during the last three preceding Fiscal Years (or if three
Fiscal Years shall not have elapsed, the average during the preceding Fiscal
Years). 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 15.6 described, the entire amount of any Award made for such
Condemnation allocable to the Term of this Lease, whether paid by way of
damages, rent or otherwise, shall be paid to Lessee. Lessee covenants that
upon the termination of any such period of temporary use or occupancy it will,
at its sole cost and expense (subject to Lessor's contribution as set forth
below), 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 of occupancy extends beyond the expiration
of the Term, in which case Lessee shall not be required to make such
restoration. If restoration is required hereunder, Lessor shall contribute to
the cost of such restoration that portion of its entire Award that is
specifically allocated to such restoration in the judgment or order of the
court, if any, and Lessee shall fund the balance of such costs.
ARTICLE XVI
16.1 Events of Default. If any one or more of the following events
(individually, an "Event of Default") occurs:
(a) if an Event of Default occurs with respect to the
lease of any Leased Property under the Existing Leases as amended by this
Consolidated Lease Amendment, any leases which are Substitute Leases for such
leases, or any other leases between Lessor or an Affiliate of Lessor, as
landlord, and any Affiliate of IHC, as tenant, or any leases which are
Substitute Leases for such leases.
(b) if Lessee fails to make payment of the Base Rent,
Percentage Rent or Additional Charges within ten (10) days after written notice
from Lessor that the same has become due and payable;
(c) except as set forth in Sections 16.1(b), if either
party fails to observe or perform any other term, covenant or condition of this
Lease and such failure is not cured by such party within a period of thirty
(30) days after receipt by such party of Notice thereof from the other party,
unless such failure cannot with due diligence be cured within a period of
thirty (30) days, in which case it shall not be deemed an Event of Default if
such party proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof provided, however, in no event shall
such cure period extend beyond 90 days after such Notice; or
(d) if Lessee, IH Company or IHC shall file a petition in
bankruptcy or reorganization for an arrangement pursuant to any federal or
state bankruptcy law or any similar federal or state law, or shall be
adjudicated a bankrupt or shall make an assignment for
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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 Lessee, IH Company or IHC 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 Lessee, IH Company or IHC 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, IH Company or IHC or of the whole or
substantially all of the assets of the Lessee, IH Company or IHC shall be
appointed in any proceedings brought by the Lessee, IH Company or IHC or if any
such receiver, trustee or liquidator shall be appointed in any proceeding
brought against Lessee, IH Company or IHC shall not be vacated or set aside or
stayed within sixty (60) days after such appointment; or
(e) if Lessee, IH Company or IHC is liquidated or
dissolved, or begins proceedings toward such liquidation or dissolution, or, if
Lessee in any manner, permits the sale or divestiture of substantially all of
its assets; or
(f) if the estate or interest of Lessee in the Leased
Property or any part thereof (i) is voluntarily or involuntarily transferred,
assigned, conveyed, levied upon or attached in any proceeding (unless Lessee is
contesting such lien or attachment in good faith in accordance with Article XII
hereof) or (ii) is transferred, assigned or conveyed except as permitted by the
terms of the Master Agreement; or
(g) if, except as a result of damage, destruction or a
partial or complete Condemnation, Lessee voluntarily ceases operations on the
Leased Property for a period in excess of thirty (30) days; or
(h) if an event of default has been declared by the
franchisor under the Franchise Agreement with respect to the Facility on the
Leased Premises as a result of any action or failure to act by the Lessee or
any other person with whom Lessee contracts for management services at the
Facility (other than a failure to complete a Capital Improvement required by
the franchisor resulting from Lessor's failure to fund the Capital Expenditure
therefor pursuant to Section 9.1(b)) and Lessee has failed, within thirty (30)
days thereafter, to cure such default by either (1) curing the underlying
default under the Franchise Agreement and paying all costs and expenses
associated therewith, or (2) obtaining at Lessee's sole cost and expense a
substitute franchise license agreement with a substitute franchisor acceptable
to Lessor, on terms and conditions acceptable to Lessor; provided, however,
that if Lessee is in good faith disputing an assertion of default by the
franchisor or is proceeding diligently to cure such default, the 30-day period
shall be extended for such period of time as Lessee continues during this
period to dispute such default in good faith or diligently proceeds to cure
such default (but in any event not longer than ninety (90) days following the
assertion of default by the franchisor) and so long as there is no period
during which the Facility is not operated pursuant to a Franchise Agreement
approved by Lessor; or
(i) the occurrence of an Event of Default under either of
the Guaranties of Lease executed by IH Company and IHC, respectively, in favor
of Lessor with respect to Lessee's obligations under this Lease.
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Then, and in any such event, Lessor may exercise one or more
remedies available to it herein or at law or in equity, including but not
limited to its right to terminate this Lease with respect to an individual
Leased Property or any other Leases identified on Exhibit A or any leases which
are Substitute Leases for such Leases, or, in the case of a breach by Lessor
under subsection (c) above, Lessee may exercise one or more remedies available
to it herein or at law or in equity, including, but not limited to its right to
terminate this Lease with respect to the individual Leased Property with
respect to which Lessor has breached its obligations under subsection (c) above
(but not with respect to any other Leases identified on Exhibit A).
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 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 so to do, immediately surrender and assign to
Lessor or Lessor's designee 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 laws for
service of notice to re-enter 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, except unless otherwise required by applicable law.
16.3 Damages. Neither (a) the termination of this Lease, (b) the
repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.
Lessee shall forthwith pay to Lessor, at Lessor's option, as
and for liquidated and agreed current damages for Lessee's default; either:
(1) Without termination of Lessee's right to possession
of the Leased Property, each installment of Rent (including Percentage
Rent as determined below)
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and other sums payable by Lessee to Lessor under the Lease as the same
becomes due and payable, which Rent and other sums shall bear interest
at the Overdue Rate, and Lessor may enforce, by action or otherwise,
any other term or covenant of this Lease; or
(2) the sum of:
(A) the unpaid Rent which had been
earned at the time of termination, repossession or
reletting, and
(B) the worth at the time of termination
repossession or reletting of the amount by which the
unpaid Rent for the balance of the Term after the
time of termination, repossession or reletting,
exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided and as reduced for
rentals received after the time of termination,
repossession or reletting, if and to the extent
required by applicable law, and
(C) 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
things, would be likely to result therefrom. The
worth at the time of termination, repossession or
reletting of the amount referred to in subparagraph
(B) is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of New
York at the time of award plus 1%.
Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to
(i) the average of the annual amounts of the Percentage Rent for the three
Fiscal Years immediately preceding the Fiscal Year in which the termination,
re-entry or repossession takes place, or (ii) if three 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 Fiscal Year has not
elapsed, the amount derived by annualizing the Percentage Rent from the
effective date of this Lease.
16.4 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 "xxxxxx the corporate veil" 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.
16.5 Application of Funds. Any payments received by Lessor under
any of the provision of this Lease during the existence or continuance of any
Event of Default shall be applied to Lessee's obligations in the order that
Lessor may determine or as may be prescribed by the laws of the State.
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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 any
Franchise Agreement other than a failure to complete improvements required by
the franchisor because the Lessor has not provided Lessee with funds therefor,
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
16.4, take all such actin thereon as, in Lessor's opinion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of Lessee.
All sums so paid by Lessor and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses, in each case to the extent
permitted by law) so incurred, together with a late charge thereon (to the
extent permitted by law) at the Overdue Rate from the date on which such sums
or expenses are paid or incurred by Lessor, shall be paid by Lessee to Lessor
on demand. The obligations of Lessee and rights of Lessor contained in this
Article shall survive the expiration or earlier termination of this Lease.
ARTICLE XVIII
Provisions Relating to Purchase of the Leased Property. If Lessee
purchases the Leased Property from Lessor pursuant to any of the terms of this
Lease, Lessor shall, upon receipt from Lessee of the applicable purchase price,
together with full payment of any unpaid Rent due and payable with respect to
any period ending on or before the date of the purchase, deliver to Lessee an
appropriate limited or special warranty deed or other conveyance conveying the
entire interest of Lessor in and to the Leased Property to Lessee free and
clear of all encumbrances other than (a) those that Lessee has agreed hereunder
to pay or discharge, (b) those mortgage liens, if any, that Lessee has agreed
in writing to accept and to take title subject to, (c) those liens and
encumbrances subject to which the Leased Property was conveyed to Lessor, (d)
encumbrances, easements, licenses or rights of way required to be imposed on
the Leased Property under Section 7.3, and (e) any other encumbrances permitted
to be imposed on the Leased Property under the provisions of Section XXXIV that
are assumable at no cost to Lessee or to which Lessee may take subject without
cost to Lessee. The difference between the applicable purchase price and the
total of the encumbrances assumed or taken subject to shall be paid in cash to
Lessor or as Lessor may direct, in federal or other immediately available
funds, except as otherwise mutually agreed by Lessor and Lessee. All expenses
of such conveyance, including, without limitation, the cost of title
examination or title insurance, if desired by Lessee, Lessee's attorneys' fees
incurred in connection with such conveyance and release, and transfer taxes and
recording fees, shall be paid by Lessee. Lessor shall pay its attorney's fees.
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ARTICLE XIX
19.1 Personal Property Limitation. Anything contained in this
Lease to the contrary notwithstanding, the average of the adjusted tax bases of
the items of personal property that are leased to the Lessee under this Lease
with respect to a Leased Property 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 (the
"Personal Property Limitation"). If Lessor reasonably anticipates that the
Personal Property Limitation will be exceeded with respect to a Leased Property
for any Fiscal Year, Lessor shall notify Lessee, and Lessee either (a) shall
purchase at fair market value any personal property anticipated to be in excess
of the Personal Property Limitation ("Excess Personal Property") either from
the Lessor or a third party or (b) shall lease the Excess Personal Property
from a third party. In either case, Lessee's Rent obligation shall be
equitably adjusted. In addition, in the case of the purchase or lease of
Excess Personal Property by the Lessee from a third party, the Lessor's capital
expenditure reserve obligation pursuant to Article XXXIX shall be appropriately
decreased to reflect the reduced need for Lessor- owned personal property.
Notwithstanding anything to the contrary set forth above, Lessee shall not be
responsible in any way for determining whether or not Lessee has exceeded or
will exceed the Personal Property Limitation, and shall not be liable to Lessor
or any of its shareholders in the event that the Personal Property Limitation
is exceeded, as long as Lessee meets its obligation to acquire or lease any
Excess Personal Property as provided above. This Section 19.1 is intended to
ensure that the Rent qualifies as "rents from real property," within the
meaning of Section 856(d) of the Code, or any similar or successor provisions
thereto, and shall be interpreted in a manner consistent with such intent.
19.2 Sublease Rent Limitation. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublet the Leased Property on
any basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee, or (b) any other formula 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.
19.3 Sublease Tenant Limitation. Anything contained in this Lease
to the contrary notwithstanding, Lessee shall not sublease the Leased Property
to any Person in which Equity Inns, owns, directly or indirectly, a 10% or more
interest, within the meaning of Section 856(d)(2)(B) of the Code, or any
similar or successor provisions thereto.
19.4 Lessee Ownership Limitation. Anything contained in this Lease
to the contrary notwithstanding, neither Lessee nor an Affiliate of the Lessee
shall acquire, directly or indirectly, a 10% or more interest in Equity Inns,
within the meaning of Section 856(d)(2)(B) of the Code, or any similar or
successor provision thereto.
19.5 Lessee Officer and Employee Limitation. Anything contained in
this Lease to the contrary notwithstanding, none of the officers or employees
of the Lessee (or any Person who furnishes or renders services to the tenants
of the Leased Property, or manages or operates the Leased Property) shall be
officers or employees of Equity Inns (or any Person who serves as an advisor to
Equity Inns). In addition, if a Person serves as both (a) a director of the
Lessee (or any Person who furnishes or renders services to the tenants of the
Leased Property, or manages or operates the Leased Property) and (b) a director
or trustee and officer (or employee) of Equity Inns (or any Person
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who serves as an advisor of Equity Inns), that Person shall not receive any
compensation for serving as a director of the Lessee (or any Person who
furnishes or renders services to the tenants of the Leased Property, or manages
or operates the Leased Property). Furthermore, if a Person serves as both (a)
a director and officer (or employee) of the Lessee (or any Person who furnishes
or renders services to the tenants of the Leased Property, or manages or
operates the Leased Property), that Person shall not receive any compensation
for serving as a director or trustee of Equity Inns (or any Person who serves
as an advisor of Equity Inns).
19.6 Payments to Affiliates of Lessee. Notwithstanding anything to
the contrary contained in this Lease, Lessee shall make no payments to
Affiliates as Gross Operating Expenses unless expressly set forth in the
Operating Budget or an approved Capital Budget or otherwise expressly agreed to
in writing by Lessor, in either case, after full written disclosure (including
information regarding competitive pricing) by Lessee to Lessor of the
affiliation and any other related information requested by Lessor.
Furthermore, Lessee shall be permitted to contract with its Affiliates for
management and other services and to pay fees for such services, provided that
such contracts and fees are disclosed in writing to Lessor and such fees shall
not be included in Gross Operating Expenses and Lessee's obligation to pay such
fees shall be subordinated to Lessee's obligation to pay Base Rent, Percentage
Rent and Additional Charges to Lessor pursuant to the terms of this Lease.
19.7 Management Agreement. Lessor shall have the right in its sole
and absolute discretion to approve or disapprove in advance any manager or
proposed manager (a "Manager") of the Facility which is not an Affiliate of
Lessee which is Controlled by IHC or its senior management, as well as any
agreement relating to the management or operation of the Facility (a
"Management Agreement") by a Manager which is not an Affiliate of Lessee and
Lessee will provide Lessor with an executed copy of any Management Agreement so
approved by Lessor. Any Management Agreement (whether with a Manager which is
an Affiliate or is not an Affiliate of Lessee) must provide that (i) upon
termination of this Lease or termination of Lessor's or Lessee's right to
possession of the Leased Property for any reason, the Management Agreement may
be terminated by Lessor without liability for any payment due or to become due
to the Manager thereunder; (ii) any management fees shall be subordinated to
payments of Rent to Lessor hereunder; and (iii) in the event Lessee is in
default, the Manager shall, at the election of Lessor and provided the Manager
continues to be paid, continues to perform under the terms of the Management
Agreement for a period not to exceed ninety (90) days. No fees or other
amounts payable by Lessee to any Manager shall excuse Lessee from its
obligations to pay Rent and other amounts payable by Lessee to Lessor
hereunder. No Management Agreement may be amended or modified in any manner
which materially affects the subordination of the management fees without the
prior written consent of Lessor.
ARTICLE XX
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Holding Over. If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such
possession shall be as a tenant at sufferance during which time Lessee shall pay
as rental each month two times the aggregate of (a) one-twelfth of the aggregate
Base Rent and Percentage Rent payable with respect to the last Fiscal Year of
the Term, (b) all Additional Charges accruing during the applicable month and
(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
tenancies at sufferance, to continue its 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 consequence of the
damage or destruction thereof by fire, the elements, casualties, thefts, riots,
wars or otherwise, or in consequence of foreclosures, attachments, levies or
executions (other than those caused by Lessor and those claiming from, through,
or under Lessor) is assumed by Lessee except as specifically provided in this
Lease, and, in the absence of negligence, willful misconduct or breach of this
Lease by Lessor, Lessor shall in no event be answerable or accountable therefor,
nor shall any of the events mentioned in this Section entitle Lessee to any
abatement of Rent except as specifically provided in this Lease.
ARTICLE XXII
Indemnification. Notwithstanding the existence of any insurance, and
without regard to the policy limits of any such insurance or self-insurance,
but subject to Section 16.4 and Article VIII, Lessee will protect, indemnify,
hold harmless and defend Lessor 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 Lessor
Indemnified Parties 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 by Lessee or
any of its agents, employees or invitees of the Leased Property or Lessee's
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which a Lessor Indemnified Party is made a
party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee or any of its agents,
employees or invitees, including any failure of Lessee or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law (other than arising out of a Condemnation proceedings), (c) any
Impositions that are the obligations of
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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,
and (e) the non-performance 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.
Lessor shall indemnify, save harmless and defend Lessee Indemnified
Parties from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses imposed upon or incurred by or
asserted against Lessee Indemnified Parties as a result of (a) the gross
negligence or willful misconduct of Lessor arising in connection with this
Lease; (b) any failure on the part of Lessor to perform or comply with any of
the terms of this Lease; (c) any Impositions that are the obligations of Lessor
pursuant to the applicable provisions of this Lease; (d) any liability arising
under the Franchise Agreement as a result of inadequate funding by Lessor for
Capital Expenditures; (e) liabilities or obligations arising under the
Americans with Disabilities Act (except to the extent relating to alterations
performed by or actions taken by Lessee subsequent to the Commencement Date of
this Lease); or (f) contractual liabilities to third parties not affiliated
with Lessee (including franchisors) relating to or arising out of, the
termination of this Lease by reason of an Event of Default by Lessor prior to
the expiration of any such third party contract.
To the extent that neither of the foregoing paragraphs applies to a
particular liability, action, claim, damage, cost or expense arising out of
operation of the Leased Property, such liability, action, claim, damage, cost
or expense shall be paid as a Gross Operating Expense.
Any amounts that become payable by an Indemnifying Party under this
Section shall be paid within ten (10) days after liability therefor on the part
of the Indemnifying Party is determined by litigation or otherwise, and if not
timely paid, shall bear a late charge (to the extent permitted by law) at the
Overdue Rate from the date of such determination to the day of payment. An
Indemnifying Party, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against the Indemnified
Party. The Indemnified Party, at its expense, shall be entitled to participate
in any such claim, action, or proceeding, and the Indemnifying party may not
compromise or otherwise dispose of the same without the consent of the
Indemnified Party, which may not be unreasonably withheld. Nothing herein
shall be construed as indemnifying a Lessor Indemnified Party against its own
grossly negligent acts or omissions or willful misconduct.
Lessee's or Lessor's liability for a breach of the provisions of this
Article shall survive any termination of this Lease.
ARTICLE XXIII
23.1 Subletting and Assignment. 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 consent of Lessor, which
consent may not be unreasonably withheld or delayed (a) assign this Lease or
sublet all or any part of the Leased Property to an Affiliate of Lessee, or (b)
sublet any retail or restaurant portion of the Leased Improvements in the
normal course
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of the Primary Intended Use; provided that any subletting to any party other
than an Affiliate of Lessee shall not individually as to any one such
subletting, or in the aggregate, materially diminish the actual or potential
Percentage Rent payable under this Lease. Any other assignment or subletting
shall require the express written consent of Lessor, which consent may be
withheld, delayed or conditioned in Lessor's sole discretion. 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 apart of Lessee to be
kept and performed and shall be, and become, jointly and severally liable with
Lessee for the performance thereof. Notwithstanding the above, Lessee may
assign the Lease without the consent of Lessor to (a) any of its Affiliates
which are Controlled by IHC or its then senior management, (b) any entity under
the Control of then senior management of IHC or Crossroads Hospitality Company,
L.L.C. or any successor to either of such entities, or (c) any party providing
a loan to IHC or any of its affiliates (a "Lender") provided the assignment is
for the purpose of granting a collateral interest in Lessee's economic interest
in the Leases or in any future leases between Lessor and Lessee, to the Lender,
or in the economic interest of any Affiliate of IHC in the Lessee, to secure
such loan; provided that any such assignee (other than a Lender) assumes in
writing and agrees to keep and perform all of the terms of the Lease on the
part of the Lessee to be kept and performed and shall be and become jointly and
severally liable with Lessee for the performance thereof. In case of either an
assignment or subletting made during the Term, Lessee shall remain primarily
liable, as principal rather than as surety, for the prompt payment of the Rent
and for the performance and observance of all of the covenants and conditions
to be performed by Lessee hereunder. An original counterpart of each such
sublease and assignment and assumption, duly executed by Lessee and such
sublessee or assignee, as the case may be, in form and substance satisfactory
to Lessor, shall be delivered promptly to Lessor. Any transfer of a
controlling interest (i.e. more than a 50% interest) in Lessee's General
Partner shall be subject to the same limitations as are applicable to a direct
assignment of this Lease pursuant to this Section 23.1.
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 hereunder 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 form the sublessee by Lessor
or Lessor's assignees, if any, as the case may be,m shall be credited against
the amounts owing by Lessee under this Lease.
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ARTICLE XXIV
Officer's Certificates; Financial Statements;
Lessor's Estoppel Certificates and Covenants.
(a) At any time and from time to time upon not less than ten (10)
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 hereunder
by Lessor or Lessee, and such other information as may be reasonably requested
by Lessor. Any such certificate furnished pursuant to this Section may be
relied upon by Lessor, any lender and any prospective purchaser of the Leased
Property.
(b) Throughout the Term, Lessee will furnish to Lessor all financial
statements and financial and operating information, and access to Lessee's
books and records as are required pursuant to Section 1.4 of the Master
Agreement.
(c) At any time and from time to time upon not less than ten (10)
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.
ARTICLE XXV
Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives as frequently as reasonably requested by Lessor to
inspect the Leased Property and Lessee's accounts 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.
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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.
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
30.1 Conveyance by Lessor. Subject to the limitations set forth in
the Master Agreement, 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.
30.2 Other Interests. This Lease and Lessee's interest hereunder
shall at all times be subject and subordinate to the lien and security title of
any deeds to secure debt, deeds of trust, mortgages, or other interests
heretofore or hereafter granted by Lessor in order to finance or refinance the
Leased Property and to any and all advances to be made thereunder and to all
renewals, modifications, consolidations, replacements, substitutions, and
extensions thereof (all of which are herein called the "Mortgage"); provided,
however, that with respect to any
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Mortgage currently in place or hereafter granted, such subordination is
conditioned upon delivery to Lessee of a commercially reasonable subordination,
non-disturbance and attornment agreement which provides that, provided that
Lessee is not then in Default under this Lease, Lessee shall not be disturbed
in its possession of the Leased Property hereunder following a foreclosure of
such Mortgage, that the holder of such Mortgage or the purchaser at a
foreclosure shall perform all obligations of Lessor under this Lease (but not
obligations which accrued before such holder or purchaser at foreclosure
obtained title to the Leased Property), and that Lessee shall attorn to and
recognize such purchaser as its landlord. In confirmation of such
subordination, however, Lessee shall, at Lessor's request, promptly execute,
acknowledge and deliver any instrument which may be required to evidence
subordination to any Mortgage and to the holder thereof. In the event of
Lessee's failure to deliver such subordination and if the Mortgage does not
change any term of the Lease, Lessor may, in addition to any other remedies for
breach of covenant hereunder, execute, acknowledge, and deliver the instrument
as the agent or attorney-in-fact of Lessee, and Lessee hereby irrevocably
constitutes Lessor its attorney-in-fact for such purpose, Lessee acknowledging
that the appointment is coupled with an interest and is irrevocable. Lessee
hereby waives and releases any claim it might have against Lessor or any other
party for any actions lawfully taken by the Holder of any Mortgage.
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.
ARTICLE XXXII
Notices. All notices, demands, requests, consents approvals and
other communications ("Notice" or "Notices") hereunder shall be in writing and
personally served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to Lessor at its principal office, as
indicated on the signature page hereof, Attention: President, and addressed to
Lessee as indicated on the signature page hereof, Attention: General Partner, or
to such other address or addresses as either party may hereafter designate.
Personally delivered Notice shall be effective upon receipt, and Notice given by
mail shall be complete at the time of deposit in the U.S. Mail system, but any
prescribed period of Notice and any right or duty to do any act or make any
response within any prescribed period or on a date certain after the service of
such Notice given by mail shall be extended five days.
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ARTICLE XXXIII
Appraisers. If it becomes necessary to determine the Fair Market
Value or Fair Market Rental of the Leased Property for any purpose of this
Lease, the party required or permitted to give Notice of such required
determination shall include in the Notice the name of a person selected to act
as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or
Lessee, as the case may be) appoint a second person as appraiser on its behalf.
The appraisers thus appointed, each of whom must be a member of the American
Institute of Real Estate Appraisers (or any successor organization thereto)
with at least five years experience in the State appraising property similar to
the Leased Property, shall, within forty-five (45) days after the date of the
Notice appointing the first appraiser, proceed to appraise the Leased Property
to determine the Fair Market Value or Fair Market Rental thereof as of the
relevant date (giving effect to the impact, if any, of inflation from the date
of their decision to the relevant date); provided, however, that if only one
appraiser shall have been so appointed, then the determination of such
appraiser shall be final and binding upon the parties. To the extent
consistent with sound appraisal practice as then existing at the time of any
such appraisal, such appraisal shall be made on a basis consistent with the
basis on which the Leased Property was appraised for purposes of determining
its Fair Market Value at the time the Leased Property was acquired by Lessor.
If two appraisers are appointed and if the difference between the amounts so
determined does not exceed 5% of the lesser of such amounts, then the Fair
Market Value or Fair Market Rental shall be an amount equal to 50% of the sum
of the amounts so determined. If the difference between the amounts so
determined exceeds 5% of the lesser of such amounts, then such two appraisers
shall have twenty (20) days to appoint a third appraiser. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value or Fair
Market Rental, whichever is earlier, either Lessor or Lessee may apply to any
court having jurisdiction to have such appointment made by such court. Any
appraiser appointed by the original appraisers or by such court shall be
instructed to determine the Fair Market Value or Fair Market Rental within 45
days after appointment of such appraiser. The determination of the appraiser
which differs most in the terms of dollar amount from the determinations of the
other two appraisers shall be excluded, and 50% of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value or Fair Market Rental of the Leased Property, as the case may be.
This provision for determining by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Lessor and Lessee shall each pay the
fees and expenses of the appraiser appointed by it and each shall pay the fees
and expenses of the appraiser appointed by it and each shall pay one-half of
the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the third appraiser and one-half of all
other costs and expenses incurred in connection with each appraisal.
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ARTICLE XXXIV
34.1 Lessor May Grant Mortgages. Without the consent of Lessee,
Lessor may, subject to the terms and conditions set forth below in this Section
XXXIV, from time to time, directly or indirectly, create or otherwise cause to
exist any Mortgage upon the Leased Property, or any portion thereof or interest
therein, whether to secure any borrowing or other means of financing or
refinancing. Any such Mortgage shall contain the agreement by the holder of the
Mortgage that it will (1) give Lessee the same notice, if any, given to Lessor
of any default or acceleration of any obligation secured by any such Mortgage or
any sale in foreclosure under such Mortgage, (2) permit Lessee to cure any such
default on Lessor's behalf within the applicable cure period (in which event,
Lessee shall be reimbursed by Lessor for any and all costs incurred in effecting
such cure, including without limitation out-of-pocket costs incurred to effect
any such cure (including reasonable attorneys' fees)), (3) permit Lessee to
appear by its representative and to bid at any sale in foreclosure made with
respect to any such Mortgage and (4) agree not to disturb Lessee's possession of
the Leased Property hereunder following the foreclosure of the Mortgage, as
provided in Section 30.2 hereof.
34.2 Lessee's Right to Cure. Subject to the provisions of Section
34.3, 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.
34.3 Breach by Lessor. If there exists an Event of Default with
respect to Lessor pursuant to Section 16.1 hereof, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee at law or in equity or pursuant to Section 16.1, may
purchase the Leased Property from Lessor for a purchase price equal to the then
Fair Market Value. If Lessee elects to purchase the Leased Property, it shall
deliver a Notice thereof to Lessor specifying a settlement date to occur not
less than ninety (90) days subsequent to the date of such Notice on which it
shall purchase the Leased Property, and the same shall be thereupon conveyed in
accordance with the provisions of Article XVIII.
34.4 Grant of Easements or Imposition of Restrictions. Lessor may not
grant easements or impose restrictions with respect to any Leased Property
without the express written consent of Lessee, which consent may not be
unreasonably withheld.
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ARTICLE XXXV
35.1 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 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 permitted
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.
35.2 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 Agreement until they have been fully performed) and, in
general, shall cooperate in good faith to effect an orderly transition of the
management lease or of the Facility.
(a) Transfer of Licenses. Upon the expiration or earlier
termination of the Term, Lessee shall use its best efforts (i) to transfer to
Lessor or Lessor's nominee or assignee all Franchise Agreements, 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 or Lessor's nominee of any applications for, all Licenses; provided, in
either case, that the costs and expenses of any such transfer or the processing
of any such application shall be paid by Lessor or Lessor's nominee.
(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 all leases and concession agreements in effect with
respect to the Facility then in Lessee's name.
(c) Books and Records. All books and records for the
Facility kept by Lessee pursuant to Section 3.7 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 one (1) year and Lessee may retain (on a confidential basis)
copies or computer records thereof.
(d) Remittance. Lessee shall remit to Lessor or Lessor's
nominee, simultaneously with the termination of this Agreement, all funds
remaining, if any, after payment of all accrued Gross Operating Expenses, and
other amounts due Lessee and after
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deducting the costs of any scheduled repair, replacement, or refurbishment of
Furniture and Equipment with respect to which deposits have been made.
35.3 Waiver of Presentment, etc. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance and waives
all notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.
ARTICLE XXXVI
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 XXXVII
Lessor's Possible Purchase of Assets of Lessee. Effective on not less
than ninety (90) days prior Notice given at any time within 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 (and provided that such early
termination is not the result of Lessee's Default hereunder), Lessee, upon
reasonable written notice to Lessor, shall have the option to require that
Lessor purchase all (but not less than all) of the on-site inventory and
supplies of Lessee, relating to the Leased Property, at the expiration or
termination of this Lease for an amount (payable in cash on the expiration date
of this Lease) equal to the fair market value thereof as appraised in
conformity with Article XXXIII, except that the appraisers need not be members
of the American Institute of Real Estate Appraisers, but rather shall be
appraisers having at least ten (10) years experience in valuing similar assets.
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 XXXVIII
Compliance with Franchise Agreement. Lessee shall comply in every
respect with the provisions of the Franchise Agreement (other than requirements
with respect to funding Capital Improvements which shall be the responsibility
of Lessor) so as to avoid any default thereunder during the term of this
Agreement. Lessee shall not terminate, extend, modify or enter into any
Franchise Agreement without in each instance first obtaining Lessor's prior
written consent. Lessor and Lessee agree to cooperate fully with each other in
the event it becomes necessary to obtain a Franchise Agreement extension or
modification or a new franchise for the Leased Property. If the Franchise
Agreement expires prior to the expiration of the Lease Term, Lessee, with the
prior approval of Lessor, shall endeavor to obtain a new
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or extended franchise license. Lessee shall be the franchisee under any such
franchise agreement. In the event of a change in the franchise for the Leased
Property, Lessor and Lessee shall promptly negotiate in good faith appropriate
and mutually acceptable modifications to the Rent terms for such Leased
Property under this Lease. In the event that Lessor and Lessee are unable to
agree, within sixty (60) days after such change in the franchise, that
modifications to the Rent terms are warranted by the change in franchise or to
agree on appropriate modifications to the Rent terms either Party may elect to
submit the matter to arbitration pursuant to Article XLI hereof. During the
pendency of the negotiations and/or arbitration, Lessee shall continue to pay
Rent in accordance with the terms of the Lease, with possible retroactive
adjustments based on the outcome of the negotiations and/or arbitration. To
the extent required by the Franchise Agreement, Lessor shall secure its
obligations to make capital expenditures or pay real property taxes by either
depositing the required funds in escrow with an escrow agent acceptable to the
franchisor or by dedicating for such purpose a portion of Lessor's line of
credit either by issuance of a letter of credit in favor of the franchisor or
in some other manner acceptable to the franchisor. If upon any expiration or
earlier termination of the Lease (other than upon an Event of Default by
Lessee), a Franchise Agreement remains in effect, or would but for such
expiration or termination remain in effect, Lessor shall indemnify, defend and
hold Lessee harmless with respect to the obligations and liabilities arising
thereunder after the date of expiration or termination of this Lease.
ARTICLE XXXIX
Capital Expenditures and Reserves. Lessor agrees to establish a
reserve account together with all interest earned thereon for each Facility
(the "Capital Expenditure Reserve Account") to fund Capital Expenditures in an
amount equal to four percent (4%) of annual Room Revenues from each Facility,
net of amounts actually expended for Capital Expenditures for such Facility
during any Fiscal Year. Any funds escrowed pursuant to a Franchise Agreement
or Mortgage and designated for Capital Expenditures shall be deemed to be part
of the Capital Expenditure Reserve Account for the applicable Leased Property.
Any funds escrowed pursuant to a Mortgage may be pledged as security for such
Mortgage, which pledge may provide that, in the event of a default by Lessor
under the Mortgage, the escrowed funds may be applied to the balance of the
loan secured by the Mortgage; provided, however, that in the event the holder
of the Mortgage exercises such remedy, Lessor shall be obligated immediately to
deposit into the Capital Expenditure Reserve Account any amount which may then
be necessary to bring the funds in such account (together with any funds
remaining in any other accounts of Lessor dedicated for such purpose) up to the
aggregate level required by this Article XXXIX. The Capital Expenditure
Reserve Account for each Facility may be commingled by Lessor with similar
accounts of Lessor with respect to other hotel properties leased by Lessor to
Lessee. Upon request by Lessee not more frequently than twice a year, Lessor
shall provide Lessee a written report stating the amounts held in such Capital
Expenditure Reserve Account with respect to each Leased Property and amounts
disbursed out of said account with respect to each Leased Property during the
prior Fiscal Year. Upon written request by Lessee to Lessor stating the
specific use to be made and the reasonable approval thereof by Lessor, the
funds in the Capital Expenditure Reserve Account shall be
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made available by Lessor for use by Lessee for Capital Expenditures in
connection with the Primary Intended Use as set forth in the approved Capital
Budget; provided, however, that no amounts made available under this Article
shall be used to purchase property (other than "real property" within the
meaning of Treasury Regulations Section 1.856-3(d)), to the extent that doing
so would cause the Lessor to recognize income other than "rents from real
property" as defined in Section 856(d) of the Code. Lessor's obligation to
fund the Capital Expenditure Reserve Account shall be cumulative and any
Capital Expenditures with respect to a Facility made in a Fiscal Year
(including Fiscal Years preceding the Term of this Lease) in excess of four
percent (4%) of Gross Revenues on a cumulative basis shall be credited to the
Capital Expenditure Reserve Account for that Facility. All amounts in the
Capital Expenditure Reserve Account are the property of Lessor. Lessee shall
have no interest in the Capital Expenditure Reserve Account other than with
respect to the funding of amounts in a Capital Budget approved by Lessor.
ARTICLE XL
Catastrophic Market Changes. In the event that a Catastrophic Market
Change (as hereinafter defined) occurs with respect to the market in which a
Leased Property is located, Lessor agrees, upon written request from Lessee, to
consider in good faith marketing such Leased Property for sale to a third
party; provided, however, that the Lessor shall have no legally binding
obligation to market or sell the Leased Property. In the event that such sale
is consummated, this Lease shall be terminated upon the date of the transfer
and, thereupon, neither party shall be further obligated to the other under
this Lease, including, without limitation, any obligation by Lessor to pay
Lessee liquidated damages upon such sale under Section 42.3 and any obligation
by Lessee to pay Rent to Lessor beyond the date of transfer. For purposes of
this Article XL, "Catastrophic Market Change" means a specific event or series
of specific events (and not general economic conditions), not caused in whole
or in part by Lessee or Lessee's Affiliates, which is reasonably deemed by
Lessee to be permanent or long-term and which is expected to reduce annual
gross revenues at the Leased Property to a level at which such annual gross
revenues will be less than the sum of Rent plus Gross Operating Expenses.
ARTICLE XLI
Arbitration. Except as otherwise expressly provided, in the event a
dispute should arise concerning the interpretation or application of any of the
provisions of this Agreement, the parties agree that the dispute shall be
submitted to arbitration of the American Arbitration Association under its then
prevailing rules, except as modified by this Article XLI. The Arbitration
Tribunal shall be formed of three (3) Arbitrators each of which shall have at
least five (5) years' experience in hotel operation, management or ownership,
one (1) to be appointed by each of Lessor and Lessee and the third (3rd) to be
appointed by the American Arbitration Association. The arbitration shall take
place in the county in which the Leased Property is located and shall be
conducted in the English language. The arbitration award shall be final and
binding upon the parties hereto and subject to no appeal, and shall deal with
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XLII the question of costs of arbitration and all matters related thereto.
Judgment upon the award rendered may be entered into any court having
jurisdiction, or applications may be made to such court for an order of
enforcement. Any arbitration under this Article XLI shall be submitted within
three (3) months following the notice which triggers the arbitration, and shall
be concluded within one (1) year thereafter. In the event either of the
foregoing deadlines are missed, either party may proceed to commence a court
proceeding to resolve the dispute.
ARTICLE XLIII
43.1 Right of First Offer. In the event that Lessor desires to sell
its interest in the Leased Property, Lessor shall first offer to Lessee by
written Notice (the "Offer Notice") the opportunity to acquire the Leased
Property at the price at which Lessor intends to offer the Leased Property (the
"Offer Price"). In the event that Lessee elects in writing, within fifteen (15)
days following receipt of such Offer Notice, to acquire the Leased Property at
the Offer Price, Lessor shall be obligated to sell the Leased Property to Lessee
or its nominee at the Offer Price, and the closing of said sale shall be
consummated within fifteen (15) days following Lessee's election in accordance
with the provisions of Article XVIII. Upon such sale, this Lease shall
terminate with respect to such Leased Property as if such date were the fixed
expiration date set forth in this Lease, without any further obligation of
either party to the other, other than any accrued obligations hereunder or any
other obligations that expressly survive the termination of this Lease. The
provisions of this Article XLII shall not apply to any sale, transfer or
conveyance by Lessor of any interest in the Leased Property to any Affiliate of
Lessor.
43.2 Sale of Leased Property by Lessor. In the event Lessee does
not elect to acquire the Leased Property in accordance with the preceding
paragraph, Lessor shall be permitted to sell the Leased Property to a third
party at a price equal to or greater than ninety-five percent (95%) of the
Offer Price. In calculating the 95% as stated herein, only the stated purchase
price shall be relevant and no adjustments offered to Lessee shall be
considered in respect of the other terms or conditions of the proposed sale.
If such sale is not consummated within one hundred ninety-five (195) days after
the delivery of the Offer Notice, Lessor shall be obligated to repeat the
procedure set forth in the preceding paragraph. If such sale is consummated,
this Lease shall terminate as of the closing date of such sale.
43.3 Termination of Lease. Upon termination of this Lease pursuant
to Section 42.2, this Lease shall be of no further force and effect except as
to any obligations existing as of such date that survive termination of the
Lease, and all Rent shall be adjusted as of such date. As compensation for the
early termination of Lessee's leasehold estate hereunder, Lessor shall, subject
to the provisions of Section 42.4 below, either (a) pay to Lessee an amount
equal to the Net Present Value (as hereinafter defined), as of the closing of
the sale, of the cash flow to Lessee from the operations of the Leased Property
being sold (after payment of all Rent hereunder) (the "Termination Payment") or
(b) offer to lease to the Lessee one or more substitute hotel facilities
pursuant to one or more leases ("Substitute Leases") that would create for
Lessee leasehold estates that have an aggregate Fair Market Value of no less
than the Fair
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Market Value of the then remaining term of the Lease with respect to the Leased
Property. If Lessor elects and complies with the option described in (b)
above, regardless of whether Lessee enters into any of the Substitute Leases,
Lessor shall have no further obligations to Lessee with respect to compensation
for the early termination of this Lease. In the event Lessor and Lessee are
unable to agree within three (3) months upon the Fair Market Value of the then
remaining term of this Lease or one or more Substitute Leases, such value(s)
shall be determined by appraisal using the appraisal procedure set forth in
Article XXXIII. The "Net Present Value" of the cash flow to Lessee from the
operations of the Leased Property shall be calculated by multiplying (a) the
average annual EBITDA (as hereinafter defined) to Lessee net of all Rent for
the three (3) Fiscal Years ended immediately prior to the date of sale, times
(b) the number of Fiscal Years (or portions thereof) remaining in the Lease
Term, times (c) one hundred percent (100%) plus the average annual percentage
increase in the CPI during the three (3) Fiscal Years ended immediately prior
to the date of sale, and (d) discounting the product of (a) times (b) times (c)
above by the Base Rate plus one percent. "EBITDA" means net earnings before
interest, taxes, depreciation and amortization.
43.4 New Leases. Notwithstanding the foregoing, in the event that
Lessor sells the Leased Property to a third party pursuant to this Article XLII
at any time after the first anniversary but prior to the fifth anniversary of
the Commencement Date of this Lease, Lessor shall not have the option of
tendering to Lessee a Substitute Lease but shall be obligated to make a
Termination Payment to Lessee unless Lessor has offered at least five (5) new
leases to Lessee or any Affiliate of Lessee for hotel properties not previously
owned, leased or operated by Lessee, during the preceding twelve month period.
Over time, the foregoing requirement shall be met if Lessor has offered an
average of at least five (5) new leases per twelve-month period following the
Commencement Date of this Lease, measured on a cumulative basis. The foregoing
restriction on Lessor's right to tender a Substitute Lease shall terminate
after the fifth anniversary of the Commencement Date of this Lease.
Notwithstanding the foregoing, Lessor may defer paying Lessee any Termination
Payments until the fifth anniversary of the Commencement Date of the Lease. At
that time, a determination shall be made whether or not the net number of new
leases offered by Lessor to Lessee or any Affiliate of Lessee over the five (5)
year period (i.e. the total number of new leases offered by Lessor to Lessee or
any Affiliate of Lessee less the number of leases between Lessor and Lessee or
Affiliates of Lessee which are terminated during that period) equals or exceeds
twenty-five (25). If the net number of new leases offered by Lessor to Lessee
or any Affiliate of Lessee during the aforementioned five (5) year period
equals or exceeds twenty-five (25), no Termination Payment shall be payable
with respect to the termination of this Lease. To the extent that the net
number of new leases offered by Lessor to Lessee or any Affiliate of Lessee
over the aforementioned five (5) year period is less than twenty-five (25),
Termination Payments shall be due with respect to the number of leases by which
such net number is less than twenty-five (25), together with interest thereon
at the Base Rate from the date when such Termination Payments would have been
due and payable but for the foregoing deferral provisions. Notwithstanding the
foregoing, the amount of any Termination Payment otherwise due and owing
hereunder shall be reduced by the Fair Market Value of any hotel management
contracts referred to Lessee or its Affiliates by Lessor or its Affiliates
during the five (5) year period.
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ARTICLE XLIV
Change in REIT Status or REIT Regulations. In the event that XXXX
terminates its status as a real estate investment trust ("REIT") for tax
purposes, or in the event that the Internal Revenue Code provisions are amended
so that REITs are permitted to operate hotels, Lessor may elect to terminate
this Lease. In the event that this Lease is so terminated, Lessor shall be
obligated to pay to Lessee the Termination Payment calculated as set forth in
Article XLII hereof.
ARTICLE XLV
45.1 Lease Renewal. At least ninety (90) days but not more than
one hundred eighty (180) days prior to the expiration of the Term of this
Lease, and provided that (a) no Event of Default nor any event which with the
giving of notice or passage of time or both, would constitute an Event of
Default has occurred and is then continuing; and (b) Lessee has met the Renewal
Performance Standard (as described in Section 44.2) with respect to a
particular Leased Property, Lessor shall submit to Lessee a proposal for the
terms under which it is prepared to extend this Lease with respect to such
Leased Property for an additional five (5) year period. Thereafter, Lessor and
Lessee shall endeavor in good faith to negotiate such extension. In the event
that Lessor and Lessee fail to reach agreement on the terms of such extension
with respect to such Leased Property at least sixty (60) days prior to the
expiration of the Term of this Lease, Lessor shall be permitted to commence
negotiations with third parties which are not Affiliates of Equity Inns or
Lessor with respect to the lease of such Leased Property upon the expiration of
the Term of this Lease, provided that Lessor may not enter into a lease with
any such third party with respect to such Leased Property on terms
substantially more favorable to such third party than those last offered to
Lessee. Notwithstanding anything to the contrary set forth above, Lessee may
renew this Lease with respect to some but not all of the Leased Properties,
provided that Lessee has met the Renewal Performance Standard with respect to
those Leased Properties with respect to which it intends to renew this Lease.
45.2 Renewal Performance Standard. The Renewal Performance
Standard with respect to each Leased Property shall be based upon such Leased
Property's performance when measured against its competitive set within its
market as documented in the annual business plan for such Leased Property
taking into consideration changes in supply. Prior to March 1, of each Fiscal
Year, Lessee shall deliver to Lessor a Competitive Set Analysis for each Leased
Property in the form of Exhibit G hereto. The Renewal Performance Standard
shall be considered satisfied with respect to an individual Leased Property if
during the first fourteen (14) Fiscal Years of the Term of this Lease: the
year-to-year REVPAR growth for the Leased Property has met or exceeded the
year-to-year average REVPAR growth for the hotels in such Leased Property's
competitive set for at least eight (8) Fiscal Years. In the event that the
Leased Property fails to rate in the top one-third (1/3) of its competitive set
in any Fiscal Year when measured in accordance with the criteria set forth on
Exhibit G hereto, such Fiscal Year shall be excluded from the computation of
the Renewal Performance Standard, and the total number of Fiscal Years during
which the Leased Property must meet the Renewal Performance
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Standard shall be reduced by one (1) for each such disqualified Fiscal Year.
If, at any time, Lessor disagrees with the results of Lessee's Competitive Set
Analysis with respect to one or more of the Leased Properties, Lessor may
submit any such dispute to arbitration in accordance with Article XLI, provided
Lessor provides written notice of such arbitration to Lessee within sixty (60)
days of the delivery by Lessee to Lessor of such Competitive Set Analysis.
IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LESSOR
Signed and acknowledged EQUITY INNS PARTNERSHIP, L.P., a
in the presence of: Tennessee limited partnership
(as to both)
By: Equity Inns Trust, general partner
By: /s/ Xxxxxxx X. XxXxxxx
------------------------------- ---------------------------------
Printed Name: Printed Name: Xxxxxxx X. XxXxxxx
------------------ ----------------------------------
Title: CEO
-------------------------------
------------------------------- By:
------------------------------------
Printed Name: Printed Name:
------------------ ---------------------------
Title:
----------------------------------
LESSEE
Signed and acknowledged CROSSROADS/MEMPHIS PARTNERSHIP,
in the presence of: L.P., a Delaware limited partnership
(as to both)
By: Crossroads/Memphis Company, L.L.C.,
general partner
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------- -----------------------------------
Printed Name Printed Name: /s/ Xxxxx X. Xxxxxxxx
-------------------- ---------------------------
Title: Vice President
-------------------------------
-------------------------------- By:
------------------------------------
Printed Name Printed Name:
------------------- ---------------------------
Title:
---------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
64
65
STATE COLLEGE LESSEE
Signed and acknowledged STATE COLLEGE BBQ/CONCORD
in the presence of: JOINT VENTURE
By: STATE COLLEGE BBQ LIMITED
PARTNERSHIP, joint venture partner
/s/ Xxxxxx X. Xxxxx By: BBQ Restaurants, Inc., its
------------------------------- general partner
Printed Name: Xxxxxx X. Xxxxx
By: /s/ Xxx Self
------------------------------- -------------------------------------
Printed Name: Printed Name: Xxx Self
------------------ -----------------------
Title: President
------------------------------
By: Crossroads/Memphis Partnership, L.P.,
joint venture partner
/s/ Xxxx X. Xxxx By: Crossroads/Memphis Company
----------------------------- L.L.C., its general partner
Printed Name: Xxxx X. Xxxx
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------- ------------------------------
Printed Name: Printed Name: Xxxxx X. Xxxxxxxx
----------------- ----------------------
Title: Vice President
----------------------------
65
66
State of Pennsylvania )
) SS.
County of Allegheny )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared Xxxxxxx X. XxXxxxx, Xx. and ________________________, the
C.E.O. and ________________________, respectively, of Equity Inns Trust,
general partner of EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited
partnership, who acknowledged that they executed the foregoing instrument for
and on behalf of said general partner, that the same was their own free act and
deed, individually and as such officers, and the free act and deed of the
partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
this 14th day of November, 1996.
/s/ Xxxxx Xxxxxxx
-----------------
Notary Public
My commission expires: May 8, 2000
State of Pennsylvania )
) SS.
County of Allegheny )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared Xxxxx X. Xxxxxxxx and ________________________, the
____________________________ and ________________________, respectively, of
Crossroads/Memphis Company, L.L.C., general partner of CROSSROADS/MEMPHIS
PARTNERSHIP, L.P., a Delaware limited partnership, who acknowledged that they
executed the foregoing instrument for and on behalf of said general partner,
that the same was their own free act and deed, individually and as such
officers, and the free act and deed of the partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
this 14th day of November, 1996.
/s/ Xxxxx Xxxxxxx
-----------------
Notary Public
My commission expires: May 8, 2000
66
67
State of Ohio )
) SS.
County of Franklin )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared Xxx Self, the President of BBQ Restaurants, Inc., general
partner of STATE COLLEGE BBQ LIMITED PARTNERSHIP, joint venture partner of
STATE COLLEGE BBQ/CONCORD JOINT VENTURE, who acknowledged that he executed the
foregoing instrument for and on behalf of said general partner, that the same
was his own free act and deed, individually and as such officer, and the free
act and deed of the partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
this 13th day of November, 1996.
/s/ Xxxxx X'Xxxxxx-Xxxxxxx
--------------------------
Notary Public-State of Ohio
My Commission Expires May 23, 1998
State of Pennsylvania )
) SS.
County of Allegheny )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared Xxxxx X. Xxxxxxxx, the ____________________________ of
Crossroads/Memphis Company, L.L.C., general partner of CROSSROADS/MEMPHIS
PARTNERSHIP, L.P., joint venture partner of STATE COLLEGE BBQ/CONCORD JOINT
VENTURE, who acknowledged that he executed the foregoing instrument for and on
behalf of said general partner, that the same was his own free act and deed,
individually and as such officer, and the free act and deed of the partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
this 14th day of November, 1996.
/s/ Xxxxx Xxxxxxx
-----------------
Notary Public
My commission expires: May 8, 2000
67
