Common use of Capital Funds Clause in Contracts

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment Capital ------------- Improvements and ordinary Hotel capital replacement items FF&E Replacements as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projectsCapital Improvements and FF&E Replacements. It is recognized that expenditures for capital replacements Capital Improvements and FF&E Replacements are incapable of precise calculation in advance. Therefore, five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacementsCapital Improvements and FF&E Replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget and FF&E Budget. Manager shall establish a reserve for capital replacements Capital Improvements and FF&E Replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements Capital Improvements and FF&E Replacements during any calendar year which have been included in an approved Capital Budget or FF&E Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. All proceeds from the sale of fixtures, furniture or equipment no longer needed for the operation of the Hotel shall be allocated primarily to the cost of replacement of such fixtures, furniture or equipment, and, secondarily, in the event of proceeds in excess of such cost, to the Reserve Fund to the extent necessary to satisfy Owner's obligation to fund the same in accordance herewith, and, thirdly, if the Reserve Fund is fully funded in accordance herewith, any remaining proceeds shall be paid directly to Owner. (The parties hereby confirm that proceeds from the sale of capital items or fixtures, furniture or equipment shall be excluded from the computation of Gross Revenues hereunder). Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget or FF&E Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a any capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund Reserve Fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi4.01(v) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment Capital Improvements and ordinary Hotel capital replacement items FF&E Replacements as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projectsCapital Improvements and FF&E Replacements. It is recognized that expenditures for capital replacements Capital Improvements and FF&E Replacements are incapable of precise calculation in advance. Therefore, five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacementsCapital Improvements and FF&E Replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget and FF&E Budget. Manager shall establish a reserve for capital replacements Capital Improvements and FF&E Replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements Capital Improvements and FF&E Replacements during any calendar year which have been included in an approved Capital Budget or FF&E Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. All proceeds from the sale of fixtures, furniture or equipment no longer needed for the operation of the Hotel shall be allocated primarily to the cost of replacement of such fixtures, furniture or equipment, and, secondarily, in the event of proceeds in excess of such cost, to the Reserve Fund to the extent necessary to satisfy Owner's obligation to fund the same in accordance herewith, and, thirdly, if the Reserve Fund is fully funded in accordance herewith, any remaining proceeds shall be paid directly to Owner. (The parties hereby confirm that proceeds from the sale of capital items or fixtures, furniture or equipment shall be excluded from the computation of Gross Revenues hereunder). Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget or FF&E Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a any capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund Reserve Fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi4.01(v) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three (3) different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, with respect to the first year, three percent (3%) of Gross Revenues, with respect to the second year, four percent (4%) of Gross Revenues and thereafter, five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, with respect to the first year, four percent (4%) of Gross Revenues and thereafter five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for Agreementfor whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for ------------- renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake under take capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, five percent (5%) of Adjusted Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Ownerowner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain The Landlord shall establish a fund to be used for the Hotel in good order sole purpose of paying for the cost of replacements to the Physical Plant (“Landlord Capital Fund”). The Landlord shall have sole signing authority on the Landlord Capital Fund and repair, shall be responsible for managing the Landlord Capital Fund. (b) comply with The Landlord shall establish a fund to be used by the standards referred Tenant for the sole purpose of paying for the cost of maintenance, repair and replacements to the Program Equipment and Plant, Specialized Equipment, Trade Fixtures and Common Areas and for the cost of maintenance and repair to the Physical Plant (“Tenant Capital Fund”). The Tenant shall notify the Landlord’s Executive Director of Finance in writing for the release of funds in the License Agreement, and Tenant Capital Fund for a specified purpose by providing the Landlord with evidence that the Tenant’s Board of Directors has approved such release. (c) comply On an annual basis, the Tenant shall submit to the Landlord the funds generated from the capital surcharge that is applied to every ticket sold. The Landlord shall deposit such funds into the Landlord Capital Fund and the Tenant Capital Fund with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, five percent a minimum fifty per cent (550%) share being allocated into the Tenant Capital Fund. The parties agree that the funds generated from the capital surcharge on tickets sold prior to the Commencement Date will be deposited into the respective Capital Funds. (d) Within one (1) year following the Commencement Date, the Landlord and the Tenant shall establish the amount of Gross Revenues each the payment to be made by the Tenant to the Landlord Capital Fund and the Tenant Capital Fund for the subsequent year taking into consideration the ten-year capital investment plan, life cycle expectancy, usual and unusual wear and tear and other relevant industry standards; which amount will begin in 2013. Upon the parties determining the payments, the Tenant shall make the payments to the Landlord Capital Fund and the Tenant Capital Fund on a semi-annual basis or the Landlord may withhold such required payments from a portion of any approved grant monies that the Tenant may receive in accordance with the Relationship Agreement. (e) Each year during the Term, the Landlord and the Tenant shall prepare an annual capital investment plan (“Investment Plan”), including an annual capital budget, setting out the replacements to the Physical Plant contemplated at some point during the ensuing year, and a ten-year capital forecast including the current year. The Investment Plan shall be submitted to the Council for approval or other direction and to the Tenant’s Board of Directors for review, as the case may be. Upon the Investment Plan being approved by the Council, the Landlord shall carry out the replacements contemplated by the Investment Plan in accordance with the Landlord’s standards and funding or funds available and based on the responsibilities agreed to by the Landlord and the Tenant. The cost of carrying out such replacements shall be paid over for out of the Landlord Capital Fund or the Tenant Capital Fund, as the case may be. (f) In the event of an emergency which necessitates the making of a replacement not contemplated in cash the Investment Plan, the Landlord may make the necessary replacements and pay the costs of such replacements out of the Landlord Capital Fund, but if there is not sufficient monies in each calendar month after the Effective Date into a Reserve Landlord Capital Fund (as hereinafter defined) to pay for capital the cost of such replacements. In lieu , the Landlord will pay for such costs out of funding monthly into its own funds and will be entitled to be repaid such monies out of future payments made to the Reserve Landlord Capital Fund as contemplated above, Owner shall have or the right, but not the obligation, to deposit into the Reserve Tenant Capital Fund, on or about as the commencement of each year, case may be. (g) Neither the full amount set forth in Landlord Capital Fund nor the Tenant Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures used to pay for capital replacements during any calendar year those costs for which have been included the Landlord or the Tenant is entitled to receive insurance proceeds. (h) Upon the expiration or earlier termination of the Term, or if the Term is extended in an approved accordance with section 2.02, the Extended Term, all monies then existing in the Landlord Capital Budget may be made without Owner's or Fee Owner's additional approval and, to Fund and the extent available, Tenant Capital Fund shall be made by Manager from deemed to be vested in and shall become the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation absolute property of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;Landlord.

Capital Funds. Owner shall expend such amounts for renovation ------------- programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, five percent (5%) of Adjusted Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-interest- bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;

Capital Funds. Owner shall expend such amounts for renovation programs, furnishings, equipment and ordinary Hotel capital replacement items as are required from time to time to (a) maintain the Hotel in good order and repair, (b) comply with the standards referred to in the License Agreement, and (c) comply with governmental regulations and orders. Owner shall cooperate fully with Manager in establishing appropriate procedures and timetables for Owner to undertake capital replacement projects. It is recognized that expenditures for capital replacements are incapable of precise calculation in advance. Therefore, with respect to the first year, four percent (4%) of Gross Revenues and thereafter five percent (5%) of Gross Revenues each year shall be paid over in cash in each calendar month after the Effective Date into a Reserve Fund (as hereinafter defined) to pay for capital replacements. In lieu of funding monthly into the Reserve Fund as contemplated above, Owner shall have the right, but not the obligation, to deposit into the Reserve Fund, on or about the commencement of each year, the full amount set forth in the Capital Budget. Manager shall establish a reserve for capital replacements on the books of account for the Hotel and the cash amounts required for such reserve shall be placed into an interest-bearing account (the "Reserve Fund") established in the Hotel's name at the bank at which the Bank Account(s) are established, with Manager's designees being the only authorized signatories on said account. All amounts on deposit in the Reserve Fund shall be Owner's. Any expenditures for capital replacements during any calendar year which have been included in an approved Capital Budget may be made without Owner's or Fee Owner's additional approval and, to the extent available, shall be made by Manager from the Reserve Fund (including accrued interest and unused accumulations from prior calendar years). Any amounts remaining in the Reserve Fund at the close of each calendar year shall be carried forward and retained in the Reserve Fund until fully used as herein provided. To the extent the Reserve Fund is insufficient at a particular time or to the extent the Reserve Fund plus anticipated contributions for the ensuing calendar year is less than the budgeted expenditures set forth in the approved Capital Budget for the ensuing calendar year then in either such event, Manager shall give Owner written notice thereof at least sixty (60) days before the anticipated date such funds will be needed. Owner shall supply the necessary funds by deposit to the Reserve Fund at least fifteen (15) days before the anticipated date such funds will be needed. All proceeds from the sale of capital items no longer needed for the operation of the Hotel shall be deposited to the Reserve Fund. Sale of such items shall be at the discretion of Manager, and conducted in a commercially reasonable manner. Manager shall not dispose of any capital item or group of capital items having a value in excess of ten thousand dollars ($10,000) without Owner's prior written consent unless the replacement of such capital item or group of capital items has been contemplated in the applicable Capital Budget. Manager also shall obtain the consent of Owner's Leasehold Mortgagee when required for any disposition of capital items otherwise prohibited under the terms of Owner's Mortgage Documents, provided, however, that to the extent a capital item is being replaced because the same is defective or obsolete or with an item of equal or greater value no such consent need be obtained from Owner's Leasehold Mortgagee. Upon termination of this Agreement for whatever reason or upon sale of the Hotel, Manager's right to expend any unused portion of the Reserve Fund shall terminate and the balance of the fund shall be paid over to Owner, less any sums then due Manager. To the extent any expenditure under this Section 4.01(vi) shall exceed twenty thousand dollars ($20,000), Manager shall first solicit bids from at least three different reputable and qualified third parties, and the lowest of the bidders shall be selected unless acceptance of a higher bid has been approved by Owner in writing or unless Manager provides a reasonably detailed explanation for its selection of a bid higher than the lowest of the bidders;