EXHIBIT 10.1(b)
LEASE AGREEMENT
DATED AS OF ________ ___, 1997
BETWEEN
EQUITY INNS PARTNERSHIP, L.P.
AS LESSOR
AND
CROSSROADS/FUTURE COMPANY, L.L.C.
AS LESSEE
TABLE OF CONTENTS
Page
ARTICLE I................................................................... 1
1.1 Leased Property................................................. 1
1.2 Term............................................................ 2
ARTICLE II.................................................................. 3
2.1 Definitions..................................................... 3
ARTICLE III................................................................. 15
3.1 Rent............................................................ 15
3.2 Confirmation of Percentage Rent................................. 19
3.3 Additional Charges.............................................. 20
3.4 Rent Payable Without Deduction.................................. 21
3.5 Conversion of Property.......................................... 21
3.6 Budgets......................................................... 21
3.7 Approval of Capital Budget...................................... 22
3.8 Capital Projects................................................ 22
3.9 Books and Records............................................... 23
ARTICLE IV.................................................................. 23
4.1 Payment of Impositions.......................................... 23
4.2 Notice of Impositions........................................... 24
4.3 Adjustment of Impositions....................................... 25
4.4 Utility Charges................................................. 25
4.5 Insurance Premiums.............................................. 25
4.6 Ground Rent..................................................... 25
4.7 Franchise Fees.................................................. 25
ARTICLE V................................................................... 25
5.1 No Termination, Abatement, etc.................................. 25
5.2 Abatement Procedures............................................ 26
ARTICLE VI.................................................................. 26
6.1 Ownership of the Leased Property................................ 26
6.2 Lessee's Personal Property...................................... 26
6.3 Lessor's Representations........................................ 27
6.4 Lessee's Representations........................................ 27
6.5 Lessor's Lien................................................... 27
ARTICLE VII................................................................. 28
7.1 Condition of the Leased Property................................ 28
7.2 Use of the Leased Property...................................... 28
7.3 Lessor to Grant Easements, etc.................................. 29
ARTICLE VIII................................................................ 30
8.1 Compliance with Legal and Insurance
Requirements, etc............................................ 30
8.2 Legal Requirement Covenants..................................... 30
8.3 Environmental Covenants......................................... 31
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ARTICLE IX.................................................................. 33
9.1 Maintenance and Repair.......................................... 33
9.2 Encroachments, Restrictions, Etc................................ 35
ARTICLE X................................................................... 36
10.1 Alterations..................................................... 36
10.2 Salvage......................................................... 36
10.3 Joint Use Agreements............................................ 36
ARTICLE XI.................................................................. 37
11.1 Liens........................................................... 37
ARTICLE XII................................................................. 37
12.1 Permitted Contests.............................................. 37
ARTICLE XIII................................................................ 38
13.1 General Insurance Requirements.................................. 38
13.2 Responsibility for Premiums..................................... 40
13.3 Replacement Cost................................................ 40
13.4 Workers' Compensation........................................... 40
13.5 Waiver of Subrogation........................................... 40
13.6 Form Satisfactory, etc.......................................... 40
13.7 Increase in Limits.............................................. 41
13.8 Blanket Policy.................................................. 41
13.9 Separate Insurance.............................................. 41
13.10 Reports On Insurance Claims..................................... 42
ARTICLE XIV................................................................. 42
14.1 Insurance Proceeds.............................................. 42
14.2 Reconstruction in the Event of Damage or
Destruction Covered by Insurance............................. 43
14.3 Reconstruction in the Event of Damage or
Destruction Not Covered by Insurance......................... 44
14.4 Lessee's Property............................................... 45
14.5 Abatement of Rent............................................... 45
14.6 Damage near End of Term......................................... 45
14.7 Waiver.......................................................... 45
ARTICLE XV.................................................................. 45
15.1 Definitions..................................................... 45
15.2 Parties' Rights and Obligations................................. 46
15.3 Total Taking.................................................... 46
15.4 Allocation of Award............................................. 46
15.5 Partial Taking.................................................. 47
15.6 Temporary Taking................................................ 47
ARTICLE XVI................................................................. 48
16.1 Events of Default............................................... 48
16.2 Surrender....................................................... 50
16.3 Damages......................................................... 51
16.4 Waiver.......................................................... 52
16.5 Application of Funds............................................ 52
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ARTICLE XVII................................................................ 52
17.1 Lessor's Right to Cure Lessee's Default......................... 52
ARTICLE XVIII............................................................... 53
18.1 Provisions Relating to Purchase of the Leased
Property..................................................... 53
ARTICLE XIX................................................................. 53
19.1 Personal Property Limitation.................................... 53
19.2 Sublease Rent Limitation........................................ 54
19.3 Sublease Tenant Limitation...................................... 54
19.4 Lessee Ownership Limitation..................................... 54
19.5 Lessee Officer and Employee Limitation.......................... 54
19.6 Payments to Affiliates of Lessee................................ 55
19.7 Management Agreement............................................ 55
ARTICLE XX.................................................................. 56
20.1 Holding Over.................................................... 56
ARTICLE XXI................................................................. 56
21.1 Risk of Loss.................................................... 56
ARTICLE XXII................................................................ 57
22.1 Indemnification................................................. 57
ARTICLE XXIII............................................................... 58
23.1 Subletting and Assignment....................................... 58
23.2 Attornment...................................................... 59
ARTICLE XXIV................................................................ 60
24.1 Officer's Certificates; Financial Statements;
Lessor's Estoppel Certificates and Covenants................. 60
ARTICLE XXV................................................................. 60
25.1 Lessor's Right to Inspect....................................... 60
ARTICLE XXVI................................................................ 60
26.1 No Waiver....................................................... 60
ARTICLE XXVII............................................................... 61
27.1 Remedies Cumulative............................................. 61
ARTICLE XXVIII.............................................................. 61
28.1 Acceptance of Surrender......................................... 61
ARTICLE XXIX................................................................ 61
29.1 No Merger of Title.............................................. 61
ARTICLE XXX................................................................. 61
30.1 Conveyance by Lessor............................................ 61
30.2 Other Interests................................................. 62
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ARTICLE XXXI................................................................ 62
31.1 Quiet Enjoyment................................................. 62
ARTICLE XXXII............................................................... 63
32.1 Notices......................................................... 63
ARTICLE XXXIII.............................................................. 63
33.1 Appraisers...................................................... 63
ARTICLE XXXIV............................................................... 64
34.1 Lessor May Grant Mortgages...................................... 64
34.2 Lessee's Right to Cure.......................................... 65
34.3 Breach by Lessor................................................ 65
34.4 Grant of Easements or Imposition of Restrictions................ 65
ARTICLE XXXV................................................................ 65
35.1 Miscellaneous................................................... 65
35.2 Transition Procedures........................................... 66
ARTICLE XXXVI............................................................... 67
36.1 Memorandum of Lease............................................. 67
ARTICLE XXXVII.............................................................. 67
37.1 Lessor's Possible Purchase of Assets of Lessee.................. 67
ARTICLE XXXVIII............................................................. 68
38.1 Compliance with Franchise Agreement............................. 68
ARTICLE XXXIX............................................................... 68
39.1 Capital Expenditures and Reserves............................... 68
ARTICLE XL.................................................................. 69
40.1 Catastrophic Market Changes..................................... 69
ARTICLE XLI................................................................. 70
41.1 Arbitration..................................................... 70
ARTICLE XLII................................................................ 71
42.1 Right of First Offer............................................ 71
42.2 Sale of Leased Property by Lessor............................... 71
42.3 Termination of Lease............................................ 71
42.4 New Leases...................................................... 72
ARTICLE XLIII............................................................... 73
43.1 Change in REIT Status or REIT Regulations....................... 73
ARTICLE XLIV................................................................ 73
44.1 Lease Renewal................................................... 73
44.2 Renewal Performance Standard.................................... 74
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LEASE AGREEMENT
(___________ Hotel,
County/City of ___________,
State of ________)
THIS LEASE AGREEMENT (hereinafter called "Lease"), made as of the
______ day of _____________, 1997, between EQUITY INNS PARTNERSHIP, L.P., a
Tennessee limited partnership (hereinafter called "Lessor"), and
CROSSROADS/FUTURE COMPANY, L.L.C., a Delaware limited liability company
(hereinafter called "Lessee"), provides as follows:
W I T N E S S E T H:
WHEREAS, Lessee is an Affiliate (as hereinafter defined) of IHC (as
hereinafter defined) 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/Memphis Partnership, L.P. (as amended, the
"Master Agreement"), Lessee has elected to enter into this Lease.
NOW, THEREFORE, intending to be legally bound, Lessor and Lessee agree that
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
described on Exhibit A attached hereto and by reference incorporated herein (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;
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(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 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.
The Lessor hereby nonexclusively assigns to Lessee any claims Lessor may
have against Lessor's seller of the Leased Property with respect to a breach of
a seller's representation or warranty. The Lessor and the Lessee shall cooperate
in any claim against Lessor's seller, with the Lessor as the lead claimant with
authority to act with respect to such claim unless such action unreasonably
affects the rights of the Lessee with respect to such claim. The Lessor and the
Lessee shall share equitably in any settlement or award with respect to such
claim, provided that it shall be rebuttably presumed that such settlement or
award is allocable to the Lessor unless Lessee can show by a preponderance of
the evidence its damages resulting from such claim.
1.2 Term. The term of the Lease (the "Term") shall commence on the
date hereof (the "Commencement Date") and shall end on the fifteenth (15th)
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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.
ARTICLE II
2.1 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
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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:
(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 1.2 of the Lease.
Condemnation, Condemnor: As defined in Section 15.1.
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Consolidated Lease Amendment shall mean the Consolidated Lease
Amendment dated November 15, 1996, between the Lessor and Crossroads/Memphis
Partnership, L.P., as may be from time to time amended or restated.
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 Consumers (1982-1984 = 100) (CPI-U).
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).
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
5
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.
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
6
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
(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.
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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 Lease, 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.
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
8
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 biphenyls, 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, authorization and similar fees and all other
governmental
9
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.
10
Lease: This Lease, as may be from time to time amended or restated.
Leased Improvements; Leased Property: Each as defined in Article I.
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.
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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.
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
12
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 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
13
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.
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,
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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.
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
15
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 of the calendar year
including the Commencement Date, Tenant shall pay percentage rent
("Percentage Rent") quarterly, with respect to the four calendar quarters of
each Fiscal Year (excluding such quarters or portions thereof which precede the
Commencement Date), 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)
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
16
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 during the
Term, 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 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
17
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" 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 Base Rent and threshold dollar
amounts of Room Revenues applicable for the prior Fiscal Year.
Lessor shall calculate the annual Consumer Price Index
18
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 Officer's Certificate
provided under Section 3.1(d) 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
19
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
20
Additional Charges, a late charge (to the extent permitted by law) computed at
the Overdue Rate on the amount of such installment, from the due date of such
installment to the date of payment thereof. To the extent that Lessee pays any
Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee
shall be relieved of its obligation to pay such Additional Charges to the entity
to which they would otherwise be due and Lessor shall pay same from monies
received from Lessee.
3.4 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.
21
(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.
(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
22
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
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,
23
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.
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
24
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
25
between Lessor and Lessee, or to which Lessor and Lessee are parties, (d) any
bankruptcy, insolvency, 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
26
"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 Lessee's Personal Property, whether effected by Lessee or Lessor.
Subject to Article XXXVII, 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
27
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 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
28
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.
(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
29
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 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
30
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
31
counsel designated by the Indemnified Party and approved by the Indemnifying
party, which approval shall not be unreasonably withheld; provided, however,
that such approval shall not be required in the case of defense by counsel
designated by any insurance company undertaking such defense pursuant to any
applicable policy of insurance. Each Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel will be at the sole expense
of such Indemnified Party unless such counsel has been approved by the
indemnifying Party, which approval shall not be unreasonably withheld. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
made without its consent, which shall not be unreasonably withheld, but if
settled with the consent of the Indemnifying Party, or if settled without its
consent (if its consent shall be unreasonably withheld), or if there be a final
nonappealable judgment for an adversary party in any such Proceeding, the
Indemnifying Party shall indemnify and hold harmless the Indemnified Parties
from and against any liabilities incurred by such Indemnified Parties by reason
of such settlement or judgment.
(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 Lease.
For purposes of this Section 8.3, all amounts for which any Indemnified
Party seeks indemnification shall be computed net of
32
(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.
Notwithstanding anything to the contrary contained in this Lease, if
Lessor shall become entitled to the possession of the Leased Property by virtue
of the termination of the Lease or repossession of the Leased Property, then
Lessor may assign its indemnification rights under Section 8.3 of this Lease
(but not any other rights hereunder) to any Person to whom the Lessor
subsequently transfers the Leased Property, subject to the following conditions
and limitations, each of which shall be deemed to be incorporated into the terms
of such assignment, whether or not specifically referred to therein:
(1) The indemnification rights referred to in
this section may be assigned only if a known Environmental Liability then exists
or if a Proceeding 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
33
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 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
34
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
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
35
determination, either (a) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee or (b)
make such changes in the Leased Improvements, and take such other actions, as
Lessee in the good faith exercise of its judgment deems reasonably practicable
to remove such encroachment, and to end such violation or impairment, including,
if necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Leased Improvements for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements were operated prior to
the assertion of such violation, impairment or encroachment. Any such alteration
shall be made in conformity with the applicable requirements of 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 or 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.
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
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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
11.1 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
12.1 Permitted Contests. Lessee shall have the right to contest the
amount or validity of any Imposition to be paid by Lessee or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim ("Claims") not otherwise permitted by 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
37
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
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
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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;
(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;
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(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) Workers' 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 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
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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-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
41
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
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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.
(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
44
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 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.
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(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. 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.
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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 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
47
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 under the Consolidated Lease
Amendment, any leases which are Substitute Leases for such leases under the
Consolidated Lease Amendment, or any other leases between Lessor or an Affiliate
of Lessor, as landlord, and Crossroads/Memphis Partnership, L.P.,
Crossroads/Future Company, L.L.C., or any other 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
48
any federal or state bankruptcy law or any similar federal or state law, or
shall be adjudicated a bankrupt or shall make an assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts generally as
they become due, or if a petition or answer proposing the adjudication of
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
49
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;
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, the Consolidated Lease Amendment with respect to one or
more leased property thereunder or any leases which are Substitute Leases for
such leases, or any other lease between Lessor or an Affiliate of Lessor, as
Landlord, and Lessee or any Affiliate of Lessee, as tenant, 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 Leased Property
with respect to which Lessor has breached its obligations under subsection (c)
above (but not with respect to any other leases).
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
50
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) 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
51
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.
ARTICLE XVII
17.1 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
52
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
18.1 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.
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
53
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
54
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 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
55
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 and Lessor (or any party
acting by or through Lessor) agrees to perform Lessee's other obligations to
Manager under the Management Agreement which accrue subsequent to the date the
Lessor makes such election, continue to perform under the terms of the
Management Agreement for a period not to exceed ninety (90) days, provided that
such election by Lessor shall not constitute a waiver by Lessor of any rights or
remedies Lessor may have as a result of Lessee's default. 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
20.1 Holding Over. If Lessee for any reason remains in possession of
the Leased Property after the expiration or earlier termination of the Term,
such possession shall be as a tenant at sufferance during which time Lessee
shall pay as rental each month two times the aggregate of (a) one-twelfth of the
aggregate Base Rent and Percentage Rent payable with respect to the last Fiscal
Year of the Term, (b) all Additional Charges accruing during the applicable
month and (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
21.1 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,
56
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
22.1 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 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
57
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 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
58
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 Crossroads Hospitality Company, L.L.C., 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
24.1 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
25.1 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
26.1 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
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continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.
ARTICLE XXVII
27.1 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
28.1 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
29.1 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
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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 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
31.1 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
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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
32.1 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.
ARTICLE XXXIII
33.1 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
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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.
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
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(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.
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
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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 Lease 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 Lease, 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
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basis) copies or computer records thereof.
(d) Remittance. Lessee shall remit to Lessor or Lessor's
nominee, simultaneously with the termination of this Lease, all funds remaining,
if any, after payment of all accrued Gross Operating Expenses, and other amounts
due Lessee and after 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
36.1 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
37.1 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.
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ARTICLE XXXVIII
38.1 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 Lease.
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 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 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
39.1 Capital Expenditures and Reserves. Lessor agrees to establish a
reserve account together with all interest earned thereon for the Facility (the
"Capital Expenditure Reserve Account") to fund Capital Expenditures in an amount
equal to four percent (4%) of annual Room Revenues from the Facility, net of
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amounts actually expended for Capital Expenditures for the 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 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 the
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 the Leased Property and amounts disbursed out of said
account with respect to the 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 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 the Facility made by Lessor or an Affiliate of
Lessor during its period of ownership of the Leased Property in excess of four
percent (4%) of Gross Revenues on a cumulative basis shall be credited to the
Capital Expenditure Reserve Account for the 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
40.1 Catastrophic Market Changes. In the event that a Catastrophic Market
Change (as hereinafter defined) occurs with respect to the market in which the
Leased Property is located,
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Lessor agrees, upon written request from Lessee, to consider in good faith
marketing the 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
41.1 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 Lease, 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
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.
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ARTICLE XLII
42.1 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 the 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.
42.2 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.
42.3 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 or an Affiliate of Lessee, IHC or IH Company one or more
substitute hotel facilities pursuant to one or more leases ("Substitute Leases")
that would create for Lessee and the applicable Affiliate of Lessee, IHC or
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IH Company leasehold estates that have an aggregate Fair Market Value of no less
than the Fair 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 or the applicable Affiliate of
Lessee, IHC or IH Company 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.
42.4 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 prior to November 15, 2001, Lessor shall not have the option of
tendering to Lessee, or an Affiliate of Lessee, IHC or IH Company, a Substitute
Lease but shall be obligated to make a Termination Payment to Lessee unless
Lessor or 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 (12) 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 November 15, 1996, measured on a
cumulative basis. The foregoing restriction on Lessor's right to tender a
Substitute Lease shall terminate on November 15, 2001. Notwithstanding the
foregoing, Lessor may defer paying Lessee any Termination Payments until
November 15, 2001. At that time, a determination shall be made whether or not
the net number of new leases offered by Lessor or any Affiliate of Lessor to
Lessee, or an Affiliate of Lessee, IHC or IH Company, over the five (5) year
period (i.e. the total number of new leases offered by Lessor or any Affiliate
of Lessor less the number of leases between Lessor or Lessee, or an Affiliate of
Lessee, IHC or IH Company, 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 an Affiliate of Lessee, IHC or IH Company, during the aforementioned
five (5) year period equals or exceeds twenty-five (25), no Termination
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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 an
Affiliate of Lessee, IHC or IH Company, 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, between Lessor, as Landlord, and Lessee, or an
Affiliate of Lessee, IHC or IH Company, as tenant, 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 between November 15, 1997 and
November 15, 2001.
ARTICLE XLIII
43.1 Change in REIT Status or REIT Regulations. In the event that
Equity Inns 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 XLIV
44.1 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 the Leased Property,
Lessor shall submit to Lessee a proposal for the terms under which it is
prepared to extend this Lease with respect to the 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 the 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
the 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 the
Leased Property on terms
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substantially more favorable to such third party than those last offered to
Lessee.
44.2 Renewal Performance Standard. The Renewal Performance Standard
with respect to the Leased Property shall be based upon the Leased Property's
performance when measured against its competitive set within its market as
documented in the annual business plan for the 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 the Leased Property in
the form of Exhibit G hereto. The Renewal Performance Standard shall be
considered satisfied with respect to the 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 the 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 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 the Leased
Property, 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.
[SIGNATURES ON FOLLOWING PAGES]
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LEASE AGREEMENT
SIGNATURE PAGE
LESSOR
EQUITY INNS PARTNERSHIP, L.P., a
Tennessee limited partnership
By: Equity Inns Trust, general
partner
By: _____________________________
Printed Name:_____________________
Title:____________________________
State of ____________________ )
) SS.
County of ___________________ )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared ______________________________________________________, the
____________________________ 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 ____ day of ________________________, 1997.
-----------------------------------
Notary Public
My commission expires:_____________
[SIGNATURES CONTINUE]
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LEASE AGREEMENT
SIGNATURE PAGE
LESSEE
CROSSROADS/FUTURE COMPANY, L.L.C.,
a Delaware limited liability
company
By:________________________________
Printed Name:______________________
Title:_____________________________
State of ____________________ )
) SS.
County of ___________________ )
BEFORE ME, a Notary Public in and for said State and County,
personally appeared __________________________________________________________,
the ____________________________ of CROSSROADS/FUTURE COMPANY, L.L.C., a
Delaware limited liability company, who acknowledged that they executed the
foregoing instrument for and on behalf of said ____________________, 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 ____ day of ________________________, 1997.
-----------------------------------
Notary Public
My commission expires:_____________
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Exhibit A
Legal Description
Exhibit B
Property Descriptions
[Intentionally Omitted]
Exhibit C
Definition of Capital Improvements
Exhibit D
Schedule of Base Rent and Percentage Rent
Exhibit E
Form of Operating Budget
Exhibit F
Form of Capital Budget
Exhibit G
Competitive Set Analysis Criteria
