Exhibit 10.9
FORM OF
LEASE AGREEMENT
DATED AS OF _______________, 199
BETWEEN
HH PERM-I, L.P.
AS LANDLORD
AND
HHC PERM-I, INC.
AS TENANT
[PROPERTY]
TABLE OF CONTENTS
Page
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ARTICLE I.........................................................................................................1
1.1 Leased Property......................................................................................1
1.2 Term.................................................................................................2
ARTICLE II........................................................................................................2
2.1 Definitions..........................................................................................2
ARTICLE III......................................................................................................12
3.1 Rent................................................................................................12
3.2 Confirmation of Percentage Rent.....................................................................15
3.3 Additional Charges..................................................................................15
3.4 Net Lease Provision.................................................................................16
3.5 Conversion of Property..............................................................................16
3.6 Tenant Requirements.................................................................................16
ARTICLE IV.......................................................................................................18
4.1 Payment of Impositions..............................................................................18
4.2 Notice of Impositions...............................................................................19
4.3 Adjustment of Impositions...........................................................................19
4.4 Utility Charges.....................................................................................19
4.5 Insurance Premiums..................................................................................19
ARTICLE V........................................................................................................19
5.1 No Termination Abatement, etc.......................................................................19
5.2 Abatement Procedures for Partial Takings............................................................19
ARTICLE VI.......................................................................................................20
6.1 Ownership of the Leased Property....................................................................20
6.2 Tenant's Personal Property..........................................................................20
6.3 Landlord's Lien.....................................................................................20
ARTICLE VII......................................................................................................20
7.1 Condition of the Leased Property....................................................................20
7.2 Use of the Leased Property..........................................................................21
7.3 Landlord to Grant Easements, etc....................................................................22
ARTICLE VIII.....................................................................................................22
8.1 Compliance with Legal and Insurance Requirements, etc...............................................22
8.2 Legal Requirements and Land Use Requirements Covenants..............................................22
8.3 Environmental Covenants.............................................................................23
ARTICLE IX.......................................................................................................24
9.1 Maintenance and Repair..............................................................................24
9.2 Encroachments, Restrictions, Etc....................................................................25
ARTICLE X........................................................................................................26
10.1 Alterations........................................................................................26
10.2 Salvage............................................................................................26
10.3 Joint Use Agreements...............................................................................26
ARTICLE XI..............................................................................................26
Lien...............................................................................................26
(i)
ARTICLE XII......................................................................................................27
Permitted Contests......................................................................................27
ARTICLE XIII.....................................................................................................27
13.8 No Separate Insurance.............................................................................29
ARTICLE XIV......................................................................................................29
14.1 Insurance Proceeds.................................................................................29
14.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance..........................30
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by Insurance......................30
14.4 Tenant's Property..................................................................................30
14.5 Abatement of Rent..................................................................................30
14.7 Waiver.............................................................................................30
ARTICLE XV.......................................................................................................31
15.1 Parties' Right and Obligations Upon Condemnation...................................................31
15.2 Total Taking.......................................................................................31
15.3 Allocation of Award................................................................................31
15.4 Partial Taking.....................................................................................31
15.5 Temporary Taking...................................................................................31
ARTICLE XVI......................................................................................................32
16.1 Events of Default..................................................................................32
16.2 Surrender..........................................................................................34
16.3 Damages............................................................................................34
16.4 Waiver.............................................................................................34
16.5 Application of Funds...............................................................................35
ARTICLE XVII.....................................................................................................35
Landlord's Right to Cure Tenant's Default...............................................................35
ARTICLE XVIII....................................................................................................35
18.1 Performance Standards..............................................................................35
18.2 Operating Standards................................................................................36
ARTICLE XIX......................................................................................................36
19.1 REIT Requirements..................................................................................36
19.3 Management Agreement...............................................................................37
19.4 Payments to Affiliates of Tenant...................................................................37
ARTICLE XX.......................................................................................................37
Holding Over............................................................................................37
ARTICLE XXI......................................................................................................38
Risk of Loss............................................................................................38
ARTICLE XXII.....................................................................................................38
22.1 Indemnification....................................................................................38
ARTICLE XXIII....................................................................................................39
23.1 Subletting and Assignment..........................................................................39
23.2 Attornment.........................................................................................39
ARTICLE XXIV.....................................................................................................39
24.1 Officer's Certificates; Financial Statements; Budgets; Landlord's Estoppel Certificates............39
24.2 Operating Budget...................................................................................41
(ii)
24.3 Marketing Plan.....................................................................................41
24.4 Capital Budget.....................................................................................41
24.5 Budget Approval and Disputes.......................................................................42
24.6 Capital Expenditure Reserve........................................................................42
ARTICLE XXV......................................................................................................42
No Waiver...............................................................................................43
ARTICLE XXVII....................................................................................................43
Remedies Cumulative.....................................................................................43
ARTICLE XXVIII...................................................................................................43
Acceptance of Surrender.................................................................................43
ARTICLE XXIX.....................................................................................................43
Conveyance by Landlord..................................................................................43
ARTICLE XXXI.....................................................................................................44
Quiet Enjoyment.........................................................................................44
ARTICLE XXXII....................................................................................................44
Notices.................................................................................................44
ARTICLE XXXIII...................................................................................................45
Appraisers..............................................................................................45
ARTICLE XXXIV....................................................................................................45
34.1 Landlord May Grant Liens...........................................................................45
34.2 Tenant's Right to Cure.............................................................................45
34.3 Breach of Landlord.................................................................................46
ARTICLE XXXV.....................................................................................................46
35.1 Miscellaneous......................................................................................46
35.2 Transfer of Licenses...............................................................................46
35.3 Waiver of Presentment, etc.........................................................................46
ARTICLE XXXVI....................................................................................................46
Memorandum of Lease.....................................................................................46
ARTICLE XXXVII...................................................................................................47
Landlord's Option to Purchase Assets of Tenant..........................................................47
ARTICLE XXXVIII..................................................................................................47
Landlord's Option to Terminate Lease....................................................................47
ARTICLE XXXIX....................................................................................................47
39.1 Compliance with Franchise Agreement................................................................47
39.2 Change of Franchise................................................................................48
39.3 Termination of Franchise Agreement.................................................................48
40.1 Landlord Approval of Capital Expenditures..........................................................48
40.2 Inventory..........................................................................................48
ARTICLE XLI......................................................................................................48
41.1 Central Cash Management............................................................................48
ARTICLE XLII.....................................................................................................49
42.1 Additional Covenants...............................................................................49
42.2 Negative Covenants.................................................................................50
Negative Covenants......................................................................................50
(iii)
LEASE AGREEMENT
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THIS LEASE AGREEMENT (as amended, modified and in effect from time to
time, this "Lease") is made as of the ____ day of ___________, 199 , by and
between HH PERM-I, L.P., a Virginia limited partnership (together with its
successors and assigns "Landlord"), and HHC PERM-I, INC., a New York corporation
(together with its permitted successors and assigns "Tenant") on the following
Terms.
RECITALS
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A. Landlord owns the Leased Property (as defined below);
B. Landlord and Tenant desire to enter this Lease Agreement with
respect to the Leased Property.
TERMS
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NOW, THEREFORE, intending to be legally bound, Landlord, in
consideration of the payment of rent by Tenant to Landlord, the covenants and
agreements to be performed by Tenant, and upon the terms and conditions
hereinafter stated, does hereby rent and lease unto Tenant, and Tenant does
hereby rent and lease from Landlord, the Leased Property.
ARTICLE I
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1.1 Leased Property. The Leased Property is comprised of Landlord's
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interest in the following:
(a) the land or ground leasehold interest described in Exhibit "A"
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attached hereto and by reference incorporated herein (the "Land");
(b) all buildings, structures and other improvements of every kind
including, but not limited to, the Facility, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas and roadways appurtenant to such buildings and structures presently
situated upon the Land (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of property
required 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 Tenant) 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 Landlord pursuant thereto).
THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LANDLORD 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, THE LIEN OF FINANCING INSTRUMENTS, MORTGAGES,
DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH WOULD BE
DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY
THEREOF.
1.2 Term. The term of the Lease (the "Term") shall commence on the
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Commencement Date and shall end on the Expiration Date, unless sooner terminated
in accordance with the provisions hereof.
ARTICLE II
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2.1 Definitions. For all purposes of this Lease, except as otherwise
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expressly provided or unless the context otherwise requires, (a) the terms
defined in this Lease have the meanings assigned to them in this Lease 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.
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Affiliate: As used in this Lease the term "Affiliate" of a Person shall
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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, fifty percent or more of the outstanding
capital stock, shares or equity interests of such Person, or (c) any officer,
director, employee, partner or trustee of such Person or any Person Controlling,
Controlled by or under common Control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
person).
Annual Revenues Computation: As defined in Exhibit "C", which is
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attached hereto and incorporated herein.
Average Daily Rate: Total daily Room Revenues divided by occupied rooms
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at the Facility.
Award: All compensation, sums or anything of value awarded, paid or
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received on a total or partial Condemnation.
Base Rate: The rate of interest published as the "Prime Rate" in the
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Money Rates section of The Wall Street Journal, a publication of Dow Xxxxx &
Company, Inc., or if such Prime Rate is no longer published the rate of interest
announced publicly by a banking institution., in New York, New York, and
designated by the Landlord, from time to time, as such bank's base rate. If no
such rates are announced or become discontinued, then such other rate as
Landlord may reasonably designate.
Base Rent: As defined in Article III.
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Business Day: Means any day other than (i) a Saturday or a Sunday, and
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(ii) a day on which federally insured depository institutions in Rochester, New
York, New York, Illinois and any State in which any Collection Account or Cash
Collateral Account is located are authorized or obligated by law, regulation,
governmental decree or executive order to be closed.
Capital Budget: As defined in Section 24.4.
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Capital Expenditures: Amounts advanced to pay the costs of Capital
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Improvements.
Capital Expenditures Reserve: As defined in Section 24.6.
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Capital Improvements: Improvements to (A) the external walls and
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internal load bearing walls (other than windows and plate glass), (B) the roof
of the Facility, (C) private roadways, parking areas, sidewalks and curbs
appurtenant thereto that are under Tenant's control (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 "B" attached hereto as "capital".
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CCA: The Capital Company of America LLC, a Delaware limited liability
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company.
Cash Collateral Account: Has the meaning set forth in the Loan
-----------------------
Agreement.
Cash Management Agreement: Has the meaning set forth in the Loan
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Agreement.
CERCLA: The Comprehensive Environmental Response, Compensation and
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Liability Act of 1980, as amended.
Change of Control: Means (i) the issuance or sale by the Tenant or the
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sale by any partner of the Tenant of a Controlling interest in Tenant; (ii) the
sale, conveyance or other transfer of all or substantially all of the assets of
the Tenant (whether by operation of law or otherwise); (iii) any transaction, or
series of transactions, pursuant to which Tenant is merged with or consolidated
into another entity and Tenant is not the surviving entity.
Credit Card Company: Shall mean the credit card companies defined in
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the payment direction letter attached to the Collection Account Agreement.
Code: The Internal Revenue Code of 1986, as amended.
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Collection Account: Has the meaning set forth in Article 41.
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Collection Account Agreement: Has the meaning set forth in Article 41.
----------------------------
Collection Account Bank: Has the meaning set forth in Article 41.
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Commencement Date: _______________________, 19__.
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Condemnation: A Taking resulting from (1) the exercise of any
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governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (2) a voluntary sale or transfer by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending.
Condemnor: Any public or quasi-public authority, or private corporation
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or individual, having the power of condemnation or other power of eminent
domain.
Consolidated Financials: For any fiscal year or other accounting period
-----------------------
for Tenant statements of earnings and retained earnings and of changes in
financial position for such period and for the period from the beginning of the
respective fiscal year to the end of such period and the related balance sheet
as at the end of such period, together with the notes thereto, all in reasonable
detail and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, and prepared in accordance
with GAAP.
Consumer Price Index: Consumer Price Index, all Items for all Urban
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Consumers (1981-83=100), published by the Bureau of Labor Statistics of the
United States Department of Labor, as reported in The Wall Street Journal.
Control: As applied to any Person, the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities,
-3-
partnership interests or other equity interests, by contract or otherwise. The
terms "Controlling" and "Controlled by" shall have correlative meanings.
CPI Adjustment Year: The calendar year next following the year in which
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the Commencement Date occurs, if the Commencement Date occurs between January 1
and June 30, or the second calendar year following the year in which the
Commencement Date occurs, if the Commencement Date occurs between July 1 and
December 31.
Date of Taking: The date the Condemnor has the right to possession of
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the property being condemned.
Encumbrance: As defined in Article XXXIV.
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Environmental Authority: Any department, agency or other body or
-----------------------
component of any Government that exercises any form of jurisdiction or authority
under any Environmental Law.
Environmental Authorization: Any license, permit, order, approval,
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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
Landlord, Tenant, any Predecessor, the Leased Property or any property used
therein and arising out of:
(a) Failure of Tenant, Landlord, 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 Tenant, Landlord 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.
Equipment Leases: Means leases of fixtures, appliances, machinery,
----------------
furniture, furnishings, decorations, tools and supplies, by Tenant.
Event of Default: As defined in Section 16.1.
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-4-
Expiration Date: The expiration date for this Lease with respect to the
---------------
Facility, which is seven (7) years after the Commencement Date.
Facility: The hotel and/or other facility offering lodging and other
--------
services or amenities being operated or proposed to be operated on or as a part
of the Leased Property.
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 Landlord and Tenant, (c) assuming that such
seller must pay customary closing costs and title premiums, and (d) taking into
account the positive or negative effect on the value of the Leased Property
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of any encumbrance that is
assumed by the transferee. In addition, in determining the Fair Market Value
with respect to damaged or destroyed Leased Property such value shall be
determined as if such Leased Property had 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.
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Fixtures: As defined in Section 1.1.
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Franchise Agreement: Any franchise license agreement with a national
-------------------
franchisor under which the Facility is operated.
GAAP: As of any date of determination, accounting principles (a) set
----
forth as generally accepted in then currently effective Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently effective
Statements of the Financial Accounting Standards Board or (c) that are then
approved by such other entity as may be approved by a significant segment of the
accounting profession in the United States of America. The term "consistently
applied," as used in connection therewith, means that the accounting principles
applied are consistent in all material respects to those applied at prior dates
or for prior periods.
Guaranty: The guaranty of Tenant's obligations under this Lease by
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Xxxxxx Hotels Corporation, as evidenced in the Guaranty among Xxxxxx, Landlord
and Hudson Hotels Corporation, dated ____ __, 1998.
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.
Governmental Authority: Means the federal government, any state,
----------------------
regional, local or other political subdivision thereof with jurisdiction and any
Person with jurisdiction exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
Gross Revenues: All revenues, receipts, and income of any kind derived
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directly or indirectly by Tenant from or in connection with the Facility
(including rentals or other payments from tenants, lessees, licensees or
concessionaires but not including their gross receipts) whether on a cash basis
or credit, paid or collected, determined in accordance with GAAP and the Uniform
System, excluding, however: (i) funds furnished by Landlord, (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 paid to
employees, (iv) proceeds of insurance (excluding business interruption
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 Facility or interests therein or components thereof,
-5-
(vii) judgments and awards, except any portion thereof arising from normal
business operations of the Facility, and (viii) items constituting "allowances"
under the Uniform Systems.
Hazardous Materials: All chemicals, pollutants, contaminants, wastes
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and toxic substances, including without limitation:
(a) Solid or hazardous waste, as defined in RCRA or in any
Environmental Law;
(b) Hazardous substances, as defined in CERCLA or in any Environmental
Law;
(c) Toxic substances, as defined in TSCA or in any Environmental Law;
(d) Insecticides, fungicides, or rodenticides, as defined in FIFRA or
in any Environmental Law; and
(e) Gasoline or any other petroleum product or byproduct,
polychlorinated biphenols, asbestos and urea formaldehyde.
Xxxxxx: Xxxxxx Hotels Trust, a Maryland real estate investment trust.
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Impositions: Collectively, all taxes (including, without limitation,
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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
Tenant or its business conducted upon the Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term), water, sewer or other rents and
charges, excises, tax inspection, authorization and similar fees and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Leased Property or the business conducted thereon by Tenant (including all
interest and penalties thereon caused by any failure in payment by Tenant),
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) Landlord'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 Tenant's personal property, or
the leasing or use of the Leased Property or Tenant's personal property or any
part thereof by Tenant. Nothing contained in this definition of Impositions
shall be construed to require Tenant to pay (1) any tax based on net income
(whether denominated as a franchise or capital stock or other tax) imposed on
Landlord or any other person, or (2) any net revenue tax of Landlord or any
other person, or (3) any tax imposed with respect to the sale, exchange or other
disposition by Landlord of any Leased Property or the proceeds thereof, or (4)
any single business, gross receipts (other than a tax on any rent received by
Landlord from Tenant), transaction, privilege or similar taxes as the same
relate to or are imposed upon Landlord, except to the extent that any tax,
assessment, tax levy or charge that Tenant 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 Tenant Indemnified Party or a Landlord
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Indemnified Party.
Indemnifying Party: Any party obligated to indemnify an Indemnified
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Party pursuant to Sections 8.3 or 22.1.
Independent Director: Means a duly appointed member of the board of
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directors of the relevant entity who shall not have been, at the time of such
appointment or at any time in the preceding five (5) years, (a) a direct or
indirect legal or beneficial owner in such entity or any of its affiliates, (b)
a creditor, supplier, employee, officer, director, manager or contractor of such
entity or any of its affiliates, (c) a person who controls such entity or any of
its affiliates, or (d) a member of the immediate family of a person defined in
(a), (b) or (c) above.
--- --- ---
Insurance Proceeds: Has the meaning set forth in Section 14.1.
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Insurance Requirements: All terms of any insurance policy required by
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this Lease and all requirements of the issuer of any such policy.
Inventory: All "Inventories of Merchandise" and "Inventories of
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Supplies" as defined in the Uniform System and including any non-depreciable
personal property and any property of the type described in Section 1221(1) of
the Code.
Land: As defined in Section 1.1.
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Landlord: As defined in the first paragraph of this Lease.
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Landlord Indemnified Party: Landlord, any Affiliate of Landlord, 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 Landlord, the officers, directors,
stockholders, employees, agents and representatives of the general partner of
Landlord and any partner, agent, or representative of Landlord, and the
respective heirs, personal representatives, successors and assigns of any such
officer, director, partner, stockholder, employee, agent or representative.
Landlord's Collection Account: Means the "Collection Account Bank"
-----------------------------
established by Landlord pursuant to the Loan Agreement.
Land Use Requirements: All obligations arising from any easement
---------------------
agreements, covenants running with the land, subleases and licenses under the
Lease, agreements recorded on the land records and similar agreements binding on
the owner of the Leased Property.
Lease: As defined in the first paragraph.
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Lease Year: Any 12-month period from January 1 through December 31
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during the Term, or any shorter period at the beginning or end of the Term.
Leased Improvements; Leased Property: Each as defined in Article I.
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Leasehold Value: The fair market value of the leasehold estate
---------------
hereunder, or for a Substitute Facility, shall be an amount equal to the net
income from the Facility (or for the facilities under a Substitute Facility) for
the most recent twelve (12) month period, discounted over the then remaining
term of the Lease at the Discount Rate. For purposes of this definition, the
"Discount Rate" shall be determined at the time of payment and shall be equal to
three hundred (300) basis points over the U.S. Treasury Note rate for the then
remaining term of the Lease.
Legal Requirements: All federal, state, county, municipal and other
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governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting Tenant or the Leased Property or the
maintenance, construction, use or alteration thereof (whether by Tenant 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 Tenant (other than encumbrances
created by Landlord without the consent of Tenant), 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; provided, however, notwithstanding the foregoing, CCA
together with its successors and assigns,
-7-
including but not limited to, a trustee in a Securitization (as defined in the
Loan Agreement) shall constitute a "Lending Institution".
Lien: Means any mortgage, deed of trust, deed to secure debt, lien
----
(statutory or other), pledge, easement, restrictive covenant, hypothecation,
assignment, preference, priority, security interest, or any other encumbrance or
charge on or affecting the Leased Property, any Other Facility (if applicable)
or any portion thereof or any Collateral (as defined in the Security Agreement)
or Tenant, or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement or similar instrument under the applicable Uniform
Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanic's, materialmen's and other similar liens and encumbrances.
Loan Agreement: Means that certain Loan Agreement by and between CCA
--------------
and Landlord dated on or about the date hereof and any other loan agreement
pursuant to which a loan is made by CCA to Landlord or an Affiliate of Landlord
secured by, inter alia, such entity's fee interest in the Leased Property.
----- ----
Marketing Plan: As defined in Section 24.3.
--------------
Material Adverse Effect: Means a material adverse effect upon (i) the
-----------------------
business or the financial position or results of operation of Tenant, (ii) the
ability of any Tenant to perform, or of Landlord to enforce, any of the this
Lease or the Security Agreement or (iii) the value of (x) the Collateral (as
defined in the Security Agreement) taken as a whole or (y) the Lease Property
and, if applicable, any Other Facility.
Merchant Agreement: Shall have the meaning set forth in each payment
------------------
direction letter attached to the Collection Account Agreement.
Notice: A notice given pursuant to Article XXXII.
------
Officer's Certificate: A certificate of Tenant signed by the chief
---------------------
financial officer or another officer authorized so to sign by the board of
directors or by-laws of Tenant, 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 24.2.
----------------
Operating Standards: Has the meaning set forth in Section 18.2.
------------------- ------------
Other Facility: Means any other hotel and/or facility offering lodging
--------------
and other services or amenities which is security under the applicable Loan
Agreement and "Other Facilities" mean all such facilities collectively.
----------------
Other Income: All revenues, receipts, and income of any kind derived
------------
directly or indirectly from or in connection with the Facility and included in
Gross Revenues, other than Room Revenues.
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: The tenth day of each calendar month of the Term.
------------
Percentage Rent: As defined in Section 3.1(b).
---------------
Performance Failure: As defined in Section 18.1.
-------------------
Person: Any Government, individuals, corporations, general and limited
------
partnerships, stock companies or associations, joint ventures, associations,
companies, limited liability companies, trusts, banks, trust companies, land
trusts, business trusts, or other entities.
-8-
Predecessor: Any Person whose liabilities arising under any
-----------
Environmental Law relating to the Leased Property have or may have been retained
or assumed by Tenant, either contractually or by operation of law.
Primary Intended Use: As defined in Section 7.2(b).
--------------------
Proceeding: Any judicial action, suit or proceeding (whether civil or
----------
criminal), any administrative proceeding (whether formal or informal), any
investigation by a governmental authority or entity (including a grand jury),
and any arbitration, mediation or other non-judicial process for dispute
resolution.
Quarterly Revenue Computations: As defined in Exhibit "C", which is
------------------------------ -----------
attached hereto and incorporated herein.
Rating Agencies: Means Fitch Investors Service, Inc., Xxxxx'x Investors
---------------
Service, Inc., Duff & Xxxxxx Credit Rating Co. and Standard & Poor's Rating
Services, a division of The XxXxxx-Xxxx Companies, Inc. ("S&P"), or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by CCA or its designees in connection with or in anticipation of a
Securitization (as defined in the Loan Agreement) (each, individually a "Rating
------
Agency").
-------
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.
Receipts: Means all rents, receipts, issues, income, accounts,
--------
royalties, profits, revenues, proceeds, bonuses, deposits (whether denoted as
security deposits or otherwise), lease termination fees or payments, rejection
damages, buy-out fees and any other fees made or to be made in lieu of rent, any
award made hereafter to Tenant in any court proceeding involving any tenant,
lessee, licensee or concessionaire under any subleases in any bankruptcy,
insolvency or reorganization proceedings in any state or federal court, and all
other payments, rights and benefits of whatever nature, including, without
limitation, (i) all other rights to payment earned by Tenant with respect to the
Leased Property and (ii) all other income, consideration, issues, accounts,
profits or benefits of any nature arising from the ownership, possession, use or
operation of such Facility, including, without limitation, all revenues,
receipts, income, receivables and accounts relating to or arising from rentals,
rent, equivalent income, income and profits from guest rooms, meeting rooms,
food and beverage facilities, vending machines, telephone and television
systems, guest laundry, and the provision or sale of other goods and services,
as well as all room rents, accounts, accounts receivable and motel receivables
and all other payments and rights to payment of any nature whatsoever made for
or with respect to motel room occupancy by any person, which includes any
payment or monies received or to be received in whole or in part, whether actual
or deemed to be, for the sale of services or products in connection with such
occupancy, advance registration fees by motel guests, tour or junket proceeds or
deposits, deposits for convention and/or party reservations, and other benefits,
and all rights to payment with respect to conference facilities, dining or bar
facilities or other facilities in any way connected with the Leased Property all
rights to payment from any consumer credit charge card organization or entity
including, without limitation, payments arising from the use of the American
Express Card, Discover Card, the Visa Card, the Xxxxx Xxxxxxx Card, the
MasterCard or any other credit card, including those now existing or hereafter
created, substitutions therefor, and proceeds thereof (whether cash or non-cash,
movable or immovable, tangible or intangible) received from the sale, exchange,
transfer, collection or other disposition or substitution thereof and any other
items of revenue, receipts or other income as identified in the Uniform System
of Accounts for Hotels, 8th Edition, International Association of Hospitality
Accountants (1986), as amended from time to time.
REIT Requirements: As defined in Section 19.1.
-----------------
Release: A "Release" as defined in CERCLA or in any Environmental Law,
-------
unless such Release has been properly authorized and permitted in writing by all
applicable Environmental Authorities or is allowed by such Environmental Law
without authorizations or permits.
-9-
Rent: Collectively, the Base Rent, Percentage Rent, and Additional
----
Charges.
Room Revenues: Gross revenue from the rental of guest rooms (including,
-------------
but not limited to, bedrooms suites, banquet rooms, meeting rooms and other
similar rooms), whether to individuals, groups or transients, but excluding the
following:
(a) The amount of all credits, rebates or refunds to customers, guests
or patrons;
(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.
Security Agreement: Means that certain Operator Security and Pledge
------------------
Agreement of even date herewith from Tenant to Landlord, as amended, modified
and in effect from time to time.
Single-Purpose Entity: Means a corporation, limited partnership, or
---------------------
limited liability company which, at all times since its formation and thereafter
(i) was organized solely for the purpose of (x) operating the Leased Property
and, if applicable, one or more Other Facility or (y) acting as the managing
member of the limited liability company which operates the Leased Property and,
if applicable, one or more Other Facilities or (z) acting as the general partner
of a limited partnership which operates the Leased Property and, if applicable,
one or more Other Facilities, (ii) has not and will not engage in any business
unrelated to the (x) the operation of the Leased Property and, if applicable,
one or more Other Facilities or (y) acting as a member of a limited liability
company which operates the Leased Property and one or more Other Facilities or
(z) acting as a general partner of a limited partnership which operates the
Leased Property and, if applicable, one or more Other Facilities, (iii) has not
and will not have any assets other than (x) those related to the operation of
the Leased Property and, if applicable, one or more Other Facilities or (y) its
member interest in the limited liability company which operates the Leased
Property and one or more Other Facilities or (z) its general partnership
interest in the limited partnership which operates the Leased Facility and, if
applicable, one or more Other Facilities, as applicable, (iv) except as
otherwise expressly permitted by this Lease, has not and will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, asset sale, transfer of partnership, membership or shareholder
interests, or amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation or operating
agreement (as applicable), (v) if such entity is a limited partnership, has as
its only general partners, general partners which are Single-Purpose Entities
which are corporations, (vi) if such entity is a corporation, at all relevant
times will have at least one Independent Director, (vii) the board of directors
of such entity has not taken and will not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including without limitation all Independent
Directors shall have participated in such vote, (viii) has not and will not fail
to correct any known misunderstanding regarding the separate identity of such
entity, (ix) if such entity is a limited liability company, has at least one
member that is a Single-Purpose Entity which is a corporation, and such
corporation is the managing member of such limited liability company, (x)
without the unanimous consent of all of the partners, directors (including
without limitation all Independent Directors) or members, as applicable, has not
and will not with respect to itself or to any other entity in which it has a
direct or indirect legal or beneficial ownership interest (a) file a bankruptcy,
insolvency or reorganization petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally; (b) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such entity or all or any portion of such
entity's properties; (c) make any assignment for the benefit of such entity's
creditors; or (d) take any action that might cause such entity to become
insolvent, (xi) has maintained and will maintain its accounts, books and records
separate from any other person or entity, (xii) has maintained and will maintain
its books, records, resolutions and agreements as official records, (xiii) has
not and will not commingle its funds or assets with those of any other entity,
(xiv) has held and will hold its assets in its own name, (xv) has conducted and
will conduct its business in its name, (xvi) has
-10-
maintained and will maintain its financial statements, accounting records and
other entity documents separate from any other person or entity, (xvii) has paid
and will pay its own liabilities out of its own funds and assets, (xviii) has
observed and will observe all partnership, corporate or limited liability
company formalities as applicable, (xix) has maintained and will maintain an
arms-length relationship with its Affiliates, (xx) (a) intentionally deleted,
(b) if such entity operates the Leased Property and, if applicable, one or more
Other Facilities and will have no indebtedness other than Equipment Leases and
unsecured trade payables incurred in the ordinary course of business relating to
the operation of the Leased Property and, if applicable, one or more Other
Facilities, which Equipment Leases and trade payables do not exceed, at any
time, a maximum aggregate amount of $100,000 per Leased Property/Other Facility
operated by such entity and a maximum aggregate amount of $[____________] for
the Leased Property, and if applicable, the Other Facilities, and, in the case
of trade payables, are paid within forty-five (45) days of the date incurred, or
(c) if such entity acts as the general partner of a limited partnership which
operates the Leased Property and, if applicable, one or more Other Facilities,
has no indebtedness other than unsecured trade payables in the ordinary course
of business relating to acting as general partner of the limited partnership
which operates the Leased Property and, if applicable, one or more Other
Facilities which (1) do not exceed, at any time, $10,000 and (2) are paid within
thirty (30) days of the date incurred, or (d) if such entity acts as a member of
a limited liability company which operates the Leased Property and, if
applicable, one or more Other Facilities, has no indebtedness other than
unsecured trade payables in the ordinary course of business relating to acting
as a member of the limited liability company which operates the Leased Property
and, if applicable, one or more Other Facilities which (1) do not exceed, at any
time, $10,000 and (2) are paid within thirty (30) days of the date incurred,
(xxi) has not and will not assume or guarantee or become obligated for the debts
of any other entity or hold out its credit as being available to satisfy the
obligations of any other entity, (xxii) has not acquired and will not acquire
obligations or securities of its partners, members or shareholders, (xxiii) has
allocated and will allocate fairly and reasonably shared expenses, including,
without limitation, shared office space and uses separate stationary, invoices
and checks, (xxiv) except as described herein, has not and will not pledge its
assets for the benefit of any other person or entity, (xxv) has held and
identified itself and will hold itself out and identify itself as a separate and
distinct entity under its own name and not as a division or part of any other
person or entity, (xxvi) has not made and will not make loans to any person or
entity, (xxvii) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it,
(xxviii) if such entity is a limited liability company, its articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall provide that such entity will dissolve only upon the
bankruptcy of the managing member, (xxix) has not entered and will not enter
into or be a party to, any transaction with its partners, members, shareholders
or its affiliates except in the ordinary course of its business and on terms
which are intrinsically fair and are no less favorable to it than would be
obtained in a comparable arms-length transaction with an unrelated third party,
(xxx) has paid and will pay the salaries of its own employees from its own
funds, (i) has maintained and will maintain adequate capital in light of its
contemplated business operations and (ii) if such entity is a limited liability
company or limited partnership, and such entity has one or more managing members
or general partners, as applicable, then such entity's organizational documents
shall provide that such entity shall continue (and not dissolve) for so long as
a solvent managing member or general partner, as applicable, exists.
State: The State or Commonwealth of the United States in which the
-----
Leased Property is located.
Substitute Facility: A lease to Tenant of one or more substitute hotel
-------------------
facilities pursuant to one or more leases that would create for the Tenant
leasehold estates that have an aggregate Leasehold Value of no less than the
Leasehold Value of the leasehold estate hereunder, such values being determined
as of the closing of the sale of the Leased Property or as of the date of
termination of this Lease.
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 by any Condemnor affecting the Leased
Property.
Tenant: The Tenant designated on this Lease and its permitted
------
successors and assigns.
Tenant Indemnified Party: Tenant, any Affiliate of Tenant, 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
-11-
stockholder's interest) in Tenant, the officers, directors, stockholders,
employees, agents and representatives of Tenant and any corporate stockholder,
agent, or representative of Tenant, and the respective heirs, personal
representatives, successors and assigns of any such officer, director,
stockholder, employee, agent or representative.
Tenant's Personal Property: As defined in Section 6.2.
--------------------------
Term: As defined in Section 1.2.
----
TSCA: The Toxic Substances Control Act, as amended.
----
Unavoidable Delays: Delays due to strikes, lock-outs, labor unrest,
------------------
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party under
this Lease or any guaranty of this Lease.
Uneconomic for its Primary Intended Use: A state or condition of the
---------------------------------------
Facility such that, in the good faith judgment of Tenant, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Tenant, 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 Tenant
intends to, and shall, complete the cessation of operations at the Leased
Facility.
Uniform System: The Uniform System of Accounts for Hotels (8th Revised
--------------
Edition, 1986) as published by the Hotel Association of New York City, Inc., as
same may hereafter be revised.
Unsuitable for its Primary Intended Use: A state or condition of the
---------------------------------------
Facility such that, in the good faith judgment of Tenant, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Tenant, 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 or standards set
forth in a Franchise Agreement.
ARTICLE III
-----------
3.1 Rent. Tenant will pay to Landlord 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: (i) by wire transfer, or (ii) at
Landlord's address set forth in Article XXXII hereof (or at such other place or
to such other Person, all as Landlord 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: An annual sum in the amount set forth on Exhibit "C"
--------- -----------
hereto as the "Base Rent" for the Leased Property, payable in arrears in equal,
consecutive monthly installments, on the Payment Date of each calendar month of
the Term ("Base Rent"); the first and last monthly payments of Base Rent shall
be pro rated as to any partial month (subject to adjustment as provided in
Sections 5.2, 14.5, 15.2, 15.4, and 15.5); and
(b) Percentage Rent: For each Fiscal Year during the Term
----------------
commencing with the Fiscal Year in which the Commencement Date occurs, Tenant
shall pay percentage rent quarterly, on or before the thirtieth day following
the end of each of the first three calendar quarters in each Fiscal Year, and on
or before February 10 of the next year, with respect to the fourth calendar
quarter of each Fiscal Year, in an amount calculated by the following formula
(with such calculated amount being the "Percentage Rent"):
The amount equal to the Quarterly Revenues Computation
less
-12-
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 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 Revenues Computation for
the applicable Fiscal Year
less
an amount equal to the Base Rent paid year-to-date for
the applicable Fiscal Year
equals
Percentage Rent for the applicable Fiscal Year.
Set forth on Exhibit "D" attached hereto is an example of the
-----------
Calculation of Percentage Rent. There shall be no reduction in the Base Rent
regardless of the result of the Monthly Revenues Computations or Annual Revenues
Computations.
(c) Officer's Certificates. Additionally, an Officer's Certificate
----------------------
in form reasonably acceptable to Landlord shall be delivered to Landlord
quarterly, together with such quarterly Percentage Rent payment, setting forth
the calculation of such rent payment for such quarter within twenty (20) days
after each of the first three quarters of each Fiscal Year (or part thereof) in
the Term. Such payments shall be based on the formula set forth in Section
3.1(b).
In addition, on or before February 10 of each year, commencing with the
February 10 first following the end of the Fiscal Year in which the Commencement
Date occurs, Tenant shall deliver to Landlord an Officer's Certificate
reasonably acceptable to Landlord setting forth the computation of the actual
Percentage Rent that accrued for the last quarter of the Fiscal Year that ended
on the immediately preceding December 31 and shall pay to Landlord Percentage
Rent, if due and payable, for the last quarter of the applicable Fiscal Year.
The Officer's Certificate shall also set forth the computation of the Percentage
Rent accrued and paid during the Fiscal Year that ended on the immediately
preceding December 31. 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 Tenant for such year, Tenant also
shall pay such excess to Landlord at the time such certificate is delivered. If
the Percentage Rent actually due and payable for such Fiscal Year is shown by
such Officer's Certificate to be less than the amount actually paid as
Percentage Rent for the applicable Fiscal Year, Landlord shall reimburse such
amount to Tenant. 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 3.3) and the total amount of quarterly payments for such
Fiscal Year actually paid by Tenant as Percentage Rent, whether in favor of
Landlord or Tenant, shall bear interest at the Overdue Rate, which interest
shall accrue from the due date of the last quarterly payment for the Fiscal Year
until
-13-
the amount of such difference shall be paid or otherwise discharged. Any such
interest payable to Landlord shall be deemed to be and shall be payable as
Additional Charges.
The obligation to pay Percentage Rent shall survive the expiration or
earlier termination of the Term, 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 Tenant's good faith best estimate of
the amount of any unresolved contractual allowances, shall be made not later
than 60 days after such expiration or termination date, but Tenant shall advise
Landlord within 60 days after such expiration or termination date of Tenant's
best estimate at that time of the approximate amount of such adjustments, which
estimate shall not be binding on Tenant or have any legal effect whatsoever.
(d) CPI Adjustments to Rent. For each Fiscal Year of the Term
-----------------------
beginning with the CPI Adjustment Year, the Base Rent then in effect, and the
threshold Room Revenues then included in the Quarterly Revenues Computations and
Annual Revenues Computations set forth in Section 3.1(b) shall be adjusted,
upward only, from time to time beginning in the CPI Adjustment Year as follows:
(1) The Consumer Price Index on the last date of the most recently
ended Fiscal Year shall be divided by the Consumer Price Index on the last date
of the Fiscal Year immediately preceding the most recently ended Fiscal Year
(but in no event shall the quotient be less than 1).
(A) The new Base Rent for the then current Fiscal Year shall be
the adjusted amount obtained by multiplying the Base Rent for the immediately
preceding Fiscal Year by the quotient obtained in subparagraph (d)(1) above.
(B) The new threshold dollar amount in the Quarterly Revenues
Computations and Annual Revenues Computations described in Section 3.1(b) above
for the then current Fiscal Year shall be the product of the threshold dollar
amount of Room Revenues in effect in the most recently ended Fiscal Year and the
quotient obtained in subparagraph (d)(1) above.
By way of example, if the CPI Adjustment Year were 2000, the amount
of Base Rent and the threshold Room Revenues amounts (and Food Sales and
Beverage Sales amounts, if applicable) in the Quarterly Revenues Computations
and Annual Revenues Computations for the Fiscal Year commencing January 1, 2000
would be adjusted to reflect any change in the Consumer Price Index from the
Fiscal Year ended December 31, 1998 as compared to the Fiscal Year ended
December 31, 1999. Base Rent and the threshold Room Revenues amounts (and Food
Sales and Beverage Sales amounts, if applicable) in the Quarterly Revenues
Computations and Annual Revenues Computations for the Fiscal Year commencing
January 1, 2001 would be the Base Rent and threshold Room Revenues amounts (and
Food Sales and Beverage Sales amounts, if applicable) applicable for the Fiscal
Year ended December 31, 2000 as further adjusted to reflect any change in the
Consumer Price Index from December 31, 1999 as compared to December 31, 2000.
Landlord shall calculate the annual adjustments as soon as
reasonably possible after the Consumer Price Index becomes available and shall
notify Tenant 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 (and Food
Sales and Beverage Sales amounts, if applicable) shall be effective on January 1
of the Fiscal Year to which such adjusted amounts apply. If rent is paid in any
Fiscal Year prior to the determination of the amount of any adjustment to Base
Rent or the threshold Room Revenues (and Food Sales and Beverage Sales amounts,
if applicable) applicable for such Fiscal Year, payment adjustments for any
shortfall of rent paid shall be made with the first Base Rent payment due after
the amount of the adjustments are determined.
In no event shall any adjustment made pursuant to this Section
3.1(d), or any decrease in the Consumer Price Index during any Fiscal Year, ever
result in a decrease in the Base Rent or threshold computed under subparagraph
d(1)(B) for any Fiscal Year below the then current Base Rent and threshold. In
that event, the existing Base Rent and threshold shall continue in effect until
the next adjustment hereunder.
-14-
(2) If (i) a significant change is made in the number or nature (or
both) of items used in determining the Consumer Price Index, or (ii) the
Consumer Price Index shall be discontinued for any reason, the 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 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. Tenant 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 GAAP and the Uniform
System, that will accurately record all data necessary to compute Percentage
Rent, and Tenant shall retain, for at least four years after the expiration of
each Fiscal Year (and in any event until the reconciliation described in Section
3.1(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. Landlord shall have the right
to audit the information that formed the basis for the data set forth in any
Officer's Certificate provided under Section 3.1(c) (i) from time to time by
Landlord's accountants or representatives at Landlord's expense (except as
provided hereinbelow), or (ii) no more frequently than twice per Fiscal Year, by
the accountants of Tenant, with at least thirty (30) days notice, and shall
reimburse Tenant for costs related to an audit performed by Tenant's accountants
(except as provided hereinbelow) within sixty (60) days of Landlord's receipt of
an invoice from Tenant for these costs. In addition, upon reasonable notice and
at its expense, Landlord shall have the right, without limitation, to examine
all of Tenant's records (including, but not limited to, supporting data,
franchisor reports and sales and excise tax returns) reasonably required to
verify Percentage Rent. If any such audit or examination discloses a deficiency
in the payment of Percentage Rent, and either Tenant agrees with the result of
such audit or the matter is otherwise determined or compromised, Tenant shall
forthwith pay to Landlord 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 Tenant to Landlord, 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 Tenant, 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 or examination discloses that the Percentage Rent actually due
from Tenant for any Fiscal Year exceed those reported and paid by Tenant by more
than 3%, Tenant shall pay the cost of such audit and examination. The audits and
examinations contemplated herein are subject to any prohibitions or limitations
on disclosure of any such data under Legal Requirements. Any proprietary
information obtained by Landlord 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 Landlord may disclose such information to
prospective lenders. The obligations of Tenant 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) Tenant also will pay and discharge as and when due and payable all
other amounts, liabilities, obligations and Impositions that Tenant is required
to pay under this Lease, and (b) in the event of any failure on the part of
Tenant to pay any of those items referred to in clause (a) of this Section 3.3,
Tenant also will promptly pay and discharge every fine, penalty, interest,
expense and cost that may be added for or related to 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 Landlord 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, but not the obligation to pay such Additional Changes on behalf of the
Tenant and to require reimbursement thereof by Tenant, 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 Landlord) shall not be paid on its due date, Tenant will pay
Landlord on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant pays any
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Additional Charges to Landlord pursuant to any requirement of this Lease, Tenant
shall be relieved of its obligation to pay such Additional Charges to the entity
to which they would otherwise be due and Landlord shall pay same from monies
received from Tenant. The payment of any Additional Charges by Landlord shall
not relieve Tenant of any of its obligations under this Lease or of its
responsibility to pay other such Additional Charges, and such payment shall not
be deemed to be a waiver of any of Landlord's rights under this Lease or
otherwise.
3.4 Net Lease Provision. The Rent shall be paid absolutely net to
-------------------
Landlord, without setoff, deduction or counterclaim, so that this Lease shall
yield to Landlord 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
Landlord.
3.5 Conversion of Property. If, during the Term, Tenant wishes to cease
----------------------
food and beverage operations (other than complimentary breakfast or
complimentary food and beverage, which Tenant may cease without Landlord's
consent) or institute food and beverage operations at the Facility (all in
accordance with the requirements of any applicable Franchise Agreement), Tenant
shall give notice of such desire to Landlord. If, during the Term, Landlord
wishes Tenant to cease food and beverage operations or to institute food and
beverage operations at the Facility (all in accordance with the requirements of
any applicable Franchise Agreement), Landlord shall give notice of such desire
to Tenant. Landlord and Tenant 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, and subject to Landlord's reasonable satisfaction
that any Rent adjustment will not adversely affect Xxxxxx'x or its Affiliate's
status as a real estate investment trust under the Code. All other terms of this
Lease will remain substantially the same. During negotiations, which shall not
extend beyond sixty (60) days, Tenant 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, Tenant or Landlord, as
appropriate, shall withdraw such notice and this Lease shall continue in full
force.
3.6 Tenant Requirements.
-------------------
(a) Guaranty. Tenant's obligations under this lease shall be
--------
guaranteed pursuant to the Guaranty, or another form of guaranty that is
acceptable to Landlord.
(b) Special Purpose Tenant. [CONFORM TO LOAN AGREEMENT] (i) Tenant
----------------------
shall upon request provide through Tenant's counsel an opinion of counsel
reasonably acceptable to Landlord's counsel and the counsel of the Rating
Agencies that Tenant shall not be "substantively consolidated" with any related
entity under Section 105 of the Bankruptcy Code and (ii) Tenant hereby
represents and warrants as of the date hereof, that:
(A) Organization. Tenant (i) is a duly organized and validly
------------
existing corporation in good standing under the laws of the State of
its formation, (ii) is duly qualified as a foreign corporation in each
jurisdiction in which the nature of its business, the Leased Property
and, if applicable, any Other Facility makes such qualification
necessary or desirable, (iii) has the requisite corporate power and
authority to carry on its business as now being conducted, and (iv) has
the requisite corporate power to execute and deliver, and perform its
obligations under, this Lease and the Security Agreement.
(B) Authorization. The execution and delivery by Tenant of this
-------------
Lease and the Security Agreement, Tenant's performance of its
obligations thereunder and the creation of the security interests and
liens provided for in this Lease and the Security documents (i) have
been duly authorized by all requisite corporate action on the part of
Tenant, (ii) will not violate any provision of any applicable Legal
Requirements, any order, writ, decree, injunction or demand of any
court or other Governmental Authority, any organizational document of
Tenant or any indenture or agreement or other instrument to which
Tenant is a party or by which Tenant is bound, (iii) will not be in
conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the
property or assets of Tenant pursuant to, any such indenture or
agreement or instrument and (iv) have been duly executed and delivered
by Tenant. Other than those obtained or filed on or prior to the
Commencement Date, Borrower is not required to obtain any consent,
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approval or authorization from, or to file any declaration or statement
with, any Governmental Authority or other agency in connection with or
as a condition to the execution, delivery or performance of this Lease
or the Security Agreement.
(C) Single-Purpose Entity.
---------------------
(i) Tenant has been, and will continue to be, a duly
formed and existing corporation and a Single-Purpose Entity.
(ii) Tenant at all times since its formation has
complied, and will continue to comply, with the provisions of all of
its organizational documents, and the laws of the state in which Tenant
was formed relating to its corporate status.
(iv) All customary formalities regarding the corporate
existence of Tenant have been observed at all times since its formation
and will continue to be observed.
(v) Tenant have been at all times since their respective
formation and will continue to be adequately capitalized in light of
the nature of its business.
(D) Litigation. There are no actions, suits or proceedings at
----------
law or in equity by or before any Governmental Authority or other
agency now pending and served or, to the knowledge of Tenant,
threatened against Tenant.
(E) Agreements. Tenant is not is a party to any agreement or
----------
instrument or subject to any restriction which is likely to have a
Material Adverse Effect. Tenant is not in default in any respect in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to
which it is a party or by which Tenant is bound.
(F) No Bankruptcy Filing. Tenant is not contemplating either
--------------------
the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of
Tenant's assets or property, and Tenant has no knowledge of any Person
contemplating the filing of any such petition against it.
(G) Location of Chief Executive Offices. The location of
-----------------------------------
Tenant's principal place of business and the location of Tenant's chief
executive office is 000 Xxxxxx & Xxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
(H) Other Debt and Obligations. Tenant has no financial
--------------------------
obligation under any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which Tenant is a party, or by
which Tenant is bound, other than obligations under the Lease and the
Security Agreement. Tenant has not borrowed or received other debt
financing that has not been heretofore repaid in full and Tenant has no
known material contingent liabilities.
(I) Solvency. Tenant (i) has not entered into this Lease or any
--------
Security Document with the actual intent to hinder, delay, or defraud
any creditor, and (ii) has received reasonably equivalent value in
exchange for its obligations under the Lease and the Security
Agreement. Giving effect to the transactions contemplated hereby, the
fair saleable value of Tenant's assets exceeds and will, immediately
following the execution and delivery of this Lease and the Security
Agreement exceed Tenant's total liabilities, including, without
limitation, subordinated, unliquidated, or disputed liabilities or
contingent obligations. The fair saleable value of Tenant's assets is
and will, immediately following the execution and delivery of this
Lease, be greater than Tenant's probable liabilities, including the
maximum amount of its contingent obligations or its debts as such debts
become absolute and matured. Tenant's assets do not and, immediately
following the execution and delivery of this Lease, will not,
constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Tenant does not intend to,
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and does not believe that it will, incur debts and liabilities
(including, without limitation, contingent obligations and other
commitments) beyond its ability to pay such debts as they mature
(taking into account the timing and amounts to be payable on or in
respect of obligations of Tenant).
(J) Enforceability. This Lease and the Security Agreement are
--------------
the legal, valid and binding obligations of Tenant, enforceable against
Tenant in accordance with their terms, subject to bankruptcy,
insolvency and other limitations on creditors' rights generally and to
equitable principles.
(K) Other Debt. Tenant has not borrowed or received other debt
----------
financing whether unsecured or secured by the Leased Property or, if
applicable, any Other Facility or any part thereof.
(L) No Liabilities. Tenant has no liabilities or obligations
--------------
including without limitation Contingent Obligations, (and including,
without limitation, liabilities or obligations in tort, in contract, at
law, in equity, pursuant to a statute or regulation, or otherwise)
other than those liabilities and obligations expressly permitted by
this Lease and the Security Agreement.
(M) Management Agreements. There are no management agreements
---------------------
in effect with respect to the Leased Property or, if applicable, any
Other Facility, other than the Interim Operations Advisory Agreement,
between Tenant and Sage Management Resources, Inc.
(N) Conduct of Business. Tenant does not conduct its business
-------------------
"also known as", "doing business as" or under any other name.
ARTICLE IV
----------
4.1 Payment of Impositions. Subject to Article XII relating to
----------------------
permitted contests, Tenant will pay, or cause to be paid, all Impositions (other
than Real Estate Taxes, which shall be paid by Landlord) 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 Landlord copies of official receipts or other satisfactory proof
evidencing such payments. Tenant'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), Tenant 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 Tenant'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. Landlord,
at its expense, shall, to the extent required or permitted by applicable law,
prepare and file all tax returns in respect of Landlord's net income, gross
receipts, sales and use, single business, transaction privilege, rent, ad
valorem, franchise taxes, Real Estate Taxes and taxes on its capital stock, and
Tenant, 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 Tenant, the same shall be paid over to or retained by Tenant 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 Landlord. Any such funds retained by Landlord due to an Event of
Default shall be applied as provided in Article XVI. Landlord and Tenant 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. Tenant shall file all personal
property tax returns in such jurisdictions where it is legally required to so
file. Landlord, to the extent it possesses the same, and Tenant, to the extent
it possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Landlord is legally required to file personal
property tax returns, Landlord shall provide Tenant with copies of assessment
notices in sufficient time for Tenant to file a protest. Tenant may, upon notice
to Landlord, at Tenant's option and at Tenant's sole expense, protest, appeal,
or institute such other proceedings (in its or Landlord's name) as Tenant may
deem appropriate to effect a reduction of personal property assessments for
those Impositions to be paid by
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Tenant, and Landlord, at Tenant's expense as aforesaid, shall fully cooperate
with Tenant in such protest, appeal, or other action. Tenant hereby agrees to
indemnify, defend, and hold harmless Landlord from and against any claims,
obligations, and liabilities against or incurred by Landlord in connection with
such cooperation. Xxxxxxxx for reimbursement of personal property taxes by
Tenant to Landlord shall be accompanied by copies of a xxxx therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Landlord, however, reserves the right to effect any such
protest, appeal or other action and, upon notice to Tenant, shall control any
such activity, which shall then go forward at Landlord's sole expense. Upon such
notice, Tenant, at Landlord's expense, shall cooperate fully with such
activities.
4.2 Notice of Impositions. To the extent Landlord is notified of
---------------------
any Impositions, Landlord shall give prompt Notice to Tenant of such Impositions
payable by Tenant hereunder, provided that Landlord's failure to give any such
Notice shall in no way diminish Tenant's obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Tenant receives Notice of any Imposition which it is
obligated to pay during the first taxing period applicable thereto.
4.3 Adjustment of Impositions. Impositions imposed in respect of
-------------------------
the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof after termination shall survive such termination.
4.4 Utility Charges. Tenant 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 on the Leased Property during the Term.
4.5 Insurance Premiums. Tenant will pay or cause to be paid all
------------------
premiums for the insurance coverages required to be maintained by Tenant under
Article XIII.
ARTICLE V
---------
5.1 No Termination Abatement, etc. Except as otherwise
-----------------------------
specifically provided in this Lease, Tenant, 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 Landlord 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 Tenant 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, Tenant'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 Tenant has or might have against Landlord
by reason of any default or breach of any warranty by Landlord under this Lease
or any other agreement between Landlord and Tenant, or to which Landlord and
Tenant are parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (e) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Tenant from any such obligations as a matter of law. Tenant hereby
specifically waives all rights, arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law to (1) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (2) entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder, except as
otherwise specifically provided in this Lease. The obligations of Tenant
hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Tenant 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 for Partial Takings. In the event of a
----------------------------------------
partial Taking as described in Section 15.4, 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 Tenant and Landlord, taking into consideration, among
other relevant factors, the number of
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usable rooms, the amount of square footage, or the revenues affected by such
partial Taking. If Landlord and Tenant 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 a court of competent jurisdiction for resolution.
ARTICLE VI
----------
6.1 Ownership of the Leased Property. Tenant acknowledges that the
--------------------------------
Leased Property is the property of Landlord and that Tenant has only the right
to the possession and use of the Leased Property upon the terms and conditions
of this Lease.
6.2 Tenant's Personal Property. Tenant will acquire and maintain
--------------------------
throughout the Term such Inventory as is required to operate the Leased Property
in the manner contemplated by this Lease. Tenant 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 Tenant. Tenant, at the commencement of the Term,
and from time to time thereafter, shall provide Landlord with an accurate list
of all such items of Tenant's personal property (collectively, "Tenant's
Personal Property"). Tenant may, subject to the first sentence of this Section
6.2 and the conditions set forth below, remove any of Tenant'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 Tenant's Personal Property, other than
Inventory, not removed by Tenant within ten days following the expiration or
earlier termination of the Term shall be considered abandoned by Tenant and may
be appropriated, sold, destroyed or otherwise disposed of by Landlord without
first giving Notice thereof to Tenant, without any payment to Tenant and without
any obligation to account therefor. Tenant 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 Tenant's Personal
Property, whether effected by Tenant or Landlord. Upon the expiration or earlier
termination of the Term, Landlord 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. Tenant may make such financing arrangements, title retention
agreements, leases or other agreements with respect to the Tenant's Personal
Property as it sees fit provided that Tenant first advises Landlord of any such
arrangement and such arrangement expressly provides that in the event of
Tenant's default thereunder, Landlord (or its designee) may assume Tenant's
obligations and rights under such arrangement.
6.3 Landlord's Lien. To the fullest extent permitted by applicable
---------------
law, Landlord is granted a lien and security interest on all of Tenant's
personal property (including Tenant's Personal Property) now or hereinafter
placed in or upon the Leased Property, and such lien and security interest shall
remain attached to such Tenant's personal property until payment in full of all
Rent and satisfaction of all of Tenant's obligations hereunder; provided,
however, Landlord shall subordinate its lien and security interest to that of
any non-Affiliate of Tenant which finances such Tenant's personal property or
any non-Affiliate conditional seller of such Tenant's personal property, the
terms and conditions of such subordination to be satisfactory to Landlord in the
exercise of reasonable discretion. Tenant shall, upon the request of Landlord,
execute such financing statements or other documents or instruments reasonably
requested by Landlord to perfect the lien and security interests herein granted.
Notwithstanding the foregoing, Tenant hereby acknowledges and agrees that
pursuant to the Security Agreement Tenant is granting to Landlord a first
priority security interest in the Collateral (as defined therein) as security
for Tenant's obligations hereunder.
ARTICLE VII
-----------
7.1 Condition of the Leased Property. Tenant acknowledges receipt
--------------------------------
and delivery of possession of the Leased Property. Tenant 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. Tenant is leasing the
Leased Property "as is" in its present condition. Tenant waives any claim or
action against Landlord in respect of the condition of the Leased Property.
LANDLORD 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
-20-
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PROPERTY
HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. Provided, however, to
the extent permitted by law, Landlord hereby assigns to Tenant all of Landlord's
rights to proceed against any predecessor in title other than Tenant (or an
Affiliate of Tenant which conveyed the Property to Landlord) for breaches of
warranties or representations or for latent defects in the Leased Property.
Landlord shall fully cooperate with Tenant in the prosecution of any such claim,
in Landlord's or Tenant's name, all at Tenant's sole cost and expense. Tenant
hereby agrees to indemnify, defend and hold harmless Landlord from and against
any costs, claims, obligations and liabilities against or incurred by Landlord
in connection with such cooperation.
7.2 Use of the Leased Property.
--------------------------
(a) Tenant 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
all Legal Requirements and Land Use Requirements.
(b) Tenant 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 Landlord
(the "Primary Intended Use"). Tenant shall not use the Leased Property or any
portion thereof for any other use without the prior written consent of Landlord,
which consent may be granted, denied or conditioned in Landlord'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 Landlord is available and Tenant
pays any premium increase), nor shall Tenant sell or permit to be kept, used or
sold in or about the Leased Property any article which may be prohibited by law
or fire underwriter's regulations. Tenant 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 Tenant's
Personal Property.
(c) Subject to the provisions of Articles XIV, XV, XXI and
XXII, Tenant 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 (other than
requirements with respect to Capital Improvements), (3) not terminate or amend
the Franchise Agreement without the consent of Landlord, (4) maintain
appropriate certifications, permits and licenses for such use and (5) will seek
to maximize the gross revenues generated therefrom consistent with sound
business practices.
(d) Tenant shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Tenant cause or
permit any nuisance thereon.
(e) Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, or Tenant's Personal Property, to be used in
such a manner as (1) might reasonably tend to impair Landlord's (or Tenant'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) Unless consented to in writing by Landlord and except
with respect to the Other Facilities, throughout the Term neither Tenant nor any
Affiliate of Tenant shall own, build, develop, lease, operate, manage, franchise
or have any interest in any hotel or motel property that is within a three (3)
mile radius of any hotel or motel property in which Landlord or an Affiliate of
Landlord has an interest on the date Tenant or its Affiliate would otherwise
commence owning, operating or managing such property, other than pursuant to
this Lease or another lease, agreement or arrangement with Landlord or an
Affiliate of Landlord. Tenant agrees to notify Landlord, from time to time at
the request of Landlord, of the location of any hotel or motel property the
Tenant or any Affiliate owns, leases, operates, manages or has an interest in.
Landlord agrees to notify Tenant, from time to time at the request of Tenant, of
the location of any hotel or motel property in which Landlord or an Affiliate of
Landlord has an interest.
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7.3 Landlord to Grant Easements, etc. Landlord will, from time to
--------------------------------
time, so long as no Event of Default has occurred and is continuing, at the
request of Tenant and at Tenant's cost and expense (but subject to the approval
of Landlord, which approval shall not be unreasonably withheld or delayed), (a)
grant easements and other rights in the nature of easements with respect to the
Leased Property to third parties, (b) release existing easements or other rights
in the nature of easements which are for the benefit of the Leased Property, (c)
dedicate or transfer unimproved portions of the Leased Property for road,
highway or other public purposes, (d) execute petitions to have the Leased
Property annexed to any municipal corporation or utility district, (e) execute
amendments to any covenants and restrictions affecting the Leased Property and
(f) execute and deliver to any person any instrument appropriate to confirm or
effect such grants, releases, dedications, transfers, petitions and amendments
(to the extent of its interests in the Leased Property), but only upon delivery
to Landlord of an Officer's Certificate stating that such grant, release,
dedication, transfer, petition or amendment does not materially and adversely
affect (A) the ability of the relevant Tenant to pay any of its obligations to
any Person as and when due, (B) the marketability of title to the Leased
Property, (C) the fair market value of the Leased Property or (D) the use or
operation 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, and
subject further to the obligations of Landlord with respect to Capital
Improvements as set forth in Section 9.1(b), Tenant, at its expense, will
promptly (a) comply with all applicable Legal Requirements, Land Use
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 Tenant's Personal Property then
being made, and for the proper erection, installation, operation and maintenance
of the Leased Property or any part thereof.
8.2 Legal Requirements and Land Use Requirements Covenants.
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Subject to Section 8.3(b) below, Tenant covenants and agrees that the Leased
Property and Tenant's Personal Property shall not be used for any unlawful
purpose, and that Tenant shall not permit or suffer to exist any unlawful use of
the Leased Property by others. Tenant 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. Tenant further covenants and agrees that
Tenant'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 and Land Use Requirements, unless the same are finally determined
by a court of competent jurisdiction to be unlawful (and Tenant shall cause all
such sub-tenants, invitees or others to so comply with all Legal Requirements
and Land Use Requirements). Tenant may, however, upon prior Notice to Landlord,
contest the legality or applicability of any such Legal Requirement and Land Use
Requirement or any licensure or certification decision if Tenant maintains such
action in good faith, with due diligence, without prejudice to Landlord's rights
hereunder, and at Tenant's sole expense. If by the terms of any such Legal
Requirement and Land Use 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 Tenant's
leasehold interest therein and without subjecting Tenant or Landlord to any
liability, civil or criminal, for failure so to comply therewith, Tenant may
delay compliance therewith until the final determination of such proceeding. If
any lien, charge or civil or criminal liability would be incurred by reason of
any such delay, Tenant shall be responsible for discharging the same; provided,
Tenant, on the prior written consent of Landlord, which consent shall not be
unreasonably withheld, may nonetheless contest as aforesaid and delay as
aforesaid provided that such delay would not subject Landlord to criminal
liability and Tenant both (a) furnishes to Landlord security reasonably
satisfactory to Landlord against any loss or injury by reason of such contest or
delay and (b) prosecutes the contest with due diligence and in good faith.
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8.3 Environmental Covenants. Landlord and Tenant (in addition to,
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and not in diminution of, Tenant's covenants and undertakings in Sections 8.1
and 8.2 hereof) covenant and agree as follows:
(a) Tenant agrees that at all times hereafter until the
later of (i) such time as all liabilities, duties or obligations of Tenant to
the Landlord under the Lease have been satisfied in full, and (ii) such time as
Tenant has completely vacated the Leased Property and surrendered possession of
the same to Landlord, Tenant shall fully comply with all Environmental Laws
applicable to the Leased Property and the operations thereon. Tenant agrees to
give Landlord written notice of the following, promptly after Tenant receives
knowledge thereof: (1) all Environmental Liabilities; (2) all pending,
threatened or anticipated Proceedings, and all notices, demands, requests or
investigations, relating to any Environmental Liability or relating to the
issuance, revocation or change in any Environmental Authorization required for
operation of the Leased Property; (3) all Releases at, on, in, under or in any
way affecting the Leased Property, or any Release 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) Tenant hereby agrees to defend, indemnify and save
harmless any and all Landlord Indemnified Parties from and against any and all
Environmental Liabilities other than (i) Environmental Liabilities which are
caused by the acts or grossly negligent failures to act of Landlord, or (ii)
unless Tenant owned or controlled the Leased Property prior to the date of this
Lease, Environmental Liabilities that result from conditions existing at the
Leased Property at the date of this Lease or from Releases or other violations
of Environmental Laws originating on adjacent property but affecting or
migrating to the Leased Property; provided that in either case such exclusions
shall not apply to the extent that the existing condition or migration has been
exacerbated by Tenant's act or negligent failure to act.
(c) Landlord hereby agrees to defend, indemnify and save
harmless any and all Tenant Indemnified Parties from and against any and all
Environmental Liabilities caused by the acts or grossly negligent failures to
act of Landlord and for those that existed on the Leased Property prior to the
date of this Lease if Landlord owned or controlled the Leased Property prior to
the date of this Lease.
(d) If any Proceeding is brought against any Indemnified
Party in respect of an Environmental Liability with respect to which such
Indemnified Party may claim indemnification under either Section 8.3(b) or (c),
the Indemnifying Party, upon request, shall at its sole expense resist and
defend such Proceeding, or cause the same to be resisted and defended by counsel
designated by the Indemnified Party and approved by the Indemnifying Party,
which approval shall not be unreasonably withheld; provided, however, that such
approval shall not be required in the case of defense by counsel designated by
any insurance company undertaking such defense pursuant to any applicable policy
of insurance. Each 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 Tenant 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), Tenant'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.
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(f) The indemnification rights and obligations provided for in this
Article VIII shall be in addition to any indemnification rights and obligations
provided for elsewhere in this Lease.
(g) The indemnification rights and obligations provided for in this
Article VIII shall survive the termination of this Agreement.
For purposes of this Section 8.3, all amounts for which any
Indemnified Party seeks indemnification shall be computed net of (a) any actual
income tax benefit resulting therefrom to such Indemnified Party, (b) any
insurance proceeds received (net of tax effects) with respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on
claims the Indemnified Party has against such third parties which reduce the
damages that would otherwise be sustained; provided that in all cases, the
timing of the receipt or realization of insurance proceeds or income tax
benefits or recoveries from third parties shall be taken into account in
determining the amount of reduction of damages. Each Indemnified Party agrees to
use its reasonable efforts to pursue, or assign to Tenant or Landlord, 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.
ARTICLE IX
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9.1 Maintenance and Repair.
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(a) Except as provided in Section 9.1(b) or Article XIV, Tenant, at
its sole expense, will keep the Leased Property and all means of access thereto
in first-class condition and repair except for ordinary wear and tear (whether
or not the need for such repairs occurred as a result of Tenant's use, any prior
use, the elements or the age of the Leased Property, or any portion thereof),
and, with reasonable promptness, make all necessary and appropriate repairs,
replacements, and improvements thereto of every kind and nature, whether
interior or exterior, structural or non-structural, 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 Government agency having jurisdiction over the Leased Property. Tenant,
however, shall be permitted to prosecute claims against Landlord's predecessors
in title for breach of any representation or warranty or for any latent defects
in the Leased Property to be maintained by Tenant unless Landlord 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. Tenant will
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Primary Intended Use. If Tenant fails to make any required
repairs or replacements after fifteen (15) days notice from Landlord (or after
such longer period as may be reasonably required provided that Tenant at all
time diligently proceeds with such repair or replacement), then Landlord shall
have the right, but shall not be obligated, to make such repairs or replacements
on behalf of and for the account of Tenant. In such event, such work shall be
paid for in full by Tenant as Additional Charges, together with a late charge
thereon at the Overdue Rate from the date on which such sums or expenses are
paid or incurred by Landlord.
(b) Notwithstanding Tenant's obligations under Section 9.1(a) above
or elsewhere in this Lease, unless caused by Tenant's negligence or willful
misconduct or that of its employees or agents, Tenant shall not be responsible
for any Capital Improvements, including (without limitation) Capital
Improvements required by the Franchisor under the Franchise Agreement. Landlord
shall be responsible for all Capital Improvements, subject to (i) Landlord's
right to approve the Capital Budget pursuant to Section 24.5 and Article XL,
(ii) Landlord's obligation to make available to Tenant amounts for Capital
Expenditures as set forth in Section 24.6, and (iii) Landlord'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, Landlord shall be responsible for all
damages and termination payments payable by Tenant under the terms of the
Franchise Agreement, application fees for a new franchise license approved by
Landlord, 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, Landlord
shall not under any circumstances be required to build or rebuild any
improvement on the Leased Property, or to make any repairs, replacements,
alterations, restorations or renewals of any nature or description to the
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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. Tenant hereby waives, to
the extent permitted by law, the right to make repairs at the expense of
Landlord pursuant to any law in effect at the time of the execution of this
Lease or hereafter enacted. Landlord shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic's lien
laws now or hereafter existing.
(c) Nothing contained in this Lease and no action or inaction by
Landlord shall be construed as (1) constituting the request of Landlord,
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 Tenant 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
Landlord 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 Landlord in the Leased Property, or any portion
thereof.
(d) Tenant will, upon the expiration or prior termination of the
Term, vacate and surrender the Leased Property to Landlord in the condition in
which the Leased Property was originally received from Landlord, 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 Tenant to maintain the Leased Property in good order and repair,
as would a prudent owner, during the entire Term of the Lease, to the extent
required in Section 9.1(a)), or damage by casualty or Condemnation (subject to
the obligations of Tenant to restore or repair as set forth in the Lease.)
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 Landlord or at the behest of any
person affected by any such encroachment, violation or impairment, Tenant shall,
at Landlord's expense, unless the circumstance giving rise to such encroachment,
violation or impairment was caused by Tenant, subject to its right to contest
the existence of any encroachment, violation or impairment and in such case, in
the event of an adverse final determination, either (a) obtain valid and
effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation or impairment, whether the same
shall affect Landlord or Tenant or (b) make such changes in the Leased
Improvements, and take such other actions, as Tenant 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. Tenant'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 Landlord.
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ARTICLE X
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10.1 Alterations. After receiving the prior written approval of
-----------
Landlord (which approval shall not be unreasonably withheld, but which shall be
subject to reasonable conditions including the conditions set forth in the Loan
Agreement and any Loan Document (as defined in the Loan Agreement) and Tenant's
payment of the reasonable expenses of Landlord and its agents, Tenant shall have
the right to make additions, modifications or improvements to the Leased
Property from time to time as Tenant may deem to be 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 Tenant
to comply with the provisions of this Lease. The cost of such additions,
modifications or improvements to the Leased Property shall be paid by Tenant
(except to the extent that they are Capital Improvements), and all such
additions, modifications and improvements shall, without payment by Landlord 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
Landlord.
10.2 Salvage. All materials which are scrapped or removed in connection
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with the making of repairs required by Articles IX or X shall be or become the
property of Landlord or Tenant depending on which party is paying for or
providing the financing for such work.
10.3 Joint Use Agreements. If Tenant constructs additional improvements
--------------------
that are connected to the Leased Property or share maintenance facilities, HVAC,
electrical, plumbing or other systems, utilities, parking or other amenities,
the parties shall enter into a mutually agreeable cross-easement or joint use
agreement 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
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Lien. Subject to the provision of Article XII relating to permitted
----
contests, Tenant 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 Landlord's interest in the Leased Property, (c) restrictions, liens and
other encumbrances which are consented to in writing by Landlord or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes upon Landlord which Tenant 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
GAAP 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 Landlord pursuant to the provisions of Article XXXIV of
this Lease.
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ARTICLE XII
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Permitted Contests. Tenant shall have the right to contest the amount
------------------
or validity of any Imposition to be paid by Tenant 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 Tenant's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Article provided), on condition, however, that such legal
proceedings shall not operate to relieve Tenant from its obligations hereunder
and shall not cause the sale or risk the loss of the Leased Property, or any
part thereof, or cause Landlord or Tenant to be in default under any mortgage,
deed of trust or security deed encumbering the Leased Property or any interest
therein. Upon the request of Landlord, Tenant shall either (a) provide a bond or
other assurance reasonably satisfactory to Landlord 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 Landlord, 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.
Tenant shall furnish Landlord and any lender of Landlord with reasonable
evidence of such deposit within five days of the same. Landlord 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 Landlord shall
not thereby be subjected to any liability for the payment of any costs or
expenses in connection with any proceedings brought by Tenant; and Tenant
covenants to indemnify and save harmless Landlord from any such costs or
expenses. Tenant shall be entitled to any refund of any Claims and such charges
and penalties or interest thereon which have been paid by Tenant or paid by
Landlord and for which Landlord has been fully reimbursed. In the event that
Tenant 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,
Landlord may, upon ten days advance Notice to Tenant, pay such charges together
with any interest and penalties and the same shall be repayable by Tenant to
Landlord as Additional Charges at the next Payment Date provided for in this
Lease. Provided, however, that should Landlord reasonably determine that the
giving of such Notice would risk loss to the Leased Property or cause damage to
Landlord, then Landlord shall give such Notice as is practical under the
circumstances. Landlord reserves the right to contest any of the Claims at its
expense not pursued by Tenant. Landlord and Tenant agree to cooperate in
coordinating the contest of any claims.
ARTICLE XIII
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13.1 (A) At all times while the Lease is outstanding, Tenant
shall maintain (at its expense unless otherwise specified herein) the following
insurance:
(i) During any period of repair or restoration, builder's "all
risk" insurance in an amount equal to not less than the full insurable
value of the Leased Property and Fixtures against such risks
(including, without limitation, fire and extended coverage and collapse
of the Leased Improvements to agreed limits) as Landlord may request,
in form and substance acceptable to Landlord (at Landlord's expense).
(ii) Insurance with respect to the Leased Improvements,
Fixtures, and Inventory against any peril included within the
classification "All Risks of Physical Loss" with extended coverage in
amounts at all times sufficient to prevent Tenant from becoming a
co-insurer within the terms of the applicable policies, but in any
event such insurance shall be maintained in an amount equal to the full
insurable value of the Leased Improvements, Fixtures and Inventory
located on the Leased Property, the term "full insurable value" to mean
the actual replacement cost of the Leased Improvements, Fixtures and
Inventory (without taking into account any depreciation), determined
annually by an insurer or by Tenant or, at the request of Landlord, by
an independent insurance broker (subject to Landlord's reasonable
approval) including an endorsement covering acts of municipal
authorities including increased cost of construction and demolition (at
Landlord's expense, except for the insurance provided for in this
Section 13.1(A)(ii) with respect to Inventory, which shall be at
Tenant's expense);
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(iii) Comprehensive general liability insurance, including
contractual injury, bodily injury, broad form death and property damage
liability, and umbrella liability insurance against any and all claims,
including all legal liability to the extent insurable imposed upon
Tenant and all court costs and attorneys' fees and expenses, arising
out of or connected with the possession, use, leasing, operation,
maintenance or condition of the Leased Property in such amounts as are
generally required by institutional lenders for properties comparable
to the Leased Property but in no event with limits for the Leased
Property of less than $1,000,000 per occurrence with combined single
limit coverage for bodily injury or property damage and excess
(umbrella) liability coverage for the Leased Property of no less than
$30,000,000 per occurrence;
(iv) Statutory workers' compensation insurance (to the extent
the risks to be covered thereby are not already covered by other
policies of insurance maintained by Tenant), with respect to any work
on or about the Leased Property;
(v) Loss of Income insurance on the "Special Form," in the
amount of eighteen (18) month's of Base Rent for the benefit and at the
expense of Landlord, and business interruption insurance on the
"Special Form" in the amount of eighteen (18) month's of gross profit
for the benefit and at the expense of Tenant;
(vi) If all or any portion of the Improvements, or any
portion of the Land is located within a federally designated flood
hazard zone, flood insurance in an amount equal to the lesser of the
full insurable value of the Leased Property or the maximum amount
available;
(vii) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, pressure vessels or similar apparatus now or hereafter
installed at the Leased Property, in such amounts as Landlord may from
time to time require and which are customarily required by
institutional mortgagees with respect to similar properties similarly
situated (at Landlord's expense); and
(viii) Such other insurance with respect to the Leased
Improvements, Fixtures and Inventory located on the Leased Property
against loss or damage as is requested by Landlord (including without
limitation liquor/dram insurance, earthquake insurance and wind and
wind driven water insurance) provided such insurance is of the kind
from time to time customarily insured against and in such amounts as
are generally required by institutional lenders for properties
comparable to the Leased Property or which Landlord may deem necessary
in its reasonable discretion.
(B) Tenant will maintain the insurance coverage described in this
Section with companies acceptable to Landlord and with a claims paying ability
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of not less than "AA" by S&P and AA or its equivalent by any one of the other
Rating Agencies. All insurers providing insurance required by this Lease shall
be authorized to issue insurance in the state where the Leased Property is
located.
The insurance coverage required under this Section may be effected
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under a blanket policy or policies covering the Leased Property and other
property and assets not constituting a part of the Leased Property; provided
that any such blanket policy shall specify, except in the case of public
liability insurance, the portion of the total coverage of such policy that is
allocated to the Leased Property and Fixtures and Inventory located thereon, and
any sublimits in such blanket policy applicable to the Leased Property, which
amounts shall not be less than the amounts required pursuant to this Section and
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which shall in any case comply in all other respects with the requirements of
this Section.
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(C) All insurance policies shall be in such form and with such
endorsements and in such amounts as shall be satisfactory to Landlord (and
Landlord shall be entitled to approve amounts, form, risk coverage, deductibles,
loss payees and insureds). The policy referred to in Section 13.1(A)(ii) shall
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contain a replacement cost endorsement and a waiver of depreciation. Certified
copies of all of the above-mentioned insurance policies have
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been delivered to and shall be held by Landlord. All such policies shall name
Landlord and CCA as an additional insured/loss payee, shall provide that all
Insurance Proceeds be payable to CCA and shall contain: (i) "Non Contributory
Standard Lender Clause" and a Lender's Loss Payable Endorsement (Form 438 BFUNS)
or their equivalents naming CCA as the person to which all payments shall be
paid and a provision that payment of Insurance Proceeds in excess of $100,000
shall be made by a check payable only to CCA and Insurance Proceeds of up to
$100,000 shall be payable to Landlord; (ii) a waiver of subrogation endorsement
as to Landlord, CCA and their respective assigns providing that no policy shall
be impaired or invalidated by virtue of any act, failure to act, negligence of,
or violation of declarations, warranties or conditions contained in such policy
by Tenant, Landlord, CCA or any other named insured, additional insured or loss
payee, except for the willful misconduct of Landlord or CCA knowingly in
violation of the conditions of such policy; (iii) an endorsement indicating that
neither Landlord, CCA nor Tenant shall be or be deemed to be a co-insurer with
respect to any risk insured by such policies and shall provide for a deductible
per loss of an amount not more than that which is customarily maintained by
prudent owners of property of the same type and quality as the Leased Property,
but in no event in excess of $100,000; provided, however, with respect to the
policy referred in Section 13.1(A)(ii), the deductible may be in an amount equal
------- -----------
to (but in no event in excess of) five percent (5%) of the full insurable value
of the Leased Improvements, Fixtures and Inventory located on the Leased
Property; (iv) a provision that such policies shall not be canceled or amended,
including, without limitation, any amendment reducing the scope or limits of
coverage, without at least thirty (30) days' prior written notice to Landlord
and CCA in each instance; and (v) include effective waivers by the insurer of
all claims for insurance premiums against any loss payees, additional insureds
and named insureds (other than Tenant). Certificates of insurance with respect
to all renewal and replacement policies shall be delivered to Landlord and CCA
not less than ten (10) days prior to the expiration date of any of the insurance
policies required to be maintained hereunder which certificates shall bear
notations evidencing payment of applicable premiums and certified copies of such
insurance policies shall be delivered to Landlord and CCA promptly after
Tenant's receipt thereof. If Tenant fails to maintain and deliver to Landlord
the certified copies of the original policies or certificates of insurance
required by this Lease, Landlord may, at its option, after written notice to
Tenant, procure such insurance, and Tenant shall reimburse Landlord for the
amount of all premiums paid by Landlord (unless such premiums are an expense of
the Landlord hereunder) thereon promptly, after demand by Landlord, with
interest thereon at the Overdue Rate from the date paid by Landlord to the date
of repayment, and such sum shall be a part of the obligations secured by the
Security Agreement.
Landlord shall not by the fact of approving, disapproving,
accepting, preventing, obtaining or failing to obtain any insurance, incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of insurance contracts, solvency of insurance companies, or
the carriers' or Tenant's payment or defense of lawsuits, and Tenant hereby
expressly assumes full responsibility therefor and all liability, if any, with
respect thereto.
13.2 No Separate Insurance. Tenant shall not on Tenant's own initiative
---------------------
or pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished, or increase the amount of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord, are included therein as additional
insureds, and the loss is payable under such additional separate insurance in
the same manner as losses are payable under this Lease. Tenant shall immediately
notify Landlord that Tenant has obtained any such separate insurance or of the
increasing of any of the amounts of the then existing insurance.
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
("Insurance Proceeds"), or any portion thereof, and insured under any policy of
------------------
insurance required by Article XIII of this Lease shall be paid to Landlord and
held by Landlord 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 Landlord from time to time for the reasonable
costs of such reconstruction or repair upon satisfaction of reasonable terms and
conditions
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specified by Landlord. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property shall be
paid to Landlord. If neither Landlord nor Tenant is required or elects to repair
and restore, all such insurance proceeds shall be retained by Landlord. All
salvage resulting from any risk covered by insurance shall belong to Landlord.
Notwithstanding anything in this Lease to the contrary, Tenant hereby
subordinates its interest in and rights to receive any Insurance Proceeds to CCA
and agrees that all Insurance Proceeds shall be payable to CCA as loss payee to
be applied by CCA in accordance with the terms of the Mortgage (as defined in
the Loan Agreement) and the Loan Agreement.
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, whether or not such damage or destruction
renders the Facility Unsuitable for its Primary Intended Use, Tenant shall be
obligated, but only to the extent of any insurance proceeds made available to
Tenant and any other sums advanced by Landlord pursuant to the next sentence, to
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. If the insurance proceeds are not adequate to restore the Facility to
that condition, each of Landlord and Tenant shall have the right to terminate
this Lease, without in any way affecting any other leases in effect between
Landlord and Tenant, by giving Notice to the other and all insurance proceeds
shall be retained by Landlord; provided, however that, if such termination is by
Tenant, Landlord 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 Tenant's Notice of termination, a Notice to Tenant of Landlord's
unconditional, legally binding obligation to be responsible for all restoration
costs in excess of the insurance proceeds. If this Lease is not terminated and
Tenant restores the Facility, the insurance proceeds, and any other sums made
available by Landlord as aforesaid, shall be paid out by Landlord 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 retained by Landlord.
(b) Notwithstanding the provisions of Section 14.2(a) above, if
Tenant 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, either Landlord or
Tenant may terminate this Lease by providing Notice to the other party, without
in any way affecting any other Leases then in effect between Landlord and
Tenant.
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 materially 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, the provisions of
Section 14.2 applicable to casualties for which insurance proceeds are
inadequate shall govern.
14.4 Tenant's Property. All insurance proceeds payable by reason of any
-----------------
loss of or damage to any of Tenant's Personal Property shall be paid to Tenant;
provided, however, no such payments shall diminish or reduce the insurance
payments otherwise payable to or for the benefit of Landlord hereunder.
14.5 Abatement of Rent. Any damage or destruction due to casualty
-----------------
notwithstanding, this Lease shall remain in full force and effect and Tenant's
obligation to make rental payments and to pay all other charges required by this
Lease shall remain unabated.
14.6 Waiver. Tenant hereby waives any statutory rights of termination
------
that may arise by reason of any damage or destruction of the Facility that
Landlord is obligated to restore or may restore under any of the provisions of
this Lease.
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ARTICLE XV
----------
15.1 Parties' Right and Obligations Upon Condemnation. 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 Landlord and Tenant shall
be determined by this Article XV.
15.2 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, without in any way affecting any other
Leases then in effect between Landlord and Tenant. 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 for its Primary Intended Use
or Uneconomic for its Primary Intended Use, Tenant and Landlord 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. All Base Rent,
Percentage Rent and Additional Charges paid or payable by Tenant hereunder shall
be apportioned as of the Date of Taking, and Tenant shall promptly pay Landlord
such amounts.
15.3 Allocation of Award. The total Award made with respect to the
-------------------
Leased Property in connection with a Total Taking shall be equitably apportioned
between Landlord and Tenant in proportion to the then fair market values of the
respective estates and interests of Landlord and Tenant in and to the Leased
Property and under this Lease.
15.4 Partial Taking. If title to less than the whole of the Leased
--------------
Property is condemned, and the Leased Property is not Unsuitable for its Primary
Intended Use, and not Uneconomic for its Primary Intended Use, or if Tenant or
Landlord is entitled but neither elects to terminate this Lease as provided in
Section 15.2, Tenant at its cost shall with all reasonable dispatch, but only to
the extent of any condemnation awards made available to Tenant and any other
sums advanced by Landlord 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 Landlord and
Tenant shall have the right to terminate this Lease, without in any way
affecting any other leases in effect between Landlord and Tenant, by giving
Notice to the other; provided, however that, if such termination is by Tenant,
Landlord 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 Tenant's Notice of termination, a Notice to Tenant of Landlord'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
Tenant restores the Facility, the condemnation awards, and any other sums made
available by Landlord as aforesaid, shall be held in trust by Landlord and paid
out by Landlord 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 Landlord 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 Landlord and Tenant in proportion to the then fair market values of the
respective estates and interests of Landlord and Tenant in and to the Leased
Property and under this Lease.
15.5 Temporary Taking. If the whole or any part of the Leased Property
----------------
or of Tenant'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 Tenant shall continue to pay, in the manner and at the terms herein
specified, the full amounts of Base Rent and Additional Charges. In addition,
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 Tenant and, except for any portion thereof utilized for restoration, shall be
deemed to be Room Revenues for the purpose of calculating the Percentage Rent
payable hereunder during such temporary taking. Except only to the extent that
Tenant may be prevented from so doing pursuant to the terms of the order of the
Condemnor, Tenant shall continue to perform and observe all of the other terms,
covenants, conditions and obligations hereof on the part of the Tenant to be
performed and observed, as though such Condemnation had not occurred. Tenant
covenants that upon the termination of any such period of temporary use or
occupancy it will, at its sole cost and expense (subject to Landlord'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
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immediately prior to such Condemnation, unless (a) such period of temporary use
or occupancy extends beyond the expiration of the Term, in which case Tenant
shall not be required to make such restoration, or (b) the condemnation award is
inadequate to cover the costs of such restoration, in which case the provisions
of Section 15.4 applicable to inadequate awards shall govern. If restoration is
required in connection with such temporary taking and the condemnation award
(together with any other sums Landlord elects, in its sole discretion, to
advance) is adequate to pay the costs thereof, the provisions of Section 15.4
shall govern the disbursement of the awards (and other sums, if applicable) and
the disposition of any awards in excess of restoration costs. If restoration is
required hereunder, Landlord 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 Tenant shall fund
the balance of such costs in advance of restoration in a manner reasonably
satisfactory to Landlord. Notwithstanding anything in this Lease to the
contrary, CCA shall be entitled to make a claim for the value of the Leased
Property and the Leased Improvements and shall have the sole and absolute right
to settle any claim with respect thereto, provided that Tenant shall be entitled
to make an independent claim for the value of the remaining Leasehold Interest
and CCA shall have the right to apply its portion of the condemnation proceeds
in accordance with the terms of the Mortgage (as defined in the Loan Agreement)
and the Loan Agreement.
ARTICLE XVI
-----------
16.1 Events of Default. If any one or more of the following events
-----------------
(individually, an "Event of Default") occurs:
(a) if Tenant fails to make payment of the Base Rent on the
Payment Date;
(b) if Tenant fails to make payment of the quarterly Percentage
Rent or payments for Additional Charges when the same becomes due and payable
and such condition continues for a period of ten days after receipt by the
Tenant of Notice from the Landlord thereof;
(c) if Tenant fails to observe or perform any term, requirement
covenant or condition of this Lease, other than the payment of Rent, and such
failure is not cured by Tenant within a period of 30 days after receipt by the
Tenant of Notice thereof from Landlord, unless such failure cannot with due
diligence be cured within a period of 30 days, in which case it shall not be
deemed an Event of Default if Tenant 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 Tenant shall file a petition in bankruptcy or
reorganization for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
shall make an assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due, or if a petition or
answer proposing the adjudication of the Tenant as a bankrupt or its
reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and the Tenant shall be
adjudicated a bankrupt and such adjudication shall not be vacated or set aside
or stayed within 60 days after the entry of an order in respect thereof, or if a
receiver of the Tenant or of the whole or substantially all of the assets of the
Tenant shall be appointed in any proceeding brought by the Tenant or if any such
receiver, trustee or liquidator shall be appointed in any proceeding brought
against the Tenant and shall not be vacated or set aside or stayed within 60
days after such appointment; or
(e) if Tenant is liquidated or dissolved, or begins proceedings
toward such liquidation or dissolution, or, in any manner, permits the sale or
divestiture of substantially all of its assets; or
(f) if the estate or interest of Tenant in the Leased Property or
any part thereof is voluntarily or involuntarily transferred, assigned,
conveyed, levied upon or attached in any proceeding, unless Tenant is contesting
such lien or attachment in good faith in accordance with Article XII hereof (for
purposes of this Section 16.1(f), a Change of Control of the Tenant shall
constitute an assignment of this Lease); or
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(g) if, except as a result of damage, destruction or a partial or
complete Condemnation, Tenant voluntarily ceases operations on the Leased
Property for a period in excess of 30 days; or
(h) if: (A) 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 Tenant or any
Person with whom Tenant contracts for management services at the Facility, other
than a failure to complete a Capital Improvement required by the Franchisor
resulting from Landlord's failure to fund the Capital Expenditure therefor
pursuant to Section 9.1(b), and (B) Tenant has failed, within 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 Tenant's sole cost and expense a substitute
franchise license agreement with a substitute franchisor acceptable to Landlord,
on terms and conditions acceptable to Landlord; provided, however, that if
Tenant is in good faith disputing an assertion of default by the Franchisor or
is proceeding diligently to cure such default, the 30-day period shall be
extended for such period of time as Tenant continues to dispute such default in
good faith or diligently proceeds to cure such default, so long as there is no
period during which the Facility is not operated pursuant to a Franchise
Agreement approved by Landlord; or
(i) if a Performance Failure has occurred and has not been cured
in accordance with this Lease; or
(j) if Tenant or any of its Affiliates defaults under any other
lease with Landlord or an Affiliate of Landlord; or
(k) if there is a Change in Control of Tenant; or
(l) if there is a default under the Guaranty, if applicable, by
the Person acting as guarantor for Tenant; or
(m) if any representation or warranty made herein by Tenant or in
the Security Agreement, or in any report, certificate, financial statement or
other Instrument, agreement or document furnished by any Tenant in connection
with this Lease shall be false in any material respect as of the date such
representation or warranty was made or remade; or
(n) if Tenant attempts to delegate its obligations or assign its
rights under this Lease or the Security Agreement or any interest herein or
therein, except as expressly permitted in this Lease or in the event Landlord's
prior written consent has been previously obtained; or
(o) if any provision of any organizational document of Tenant is
amended or modified in any respect which may adversely affect Landlord or if
Tenant fails to perform or enforce the provisions of such organizational
documents or attempts to dissolve Tenant; or
(p) Tenant's failure to meet the Operating Standards as described
in Section 18.2
then, and in any such event, Landlord 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 by giving Tenant not less than ten
days' Notice of such termination.
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, Tenant remedies such default or Event of Default
without further delay.
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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, Tenant shall, if
requested by Landlord so to do, immediately surrender to Landlord the Leased
Property including, without limitation, any and all books, records, files,
licenses, permits and keys relating thereto, and quit the same and Landlord may
enter upon and repossess the Leased Property by reasonable force, summary
proceedings, ejectment or otherwise, and may remove Tenant 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. Tenant hereby waives any and all
requirements of applicable laws for service of notice to re-enter the Leased
Property. Landlord shall be under no obligation to, but may if it so chooses,
relet the Leased Property or otherwise mitigate Landlord'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 Landlord to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Tenant of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Tenant shall forthwith pay to Landlord all Rent due and
payable with respect to the Leased Property to and including the date of such
termination.
Tenant shall forthwith pay to Landlord, at Landlord's option, as
and for liquidated and agreed current damages for Tenant's default, either:
(1) Without termination of Tenant's right to possession of the
Leased Property, each installment of Rent and other sums payable by Tenant to
Landlord under the Lease as the same becomes due and payable, which Rent and
other sums shall bear interest at the Overdue Rate, and Landlord 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 Tenant
proves could be reasonably avoided, and
(C) any other amount necessary to compensate
Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under
this Lease or which in the ordinary course of things,
would be likely to result therefrom. The worth at the
time of termination, repossession or reletting of the
amount referred to in subparagraph (B) is computed by
discounting such amount at the discount rate of the
Federal Reserve Bank of New York at the time of award
plus 1%.
Rent for the purposes of this Section 16.3 shall be a sum equal to (i) the
average of the annual amounts of the 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 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 Rent from the effective date of this Lease.
16.4 Waiver. If this Lease is terminated pursuant to Section 16.1,
------
Tenant 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 Landlord waives
any right to "xxxxxx the corporate veil" of Tenant other than to the extent
funds shall have been inappropriately paid any Affiliate of Tenant following a
default resulting in an Event of Default.
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16.5 Application of Funds. Any payments received by Landlord under any
--------------------
of the provisions of this Lease during the existence or continuance of any Event
of Default shall be applied to Tenant's obligations in the order that Landlord
may determine or as may be prescribed by the laws of the State.
ARTICLE XVII
------------
Landlord's Right to Cure Tenant's Default. If Tenant fails to make any
-----------------------------------------
payment or to perform any act required to be made or performed under this Lease
including, without limitation, Tenant's failure to comply with the terms of any
Franchise Agreement, and fails to cure the same within the relevant time periods
provided in Section 16.1, Landlord, without waiving or releasing any obligation
of Tenant, 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 Tenant, 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 action thereon as, in Landlord's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction of Tenant. All sums so paid by Landlord and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses, in each
case to the extent permitted by law) so incurred, together with a late charge
thereon (to the extent permitted by law) at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Landlord, shall be paid by
Tenant to Landlord on demand. The obligations of Tenant and rights of Landlord
contained in this Article shall survive the expiration or earlier termination of
this Lease.
ARTICLE XVIII
-------------
18.1 Operational Standards. Upon Tenant's failure to comply with any of
---------------------
the standards set forth in Sections 18.1(a)-(c) below (a "Performance Failure"),
Landlord shall have the right, subject to subsection (d) of this Section 18.1,
at Landlord's option, to terminate this Lease upon thirty (30) days' Notice (the
"Notice Period") to Tenant.
(a) Leased Property. The Tenant, at its expense, shall maintain
---------------
and operate the Leased Property and all means of access in a first class manner,
at a minimum comparable to other first class hotels [charging comparable rates
and] [including, without limitation, those identified on Schedule 18.1(a)]
sharing a primary trade area with the Leased Property with respect to
appearance, maintenance of furniture, fixtures and equipment, soft goods,
cleanliness, signage, lobby appearance, service and health and safety standards.
Landlord shall be permitted to inspect the Leased Property for these purposes as
set forth in Article XXV.
(b) Intentionally omitted.
(c) Approval of Advertising and Marketing Programs. If there is no
----------------------------------------------
Franchise Agreement applicable to the Facility, Tenant shall comply with the
provisions of this Section 18.1(c) (which are in addition to those set forth in
Section 24.3). In such a case, the Marketing Plan shall be subject to Landlord's
approval in its reasonable discretion. The Marketing Plan shall set forth the
Tenant's marketing and advertising strategy for the forthcoming Lease Year. The
Marketing Plan shall include a comparison of the actual marketing and
advertising implemented for the previous Lease Year (and the costs thereof) with
those proposed for the current Lease Year. Along with the Marketing Plan, Tenant
shall submit copies of any print advertising or other marketing materials to
Landlord for its approval. Tenant shall follow the strategy set forth in the
Marketing Plan, and all marketing and advertising shall have been approved by
Landlord, unless Tenant obtains Landlord's approval otherwise, which approval
shall not be unreasonably withheld, conditioned or delayed. At any point during
the Lease Year, should Landlord determine that Tenant's marketing and
advertising activities have failed to comply with those set forth in an approved
Marketing Plan, Landlord may instruct Tenant to implement additional marketing
or advertising activities, at Tenant's sole expense.
(d) Landlord's right to terminate the Lease for a Performance
Failure under this Section 18.1 shall be subject to Tenant's right to cure as
follows:
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(1) For Performance Failures pursuant to
subsections (a) and (c) above, Tenant shall have the right to cure the
Performance Failure occurring thereunder within the Notice Period; provided that
with respect to subsection (a) if Tenant shall commence the cure during the
Notice Period and thereafter prosecute such cure diligently, the cure period
shall be extended up to an additional 60 days after the expiration of the Notice
Period; and
(2) Intentionally omitted.
If Landlord chooses to terminate the Lease as provided herein, Tenant
shall immediately surrender the Leased Property to Landlord. If Tenant fails to
so surrender, Landlord shall have the right, without notice, to enter upon and
take possession of the Leased Property and to expel or remove Tenant and its
effects without being liable for prosecution or any claim for damages therefor,
and Tenant shall, and hereby agrees to, indemnify Landlord for the total of (i)
in the event that Tenant does not promptly surrender the Leased Property, the
reasonable costs of recovering the Leased Property and all other losses,
liabilities and reasonable expenses incurred by Landlord in connection with
Tenant's failure to surrender; (ii) the unpaid Rent earned as of the date of
termination, plus interest at the Overdue Rate accruing after the due date; and
(iii) all other sums of money then owing by Tenant to Landlord.
18.2 Operating Standards. Tenant hereby covenants and agrees that it
-------------------
shall operate the Leased Facilities such that (a) as of the last day of each
calendar quarter while the Loan Agreement is in effect, the Debt Service
Coverage Ratio (as defined in the Loan Agreement) for the Leased Property and,
if applicable, the Other Facilities, computed on the basis of the prior twelve
(12) calendar months, is not less than 1.10 and (b) as of the last day of each
calendar quarter while the Loan Agreement is in effect, the Adjusted Net
Operating Income (as defined in the Loan Agreement) for the Leased Property and,
if applicable, the Other Facilities, computed on the basis of the prior twelve
(12) calendar months, is not less than sixty-five percent (65%) of the Base
Adjusted NOI (as defined in the Loan Agreement). Failure to satisfy the
foregoing standards (the "Operating Standards") shall constitute an immediate
-------------------
Event of Default; provided, however, that any failure to satisfy the foregoing
standards shall not constitute an Event of Default if the reduction in the Debt
Service Coverage Ratio is due, as determined by Lender in its sole discretion,
is attributable primarily to (a) an overall decline in the hospitality industry
in the jurisdictions in which the Leased Property and the Other Facilities are
located such as a decline attributable to the effect of a natural disaster in
such jurisdictions or a similar event or (b) specific economic conditions
affecting the Leased Property and the Other Facilities which are beyond the
Tenant's control, such as the bankruptcy of a major contract customer of the
Leased Property and the Other Facilities and similar events. If Landlord
declares such Event of Default and seeks to terminate the Lease, Tenant may
avoid such termination if within five (5) days of Landlord's request that this
Lease be terminated, Tenant remits to Landlord cash to be applied in accordance
with and subject to the terms of Section 2.7 of the Loan Agreement in an amount
-----------
sufficient to cause the Debt Service Coverage Ratio (as defined in the Loan
Agreement) for the Leased Property and the Other Facilities computed on the
basis of the prior twelve (12) calendar months to be greater than or equal to
1.50 (calculated as if such amount was actually applied to reduce the Principal
Indebtedness (as defined in the Loan Agreement) upon which Debt Service (as
defined in the Loan Agreement) was paid and calculated as if the Principal
Indebtedness (as defined in the Loan Agreement) was reamortized on a
straight-line basis (as if the reduction had occurred) over the remaining number
of months until the Maturity Date (as defined in the Loan Agreement)). In the
event that this Lease is terminated pursuant hereto (or for any other reason),
Tenant shall cooperate with Landlord to secure a replacement tenant or manager
so as not to adversely affect Xxxxxx'x status as a REIT.
ARTICLE XIX
-----------
19.1 REIT Requirements. [CONFORM WITH STRATEGIC ALLIANCE AGREEMENT]
-----------------
(a) Tenant understands that, in order for Xxxxxx to qualify as a
REIT, the following requirements (the "REIT Requirements") must be satisfied:
(i) The average of the adjusted tax bases of the
personal property that is leased to Tenant with respect to the Leased Property
at the beginning and end of a calendar year cannot exceed 15% of the average of
the aggregate adjusted tax bases of the real and personal property comprising
such Leased Property that is
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leased to Tenant under such lease at the beginning and end of such calendar year
(the "Personal Property Limitation"). If Landlord reasonably anticipates that
the Personal Property Limitation will be exceeded with respect to a Leased
Property for any calendar year, Landlord shall notify Tenant, and Tenant agrees
to lease or purchase the personal property anticipated to be in excess of the
Personal Property Limitation (the "Excess Personal Property") from a third party
on terms mutually agreeable to Tenant and such third-party. Tenant shall pay all
sums required to be paid to purchase or under the leases of Excess Personal
Property. In the event that Tenant enters into such a lease or purchases such
Excess Personal Property, Tenant's Rent obligation shall be reduced, dollar for
dollar, for the amount paid by Tenant to lease or purchase the Excess Personal
Property. If Tenant purchases Excess Personal Property, the amount required by
Landlord to be made available under the Capital Expenditure Reserve pursuant to
Section 24.6 hereof shall be reduced for the Lease Year during which such
purchase or lease occurs by an amount equal to the aggregate purchase price or
leasing costs of such Excess Personal Property. Both Landlord and Tenant agree
to fully cooperate in obtaining and implementing the leasing or purchase of the
Excess Personal Property.
(ii) Tenant cannot sublet the property that is
leased to it by Landlord, or enter into any similar arrangement, on any basis
such that the rental or other amounts paid by the sublessee thereunder would be
based, in whole or in part, on either (i) the net income or profits derived by
the business activities of the sublessee or (ii) any other formula such that any
portion of the rent paid by Tenant to Landlord would fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code.
(iii) Tenant cannot sublease the property leased
to it by Landlord to, or enter into any similar arrangement with, any person in
which Xxxxxx owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Xxxxxx cannot own, directly or indirectly, a
10% or more interest in Tenant, within the meaning of Section 856(d)(2)(B) of
the Code.
(v) No person can own, directly or directly,
capital stock of Xxxxxx that exceeds the "Limit" (as defined in Xxxxxx'x
Charter, as amended and restated).
(b) Tenant agrees, and agrees to use reasonable efforts to cause
its Affiliates, to use its best efforts to permit the REIT Requirements to be
satisfied. Tenant agrees, and agrees to use reasonable efforts to cause its
Affiliates, to cooperate in good faith with Xxxxxx and Landlord to ensure that
the REIT Requirements are satisfied, including but not limited to, providing
Xxxxxx with information about the ownership of Tenant, and its Affiliates to the
extent that such information is reasonably available. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, upon request by Xxxxxx, and
where appropriate, at Xxxxxx'x expense, to take reasonable action necessary to
ensure compliance with the REIT Requirements. Immediately after becoming aware
that the REIT Requirements are not, or will not be, satisfied, Tenant shall
notify, or use reasonable efforts to cause its Affiliates to notify, Xxxxxx of
such noncompliance.
19.2 Intentionally Deleted
19.3 Management Agreement. Tenant agrees that it will not enter into
--------------------
any management or agency agreement relating to the management or operation of
the Facility without the prior written consent of Landlord and the approval of
the franchisor under the Franchise Agreement.
19.4 Payments to Affiliates of Tenant. During the Term, Tenant shall
--------------------------------
not pay any fees to any Affiliate of Tenant in connection with the Facility,
except as approved in writing in advance by Landlord and as are consistent with
the Tenant's status as a single purpose Entity.
ARTICLE XX
----------
Holding Over. If Tenant 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 Tenant shall pay
as
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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 Tenant under this Lease with respect to
the Leased Property. During such period, Tenant 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 Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
-----------
Risk of Loss. During the Term, the risk of loss or of decrease in the
------------
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than those caused by Landlord and those claiming from, through or under
Landlord) is assumed by Tenant except as specifically provided in this Lease,
and, in the absence of gross negligence, willful misconduct or breach of this
Lease by Landlord pursuant to Section 34.3, Landlord shall in no event be
answerable or accountable therefor, nor shall any of the events mentioned in
this Section entitle Tenant 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, Tenant will protect, indemnify,
hold harmless and defend Landlord 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 Landlord
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 Tenant or
any of its agents, employees or invitees of the Leased Property or Tenant's
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which a Landlord Indemnified Party is made a
party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Tenant or any of its agents,
employees or invitees, including any failure of Tenant or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law, (c) any Impositions that are the obligations of Tenant pursuant
to the applicable provisions of this Lease, (d) any failure on the part of
Tenant 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.
Landlord shall indemnify, save harmless and defend Tenant 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 Tenant Indemnified Parties as a result of (a) the gross
negligence or willful misconduct of Landlord arising in connection with this
Lease or (b) any failure on the part of Landlord to perform or comply with any
of the terms of this Lease.
Any amounts that become payable by an Indemnifying Party under this
Section shall be paid within ten 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 date 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.
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Tenant's or Landlord'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 conditions (or limitations set forth herein),
Tenant may, but only with the prior written consent of Landlord, (a) assign this
Lease or sublet all or any part of the Leased Property to an Affiliate of
Tenant, or (b) sublet any retail or restaurant portion of the Leased
Improvements in the normal course of the Primary Intended Use; provided, Tenant
warrants that any subletting to any party other than an Affiliate of Tenant
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. In the case of a subletting, the sublessee shall comply with the
provisions of Section 23.2, and in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this Lease
on the part of Tenant to be kept and performed and shall be, and become, jointly
and severally liable with Tenant for the performance thereof. Notwithstanding
the above, Tenant may assign the Lease to an Affiliate without the consent of
Landlord; provided that the organizational documents of such assignee are
acceptable to Landlord and the Rating Agencies and such replacement tenant has
delivered to Tenant and the Rating Agencies a nonconsolidation opinion in form
acceptable to such parties any such assignee assumes in writing and agrees to
keep and perform all of the terms of the Lease on the part of the Tenant to be
kept and performed and shall be and become jointly and severally liable with
Tenant for the performance thereof. In case of either an assignment or
subletting made during the Term, Tenant 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 Tenant hereunder. An original counterpart of each such sublease and
assignment and assumption, duly executed by Tenant and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Landlord,
shall be delivered promptly to Landlord.
23.2 Attornment. Tenant 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 Landlord hereunder, (b) if this Lease terminates before the expiration of
such sublease, the sublessee thereunder will, at Landlord's option, attorn to
Landlord 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 Landlord or Landlord's
assignees, if any, stating that an uncured Event of Default exists under this
Lease, the sublessee shall thereafter be obligated to pay all rentals accruing
under said sublease directly to the party giving such Notice, or as such party
may direct. All rentals received from the sublessee by Landlord or Landlord's
assignees, if any, as the case may be, shall be credited against the amounts
owing by Tenant under this Lease.
ARTICLE XXIV
------------
24.1 Officer's Certificates; Financial Statements; Budgets; Landlord's
-----------------------------------------------------------------
Estoppel Certificates.
---------------------
(a) At any time and from time to time upon not less than 20
days Notice by Landlord, Tenant will furnish to Landlord 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 Tenant there is any existing default or Event of Default exists
thereunder by Landlord or Tenant, and such other information as may be
reasonably requested by Landlord. Any such certificate furnished pursuant to
this Section may be relied upon by Landlord, any lender and any prospective
purchaser of the Leased Property.
(b) Financial Reporting. (i) Tenant shall keep and maintain or
-------------------
shall cause to be kept and maintained on a Fiscal Year basis, in accordance with
GAAP, books, records and accounts reflecting in reasonable detail all of the
financial affairs of Tenant and all items of income and expense in connection
with the operation of the Leased Property and in connection with any services,
equipment or furnishings provided in connection with the operation of the Leased
Property. Landlord, at Landlord's cost and expense, whether such income or
expense may
-39-
be realized by Tenant or by any other Person whatsoever, shall have the right
from time to time and at all times during normal business hours upon reasonable
prior written notice to Tenant to examine such books, records and accounts at
the office of Tenant or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Landlord shall desire.
After the occurrence of an Event of Default, Tenant shall pay any costs and
expenses incurred by Landlord to examine any and all of Tenant's books, records
and accounts as Landlord shall determine in Landlord's sole discretion to be
necessary or appropriate in the protection of Landlord's interest.
(ii) Tenant shall furnish to Landlord annually
within ninety (90) days following the end of each Fiscal Year, a true, complete,
correct and accurate copy of Tenant's respective financial statements audited by
a Big Six Accounting Firm or other firm acceptable to Landlord in Landlord's
sole discretion which shall (a) be presented on a consolidated basis, provided,
however, that said consolidated financials are accompanied by a statement of
written procedures acceptable to Landlord regarding the relationship between and
the use of the relevant unaudited Leased Property level financial statements
(described more fully in subparagraph iii below) in the preparation of the
audited financial statements described in this subparagraph, (b) be in form and
substance acceptable to Landlord in Landlord's sole discretion, (c) be prepared
in accordance with GAAP, (d) include, without limitation, a statement of
operations (profit and loss), a statement of cash flows, a calculation of Gross
Revenues, net operating income, a consolidated balance sheet, an aged accounts
receivable report and such other information or reports as shall be reasonably
requested by Landlord or any applicable Rating Agency, (e) be accompanied by an
Officer's Certificate from a senior executive of Tenant respectively, certifying
as of the date thereof (x) that such statement is true, correct, complete and
accurate and fairly reflects the results of operations and financial condition
of Tenant for the relevant period, and (y) notice of whether there exists an
Event of Default or default, and if such Event of Default or default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy same and (f) be accompanied by an opinion from an Independent
certified public accountant acceptable to Landlord in Landlord's sole
discretion.
(iii) Tenant shall furnish or shall cause to be
furnished to Landlord annually within forty (40) days following the end of each
Fiscal Year, a true, complete, correct and accurate copy of Tenant's unaudited
financial statement which shall (a) be presented on a consolidated as well as an
individual Leased Property and Other Facility basis, (b) be in form and
substance acceptable to Landlord in Landlord's sole discretion, (c) be prepared
in accordance with GAAP, (d) include, without limitation, a statement of
operations (profit and loss), a statement of cash flows, a calculation of Gross
Revenues and adjusted net operating income, a consolidated balance sheet, an
aged accounts receivable report and such other information or reports as shall
be reasonably requested by Landlord or any applicable Rating Agency and (e) be
accompanied by an Officer's Certificate from a senior executive of Tenant
certifying as of the date thereof (x) that such statement is true, correct,
complete and accurate and fairly reflects the results of operations and
financial condition of Tenant for the relevant period, and (y) notice of whether
there exists an Event of Default or default, and if such Event of Default or
default exists, the nature thereof, the period of time it has existed and the
action then being taken to remedy same.
(iv) Tenant shall furnish to Landlord within
twenty (20) days following the end of each calendar month, a true, correct,
complete and accurate monthly unaudited financial statement for Tenant which
shall (a) be presented on a consolidated as well as an individual Leased
Property and Other Facility basis (b) be in form and substance acceptable to
Landlord in Landlord's sole discretion, (c) be prepared in accordance with GAAP,
(d) include, without limitation, a statement of operations (profit and loss), a
statement of cash flows, a calculation of net operating income, a consolidated
balance sheet, an aged accounts receivable report and such other information or
reports as shall be reasonably requested by Landlord or any applicable Rating
Agency and (e) be accompanied by an Officer's Certificate from a senior
executive of Tenant certifying as of the date thereof (x) that such statement is
true, correct, complete and accurate and fairly reflects the results of
operations and financial condition of Tenant for the relevant period, and (y)
notice of whether there exists an Event of Default or default, and if such Event
of Default or default exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy same.
(v) Tenant shall furnish to Landlord, within
twenty (20) days following the end of each calendar month, and with respect to
the Leased Property and each Other Facility, a true, complete, correct and
-40-
accurate rent roll and occupancy report and such other occupancy and rate
statistics as Landlord shall request in Landlord's discretion. Each such
document shall (a) be presented on a consolidated as well as a facility by
facility basis, (b) be in form and substance acceptable to Landlord in
Landlord's sole discretion, and (c) be accompanied by an Officer's Certificate
from a senior executive of Tenant certifying as of the date thereof (x) that
such statement is true, correct, complete and accurate and (y) notice of whether
there exists an Event of Default or default, and if such Event of Default or
default exists, the nature thereof, the period of time it has existed and the
action then being taken to remedy same.
(vi) Tenant shall furnish to Landlord, within ten (10)
Business Days after request, such further information with respect to the
operation of the Leased Property or Other Facilities or any of them, and the
financial affairs of Tenant as may be reasonably requested by Landlord,
including without limitation all business plans prepared for Tenant or for the
operation of the Leased Property or the Other Facilities.
(vii) Intentionally deleted.
(viii) Tenant shall, concurrently with Tenant's delivery
to Landlord, provide a copy of the items required to be delivered to Landlord
under this Section to the Rating Agencies and CCA.
(ix) Tenant shall furnish to Landlord such other
financial information with respect to Tenant as Landlord may reasonably request
from time to time.
(c) At any time and from time to time upon not less than 20
days notice by Tenant, Landlord will furnish to Tenant or to any person
designated by Tenant 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 Landlord there is any existing
default or Event of Default on Tenant's part hereunder, and such other
information as may be reasonably requested by Tenant.
24.2 Operating Budget. Not later than sixty (60) days prior to the
----------------
commencement of each Lease Year, Tenant shall prepare and submit to Landlord an
operating budget (the "Operating Budget") in substantially the form attached
hereto as Exhibit "F", prepared in accordance with the requirements of this
-----------
Section 24.2. The Operating Budget shall be prepared in accordance with the
Uniform System to the extent applicable and show by month and quarter and for
the year as a whole in the degree of detail specified by the Uniform System for
monthly statements, and in accordance with the detail level of monthly financial
statements, the following:
(a) Tenant's reasonable estimate of Gross Revenues, Room Revenues,
Food Sales and Beverage Sales (including room rates) for the Facility for the
forthcoming Lease Year itemized on schedules on a monthly and quarterly basis as
approved by Landlord, together with the assumptions, in narrative form, forming
the basis of such schedules.
(b) A cash flow projection.
(c) Tenant's reasonable estimate for each quarter of the Lease
Year of Percentage Rent.
24.3 Marketing Plan. Not later than sixty (60) days prior to the
--------------
commencement of each Lease Year, Tenant will prepare and submit to Landlord a
narrative description of the program for advertising and marketing the Facility
for the forthcoming Lease Year (the "Marketing Plan") containing a detailed
budget itemization of the proposed advertising expenditures by category and the
assumptions, in narrative form, forming the basis of such budget itemization.
24.4 Capital Budget. Not later than sixty (60) days prior to the
--------------
commencement of each Lease Year, Tenant shall prepare and submit to Landlord a
capital budget (the "Capital Budget") prepared in accordance with this Section
24.4. The Capital Budget shall be prepared in accordance with the Uniform System
to the extent applicable and
-41-
shall set forth Tenant's proposed Capital Expenditures for the ensuing Lease
Year and the next five (5) Lease Years, including a project-by-project schedule
of estimated start and completion dates.
24.5 Budget Approval and Disputes. Landlord shall have the right to
----------------------------
approve the Operating Budget, Marketing Plan and Capital Budget prepared by
Tenant for each Lease Year, which approval shall not be unreasonably withheld.
In the event of any dispute between Landlord and Tenant as to the Operating
Budget, the Marketing Plan or the Capital Budget, Landlord and Tenant shall act
promptly, reasonably and in good faith in seeking to resolve such disputes and
in arriving at a mutually acceptable Operating Budget, Marketing Plan and
Capital Budget; provided, however, that disputes regarding the Marketing Plan
shall be controlled by Section 18 if Section 18(c) is applicable to this Lease.
24.6 Capital Expenditure Reserve.
---------------------------
(a) Landlord shall be obligated to make available to Tenant an
amount equal to 5% of Room Revenues from the Facility during each Lease Year
("Capital Expenditures Reserve"). Upon written request by Tenant to Landlord
stating the specific use to be made and subject to the approval thereof by
Landlord, which approval shall not be unreasonably withheld, such funds shall be
made available by Landlord for Capital Expenditures set forth in the Capital
Budget; provided, however, that no Capital Expenditures shall be made 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
Landlord to recognize income other than "rents from real property" as defined in
Section 856(d) of the Code. Landlord's obligation shall be cumulative, but not
compounded, and any amounts that have accrued hereunder shall be payable in
future periods for such uses and in accordance with the procedure set forth
herein. Tenant shall have no interest in any accrued obligation of Landlord
hereunder after the termination of this Lease. All Capital Improvements shall be
owned by Landlord subject to the provisions of this Lease.
(b) Landlord's obligation with respect to Capital Expenditures
shall be limited to amounts available in the Capital Expenditures Reserve. No
arbitration resulting from the failure of Landlord and Tenant to agree on the
Capital Budget shall increase Landlord's obligation for Capital Expenditures
beyond the amount set forth in the immediately preceding sentence.
ARTICLE XXV
-----------
Landlord's Right to Inspect. Tenant shall permit Landlord and its
---------------------------
authorized representatives as frequently as reasonably requested by Landlord to
inspect the Leased Property and Tenant'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 Tenant.
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ARTICLE XXVI
------------
No Waiver. No failure by Landlord or Tenant to insist upon the strict
---------
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XXVII
-------------
Remedies Cumulative. To the extent permitted by law, each legal,
-------------------
equitable or contractual right, power and remedy of Landlord or Tenant 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 Landlord or Tenant
of any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XXVIII
--------------
Acceptance of Surrender. No surrender to Landlord 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 Landlord and no
act by Landlord or any representative or agent of Landlord, other than such a
written acceptance by Landlord, shall constitute an acceptance of any such
surrender.
ARTICLE XXIX
------------
No Merger of Title. There shall be no merger of this Lease or of the
------------------
leasehold estate created hereby by reason of the fact that the same person or
entity may acquire, own or hold, directly or indirectly: (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
ARTICLE XXX
-----------
Conveyance by Landlord. If Landlord or any successor owner of the
----------------------
Leased Property conveys the Leased Property to a Person other than an Affiliate
of Landlord 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 Landlord hereunder arising or accruing from and after the date of
such conveyance or transfer, Landlord or such successor owner, as the case may
be, shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
-43-
ARTICLE XXXI
------------
Quiet Enjoyment. So long as Tenant 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,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances subject to which the Leased Property was conveyed to Landlord or
hereafter consented to by Tenant or provided for herein. Notwithstanding the
foregoing, Tenant shall have the right by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXXII
-------------
Notices. All notices, demands, requests, consents approvals and other
-------
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served, delivered overnight by a reputable overnight express delivery
service (e.g., UPS, Federal Express), mailed (by registered or certified mail,
return receipt requested and postage prepaid) or sent by facsimile, addressed to
the following address or to such other address or addresses as either party may
hereafter designate:
LANDLORD: HH Perm-I, L.P.
c/x Xxxxxx Hotels Trust
000 Xxxxxx & Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention:__________________
TENANT: HHC Perm-I, Inc.
c/x Xxxxxx Hotels Corporation
000 Xxxxxx & Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention:__________________
Personally or express overnight delivered Notice shall be effective
upon receipt, and Notice given by mail shall be complete at the time of deposit
in the U.S. Mail system, but any prescribed period of Notice and any right or
duty to do any act or make any response within any prescribed period or on a
date certain after the service of such Notice given by mail shall be extended
five days.
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ARTICLE XXXIII
--------------
Appraisers. If it becomes necessary to determine the Fair Market Value
----------
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
10 days after Notice, Landlord (or Tenant, as the case may be) shall by Notice
to Tenant (or Landlord, 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 45 days after the date of the
Notice appointing the first appraiser, proceed to determine the Fair Market
Value 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. 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 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 20 days to appoint a third appraiser. If no such
appraiser shall have been appointed within such 20 days or within 90 days of the
original request for a determination of Fair Market Value, whichever is earlier,
either Landlord or Tenant 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 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 Landlord and
Tenant as the Fair Market Value hereunder. 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.
Landlord and Tenant shall each pay 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 Landlord May Grant Liens. Without the consent of Tenant, Landlord
------------------------
may, subject to the terms and conditions set forth below in this Section 34.1,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement ("Encumbrance") upon the
Leased Property, or any portion thereof or interest therein, whether to secure
any borrowing or other means of financing or refinancing. Any such Encumbrance
shall contain the agreement by the holder of the Encumbrance that it will (1)
give Tenant the same notice, if any, given to Landlord of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure under such Encumbrance, (2) permit Tenant to cure any such default
on Landlord's behalf within any applicable cure period, and Tenant shall be
reimbursed by Landlord for any and all costs incurred in effecting such cure,
including without limitation out-of-pocket costs incurred to effect any such
cure (including reasonable attorneys' fees) and (3) permit Tenant to appear by
its representative and to bid at any sale in foreclosure made with respect to
any such Encumbrance. Upon the request of Landlord, Tenant shall subordinate
this Lease to the lien of a new mortgage on the Leased Property.
34.2 Tenant's Right to Cure. Subject to the provisions of Section 34.3,
----------------------
if Landlord breaches any covenant to be performed by it under this Lease,
Tenant, after Notice to and demand upon Landlord, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Tenant, 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 Landlord.
All sums so paid by Tenant 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 Tenant, shall be paid by Landlord to Tenant on demand or,
following entry of a final, nonappealable judgment against Landlord for such
sums, may be offset by Tenant against the Base Rent payments next accruing or
-45-
coming due. The rights of Tenant hereunder to cure and to secure payment from
Landlord in accordance with this Section 34.2 shall survive the termination of
this Lease with respect to the Leased Property.
34.3 Breach of Landlord. It shall be a breach of this Lease if Landlord
------------------
fails to observe or perform any term, covenant or condition of this Lease on its
part to be performed and such failure continues for a period of 30 days after
Notice thereof from Tenant, unless such failure cannot with due diligence be
cured within a period of 30 days, in which case such failure shall not be deemed
to continue if Landlord, within such 30-day period, proceeds promptly and with
due diligence to cure the failure and diligently completes the curing thereof.
The time within which Landlord shall be obligated to cure any such failure also
shall be subject to extension of time due to the occurrence of any Unavoidable
Delay.
ARTICLE XXXV
------------
35.1 Miscellaneous. Anything contained in this Lease to the contrary
-------------
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other
application of such term or provisions shall not be affected thereby. If any
late charges or any interest rate provided for in any provision of this Lease
are based upon a rate in excess of the maximum rate permitted by applicable law,
the parties agree that such charges shall be fixed at the maximum permissible
rate. Neither this Lease nor any provision hereof may be changed, waived,
discharged or terminated except by a written instrument in recordable form
signed by Landlord and Tenant. 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 Transfer of Licenses. Upon the expiration or earlier termination
--------------------
of the Term, Tenant shall use its best efforts (i) to transfer to Landlord or
Landlord's nominee 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"), and (ii) if any such
transfer is prohibited by law or Landlord otherwise elects, to cooperate with
Landlord or Landlord's nominee in connection with the processing by Landlord or
Landlord's nominee of any applications for all Licenses; provided, in either
case, that the reasonable costs and expenses of any such transfer or the
processing of any such application shall be paid by Landlord or Landlord's
nominee.
35.3 Waiver of Presentment, etc. Tenant 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.
35.4 No Change in Control. Tenant covenants that throughout the Term
--------------------
there will be no Change in Control with regard to Tenant without the prior
written consent of Landlord.
ARTICLE XXXVI
-------------
Memorandum of Lease. Landlord and Tenant 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. The requesting party
shall pay all costs and expenses of recording such memorandum of this Lease.
-46-
ARTICLE XXXVII
--------------
Landlord's Option to Purchase Assets of Tenant. Effective on not less
----------------------------------------------
than 90 days prior Notice given at any time within 180 days before the
expiration of the Term, but not later than 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, Landlord shall have the option to
purchase all (but not less than all) of the assets of Tenant, tangible and
intangible, relating to the Leased Property (other than this Lease), 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 years experience in valuing similar assets.
Notwithstanding any such purchase, Landlord shall obtain no rights to any trade
name or logo used in connection with the Franchise unless separate agreement as
to such use is reached with the applicable franchisor.
ARTICLE XXXVIII
---------------
Landlord's Option to Terminate Lease. In the event (a) Landlord enters
------------------------------------
into a bona fide contract to sell the Leased Property to a non-Affiliate, or (b)
Landlord determines that because of a change in the tax laws or for any other
reason in Landlord's sole discretion, it wishes to terminate the Lease, Landlord
may terminate this Lease effective upon the closing under such contract or the
date determined by Landlord, provided that no such termination shall be
effective unless and until (i) Landlord shall have given not less than thirty
(30) days prior Notice to Tenant of Landlord's election to terminate this Lease
(or such longer notice as may be required to comply with the WARN Act or other
similar or successor federal or state laws), and (ii) the Leasehold Value
hereunder shall have been determined. Effective upon such termination, provided
that the above conditions are met, this Lease shall terminate and be of no
further force and effect except as to any obligations of the parties existing as
of such date that survive termination of this Lease. As compensation for the
early termination of its leasehold estate under this Article XXXVIII, Landlord
or its Affiliates may within one year before or after the date of such
termination, at its option either (a) pay to Tenant the Leasehold Value as of
the closing of the sale of the Leased Property (b) offer to lease to Tenant or
its Affiliates a Substitute Facility or (c) offer to both lease to Tenant or its
Affiliates a Substitute Facility and to pay the difference between the Leasehold
Value and the value of the Substitute Facility. If the Landlord elects to offer
Tenant or its Affiliates a Substitute Facility for the Leased Property and the
Substitute Facility is one that was leased to Tenant or its Affiliates before
the termination of this Lease, the Substitute Facility has to be identified at
the time it is leased to Tenant or its Affiliates as a substitute for up to
three specified existing leases for which terminations are contemplated and
termination of such existing leases have to occur within one year after entering
into the new lease for the Substitute Facility. If Landlord elects and complies
with the options described in (b) or (c) above, regardless of whether Tenant
enters into the lease(s) for a Substitute Facility described therein, Landlord
shall have no further obligations to Tenant with respect to compensation for the
early termination of this Lease, except for the obligation to pay fees and costs
as aforesaid. Notwithstanding anything in this Section to the contrary, the
terms of this Section shall not be applicable in connection with a termination
due to an Event of Default.
ARTICLE XXXIX
-------------
39.1 Compliance with Franchise Agreement. To the extent any of the
-----------------------------------
provisions of the Franchise Agreement impose a greater obligation on Tenant than
the corresponding provisions of this Lease, then Tenant shall be obligated to
comply with the provisions of the Franchise Agreement (other than requirements
with respect to Capital Improvements). It is the intent of the parties hereto
that Tenant shall comply in every respect with the provisions of the Franchise
Agreement so as to avoid any default thereunder during the term of this Lease.
Tenant shall not terminate, extend or enter into any modification of the
Franchise Agreement without in each instance first obtaining Landlord's prior
written consent. Landlord and Tenant agree to cooperate with each other in the
event it becomes necessary to obtain a franchise extension or modification or a
new franchise for the Leased Property, and in any transfer of the Franchise
Agreement to Landlord or, any designee of Landlord or any successor to Tenant
upon the termination of this
-47-
Lease. In the event of expiration or termination of a Franchise Agreement, for
whatever reason, the Landlord will have the right, in its sole discretion, to
approve any new Franchise Agreement for the Facility. If, upon any expiration or
earlier termination of this Lease (other than upon an Event of Default by
Tenant), a Franchise Agreement remains in effect, or would but for such
expiration or termination remain in effect, Landlord shall indemnify, defend and
hold Tenant harmless with respect to the obligations and liabilities arising
thereunder after the date of expiration or termination of this Lease.
39.2 Change of Franchise. Tenant shall not alter, amend or terminate
-------------------
the Franchise Agreement without Landlord's prior written consent.
Notwithstanding anything else in this Lease, Landlord may, in its sole
discretion, change the Franchise Agreement for the Facility upon sixty (60) days
Notice to Tenant. Landlord shall be responsible for the payment of any
termination fees under the Franchise Agreement. If the franchise fees under the
new Franchise Agreement materially differ from those in the prior Franchise
Agreement, the parties shall negotiate in good faith new Lease terms to account
for the increase or decrease, as the case may be, in franchise fees.
39.3 Termination of Franchise Agreement. The parties hereto
----------------------------------
acknowledge that an uncured default caused by Tenant under the Franchise
Agreement which leads to termination under the terms and conditions of the
Franchise Agreement will constitute a default under the terms and conditions of
this Lease, and, in such event, this Lease must be terminated if the Leased
Property is to continue in the Fairfield Inn System upon cure of the default by
Landlord or its agents. If (i) Landlord demonstrates to the reasonable
satisfaction of franchisor under the Franchise Agreement that the default will
be cured in a timely manner (or if the default will be cured by the mere
replacement of Tenant) and (ii) Landlord promptly engages an interim tenant and
such interim tenant assumes in writing the obligation of franchisee under the
Franchise Agreement, then in such event, franchisor under the Franchise
Agreement shall recognize such interim tenant as franchisee and the Franchise
Agreement shall remain in effect for ninety (90) days to enable Landlord to
engage a substitute tenant.
39.4 Landlord Approval of Capital Expenditures. All Capital
-----------------------------------------
Expenditures whether pursuant to the Capital Budget or otherwise shall be
subject to the approval of Landlord, which approval shall extend both to the
plans and specifications (including matters of design and decor) and to the
contracting and purchasing of all labor, services and materials. Landlord shall
have the right to require competitive bidding of contracts for Capital
Improvements, review all bids and monitor costs, time, quality and performance.
The foregoing restrictions shall not apply to emergency Capital Expenditures
made by Tenant in amounts not to exceed $25,000, and with prior notice to
Landlord (if possible under the circumstances).
39.5 Inventory. On the Commencement Date, Tenant agrees to purchase
---------
from Landlord, for cash, the fair market value of any Inventory at the Facility.
ARTICLE XL
----------
40.1 Central Cash Management. [CONFORM TO LOAN AGREEMENT]
-----------------------
(a) Collection Accounts. Operator shall open and maintain at a
-------------------
bank acceptable to Landlord (the "Collection Account Bank") a trust account (the
-----------------------
"Collection Account"), and such Collection Account Bank shall not commingle the
------------------
amounts in such account with any other amounts held on behalf of any other
Person. The Collection Account shall be assigned an identification number by the
relevant Collection Account Bank and shall be opened and maintained in the name
" [Landlord's Name] as Secured Party of ____________________." Tenant shall not
have any right of withdrawal from any Collection Account. Pursuant to a payment
direction letter in the form attached to the Collection Account Agreement,
Tenant shall direct each Credit Card Company to pay all amounts payable to
Tenant pursuant to each Merchant Agreement between Tenant and each Credit Card
Company directly into the Collection Account. In addition, Tenant shall deposit
all Receipts, money or other items of Gross Revenues payable to Tenant with
respect to the Leased Property directly into the Collection Account within on
Business Day after receipt thereof.
-48-
(b) Sweeps. On a daily basis, prior to Landlord's written
------
notification to the Collection Account Bank that a Cash Management Event has
occurred, the Collection Account Bank shall transfer amounts constituting
collected funds on deposit in the Collection Account to such account as may be
designated by Tenant from time to time in writing by Tenant to Collection
Account Bank. On a daily basis, on and after Landlord's written notice to
Collection Account Bank that a Cash Management Event has occurred, the
Collection Account Bank shall transfer by wire transfer or via the ACH system
amounts constituting collected funds on deposit in the Collection Account to an
account identified in writing by Landlord.
(c) Payments. Prior to the occurrence of a Cash Management Event,
--------
Tenant shall pay to Landlord by depositing in the Landlord's Collection Account
on or prior to each Payment Date, the Basic Rent and the Percentage Rent. After
the occurrence of a Cash Management Event, pursuant to the Collection Account
Agreements among the respective Collection Account Banks, Borrowers and Lender
(each a "Collection Account Agreement"), Landlord will authorize and direct the
----------------------------
Collection Account Bank to transfer on a daily basis, all funds deposited in the
Collection Account to Landlord's Collection Account. The sums in Landlord's
Collection Account will be swept to the Cash Collateral Account. Such sums will
be allocated to the Sub-Accounts (as defined in the Loan Agreement) of the Cash
Collateral Account. Upon Landlord's receipt of Excess Cash (as defined in the
Loan Agreement), Landlord will remit to Tenant an amount equal to the (1) the
sums swept to the Cash Collateral Account (as defined in the Loan Agreement)
less (2) the Base Rent and monthly Percentage Rent payable by Tenant under the
Lease.
(d) Exercise of Landlord's Rights. Tenant hereby acknowledges and
-----------------------------
agrees that Landlord will be assigning to CCA Landlord's rights under this
Section as well as under the other terms of this lease as collateral security
for the loan evidenced by the Loan Agreement.
ARTICLE XLI
-----------
41.1 Additional Covenants.
(A) Existence; Compliance with Legal Requirements; Insurance.
--------------------------------------------------------
Tenant shall do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its corporate existence, rights, licenses, permits
and franchises necessary for the conduct of its business and comply in all
respects with all applicable Legal Requirements and Insurance Requirements
applicable to it and any the Leased Facility. Tenant shall notify Landlord
promptly of any written notice or order that Tenant receives from any
Governmental Authority relating to Tenant's failure to comply with such
applicable Legal Requirements relating to the Leased Property.
(B) Litigation. Tenant shall give prompt written notice to
----------
Landlord of any litigation or governmental proceedings pending or threatened
against Tenant which is reasonably likely to have a Material Adverse Effect.
(C) Single Purpose Entity.
---------------------
(i) Tenant shall at all times be a duly formed and
existing corporation and a Single Purpose Entity.
(ii) Tenant will continue to comply with the
provisions of all of its organizational documents, and the laws of the
state in which Tenant was formed relating to its corporate status.
(iii) All customary formalities regarding the
corporate existence of Tenant will continue to be observed.
(iv) Tenant will continue to be adequately
capitalized in light of the nature of its business.
-49-
(D) Collection Account Agreement. Tenant shall observe, perform
----------------------------
and satisfy all of the terms, provisions covenants and conditions of the
Collection Account Agreement applicable to Tenant.
(E) Security Agreement. Tenant shall observe, perform and satisfy
------------------
all of the terms, provisions, covenants and conditions of the Security Agreement
applicable to Tenant.
41.2 Negative Covenants. Tenant covenants and agrees that during the
------------------
term of this Lease, it will not do, directly or indirectly, any of the following
unless Landlord consents thereto in writing:
(A) Liens on the Leased Property. Incur, create, assume, become or
----------------------------
be liable in any manner with respect to, or permit to exist, any Lien with
respect to the Leased Property, except: (i) Liens in favor of Landlord and (ii)
the Permitted Encumbrances (as defined in the Loan Agreement).
(B) Intentionally deleted.
---------------------
(C) Other Borrowings. Except as permitted pursuant to this Lease,
----------------
incur, create, assume, become or be liable in any manner with respect to any
indebtedness.
(D) Intentionally Omitted.
---------------------
(E) Change In Business. Cease to be a Single-Purpose Entity or
------------------
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.
(F) Debt Cancellation. Cancel or otherwise forgive or release any
-----------------
material claim or debt owed to Tenant, Person, except for adequate consideration
or in the ordinary course of Tenant's business.
(G) Affiliate Transactions. Enter into, or be a party to, any
----------------------
transaction with an Affiliate of Tenant, except in the ordinary course of
business and on terms which are no less favorable to Tenant or such Affiliate
than would be obtained in a comparable arm's length transaction with an
unrelated third party, and, if the amount to be paid to the Affiliate pursuant
to the transaction or series of related transactions is greater than $50,000
(determined annually on an aggregate basis) fully disclosed to Landlord in
advance.
(H) Creation of Easements. Create, or permit the Leased Property
---------------------
or any part thereof to become subject to, any easement, license or restrictive
covenant, other than a Permitted Encumbrance (as defined in the Loan Agreement).
(I) Misapplication of Funds. Distribute any Receipts or Money
-----------------------
received in violation of the provisions of Article 41 and the Collection Account
Agreement.
(J) Intentionally deleted.
---------------------
(K) Issuance of Equity Interests. Issue or allow to be created any
----------------------------
stocks or shares or shareholder, partnership or membership interests, as
applicable, or other ownership interests other than the stocks, shares,
shareholder, partnership or membership interests and other ownership interests
which are outstanding or exist on the Commencement Date or any security or other
instrument which by its terms is convertible into or exercisable or exchangeable
for Tenant's ownership interests in Tenant.
(L) Assignment of Licenses and Permits. Assign or transfer any of
----------------------------------
its interest in any permits pertaining to the Leased Property, or assign,
transfer or remove or permit any other Person to assign, transfer or remove any
records pertaining to the Leased Property without Landlord's prior written
consent which consent may be granted or refused in Landlord's sole discretion.
-50-
(M) Place of Business. Change its chief executive office or its
-----------------
principal place of business or place where its books and records are kept
without giving Landlord at least thirty (30) days' prior written notice thereof
and promptly providing Landlord such information as Landlord may reasonably
request in connection therewith.
(N) Franchise Agreements. Enter into any Franchise Agreements
--------------------
other than those existing on the Commencement Date without the prior written
consent of Landlord.
(O) Collection Account Agreement. Amend, modify or terminate the
----------------------------
terms of the Collection Account Agreement, or enter into any new Collection
Account Agreement except for the one existing on the Commencement Date without
the prior written consent of the Landlord and the confirmation by the Rating
Agencies that such amendment, modification or termination or new agreement will
not result in the withdrawal, downgrade or qualification of the then applicable
ratings assigned to any securities issued in any Securitization (as defined in
the Loan Agreement).
(P) Security Agreement. Amend, modify or terminate the Security
------------------
Agreement, or enter into a new Security Agreement except for the on existing on
the Commencement Date without the prior written consent of the Landlord and the
confirmation by the Rating Agencies that such amendment, modification or
termination or new agreement will not result in the withdrawal, downgrade or
qualification of the then applicable ratings assigned to any securities issued
in any Securitization (as defined in the Loan Agreement).
-51-
IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
"LANDLORD"
HH PERM-I, L.P.
By: Xxxxxx Hotels Trust, its General Partner
By:
---------------------------------
Title:
---------------------------------
"TENANT"
HHC PERM-I, INC.
By:
-------------------------------------
Title:
-------------------------------------
-52-
Exhibit A
PROPERTY DESCRIPTION
A-1
Exhibit B
CAPITAL EXPENDITURES POLICY
CAPITAL EXPENDITURES
[Alternative Policy (Nomura) to be Supplied]
A capital expenditure is defined as an investment in a readily identifiable
facility which (1) is held for use or income rather than for sale or conversion
into goods or cash and (2) has a useful service life in excess of one year.
Nonrecurring expenses directly associated with the investment should be included
as part of the total expenditure for evaluation purposes, this includes
pre-opening expenses.
Capitalization Policy
---------------------
If the cost of the capital addition is $10,000 or greater and the items acquired
have an expected service life of more than one year, the expenditure is
capitalized. See "Maintenance and Repairs" for those expenditures which are
expensed without regard to the $10,000 guideline. If the item(s) acquired meet
the more invoice cost is less than $10,000, the expenditure is considered an
expense item except as provided below.
Replacement - Component Parts
-----------------------------
If the estimated job or total invoice cost (including parts and labor) of any
particular item or series of items acquired with respect to one particular job
for replacement of the following major building components is over $5,000, the
expenditure should be capitalized:
Heating Equipment - Pumps, boilers, heat exchangers, thermostats,
pressure gauges, alarm devices, piping.
Plumbing Equipment - Pumps, meters, sprinkler and fire alarm system,
piping.
Air Conditioning Equipment - Compressors, condensers, motors, cooling
towers, evaporative coolers, piping.
Fire Prevention Equipment - Major fire system sprinklers, smoke
detectors.
Power - Transformer, conduits and boxes, panel boards, switches and
outlets.
Betterments
-----------
If the estimated job or total invoice cost is $5,000 or above, and the
expenditure(s) will extend the useful life of an asset previously capitalized,
then the expenditure should be capitalized.
B-1
CAPITAL EXPENDITURES POLICY
Maintenance and Repairs
-----------------------
The following replacement expenditures are considered maintenance and repairs
and are not subject to the total invoice cost guideline of $5,000.
Repainting of Buildings Pools, Park Areas (5)
Refinishing of Furniture (1)
Glass Replacement
Maintenance Service Contracts, such- Yard, Television, Elevator, Swimming Pool
Wall Paper Vinyl (1)
Reupholstery of Furniture (1)
Replastering (1)
Replacement of Chain Locks, Key Blanks, Keys, Locks, Locksets. Locks
and locksets installed in new doors or offering substantial security
improvements should be capitalized if the invoice is over $5,000.
Patching Parking Lot (2)
Roof Repairs (3)
Waterproofing of Lamp Globes & Lightbulbs
Section Replacement for Neon Signs
Caulking and Sealing (6)
Chrome Fittings such as Faucets, Towel Bars, etc.(1)
Toilet and Toilet Seats
Stolen or Damaged Television
Small Parts for Equipment
Landscaping/Plants (4)
Clocks, Clock-Radios or Similar Small Items
1. Expenditures for interior painting, wall paper, refinishing of furniture,
replastering, or reupholstering may be capitalized if:
1) these expenditures are part of a major refurbishment project, or
2) the cost of these expenditures exceed $5,000 with
respect to any particular item or series of items
related to one particular job and extend the useful
life of the asset.
2. Repairing of parking lots, including resealing and resurfacing, will be
capitalized if the expenditures exceed $10,000.
3. Replacement of the complete roof or complete section of the roof (including
laying a roof over an existing roof) will be capitalized if total expenditures
exceed $5,000.
4. If the landscaping is new or replacement of existing interior or exterior
landscaping and exceeds $10,000, the cost of the landscaping can be capitalized.
B-2
CAPITAL EXPENDITURES POLICY
5. Major overhauls to the pool which exceed $10,000 in cost and extend the
useful life of the asset will be capitalized.
6. If the complete exterior of the building is repainted, including caulking
and sealing of the building, those costs will be capitalized.
All expense items will be expensed to M&R expense line items above GOP.
B-3
EXHIBIT C
Schedule of Lease Terms
[UNDER REVIEW]
Quarterly Revenues Computation and Annual Revenues Computation
Base Rent: $_________________ per annum payable in monthly installments of
$____________ each.
For the purposes of the Percentage Rent formula:
The Quarterly Revenues Computation is equal to the amount obtained by
------------------------------
adding, for the applicable Fiscal Year, amounts equal to:
1. The First Room Revenue Threshold Percentage multiplied by all
year to date Room Revenues up to the year to date First Room
Revenue Threshold. The year to date First Room Revenue
Threshold is obtained by adding each of the Quarterly First
Room Revenue Threshold amounts from the beginning of the
Fiscal Year to the end of the current month. The Quarterly
First Room Revenue Threshold amounts effective for the Fiscal
Year ended December 31, 19__ for all current leases are
scheduled in this Exhibit.
2. If applicable, the Second Room Revenue Threshold Percentage
multiplied by all year to date Room Revenues which are (x) in
excess of the First Room Revenue Threshold but (y) less than
the year to date Second Room Revenue Threshold. The year to
date Second Room Revenue Threshold is obtained by adding each
of the Quarterly Second Room Revenue Threshold amounts from
the beginning of the Fiscal Year to the end of the current
month. The Quarterly Second Room Revenue Threshold amounts
effective for the Fiscal Year ended December 31, 19__ for all
current leases are scheduled in this Exhibit.
3. The Third Room Revenue Threshold Percentage multiplied by the
difference between (x) all year to date Room Revenue less (y)
the threshold amounts calculated pursuant to clauses (1) and
(2) above.
4. The Other Income Percentage multiplied by the year to date
Other Income for the current Fiscal Year.
X-0
Xxxxxxxxx Xxxxxxxx Computation and Annual Revenues Computation
For the purposes of the Percentage Rent formula:
The Annual Revenues Computation is equal to the amount obtained by
---------------------------
adding, for the applicable Fiscal Year, amounts equal to:
1. The First Room Revenue Threshold Percentage multiplied by
annual Room Revenues up to the Annual First Room Revenue
Threshold. The Annual First Room Revenue Threshold amounts
effective for the Fiscal Year ended December 31, 19__ for all
current leases are scheduled in this Exhibit.
2. If applicable, the Second Room Revenue Threshold Percentage
multiplied by the annual Room Revenues which are (x) in excess
of the Annual First Room Revenue Threshold but (y) less than
the Annual Second Room Revenue Threshold. The Annual Second
Room Revenue Threshold amounts effective for the Fiscal Year
ended December 31, 19__ for all current leases are scheduled
in this Exhibit.
3. The Third Room Revenue Threshold Percentage multiplied by the
difference between (x) the annual Room Revenue less (y) the
threshold amounts calculated pursuant to clauses (1) and (2)
above.
4. The Other Income Percentage multiplied by the annual Other
Income for the current Fiscal Year.
C-2
Schedule of Lease Terms
Base Rent: $__________
First Room Revenue Threshold Percentage: _________%
Quarterly First Room Revenue Threshold: $__________
Annual First Room Revenue Threshold: $__________
Second Room Revenue Threshold Percentage: _________%
Quarterly Second Room Revenue Threshold: $__________
Annual Second Room Revenue Threshold: $__________
Third Room Revenue Threshold Percentage: _________%
Other Income Percentage: 20%
C-3
