EXHIBIT 10.3
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of February 14,
1997, and is entered into by and between LONG BEACH HOTEL ASSOCIATES, L.P., as
lessor (hereinafter called "Lessor"), and SLC OPERATING LIMITED PARTNERSHIP, a
Delaware limited partnership, as lessee (hereinafter called "Lessee"). As
parties hereto, Lessor and Lessee agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1. Definitions: "Shall" or "will" means "covenants to" whenever
the context permits. "According to law" means in strict compliance with
applicable statutes, ordinances and regulations of any governmental authority
having jurisdiction.
Section 2. Construction: This lease shall be governed by and construed in
accordance with the laws of the State of Arizona. The validity or
unenforceability of any provision hereof shall not affect any other provision,
and any invalid or unenforceable provision shall be limited only to the extent
necessary to conform to law and so as most closely to carry out the intent of
the parties hereto as expressed herein. Whenever provision is made for either
party to secure the consent or approval of the other, such consent or approval
shall not be unreasonably withheld.
Section 3. Captions: The headings of the articles and sections of this
Lease are for convenience only and do not define or limit, and shall not be used
to construe, such articles or sections.
ARTICLE II
PREMISES AND TERM
Section 1. Leased Premises: Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, on the terms and conditions contained in this Lease,
Lessor's interest in (a) the real property commonly known as the Sheraton Long
Beach Hotel and located at 000 Xxxx Xxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxxxxx
00000, and more fully described on Xxxxxxx "X" xxxxxxxx xxxxxx (xxx "Xxxx"), (x)
all buildings and improvements now or in the future located on the Land, and all
appurtenances thereto (the "Improvements"), (c) all easements, licenses, permits
and other rights or privileges appurtenant to or necessary for the intended use
of the Land or Improvements (the "Appurtenances") (the Land, Improvements and
Appurtenances are collectively referred to herein as the "Real Property"), and
(d) all equipment, furniture and other personal property owned by Lessor and
located in or on the Real Property, or associated therewith, or that may in the
future be installed therein or thereon by Lessor (the "Personal Property"). The
Real Property and the Personal Property are sometimes hereinafter collectively
referred to as the "Premises."
Lessee hereby acknowledges that Lessor has delivered possession of
the Premises to Lessee, and that Lessee accepts the Premises in an "as is"
condition as of the Commencement Date (as defined below). Lessee further
acknowledges that Lessor shall not have any obligation to make any improvements
or repairs in or to the Premises except as may be expressly set forth in this
Lease.
Section 2. Lease Term: The term of this Lease (the "Lease Term") shall
commence on February 14, 1997 (the "Commencement Date") and shall end on
February 13, 2000, unless sooner terminated as set forth in this Lease.
Section 3. Lease Year: As used in this Lease, the term "Lease Year"
means the full calendar year, except that the first Lease Year shall commence on
the Commencement Date, and shall end on December 31 of the same calendar year,
and the last Lease Year shall end at the same time as the Lease Term shall end,
even if less than a full calendar year.
Section 4. Recording: Neither this Lease nor a copy thereof shall be
recorded by either party hereto in any public record. Upon request of either
party after the Commencement Date, Lessor and Lessee shall execute a memorandum
of lease in recordable form containing the terms and provisions required by
applicable law. The memorandum may be recorded by either party in the county
where the Premises are located.
ARTICLE III
IMPROVEMENTS, FURNISHINGS AND INVENTORY
Section 1. Furnishings: Lessee shall keep all of the furnishings,
fixtures and equipment (the "Furnishings") installed in or furnished to the
Premises, whether installed or furnished by Lessee, Lessor or a third party, in
good condition and repair (ordinary wear and tear excepted) and keep the same
free of all liens, claims, encumbrances and rights of others, and shall replace
the same when needed at all times during the Lease Term at Lessee's sole cost
and expense.
Section 2. Improvements: Any property permanently installed, affixed
or embedded in the Premises such as could not be removed without damage to the
Premises, and any and all alterations or repairs thereto or replacements
thereof, shall at once become a part of Lessor's estate in the realty and belong
to Lessor, without any obligation of Lessor to compensate Lessee therefor other
than as expressly set forth in this Lease.
Section 3. Inventories: Lessee shall be obligated to provide, at its
sole cost and expense, all food, beverage, supplies and other inventories (the
"Inventories") necessary to the operation of the Premises as a high-quality
hotel facility, and to maintain or replace such Inventories in the ordinary
course of business. Lessor shall have no obligations with respect to the
Inventories.
ARTICLE IV
RENT
Section 1. Amount of Rent:
(a) At such place or places as Lessor shall designate from time to
time in writing, Lessee shall pay to Lessor when due, without prior demand
therefor and without any deduction or offset whatsoever, rent as follows:
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(i) A "Basic Rent" equal to Thirty-Three Thousand Three Hundred
Thirty-Three and 33/100 Dollars ($33,333.33) per month (partial months, if
any, being prorated on the basis of a 30-day month). The Basic Rent shall
be payable in advance on or before the first day of each month (in the
event that the first Lease Year commences on a day other than the first
day of a month, said rent for the first month of the Lease Term shall be
paid on a prorated basis on the Commencement Date) beginning with the
start of the first Lease Year and continuing until the end of the Lease
Term, and shall constitute the minimum monthly rental hereunder.
(ii) A quarterly percentage rent, cumulated and adjusted quarterly
(the "Percentage Rent"), equal to the sum of Forty-two percent (42%) of
Lessee's "Gross Receipts" (as hereinafter defined) from the operation of
Lessee's business in the hotel portion of the Premises (the "Rooms
Percentage") during each Lease Year, plus Five percent (5%) of the "Gross
Sales" (as hereinafter defined) of the business in the restaurant and
lounge portions of the Premises during each Lease Year. Said sums shall be
monthly and shall be accompanied by a detailed statement (certified by the
chief accounting officer of Lessee) of Gross Receipts and Gross Sales.
Lessee shall be entitled to a deduction, from the Percentage Rent, of all
Basic Rent actually paid.
(b) Within 45 days after the end of each Lease Year during the term
hereof, a Percentage Rent computation for such prior Lease Year shall be
delivered by Lessee to Lessor. If requested in writing, by either party, such
Percentage Rent calculation shall be certified by a nationally recognized
certified public accountant reasonably acceptable to Lessor, and shall set forth
a detailed statement of the Gross Receipts of the hotel portion of the Premises
and the Gross Sales of the restaurant and lounge portions of the Premises. If
the aggregate Percentage Rent paid during any Lease Year is less than the
Percentage Rent payable hereunder computed with respect to such Lease Year, the
deficit shall forthwith be paid over to Lessor by Lessee. If the aggregate
Percentage Rent paid during such Lease Year exceeds the Percentage Rent payable
hereunder with respect to such Lease Year, the excess Percentage Rent amount
shall be carried over as a credit against the Percentage Rent payable with
respect to the following one or more subsequent Lease Year quarterly periods
until such credit shall have been used up completely.
Section 2. Gross Receipts and Gross Sales: As used in this Lease:
(a) "Gross Receipts" means the total revenue received from the
rental of guest rooms and meeting rooms in the hotel portion of the
Premises, without deduction. Gross Receipts shall not include revenue of
Lessee derived from or in respect of vending machines, telephones, laundry
or dry cleaning. Gross Receipts also shall not include sales, rooms or
other excise taxes, if any, required to be collected by Lessee to the
extent such taxes are actually paid to the proper tax receiving
authorities.
(b) "Gross Sales" means the gross sales price of all food and
beverages sold by Lessee, or any subtenant, agent, licensee, or
concessionaire of Lessee at, in or from the restaurant, bar and banquet
portions of the Premises; provided, however, that "Gross Sales" shall
exclude any and all rebates and/or refunds to customers, proceeds from
vending machines, meals charged to or paid for by employees and deducted
for tax accounting purposes or minimum wage requirements during hours of
employment, the amount of all sales tax receipts or other taxes that are
required by law to be and are in fact accounted for and paid by Lessee, or
such subtenant, agent, licensee or concessionaire of Lessee, to any
government or governmental agency.
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Section 3. Additional Rent: In addition to the rental provided for
in Section 1 of this Article IV, Lessee shall pay, as additional rent, each and
all of the payments called for by all equipment leases, if any, to which Lessor
is a party and that relate to equipment currently utilized on the Premises,
whether in effect as of the date hereof or entered into subsequent to the
Commencement Date of this Lease (the "Equipment Leases"), as such payments may
be adjusted from time to time in accordance with the terms of the Equipment
Leases. Such payments shall be made by Lessee directly to the lessor under each
of the Equipment Leases. Such payments by Lessee under the Equipment Leases
shall be wholly separate from, and shall not affect, Lessee's obligations to
make all other payments provided for in this Lease, including, without
limitation, payments of any type of rental provided for by Section 1 of this
Article IV, and shall not be included in, or affect in any fashion, the
calculation of any Basic Rent or Percentage Rent owed or payable thereunder.
Lessor shall retain all rights under the Equipment Leases, and Lessee shall have
no right, title or interest in or with respect to the Equipment Leases, or the
equipment covered by the Equipment Leases, other than the right to use such
equipment for so long as it may be located on the Premises.
Section 4. Net: Lessee acknowledges that this Lease is a "net"
lease. Accordingly, in addition to the rental provided for in Sections 1 and 3
of this Article IV, Lessee shall pay, as additional rent hereunder, all
insurance, taxes, water, heat, gas, electricity, rubbish removal, landscape,
parking lot maintenance and all other utilities and services supplied to the
Premises, and all other charges, costs and expenses relating to the Premises or
the use and occupancy of the same by Lessee or any other person or entity.
Anything herein contained to the contrary notwithstanding, Lessee shall not
engage for the account of Lessor the services of any consultant (including,
without limitation, legal counsel, management consultants, appraisers and
accountants) for the Premises without Lessor's prior written consent.
Section 5. Reports and Records: Lessee shall keep, at the Premises
or at Lessee's corporate offices, permanent and accurate records of all Gross
Receipts and Gross Sales, which records shall be open to inspection by Lessor or
its agents during ordinary business hours. Lessee will preserve, or cause to be
preserved, all such records for at least five years after the expiration of each
Lease Year. In addition, Lessee shall give Lessor, (i) on the 10th, 20th and
last day of each calendar month, Gross Receipts, Gross Sales and occupancy
reports, (ii) on a monthly basis, on or before the 20th day following the end of
each month, a complete set of financial statements, including a balance sheet
and a detailed monthly profit and loss statement, and (iii) on an annual basis,
within 45 days after the end of each Lease Year, a complete set of financial
statements, including a balance sheet and profit and loss statement certified by
a nationally recognized independent certified public accountant reasonably
acceptable to Lessor.
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Section 6. Special Audit of Annual Reports: At any time, upon
reasonable notice to Lessee, Lessor may make a special audit of any of Lessee's
books and records in respect of business operations on the Premises; provided,
however, that Lessor shall give Lessee a copy of any audit report. If such audit
discloses a deficiency in Percentage Rent for any Lease Year, the amount
thereof, together with interest thereon at a floating rate five percentage
points (5%) above Xxxxx Fargo Bank's announced "prime rate" from the date that
the Percentage Rent should have been paid to the date of payment, shall be paid
to Lessor no later than the first day of the next calendar month. If such audit
shows the Percentage Rent to have been overpaid, the amount thereof shall be
deducted from the next Percentage Rent payments thereafter becoming due. If such
audit discloses a deficiency in the payment of the Percentage Rent of more than
three percent (3%) of the amount that should have been paid, Lessee shall pay
for the special audit. Otherwise, such audit shall be at Lessor's expense. The
auditor shall be a reputable firm of national standing chosen by Lessor, and
whose rates shall be comparable to rates charged by accounting firms of similar
size and reputation.
Section 7. Financial Plan: Lessee shall provide to Lessor, within 30
days prior to the beginning of each Lease Year, an annual financial and
operating plan (the "Financial Plan") for Lessor's approval, which approval will
not be unreasonably withheld. The Financial Plan shall include a month-to-month
forecast of all revenues expected to be generated at the Premises, and operating
expenses associated therewith, including a schedule of proposed capital
improvements and refurbishment, and cost estimates thereof, for the next
succeeding Lease Year. The Financial Plan shall be updated within 15 days after
the end of each calendar quarter of each Lease Year, if Gross Receipts or Gross
Sales vary by more than ten percent (10%) from amounts set forth on the
Financial Plan, or if gross operating profit, as that term is generally
understood, varies by more than twenty percent (20%) from amounts set forth on
the Financial Plan.
ARTICLE V
USE, REPAIR, REPLACEMENTS AND ALTERATIONS
Section 1. Business Use: The Premises may be used solely for the
purpose of operating a hotel, together with (i) such ancillary uses as are
commonly associated therewith or incidental thereto; and (ii) to the extent not
covered by the foregoing, such uses as are, as of the date of execution of this
Lease, being made of the Premises by Lessee or its subtenants, agents, licensees
or concessionaires. Lessee agrees to operate its business on the Premises
continuously during the Lease Term, and to keep the Premises open for business
during usual business hours each and every day as is customary for such
businesses in the metropolitan area in which the Premises are located, subject
only to such periodic closures as may be necessary to complete required repairs,
restoration, replacements, refurbishment or construction. Lessee shall conduct
its business according to law and as a high grade and reputable concern.
Lessee shall not permit the Premises or any part thereof to be
vacated or abandoned at any time during the Lease Term nor remove from service
any of the guest rooms of the hotel portion of the Premises or any of the
seating capacity in the restaurant or lounge portions of the Premises, without
Lessor's prior written consent; provided, however, that if a fire, flood,
explosion, earthquake, act of God or other accident or contingency beyond the
control of Lessee and not caused by the action or inaction of Lessee (an
"Unusual Circumstance") shall occur on the Premises, Lessee shall be permitted
to vacate or abandon that part of the Premises directly affected by such Unusual
Circumstance for such period of time as the same remains untenantable; and
provided, further, that if any law, ordinance, regulation, ruling or order (a
"Governmental Order") shall be enacted or otherwise properly put into effect by
any governmental authority mandating vacation or abandonment of any part or all
of the
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Premises, Lessee shall be permitted to vacate or abandon that part of the
Premises directly affected by such Governmental Order for such period of time as
the Governmental Order remains in effect with respect to the Premises. Lessee
shall give Lessor written notice within two days after any portion of the
Premises is abandoned or any guest room or any of the seating capacity of the
restaurant or lounge portions of the Premises are taken out of service because
of an Unusual Circumstance or Governmental Order. Lessee's right to vacate or
abandon the Premises shall cease, and Lessee shall reoccupy the vacated or
abandoned portion of the Premises, within 30 days after the Premises become
tenantable or the Governmental Order ceases to affect such Premises, as the case
may be. If the Premises (whether in whole or in part) shall be abandoned,
vacated or surrendered for any reason other than due to an Unusual Circumstance
or Governmental Order, or if Lessee shall be dispossessed therefrom by process
of law or otherwise, any personal property left in or upon the Premises shall be
deemed to have been abandoned and shall become the property of Lessor.
Lessee shall use and operate the Premises in strict compliance with
(i) all applicable laws, statutes, ordinances, rules and regulations of any
governmental body with jurisdiction over the Premises ("Applicable Laws")
including, without limitation, all environmental laws and all laws prohibiting
discrimination or segregation by reason of race, color, religion, disability,
sex, natural origin or otherwise; (ii) all orders or decrees affecting the
Premises ("Applicable Decrees"); and (iii) all conditions and restrictions
contained in recorded covenants, conditions and restrictions affecting the
Premises, if any ("Applicable Restrictions"). Lessee shall not take any action,
or permit the Premises to be used or operated in any manner, that would violate
any Applicable Law, Applicable Decree or Applicable Restriction. Lessee or its
assignee shall obtain and maintain, at its sole cost and expense, such licenses
as are necessary in connection with operation of the restaurant and lounge.
Section 2. Repairs and Replacements: Lessee, at its sole cost and
expense, shall keep the Premises, or cause them to be kept, in good order and
repair, in a clean and sanitary condition, and shall comply with all laws,
statutes, rules and regulations of all governmental authorities having
jurisdiction over the Premises. Lessee, at no cost or expense to Lessor, shall
make or cause to be made such ordinary and necessary repairs to the Premises as
are caused or made necessary by Lessee's use or occupation of the Premises or
the conduct of Lessee or its agents, employees or invitees upon the Premises.
Sections 3. Operating Expenses and Working Capital: Except as
otherwise provided in this Lease, Lessee shall pay all expenses and costs
associated with the operation of the Premises and shall provide all working
capital therefor whether from funds originating from the operation of the
property or otherwise.
Section 4. Alterations: Lessee may make, at its sole cost and
expense, reasonable alterations or additions to the Premises, but alterations
estimated to cost in excess of Ten Thousand Dollars ($10,000) may only be made
with Lessor's prior written consent, which consent shall not be unreasonably
withheld. Lessor shall be deemed to have given its consent if Lessor fails to
respond to any notice of such alterations within 15 business days of the giving
of notice thereof by Lessee.
Section 5. Construction in Accordance with all Laws: All
improvements constructed by Lessee on or about the Premises, if any, shall be
constructed in strict compliance with the plans as approved by Lessor and in
strict compliance with all applicable laws and governmental regulations. Lessee
agrees to procure and deliver to Lessor at Lessee's expense evidence of
compliance with all applicable codes, ordinances, regulations and requirements
for permits and approvals, including, but not limited to, building permits,
zoning and planning requirements, and approvals from various governmental
agencies having jurisdiction over the Premises. Lessor shall have
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the right to post and maintain on the Premises any notice of non-responsibility
provided for under applicable law, and to inspect the Premises in relation to
the construction at all reasonable times.
Section 6. Mechanics' Liens: Lessee shall neither cause nor permit
any claim of lien to be filed against the Premises for labor done or materials
furnished to or contracted for by Lessee or alleged to have been so done or
furnished, and in the event that any such claim shall nevertheless be so filed,
Lessee shall discharge or adequately bond the same within 10 days after the
filing thereof; provided, however, that Lessee shall not be in default of this
Section 6, and shall not be required to provide any such discharge or bond, if
any such claim is filed against the Premises due to the fault of Lessor.
Section 7. Capital Expenditures by Lessor: Lessor shall pay for
those capital expenditures set forth in the Financial Plan that are approved by
Lessor. Within 10 days after receiving the Financial Plan, Lessor shall advise
Lessee as to which capital expenditures in the Financial Plan Lessor approves.
Such approval shall be in Lessor's absolute discretion. If Lessee disagrees with
such decision made by Lessor, Lessee's sole remedy shall be to terminate the
Lease upon not less than 90 days written notice to Lessor. If the capital
expenditure agreed to by Lessor is greater than four percent (4%) of the Gross
Receipts, then, and in that event, the Basic Rent payable hereunder shall be
renegotiated, at the option of Lessor. If the parties are unable to reach
agreement on a new Basic Rent amount, Lessor shall have the option of reducing
the amount of its capital expenditure so that such expenditure is not greater
than said 4% of Gross Receipts.
ARTICLE VI
ADDITIONAL COVENANTS
Section 1. Additional Obligations: Lessee agrees:
(a) To purchase all Inventories for the Premises, and to
maintain such Inventories at levels necessary for the ongoing operation of
the Premises;
(b) To provide all working capital reasonably necessary to
operate the Premises efficiently and effectively; and
(c) To pay all costs and expenses in connection with obtaining
and maintaining liquor licenses utilized in the restaurant and bar portion
of the Premises.
Section 2. Liquor License:
(a) To the extent permitted by law, Lessee hereby grants to Lessor,
to secure each and all of Lessee's obligations hereunder, a security interest in
each liquor license for the restaurant and bar portions of the Premises. Lessee
warrants that upon its acquisition of said liquor license(s), Lessee will have
title to such license(s) free and clear of all liens, claims, encumbrances and
rights of third parties except as may have been approved by Lessor. Lessee
further warrants that the grant of the foregoing security interest is not and
will not be in violation of the terms, conditions or covenants of any agreement,
arrangement or understanding, whether oral or written, between Lessee and any
third party. Lessee shall not sell, contract to sell, lease, encumber or
otherwise dispose of any such license without the prior written consent of
Lessor.
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(b) Lessee shall pay when due all fees, assessments, charges, liens
or encumbrances, if any, that might at any time, either in accordance with or in
violation of the terms of this Lease, affect the liquor license(s). Lessee shall
take no action in connection with the operation of Lessee's business on the
Premises that would jeopardize Lessee's possession of such license(s), and shall
immediately notify Lessor in writing about any communication received from any
party, public or private, relating to Lessee's possession of said license(s).
Lessee, at Lessor's request, shall execute and deliver to Lessor any and all
financing statements, deeds of trust and other documents or instruments deemed
necessary by Lessor in connection with or for the perfection of Lessor's
security interest hereunder. In the event of any default under this Lease,
Lessor may exercise all rights and remedies of a secured party, all of which
rights and remedies shall be cumulative. Lessee hereby waives any right to
require Lessor to proceed against any other person or entity or to exhaust
Lessor's rights against any collateral or to pursue any other remedy in Lessor's
power in the event of a default under this Lease. Each of Lessor and Lessee
acknowledges that, under local law, the liquor license(s) may not be
transferable.
(c) Lessor acknowledges that Lessee plans to take title to each of
the above-described liquor licenses, to the extent permissible by law, in
Lessee's own name, in the name of a subsidiary or affiliate of Lessee or in the
name of the manager of the Premises and hereby consents to such vesting,
provided that if and to the extent requested by Lessor, Lessee shall have (if
permitted by law) caused
(d) the holder(s) of the license(s) to have (i) executed an
agreement granting to Lessor a security interest in the license(s) on the same
terms as set forth above; and (ii) executed a financing statement on Form UCC-1
or such other documentation as may be necessary to perfect Lessor's security
interest in such license(s).
ARTICLE VII
INDEMNITY. INSURANCE AND TAXES
Section 1. Indemnity: To the maximum extent permitted by applicable
law, Lessee shall indemnify and save Lessor harmless against any and all claims
of third parties for damage, injury or expenses arising from or incidental to
the use or occupation of the Premises, or from any act or negligence of Lessee
or its agents, employees, invitees or licensees or of any other person or
entity, who, with or without authority of Lessee, enter upon or perform any act
relating to the Premises. If any such claim or action shall be brought against
Lessor, Lessor shall give Lessee written notice of such claim or action within
15 days of receipt by Lessor of such claim or action, and Lessee shall assume
the defense thereof. Lessee, for itself, its successors and assigns, hereby
waives, to the maximum extent permitted by applicable law, any and all claims
against Lessor for damage, injury, loss or expense arising or resulting from the
use or occupation of the Premises.
Section 2. Insurance: Lessee shall procure and maintain throughout
the Lease Term, at Lessee's sole cost and expense, standard fire and extended
coverage insurance on the Premises to such extent as to cover the full
replacement costs of the Premises, which insurance shall be (in form and
substance) subject to Lessor's approval and shall be adjusted annually to
reflect the then-current full replacement costs thereof. Except as hereinafter
provided, the proceeds of this insurance shall be used for the repair or
replacement of the property so insured. Lessor shall be named as an insured as
Lessor's interest may appear. Lessee shall, at all times, keep Lessor supplied
with certificates evidencing that such insurance is in effect, and that Lessor
is named as an additional insured.
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Lessee shall procure and maintain throughout the Lease Term, at
Lessee's sole cost and expense, public liability insurance (including liquor
liability) against all claims or actions arising from or incident to the
business conducted by Lessee on or about the Premises or from or incident to any
act or negligence of Lessee, or of the agents, employees, invitees or licensees
of Lessee or of any other person or entity who, with or without authority of
Lessee, enter upon or perform any act relating to the Premises; such insurance
shall be in an amount approved by Lessor, but in any event not less than Five
Million Dollars ($5,000,000) for injury to or death of one person, also
including injury to or death of two or more persons and damage to property. In
addition, Lessee shall cause any sublessee to procure and maintain, throughout
the Lease Term and at no cost or expense to Lessor, a policy or policies of
public liability and property damage insurance, with identical policy limits,
including products liability insurance, issued by an insurance company or
companies approved by Lessor. Lessor shall be named as an additional insured on
said policies as Lessor's interest may appear. Lessee shall also procure and
maintain business interruption insurance, which insurance shall be (in form and
substance) satisfactory to Lessor. Lessee shall at all times keep Lessor
supplied with certificates evidencing that such insurance is in effect and that
Lessor is named as an additional insured. Lessee shall not do, omit to do, or
permit to be done or omitted any act or thing upon the Premises that will
invalidate or be in conflict with any such insurance policy.
The amounts of insurance specified in this Section 2 shall be
subject to review and adjustment by Lessor on every anniversary of the
Commencement Date in Lessor's reasonable discretion, and shall in no event be
permitted by Lessee to fall below amounts customary in the hotel and restaurant
industry in the metropolitan area where the Premises are located. Lessee shall
not be obligated to procure and maintain earthquake, flood or structural defect
insurance on the improvements on the Premises, unless required by law.
Lessor and Lessee each hereby waive their entire right to recovery
against the other party, and the other party's officers, directors, agents,
representatives, employees, successors and assigns, with respect to any loss or
damage, including any consequential damage, to the insured party's property
caused or occasioned by any peril (including negligent acts) that is actually
covered by any policy or policies of insurance required to be carried by the
insured party and under that such waiver of subrogation is permitted.
Section 3. Taxes: Lessee shall pay before delinquency all real and
personal property taxes and assessments levied upon or against the Premises
imposed by any state, county or local government during the Lease Term. Real and
personal property taxes shall be prorated as of the Commencement Date. Real and
personal property taxes payable for the last Lease Year shall be prorated as of
the termination date of this Lease. Lessee shall have the right before any
delinquency occurs to contest the amount or validity of any such tax by
appropriate legal proceedings, but this shall not be deemed or construed in any
way as relieving, modifying or extending Lessee's covenant to pay any such tax
prior to delinquency.
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ARTICLE VIII
DESTRUCTION
Section 1. Total Destruction: If thirty percent (30%) or more of the
total guest rooms (the "Total Rooms") available for rental at the Premises
should be totally destroyed, either Lessor or Lessee may elect to terminate this
Lease upon giving the other party 30 days' written notice, and all insurance
proceeds, if any, payable as a result of the destruction shall be paid to
Lessor. Lessor and Lessee each expressly agree that prior to electing to
terminate this Lease as permitted in this Section 1, such party will first
attempt to negotiate in good faith with the other party towards an appropriate
amendment to this Lease to take into account such destruction, including an
equitable abatement of rent, and will only give such notice of termination after
a good faith attempt towards such negotiation.
Section 2. Other Destruction: If less than thirty percent (30%) of
the Total Rooms should be destroyed, or if thirty percent (30%) or more of the
Total Rooms are destroyed and neither Lessor nor Lessee elects to terminate this
Lease as permitted under the foregoing Section 1 of this Article VIII, the
Premises shall be repaired or reconstructed (which for purposes of this Article
VIII shall include refurnishing and re-equipping destroyed Furnishings) in
accordance with subparagraphs (a) through (c) hereof as speedily as possible at
Lessor's sole cost and expense (but only if insurance proceeds are sufficient
for such purposes); such repairs or reconstruction shall conform to all
applicable laws, ordinances and regulations and be at least comparable to the
quality of the original improvements; provided, however, that if this Lease is
not terminated under Section 1 of this Article VIII, the proceeds of any
insurance payable as a result thereof shall be applied toward the reconstruction
of the Premises, and if such proceeds are insufficient to complete such
reconstruction, Lessee shall be obligated to provide the additional funds for
the reconstruction, and this Lease shall remain in full force and effect. If
Lessee does not provide such additional funds for reconstruction, Lessor shall,
at its sole option, have the right to terminate this Lease.
(a) If the destruction costs Fifty Thousand Dollars ($50,000)
or less to repair or reconstruct, Lessee shall be entitled to receive and
retain any and all insurance proceeds payable as a result of the
destruction and shall use same for the repair or reconstruction of the
Premises.
(b) If the destruction costs more than Fifty Thousand Dollars
($50,000), but not more than Two Hundred Fifty Thousand Dollars
($250,000), to repair or reconstruct, Lessor shall be entitled to receive
any and all insurance proceeds payable as a result of the destruction,
shall hold such proceeds in escrow and shall pay such proceeds to Lessee
upon receipt of certificates from Lessee's contractor or architect (or
from Lessee, if Lessee shall act as its own contractor) that said repair
or reconstruction has been completed. Before making any such payment,
however, Lessor shall have the right to make such inspections as Lessor
deems necessary to assure itself that the work required to be performed
has been so performed. Lessor shall make payments out of such proceeds as
the repair or reconstruction progresses, in accordance with certificates
from Lessee's contractor and subject to the inspection of Lessor;
provided, however, that the last such payment shall not be made until
after the expiration of the period for filing of mechanic's or similar
liens without any such lien having been filed.
(c) If the destruction costs more than Two Hundred Fifty
Thousand Dollars ($250,000) to repair or reconstruct, Lessor shall be
entitled to receive any and all insurance
Page 10
proceeds payable as a result of the destruction, shall hold such proceeds
in escrow and shall pay such proceeds out in the following manner:
(i) Lessee shall obtain firm bids for the repair or
reconstruction of the Premises from three or more qualified
contractors other than Lessee.
(ii) Lessee shall submit said bids to Lessor. Thereafter,
Lessee shall, with Lessor's prior approval, hire one of the bidding
contractors to do the repair or reconstruction and shall provide in
said contract that the contractor shall provide performance, labor
and materials bonds or other appropriate security to insure complete
repair or reconstruction of the Premises in accordance with such
contractor's bid, free of liens, in the full amount of the estimated
cost thereof.
(iii) If the amount estimated by the contractor chosen to
complete the repair or reconstruction should be in excess of the
amount of the insurance proceeds, if any, Lessor shall have the
right to terminate this Lease unless Lessee shall deposit with
Lessor sufficient additional monies to create a fund that shall
equal the difference. Title to such insurance funds shall reside in
Lessor who shall have the sole right to said funds.
(iv) Lessor shall make payments out of the insurance proceeds
and the aforesaid fund as the repair or reconstruction progresses.
In the event that any sum deposited by Lessee remain after
completion of the repair or reconstruction, such sums shall be paid
to Lessee.
Section 3. Abatement of Rent: Unless otherwise expressly provided
herein, there shall be no abatement or reduction of rent in the event of any
destruction of less than thirty percent (30%) of the Total Rooms on the
Premises, and Lessee expressly waives the provisions of any law that purports to
effect a termination of this Lease upon such destruction.
Section 4. Disputes: If there should be any dispute as to whether
any work required to be performed under this Article VIII has been performed,
said dispute shall be settled by Arbitration (as defined in Article XVII,
Section 11 hereof).
Section 5. Constructive Destruction: In the event that the Premises
or any part thereof shall be declared unsafe or unfit for occupancy by any
authorized public agency for any reason and the cause of such declaration is
capable of cure through repair or reconstruction, then the provisions of Section
2 of this Article VIII shall be applicable as if a destruction of the type
referred to therein had occurred. In the event that any authorized public agency
shall declare the Premises or any part thereof unsafe or unfit for occupancy by
reason of the act, or failure to act by Lessee, and the cause of such
declaration is not capable of cure through repair or reconstruction, this Lease
shall nevertheless remain in full force and effect, with no reduction or
abatement in rent. In the event that the Premises or any party thereof shall be
declared unsafe or unfit for occupancy due to any other reason, and the cause of
such declaration is not capable of cure through repair or reconstruction, then
the provisions of Section 1 of this Article VIII shall be applicable as if a
destruction of the type referred to therein had occurred.
Page 11
ARTICLE IX
EMINENT DOMAIN
Section 1. Definitions: The term "eminent domain" shall include both
the exercise of the power of eminent domain or any similar governmental power,
whether by public authority or a private corporation, and any purchase or other
acquisition in lieu of or in exercise of condemnation. The expression "date of
taking" means the date on which actual physical possession is taken by the
condemning, purchasing or acquiring entity.
Section 2. Right of Termination: If thirty percent (30%) or more of
the Total Rooms should be taken under the power of eminent domain, either party
shall be permitted to terminate this Lease upon giving the other party not less
than 30 days' written notice; provided, however, that prior to the giving of
such notice of termination, both parties shall have been unable to negotiate an
abatement of the Rent satisfactory to both parties after a good faith attempt by
both parties to effect such an abatement. If less than thirty percent (30%) of
the Total Rooms on the Premises should be taken under the power of eminent
domain, this Lease shall remain in full force and effect.
Section 3. Damages Upon Termination: In the event of a termination
of this Lease pursuant to Section 2 of this Article IX by reason of the taking
under the power of eminent domain of thirty percent (30%) or more of the Total
Rooms, Lessor and Lessee shall divide the amount of the award for such taking
based upon the appraised value of their respective interests as determined in
the eminent domain proceeding or by independent appraisal.
Section 4. Assignment of Rights: Subject to the right to receive
payments as provided in Section 3 of this Article, Lessee hereby assigns to
Lessor all rights or interests Lessee may have now or hereafter in any such
condemnation award. In the event of a termination under this Article IX, Lessor
and Lessee shall have no liability thereafter one to the other hereunder with
respect to the property taken for the period after said termination takes place.
Section 5. Abatement of Rent: Unless otherwise expressly provided
herein, in the event of any taking under the power of eminent domain of less
than thirty percent (30%) of the Total Rooms, rent shall not be abated, and the
Lease Term shall not be reduced in any way, and Lessor and Lessee shall each be
entitled to their respective equitable share of any award for the use or estate
taken. If a result of the taking is to necessitate expenditures for changes,
repairs, alterations, modifications, or reconstruction to restore the Premises
or the furnishings therein to their condition at the date of the taking, Lessor
shall receive, hold and disburse the award in trust for such work. At the
completion of the work and the discharge of the Premises from all liens and
claims, Lessor and Lessee shall divide any surplus based on the relative
percentage value of their respective interests in the Premises .
Section 6. Temporary Taking: In the event of any taking of all or
any part or parts of the Premises for a period ending before the expiration date
of the Lease Term, neither the Lease Term nor the rent shall be reduced or
abated in any way, and Lessee shall be entitled to any award for the use or
estate taken. If a result of the taking is to necessitate expenditures for
changes, repairs, alterations, modifications, or reconstruction to restore the
Premises or the Furnishings to their condition at the time of the taking, Lessee
shall receive, hold, and disburse the award in trust for such work. At the
completion of the work and the discharge of the Premises from all liens and
claims, Lessee shall be entitled to any surplus and shall be liable for any
deficit.
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ARTICLE X
ASSIGNMENT AND SUBLETTING
Section 1. Lessee: Lessee may not assign this Lease, or any interest
therein, or sublet the Premises, or any part thereof, without Lessor's prior
written consent, which consent shall not be unreasonably withheld. At Lessor's
option, Lessee shall, concurrently with the execution of each sublease, assign
to Lessor all of Lessee's right, title and interest in the said sublease as
additional security for the performance of Lessee's obligations under this
Lease. Lessee agrees to execute an assignment of rents or such other documents
or instruments as Lessor reasonably requests to evidence such assignment. Except
as permitted by this Section 1, any attempt to assign this Lease, or any
interest therein, or any rights thereunder, or to sublease the Premises, or any
part thereof, shall be null and void ab initio. For purposes of this Section 1,
an assignment of this Lease shall be deemed to include the transfer of a
majority of Lessee's outstanding interests; provided, however, that transfers
between existing stockholders or partners and transfers of stock or partnership
interests on the death of any stockholder or partner, whether by will or
intestacy, regardless of the amount so transferred, shall not constitute an
assignment of this Lease.
Section 2. Lessor: Lessor shall have the right, at any time, to
freely assign all or any part of Lessor's interest in this Lease.
ARTICLE XI
BANKRUPTCY
If, during the term hereof, there is filed by or against Lessee, in
any court pursuant to any statute or law of either the United States or any
state, a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Lessee's property,
and within 90 days thereafter, said petition is not discharged, or if Lessee
makes an assignment for the benefit of creditors or petitions for or enters into
an arrangement with creditors, this Lease, at the sole option of Lessor
exercisable within a reasonable time after notice of the happening of any one or
more of such events, may be canceled and terminated. Such cancellation and
termination will be effective retroactively as of the expiration of said period
of 90 days or as of the date of such assignment or of such petitioning for or
entering into, in which event neither Lessee nor any person or entity claiming
through or under Lessee by virtue of any statute, law or order of any court
shall be entitled to possession or to remain in possession of the Premises, but
shall forthwith quit and surrender the Premises to Lessor. In the event of a
termination of this Lease pursuant to this Article XI, an Event of Default shall
have deemed to occur under this Lease, and Lessor shall have all of the rights
and remedies set forth in Article XII, Section 2 hereof.
ARTICLE XII
REMEDIES
Section 1. Defaults: Unless permitted by the terms of this Lease or
consented to by Lessor, upon the occurrence of any of the events designated
hereunder as Paragraphs (a), (b), (c) and (d), an Event of Default shall have
occurred under this Lease, and Lessor shall have all of the rights and remedies
set forth in Section 2 of this Article XII:
(a) Lessee shall fail to pay any monies payable by Lessee to
Lessor or otherwise required hereunder to be paid by Lessee, including but
not limited to the Basic Rent
Page 13
or the Percentage Rent, and such failure shall continue for five days
after written notice by Lessor or any other party to whom such obligation
shall be payable of such failure; or
(b) Lessee shall permit the Premises to become vacant or
deserted, and Lessee shall fail to occupy or cause to be occupied the
vacated or deserted portion of the Premises within 10 days after written
notice from Lessor; or
(c) Lessee shall default in the performance of any of Lessee's
obligations hereunder, including, without limitation, the obligation to
cause the Premises to remain occupied, and shall fail to cure such default
within 30 days after written notice from Lessor (or if the default is of
such a nature that the default cannot be cured within said 30-day period
if Lessee shall not commence the cure of such default during such 30-day
period and proceed diligently with the cure thereof); or
(d) Any attachment or execution shall be issued against
Lessee's property (whether or not contained on the Premises), the Premises
or a portion thereof shall be taken or occupied or attempted to be taken
or occupied in connection with such attachment or execution by someone
other than Lessee, and such attachment or execution shall not be released,
discharged, or adequately bonded within 30 days thereafter.
Section 2. Remedies Upon Default: Upon the occurrence of an Event of
Default, in addition to all other remedies available at law or in equity, Lessor
shall have the following remedies:
(a) The right to terminate Lessee's right to possession (including
the right of re-entry) in any manner permitted by law;
(b) Upon termination of such right to possession or upon abandonment
of the Premises by Lessee, Lessor may recover from Lessee (i) the worth at
the time of award of the unpaid rent that had been earned at the time of
termination, calculated by allowing interest on such unpaid rent at the
lesser of ten percent (10%) per annum or the highest interest rate
allowable under applicable law at the time of award; (ii) the worth at the
time of award (calculated by allowing interest as in clause (i) above) of
the amount by which the unpaid rent that would have been earned after
termination, until the time of award, exceeds the amount of such rental
loss that Lessee proves could have been reasonably avoided; (iii) the
worth at the time of award (calculated by discounting such amount to
present value at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%) per annum) of the
amount by which the unpaid rent for the balance of the Lease Term, after
the time of award, exceeds the amount of such rental loss that Lessee
proves could have been reasonably avoided; and (iv) any other amount
necessary to compensate Lessor for all of the detriment proximately caused
by Lessee's failure to perform Lessee's obligations under this Lease, or
that in the ordinary course of things would be likely to result therefrom;
(c) If there should be an abandonment, without a termination
by Lessor of Lessee's right to possession, this Lease shall continue in
effect (unless and until there shall be such a termination), and Lessor
may enforce all rights and remedies under this Lease, including, without
limitation, the right to recover the rent (including, without limitation,
all amounts payable hereunder) as the rent becomes due under this Lease.
Such abandonment shall be an Event of Default and shall be grounds for
termination, at Lessor's sole option, of such right to possession at any
time unless and until (i) such default shall be cured by occupancy by a
permitted assignee or sublessee or reoccupancy by Lessee; and (ii) any
other
Page 14
Event of Default shall have been cured. No acts of maintenance or
preservation of the Premises by Lessor, nor efforts to relet the Premises
or a portion thereof, shall be deemed to constitute a termination of
Lessee's right to possession;
(d) In the event of the exercise by Lessor of any one or more
of Lessor's rights and remedies hereunder, Lessee expressly waives, to the
maximum extent permitted by applicable law, any and all rights of
redemption granted by or under any present or future law;
(e) Lessee hereby waives, to the maximum extent permitted by
applicable law, (i) all claims and demands against Lessor for damages or
loss arising out of or in connection with any re-entering and taking
possession of the Premises as permitted by law, and (ii) all claims for
damages or loss arising out of or in connection with any destruction of or
damage to the Premises, or for any loss of property belonging to Lessee or
to any other person or entity that may be in or upon the Premises at the
time of such re-entry;
(f) Upon taking possession of the Premises, Lessor may, at its
sole option, remove all of Lessee's property therefrom and store the same
at a public warehouse or elsewhere at the cost and for the account of
Lessee. No re-entry nor any reletting under this Article XII shall be
deemed to constitute a surrender or termination of this Lease, or of any
of the rights reserved by Lessor hereunder, or a release of Lessee from
any of Lessee's obligations hereunder, unless Lessor shall specifically
notify Lessee, in writing, to that effect. No such reletting shall
preclude Lessor from thereafter at any time terminating this Lease as
herein provided; and,
(g) The various rights, options, elections, powers and
remedies of Lessor contained in this Lease shall be cumulative, and no one
of them shall be deemed to be exclusive of any of the others or of any
right or priority allowed by law or in equity.
Section 3. Advances: If Lessee shall default in the observance or
performance of any term or covenant on Lessee's part to be observed or performed
under or in connection with this Lease, Lessor may, but without obligation so to
do, in addition to any and all other rights and remedies that Lessor has or may
have hereunder at law or in equity, immediately or at any time thereafter
perform the same for the account of Lessee. If Lessor makes any expenditure or
incurs any obligation for the payment of money in connection therewith,
including, without limitation, attorneys' fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or obligations incurred, with
interest thereon at the then-maximum lawful rate (or, if there shall be none, at
a floating rate five percentage points (5%) above Xxxxx Fargo Bank's announced
"prime rate"), shall be deemed to be additional rent hereunder and shall be paid
by Lessee to Lessor within 10 days after rendition of a xxxx to Lessee therefor.
ARTICLE XIII
SURRENDER OF POSSESSION
Section 1. Surrender: At the expiration by lapse of time or other
termination of the Lease Term, Lessee shall surrender the Premises in good
condition and repair, reasonable wear and tear excepted.
Section 2. Furnishings: Upon the expiration or other termination of
the Lease Term, all Furnishings and other personal property shall immediately
become the property of Lessor.
Page 15
\
Section 3. No Waiver: No agreement to accept a surrender of this
Lease and the Premises, or to waive any provision hereof, shall be valid unless
in writing and signed by Lessor. The receipt by Lessor of rent with knowledge of
any breach of this Lease by Lessee (other than the failure by Lessee to pay the
rent being accepted) shall not be deemed a waiver of such breach. No acceptance
by Lessor of a lesser amount than the Basic Rent or Percentage Rent actually due
shall be deemed an accord and satisfaction or shall prejudice Lessor's right to
recover the balance of such rent or to pursue any other right or remedy. Lessee
hereby waives any right to seek damages based upon a claim that Lessor has
unreasonably withheld its consent or approval under any provision of this Lease,
and acknowledges that Lessee's sole remedy shall be to seek declaratory or
injunctive relief.
ARTICLE XIV
SUBORDINATION
This Lease shall be subject and subordinate to, and Lessee covenants
that it will upon Lessor's request execute an agreement subordinating this Lease
to, the lien, terms and provisions of any mortgage, deed of trust, deed to
secure debt or other encumbrance that may hereafter be placed upon the Premises
by Lessor; provided, however, that Lessor first executes (and procures execution
by each and every secured party or beneficiary under the encumbrance) and
records an agreement that provides, among other things, that if and as long as
Lessee is not in default under the terms of this Lease, the secured party or
beneficiary:
(a) Will at all times and under all conditions (including,
without limitation, any foreclosure or other repossession proceedings)
recognize, permit and continue the tenancy of Lessee or its permitted
successors and assigns on the Premises under the provisions of and for the
then-remaining term of this Lease; and
(b) Will require that any purchaser or purchasers acquiring
the Premises take the Premises subject to such agreement so that the
rights of Lessee, or those holding under Lessee, shall not be interfered
with or affected in any manner or means.
ARTICLE XV
QUIET ENJOYMENT
Section 1. Covenant: Lessor hereby covenants and agrees with Lessee
that, conditioned upon Lessee's prompt payment of the rent and Lessee's
performance of all of the terms, covenants and conditions hereof to be performed
or observed by Lessee, and subject to the provisions of Section 2 of this
Article XV, Lessee may peaceably and quietly enjoy the Premises in accordance
with the provisions of this Lease.
Section 2. Inability to Perform: If, by reason of a strike, labor
troubles, act of God, or other cause outside Lessor's control, including,
without limitation, governmental preemption in connection with a national
emergency, any rule, order or regulation of any governmental agency, or
conditions of supply and demand that are affected by war (whether or not
declared by Congress) or other emergency, Lessor shall be unable to fulfill
Lessor's obligations under this Lease or shall be unable to supply any service
that Lessor is obligated to supply to Lessee that does not affect Lessee's
ability to perform hereunder, this Lease and Lessee's obligation to pay rent
hereunder shall in no way be affected, impaired or excused.
Page 16
ARTICLE XVI
INDEMNITY
Without limiting or modifying anything in this Lease, Lessee shall,
to the maximum extent permitted by applicable law, indemnify Lessor for all
expenses, damages or fines incurred or suffered by Lessor, by reason of any
breach, violation or nonperformance by Lessee, or its agents or employees or
invitees, of any covenant, condition or provision of this Lease.
ARTICLE XVII
MISCELLANEOUS
Section 1. Additional Rent. Any and all monetary obligations of
Lessee under this Lease shall be deemed to be additional rent.
Section 2. Notices: All notices to be delivered pursuant to this
Lease shall be in writing and delivered in person or sent by registered or
certified mail, to:
LESSOR: LONG BEACH HOTEL ASSOCIATES, L.L.C.
c/o Starwood Lodging Trust, General Partner
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx. Vice President
and Chief Financial Officer
LESSEE: SLC OPERATING LIMITED PARTNERSHIP
c/o Starwood Lodging Corporation, Managing General Partner
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxxxx, Secretary and
General Counsel
or to such other places as either party may designate in writing from time to
time in the manner provided herein for giving notices. All such notices shall be
deemed given when mailed.
Section 3. Successors in Interest: Subject to the provisions set
forth in Article X hereof, the obligations of Lessor and Lessee set forth in
this Lease shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of both parties.
Section 4. No Merger: The voluntary or other surrender of this Lease
by Lessee or mutual cancellation thereof shall not work a merger, and shall, at
Lessor's sole option, either terminate any and all existing subleases or
subtenancies, or operate as an assignment to Lessor of any or all of such
subleases or subtenancies.
Page 17
Section 5. Excise Taxes: Lessee shall assume and pay to Lessor at
the time of paying rent hereunder any excise, sales, gross receipts or other tax
that may be imposed upon or measured by the gross amount of rent received by
Lessor or by virtue of the letting of real property, under any law now in effect
or hereinafter enacted. The foregoing provision shall not apply to any tax
imposed upon or measured by net income from renting.
Section 6. Survival: Lessee's obligation to observe and perform the
terms and conditions of this Lease shall survive the expiration or termination
of the Lease Term.
Section 7. Attorneys' Fees. In the event that any action, suit or
proceeding is commenced under or in connection with this Lease or for the
recovery of possession of the Premises, the losing party shall pay to the
prevailing party in any such action, suit or proceeding the reasonable
attorneys' fees incurred in connection therewith, together with all costs and
expenses of said prevailing party.
Section 8. Counterparts: This Lease may be entered into in several
counterparts, each of which shall be deemed an original when executed, and which
together shall constitute but one and the same Lease.
Section 9. Lessor's Disclaimer: The name "Starwood Lodging Trust" is
the designation of Lessor, a Maryland real estate investment trust, and its
trustees (as trustees but not personally) under a Declaration of Trust dated as
of August 15, 1969, as amended as of June 6, 1988, and further amended from time
to time, and all persons dealing with Lessor must look solely to Lessor's
property for the enforcement of any claim against Lessor, as the trustees,
officers, agents and security holders of Lessor assume no personal liability for
obligations entered into on behalf of Lessor, and their respective properties
shall not be subject to claims relating to any such obligation.
Section 10. Franchise Affiliation; Ground Leases: Lessee agrees to
operate the Premises in accordance with the rules and regulations of any
franchise agreement under which the Premises are operated, and all expenses
associated with maintaining said franchise shall be borne by the Lessee. Lessee,
at Lessee's sole cost and expense, shall comply with the terms of any ground
lease or similar agreement affecting the Premises.
Section 11. Arbitration: All references in this Lease to the use of
"Arbitration" shall mean an arbitration in accordance with the rules of the
American Arbitration Association, or its successor. Notice of demand for
arbitration shall be filed in writing with the other party and with the American
Arbitration Association. The demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter in question has arisen.
Nothing contained herein shall prevent any party from (i) seeking and obtaining
equitable relief, including but not limited to prohibitory or mandatory
injunctions, specific performance or extraordinary writs, nor (ii) joining any
other party as defendant in any action brought by or against a third party. All
fees and expenses of the arbitrators and all other expenses of the arbitration
shall be paid as ordered by the arbitrators. Judgment may be entered upon the
arbitrator's decision.
Section 12. No Usury: If the interest rate on any obligation owed by
Lessee to Lessor hereunder exceeds the highest lawful rate under any applicable
law, such interest rate shall be reduced to the maximum legal limit.
Section 13. Time: Time is of the essence of this Lease and of the
performance or observance of every provision hereof.
Page 18
Section 14. Holding Over: In the event Lessee remains in possession
of all or any part of the Premises after the expiration of this Lease and
without the execution of a new lease, Lessee shall be deemed to be occupying the
Premises as a tenant from month to month at a rental equal to the Basic Rent and
Percentage Rate and additional rent herein provided and otherwise subject to all
the conditions, provisions and obligations of this Lease insofar as the same are
applicable to a month-to-month tenancy.
Section 15. Lessor's Right of Access: Lessor and its authorized
agents shall be entitled to enter the premises at reasonable times after
reasonable written notice, except in case of emergency, for the purpose of (i)
inspecting the Premises; (ii) showing the Premises to prospective purchasers and
lenders; (iii) posting notices of nonresponsibility and such notices as may be
required by law to protect Lessor's interest in the Premises; and (iv)
monitoring the observance and performance by Lessee of its obligations
hereunder.
Section 16. Estoppel Certificates: At any time and from time to time
within 20 days after request by either party, the other party shall execute and
deliver to the requesting party, or to such other recipient as the notice shall
direct, a statement certifying that this Lease is unmodified and in full force
and effect, or, if there have been modifications, that this Lease is in full
force and effect as modified in the manner specified in the statement, and that
there are no defenses or offsets claimed by the party making such statement
other than those specified therein. The statement shall also state the dates to
which the rent and all other charges have been paid in advance. The statement
shall be such that it can be relied upon by any person or entity specified in
the request.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.
Section 17. Amendments. This Lease may be amended, extended or
otherwise modified only by a writing signed by each of Lessee and Lessor. Lessor
and Lessee acknowledge and confirm their mutual intention to review the terms
and conditions hereof at such time following the Commencement Date as the
parties determine to be appropriate and to make such modifications hereto, if
any, as Lessor and Lessee then may agree are appropriate.
[remainder of page left intentionally blank]
Page 19
IN WITNESS WHEREOF, the parties hereto have executed this Lease as
of the date first written above.
LESSOR: LESSEE:
By: Long Beach Hotel Associates, L.P. By: SLC Operating Limited Partnership,
a Delaware limited partnership
By: Starwood Lodging Trust, By: Starwood Lodging Corporation,
a Maryland real estate a Maryland corporation
investment trust Its: Managing General Partner
Its: General Partner
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxx X. Xxxxxxxx
----------------------------- -------------------------------
Xxxxxx X. Xxxxx Xxx X. Xxxxxxxx
Xx. Vice President, CFO Vice President, Secretary
WITNESS: WITNESS:
/s/ Xxxx Xxxxxxx /s/ Xxxx Xxxxxxx
------------------------------------- --------------------------------
Print Name: Xxxx Xxxxxxx Print Name: Xxxx Xxxxxxx
Page 20
