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EXHIBIT 10.1
LEASE AGREEMENT
by and between
GLENBOROUGH PROPERTIES, L.P.
a California limited partnership
and
GLENBOROUGH HOTEL GROUP,
a Nevada corporation
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TABLE OF CONTENTS
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Option to Extend Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Confirmation of Percentage Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Net Lease Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Payment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Notice of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Adjustment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 No Termination, Abatement, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Abatement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Ownership of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Lessee's Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Lessor's Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Condition of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Use of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Lessor to Grant Easements, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Compliance with Legal and Insurance Requirements, etc . . . . . . . . . . . . . . . . . . 23
8.2 Legal Requirement Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Environmental Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Encroachments, Restrictions, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Salvage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Joint Use Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.1 General Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.3 Worker's Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.4 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.5 Form Satisfactory, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.6 Increase in Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.8 No Separate Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance . . . . . . . . 35
14.3 Reconstruction in the Event of Damages or
Destruction Not Covered by Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.4 Lessee's Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.5 Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.6 Damage Near End of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.2 Parties' Rights and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.3 Total Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.4 Allocation of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.5 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.6 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.7 Lessee's Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.2 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
16.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
16.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
16.5 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Lessor's Right to Cure Lessee's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Provisions Relating to Purchase of the Leased Property . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
19.1 Personal Property Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
19.2 Sublease Rent Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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19.3 Sublease Tenant Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.4 Lessee Ownership Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.5 Lessee Officer and Employee Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . 45
19.6 Payments to Affiliates of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
22.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE XXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
23.1 Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
23.2 Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Officer's Certificates; Financial Statements;
Lessor's Estoppel Certificates and Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XXV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Lessor's Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Conveyance by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XXXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XXXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XXXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Appraisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XXXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
34.1 Lessor May Grant Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
34.2 Lessee's Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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34.3 Breach by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XXXV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
35.1 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
35.2 Transfer of Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
35.3 Waiver of Presentment, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XXXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Lessor's Option to Purchase Assets of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XXXVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Lessor's Option to Terminate Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XXXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Compliance with Franchise Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XXXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Furniture Fixture and Equipment Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XL
Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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LEASE AGREEMENT (SCOTTSDALE)
THIS LEASE AGREEMENT (hereinafter called "Lease"), made as of the 1st
day of March, 1997, by and between GLENBOROUGH PROPERTIES, L.P., a California
limited partnership (hereinafter called "Lessor"), and GLENBOROUGH HOTEL GROUP,
a Nevada corporation (hereinafter called "Lessee"), provides as follows.
W I T N E S S E T H:
Contemporaneously with the execution hereof, Lessor acquired the
"Leased Property" (as hereinafter defined).
In furtherance of the consummation of such series of transactions,
Lessor and Lessee wish to enter into this Lease.
NOW, THEREFORE, Lessor, in consideration of the payment of rent by
Lessee to Lessor, the covenants and agreements to be performed by Lessee, and
upon the terms and conditions hereinafter stated, does hereby rent and lease
unto Lessee, and lessee does hereby rent and lease from Lessor, the Leased
Property.
ARTICLE I
1.1 Leased Property. The Leased Property is comprised of Lessor's
interest in the following:
(a) the parcel of property described in Exhibit "A"
attached hereto and by reference incorporated herein (the "Land");
(b) all buildings, structures and other improvements of
every kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and 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,
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together with all replacements, modifications, alterations and additions
thereto (collectively, the "Fixtures");
(e) all furniture and furnishings and all other items of
personal property (excluding Inventory and personal property owned by Lessee)
located on, and used in connection with, the operation of the Leased
Improvements as a hotel, together with all replacements, modifications,
alterations and additions thereto; and
(f) all existing leases of space within the Leased
Property (including any security deposits or collateral held by Lessor pursuant
thereto).
THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, THE LIEN OF FINANCING INSTRUMENTS,
MORTGAGES, DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH
WOULD BE DISCLOSED BY ANY 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 date hereof (the "Commencement Date") and shall end on the fifth
anniversary of the last day of the month in which the Commencement Date occurs,
unless sooner terminated in accordance with the provisions hereof.
1.3 Option to Extend Term. Lessor hereby grants to Lessee an option
to extend the Term for five (5) years ("Option Period") on the following terms
and conditions:
(a) Lessee must give Lessor notice in writing of its exercise
of the option to extend the Term not less than two hundred ten (210) days nor
more than two hundred seventy (270) days before the date the Term would end but
for said exercise.
(b) All terms and conditions of this Lease shall apply during
the Option Period, except that the Base Rent and the Percentage Rent for the
Option Period shall be determined as provided in Subparagraph (c)
(c) The Base Rent and the Percentage Rent for the Option
Period shall be the then Fair Market Rent for the Leased Property determined,
as hereinafter provided, as of the commencement of the Option Period. In
determining the Fair Market Rent, the parties (or any appraisers) shall provide
for both a base rent and a percentage rent in a manner comparable to the Base
Rent and Percentage Rent during the initial five years of the Term. In
determining the Fair Market Rent, the parties (or any appraisers) may provide
that the Base Rent be subject to periodic increases
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based upon the Consumer Price Index or such other adjustments if such parties
(or any appraisers) shall determine that as of the commencement of the Option
Period, five-year leases at such time for comparable properties would provide
for adjustments during the term thereof for increase in the Consumer Price
Index or other adjustments; provided, however, if such adjustments are provided
for, they shall only provide for increases and in no event shall any rent be
decreased from the amount previously paid. In determining the Fair Market Rent
for the Leased Property, the parties (or any appraisers) shall take into
account that the respective obligations of Lessor and Lessee, including, but
not being limited to, payment of taxes, maintenance and insurance, will remain
the same during the option period. If the parties are unable to agree upon the
Fair Market Rent for the Leased Property at least one hundred eighty (180) days
prior to the commencement of the Option Period, then the Fair Market Rent shall
be determined by appraisal conducted pursuant to Article XXXIII consistent with
the provisions of this Subparagraph (c).
(d) Notwithstanding any provision herein to the contrary, the Base
Rent and the Percentage Rent during the Option Period shall not be less than
the Base Rent and the Percentage Rent payable during the first five years of
the Term following the Commencement Date. If the Option to Extend is
exercised, wherever reference is made to the Term, it shall include the Option
Period. If the appraisal process has not been completed by the commencement of
the Option Period, the Base Rent and Percentage Rent payable at the end of the
initial five years of the Term shall continue during the Option Period until
the Base Rent and Percentage Rent for the Option Period has been determined and
on the first day of the first calendar month following such determination,
Lessee shall pay, in addition to any payments then due, any additional amount
that may be required since the commencement of the Option Period as a
consequence of any change in the Base Rent and/or Percentage Rent, unless the
first day for payment of Percentage Rent since the commencement of the Option
Period is not yet due, in which event Percentage Rent shall be calculated from
the commencement of the Option Period and shall be due on such first payment
date.
ARTICLE II
Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context other wise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as are at the time applicable, (c) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (d) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to
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this Lease as a whole and not to any particular Article, Section of other
subdivision:
Additional Charges: As defined in Section 3.3.
Affiliate: As used in this Lease the term "Affiliate" of a person
shall mean (a) any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (b) any other person
that owns, beneficially, directly or indirectly, five 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). The term "person" means and includes
individuals, corporations, general and limited partnerships, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof, For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.
Award: As Defined in Section 15.1(c).
Base Rate: The rate of interest announced publicly by Citibank, N.A.,
in New York, New York, from time to time, as such bank's base rate, If no such
rate is announced or becomes discontinued, then such other rate as Lessor may
reasonably designate.
Base Rent: As defined in Article III.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
this is not a day on which national banks in the City of New York, New York, or
in the municipality wherein the Leased Property is located are closed.
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Section 1.2 of the Lease.
Condemnation, Condemnor: As defined in Section 15.1.
Consolidated Financials: For any fiscal year or other
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accounting period for Lessee and its consolidated subsidiaries, 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 proceeding fiscal year, and prepared in accordance with generally
accepted accounting principles and audited by independent certified public
accountants acceptable to Lessor in its sole discretion.
Consolidated Net Worth: At any time, the sum of the following for
Lessee and any consolidated subsidiaries, on a consolidated basis determined in
accordance with generally accepted accounting principles;
(a) The amount of capital or stated capital (after deducting the cost
of any share held in its treasury), plus
(b) the amount of capital surplus and retained earnings (or, in the
case of a capital or retained earnings deficit, minus the amount of such
deficit), minus
(c) the sum of the following (without duplication of deductions with
respect to items already deducted in arriving at surplus and retained
earnings): (1) unamortized debt discount and expense; and (2) any write-up in
the book value of assets resulting from a revaluation thereof subsequent to the
most recent Consolidated Financials prior to the date thereof, except any net
write-up in value of foreign currency in accordance with generally accepted
accounting principles.
CPI: The Consumer Price Index of the Bureau of Labor Statistics of
the United States Department of Labor for all Urban Consumers - U.S. City
Average - All Items. In the event the compilation and/or publication of the
CPI shall be transferred to any other governmental department or bureau or
agency or shall be otherwise changed or discontinued, then the index most
nearly the same as the CPI shall be used to make such calculation. In the
event that Sublessor and Sublessee cannot agree on such alternative index, then
the matter shall be submitted for decision to the American Arbitration
Association in Los Angeles, California, in accordance with the then rules of
said association and the decision of the arbitrators shall be binding upon the
parties. The cost of the Arbitration shall be paid equally by Lessor and
Lessee.
Date of Taking: As defined in Section 15.1(b).
Encumbrance: As defined in Section XXXIV.
Environmental Authority: Any department, agency or other body
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or component of any Government that exercises any form of jurisdiction or
authority under any Environmental Law.
Environmental Authorization: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.
Environmental Laws: All applicable federal, state, local and foreign
laws and regulations relating to pollution of the environment (including
without limitation, ambient air, surface water, ground water, land surface or
subsurface stratus), 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,
judgement 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 amount 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 against or imposed
upon Lessor, Lessee, any Predecessor, the Leased Property or any property used
therein and arising out of:
(a) Failure of Lessee, Lessor, any Predecessor or the Leased Property
to comply at any time with all Environmental Laws;
(b) Presence of any Hazardous Materials on, in, under, at or in any
way affecting the Leased Property;
(c) A Release at any time of any Hazardous Materials on, in at, under
or in any way affecting the Leased Property;
(d) Identification of Lessee, Lessor or any Predecessor as a
potentially responsible part 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 of facility; or
(f) Any and all claims for injury or damage to persons or property
arising out of exposure to Hazardous Materials originating
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or located at the Leased Property, or resulting from operation thereof or any
adjoining property.
Event of Default: As defined in Section 16.1.
Facility: The hotel and/or other facility offering lodging and other
services or amenities being operated or proposed to be operated on the Leased
Property.
Fair Market Rent: The fair market rent of the Leased Property means
the rental which a willing tenant not compelled to rent would pay a willing
landlord not compelled to lease for the use and occupancy of such Leased
Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder and (b) determined in accordance with the
appraisal procedures set forth in Article XXXIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee.
Fair Market Value: The fair market value of the Leased Property and/or
the Inventory 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 and/or Inventory, (a) assuming the same is unencumbered by this
Lease, (b) determined in accordance with the appraisal procedures set forth in
Article XXXIII or in such other manner as shall be mutually acceptable to
Lessor and Lessee, (c) assuming, in the case of the Leased Property, 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 encumbrances 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.
FF&E Allowance: The quarterly furniture, fixture and equipment
allowance set forth on Exhibit B hereto, as adjusted pursuant to Article XL,
which Lessor shall make available to Lessee pursuant to Article XL.
FIERA: The Federal Insecticide, Fungicide, and Rodenticide Act, as
amended.
Fiscal Year: The 12-month period from January 1 to December 31.
Fixtures: As defined in Section 1.1.
Franchise Agreement: Any Franchise Agreement with a national
franchisor (such as Country Suites by Xxxxxxx) under which the Facility is
operated.
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Government: The United State 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.
Hazardous Materials: All chemicals, pollutants, contaminants, wastes
and toxic substances, including without limitation:
(a) Solid or hazardous waste, as defined in RCRA or in any
Environmental Law;
(b) Hazardous substances, as defined in CERCLA or in any
Environmental Law;
(c) Toxic substances, as defined in TSCA or in any Environmental Law;
(d) Insecticides, fungicides, or rodenticides, as defined in FIFRA or
in any Environmental Law; and
(e) Gasoline or any other petroleum product or byproduct,
polychlorinated biphenols, asbestos and urea formaldehyde.
Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessee or its business conducted upon the Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term, ground rents, 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 Lessee (including all interest and penalties thereon caused by any failure
in payment by Lessee), which at any time prior to, during or with respect to
the Term hereof may be assessed or imposed on or with respect to or be a lien
upon (a) Lessor's interest in the Leased Property, (b) the Leased Property, or
any part thereof or any rent therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on or in connection with the Leased Property, or the
leasing or use of the Leased Property or any part thereof by Lessee. Nothing
contained in this definition of Impositions shall be construed to require
Lessee to pay (1) any tax based on net income (whether denominated as a
franchise or a capital stock or other tax) imposed on Lessor or any other
person, or (2) any net revenue tax of Lessor or any other person, or (3) any
tax imposed with respect to the sale, exchange or other disposition by Lessor
of any Leased Property or the proceeds thereof, or (4) any single
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business, gross receipts (other than a tax on any rent received by Lessor from
Lessee), transaction privilege or similar taxes as the same relate to or are
imposed upon Lessor, except to the extent that any tax, assessment, tax levy or
charge that Lessee is obligated to pay pursuant to the first sentence of this
definition and that is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
Indemnified Party: Either of a Lessee Indemnified Party or a Lessor
Indemnified Party.
Indemnifying Party: Any party obligated to indemnify an Indemnified
Party pursuant to Sections 83. or 22.1.
Insurance Requirements: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
Inventory: All "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System 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.
Land: As defined in Article I.
Lease: This Lease.
Leased Improvements: Leased Property: Each as defined in Article I.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the
maintenance, construction, use or alteration thereof (whether by Lessee or
otherwise), whether or not hereafter enacted and in force, including (a) all
laws, rules or regulations pertaining to the environment, occupational health
and safety and public health, safety or welfare, and (b) any laws, rules or
regulations that may (1) require repairs, modifications or alterations in or to
the Leased Property or (2) in any way adversely affect the use and enjoyment
thereof; and all permits, licenses and authorizations and regulations relating
thereto and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at any time in
force affecting the Leased Property.
Lending Institution: Any insurance company, credit company, federally
insured commercial or savings bank, national banking
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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 lease $10,000,000.
Lessee: The Lessee designated on this Lease and its respective
permitted successors and assigns.
Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as
a result of a direct or indirect ownership interest (including a stockholder's
interest) in Lessee, the officers, directors, stockholders, employees, agents
and representatives of Lessee and any corporate stockholder, agent, or
representative of Lessee, and the respective heirs, personal representatives,
successors and assigns of any such officer, director, stockholder, employee,
agent or representative.
Lessor: The Lessor designated on this Lease and its respective
successors and assigns.
Lessor Indemnified Party: Lessor, any Affiliate of Lessor, any other
Person against whom any claim for indemnification may be asserted hereunder as
a result of a direct or indirect ownership interest (including a stockholder's
or partnership interest) in Lessor, the officers, directors, stockholders,
employees, agents and representatives of the general partner of Lessor and any
partner, agent, or representative of Lessor, and the respective heirs, personal
representatives, successors and assigns of any such officer, director, partner,
stockholder, employee, agent or representative.
Minimum Price: The sum of (a) the equity in the Leased Property at
the time of acquisition of the Leased Property by Lessor (i.e. based upon the
appraised value thereof as established by Xxxxxx X. Xxxxxxx & Co., Inc. as of
June 30, 1994, if the Leased Property was acquired by Lessor from Glenborough
Realty Trust Incorporated as part of the original capitalization of Lessor, or
that portion of the purchase price of the Leased Property paid by Lessor is
cash) plus (b) other capital expenditures on the Leased Property by Lessor
after the date hereof plus (c) the unpaid principal balance of all encumbrances
against the Leased Property at the time of purchase of the Leased Property by
Lessee, less (x) all proceeds received by Lessor from any financing or
refinancing of the Leased Property after the date hereof (after payment of any
debt refinanced and net of any costs and expenses incurred in connection with
such financing or refinancing, including, without limitation, loan points,
commitment fees and commissions and legal fees) and (y) the net amount (after
deduction of all reasonable legal fees and other costs and expenses, including
without
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limitation expert witness fees, incurred by Lessor in connection with obtaining
any such proceeds or award) of all insurance proceeds received by Lessor and
awards received by Lessor from any partial Taking of the Leased Property that
are not applied to restoration.
Notice: A notice given pursuant to Article XXXII.
Officer's Certificate: A certificate of Lessee signed by the chief
financial officer or another officer authorized so to sign by the board of
directors or by-laws of Lessee, or any other person whose power and authority
to act has been authorized by delegation in writing by any such officer.
Option Period: As defined in Section 1.3.
Other Revenues: Shall mean gross revenues from the operation of the
Leased Property, including parking; telephone; laundry; incidental services;
food and beverage sales; or otherwise, and whether such revenues are received
or accrue from operations conducted by Lessee or any permitted sublessee or
licensee of Lessee, but excluding the following:
(a) Revenues from the rental of guest rooms (whether to individuals,
groups or transients);
(b) The amount of all credit, rebates or refunds to customers, guests
or patrons relating to the services and other items including in the
computation of Other Revenues;
(c) All sales taxes or any other taxes imposed on the services and
other items included in the computation of Other Revenues; and
(d) All gratuities collected from customers, guests or patrons and
paid to employees which relate to the services and other items included in
Other Revenues.
Overdue Rate: On any date, a rate equal to the Base Rate plus 5% per
annum, but in no event greater that the maximum rate then permitted under
applicable law.
Payment Date: Any due date for the payment of any installment of Base
Rent.
Percentage Rent: As defined in Section 3.1(b), 3.1(c).
Person: Any Government, natural person, corporation, partnership or
other legal entity.
Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by Lessee, either
contractually or by operation of law, relating to the Leased Property.
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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.
RCRA: The Resource Conservation and Recovery Act, as amended.
Real Estate Taxes: All real estate taxes, including general and
special assessments, if any, which are imposed upon the Land, and any
improvements thereon.
Rejectable Offer Price: An amount equal to the greater of (a) the Fair
Market Value, determined as of the applicable purchase date, or (b) the Minimum
Price.
Release: A "Release" as defined in CERCLA or in any Environmental
Law, unless such Release has been properly authorized and permitted in writing
by all applicable Environmental Authorities or is allowed by such Environmental
Law without authorizations or permits.
Rent: Collectively, the Base Rent, Percentage Rent, and Additional
Charges.
Room Revenues: Shall mean gross revenues from the operation of the
Leased Property from the rental of guest rooms, whether to individuals, groups
or transients, whether such revenues are received or accrue from operations
conducted by Lessee or any permitted sublessee or licensee of Lessee, but
excluding the following:
(a) The amount of all credit, rebates or refunds to customers, guests
or patrons;
(b) All sales taxes or any other taxes imposed on the rental of
guest rooms; and
(c) All gratuities collected from customers, guests or patrons and
paid to employees which relate to the rental of guest rooms.
XXXX: The Superfund Amendments and Reauthorization Act of 1986, as
amended.
State: The State or Commonwealth of the United States in which the
Leased Property is located.
Subsidiaries: Corporations in which Lessee owns, directly or
indirectly, more than 50% of the voting stock or control, as applicable
(individually, a "Subsidiary").
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Taking: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of, any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
Term: As defined in Section 1.2.
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 Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, the Facility cannot be operated on a commercially practicable
basis for its Primary Intended Use, taking into account, among other relevant
factors, the number of usable rooms and projected revenues, such that Lessee
intends to, and shall, complete the cessation of operations from the Leased
Facility.
Uniform System: Shall mean the Uniform System of Accounts for Hotels
(8th Revised Edition, 1986) as published by the Hotel Association of New York
City, Inc., as same may hereafter be revised.
Unsuitable for its Primary Intended Use: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, due to casualty damage or loss through Condemnation, the
Facility cannot function as a integrated hotel facility consistent with
standards applicable to a well maintained and operated hotel.
ARTICLE III
3.1 Rent. Lessee will pay to Lessor in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, in immediately available funds, at Lessor's address set forth in
Article XXXII hereof or at such other place or to such other Person, as Lessor
from time to time may designate in a Notice, all Base Rent, Percentage Rent and
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Additional Charges, during the Term, as follows:
(a) Base Rent: The annual sum set forth on Exhibit B hereto for the
Leased Property, payable in advance in equal, consecutive monthly installments,
on or before the first day of each calendar month of the Term ("Base Rent");
provided however, that the first and last monthly payments of Base Rent shall
be pro rated as to any partial month (subject to adjustment as provided in
Sections 5.2, 14.5, 15.3, 15.5, and 15.6); and
(b) Percentage Rent: For each Fiscal Year during the Term commencing
with the Fiscal Year ending December 31, 1997, Tenant shall pay percentage rent
("Percentage Rent") quarterly in an amount calculated by the following
formulas:
(i) Percentage Rent from Room Revenues:
The Percentage Rent applicable to the Room
Revenues of the Leased Property as
set forth on Exhibit B hereto
less
an amount equal to the Base Rent paid year to
date for the applicable Fiscal Year
less
an amount equal to Percentage Rent from Room
Revenues paid year to date for the
applicable Fiscal Year
equals
Percentage Rent from Room Revenues for the
applicable quarter.
(ii) Percentage Rent from Other Revenues:
5% of Other Revenues.
(c) Officer's Certificates. Additionally an Officer's Certificate
shall be delivered to Lessor quarterly, together with such quarterly Percentage
Rent payment, setting forth the calculation of such rent payment for such
quarter within 45 days after each of the first three quarters of each Fiscal
Year (or part thereof) in the Term. Such quarterly payments shall be based on
the formulas set forth in Section 3.1(b). There shall be no reduction in the
Base Rent regardless of the result of the Revenue computations.
In addition, on or before March 31 each year, commencing with
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March 31, 1998, Lessee shall deliver to Lessor an Officer's Certificate
reasonably acceptable to Lessor setting forth the computation of the actual
Percentage Rent that accrued for each quarter of the Fiscal Year that ended on
the immediately preceding December 31 and shall pay to Lessor Percentage Rent,
if due and payable, for the last quarter of the applicable Fiscal Year.
Additionally, if the annual Percentage Rent due and payable for any Fiscal Year
(as shown in the applicable Officer's Certificate) exceeds the amount actually
paid as Percentage Rent by Lessee for such year, Lessee also shall pay such
excess to Lessor at the time such certificate is delivered. If the Percentage
Rent actually due and payable for such Fiscal Year is shown by such certificate
to be less than the amount actually paid as Percentage Rent for the applicable
Fiscal Year, Lessor, at its option, shall reimburse such amount to Lessee or
credit such amount against the next month's Base Rent and, to the extent
necessary, the next quarter's Percentage Rent payments, which credits shall
continue until the amount due Lessee has been paid or otherwise discharged.
Any interest payable to Lessor 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 final reconciliation, taking into account
among other relevant adjustments, any adjustments which are accrued after such
expiration or termination date but which related to Percentage Rent accrued
prior to such termination date, and Lessee's good faith best estimate of the
amount of any unresolved contractual allowances, shall be made not later than
two years after such expiration or termination date, but Lessee shall advise
Lessor within 60 days after such expiration or termination date of Lessee's
best estimate at that time of the approximate amount of such adjustments, which
estimate shall not be binding on Lessee or have any legal effect whatsoever.
(c) Adjustments for Changes in CPI: The threshold set forth on
Exhibit B hereto which is used to determine when there will be a change in the
percentage that is used to calculate Percentage Rent from Room Revenues shall
be adjusted annually as of the first day of each Fiscal Year commencing January
1, 1997, for any increase, but not because of any decrease, in the CPI from the
beginning of the previous Fiscal Year.
3.2 Confirmation of Percentage Rent. Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices, and in accordance with
generally accepted accounting principles and the Uniform System, that will
accurately record all data necessary to compute Percentage Rent, and Lessee
shall retain, for at least 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
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to such accounting system showing all data necessary to compute Percentage Rent
for the applicable Fiscal Years. Lessor, at its expense (except as provided
hereinbelow), shall have the right from time to time by its accountants or
representatives to audit the information that formed the basis for the data set
forth in any Officer's Certificate provided under Section 3.1(c) and, in
connection with such audits, to examine all Lessee's records (including
supporting data and sales and excise tax returns) reasonably required to verify
Percentage Rent, subject to any prohibitions or limitations on disclosure of
any such data under Legal Requirements. If any such audit discloses a
deficiency in the payment of Percentage Rent, and either Lessee agrees with the
result of such audit or the matter is otherwise determined or compromised,
Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally
agreed or determined, together with interest at the Overdue Rate from the date
when said payment should have been made to the date of payment thereof;
provided, however, that as to any audit that is commenced more than two years
after the date Percentage Rent for any Fiscal Year is reported by Lessee to
Lessor, the deficiency, if any, with respect to such Percentage Rent shall bear
interest at the Overdue Rate only from the date such determination of
deficiency is made unless such deficiency is the result of gross negligence or
willful misconduct on the part of Lessee, is which case interest at the Overdue
Rate will accrue from the date such payment should have been made to the date
of payment thereof. If any such audit discloses that the Percentage Rent
actually due from Lessee for any Fiscal Year exceed those reported by Lessee by
more than 3%, Lessee shall pay the cost of such audit and examination. Any
proprietary information obtained by Lessor pursuant to the provisions of this
Section shall be treated as confidential, except that such information may be
used, subject to appropriate confidentiality safeguards, in any litigation
between the parties and except further that Lessor may disclose such
information to prospective lenders. The obligations of Lessee contained in
this Section shall survive the expiration or earlier termination of this Lease.
3.3 Additional Charges. In addition to the Base Rent and
Percentage Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions that Lessee
assumes or agrees to pay under this Lease, and (b) in the event of any failure
on the part of Lessee to pay any of those items referred to in clause (a) of
this Section 3.3, Lessee also will promptly pay and discharge every fine,
penalty, interest and cost that may be added for non-payment or late payment of
such items (the items referred to in clauses (a) and (b) of this Section 3.3
being additional rent hereunder and being referred to herein collectively as
the "Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statutes or otherwise in the case of non-payment of the Additional Charges as
in the case of non-payment of the Base Rent. If any installment of Base Rent,
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Percentage Rent or Additional Charges (but only as to those Additional Charges
that are payable directly to Lessor) shall not be paid within fifteen calendar
days after the due date, Lessee will pay Lessor on demand, as Additional
Charges, a late charge (to the extent permitted by law) equal to five percent
(5%) of such overdue amount together with interest computed at the Overdue
Rate on such overdue amount from the due date to the date of payment thereof.
To the extent that Lessee pays any Additional Charges to Lessor pursuant to any
requirement of this Lease, Lessee shall be relieved of its obligation to pay
such Additional Charges to the entity to which they would otherwise be due and
Lessor shall pay same from monies received from Lessee.
3.4 Net Lease Provision. The Rent shall be paid absolutely net to
Lessor, so that this Lease shall yield to Lessor the full amount of the
installments of Base Rent, Percentage Rent and Additional Charges throughout
the Term, all as more fully set forth in Article V, but subject to any other
provisions of this Lease that expressly provide for adjustment or abatement of
Rent or other charges or expressly provide that certain expenses or maintenance
shall be paid or performed by Lessor.
ARTICLE IV
4.1 Payment of Impositions. Subject to Article XII relating to
permitted contents, Lessee will pay, or cause to be paid, all Impositions
(other than Real Estate Taxes, which shall be paid by Lessor) before any fine,
penalty, interest or cost may be added for non- payment, such payments to be
made directly to the taxing or other authorities where feasible, and will
promptly furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. Lessee's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof. If any such Imposition may, at
the option of the taxpayer, lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition), Lessee may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and in such event, shall pay such
installments during the Term hereof (subject to Lessee's right to contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Lessor, at its expense, shall, to the extent required or permitted by
applicable law, prepare and file all tax returns in respect of Lessor's net
income, gross receipts, sales and use, single business, transaction privilege,
rent, ad valorem, franchise taxes, Real Estate Taxes and taxes on its capital
stock, and Lessee, at its expense, shall, to the extent required or permitted
by applicable laws and regulations prepare and file all other tax returns and
reports in respect of any Imposition as may be required
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by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Lessee, the same shall be paid
over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. If an Event of Default shall have occurred and be
continuing, any such refund shall be paid over to or retained by Lessor. Any
such funds retained by Lessor due to an Event of Default shall be applied as
provided in Article XVI. Lessor and Lessee shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any required
returns and reports. Lessee shall file all personal property tax returns in
such jurisdictions where it is legally required to so file. Lessor, to the
extent it possesses the same, and Lessee, to the extent it possesses the same,
will provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Lessor is legally required to file personal property tax
returns, Lessor shall provide Lessee with copies of assessment notices in
sufficient time for Lessee to file a protest. Lessee may, upon notice to
Lessor, at Lessee's option and at Lessee's sole expense, protect, appeal, or
institute such other proceedings (in it's or Lessor's name) as Lessee may deem
appropriate to effect a reduction of real estate or personal property
assessments for those Impositions to be paid by Lessee, and Lessor, at Lessee's
expense as aforesaid, shall fully cooperate with Lessee in such protest,
appeal, or other action. Lessee hereby agrees to indemnify, defend, and hold
harmless Lessor from and against any claims, obligations, and liabilities
against or incurred by Lessor in connection with such cooperation. Billings
for reimbursement of personal property taxes by Lessee to Lessor 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. Lessor,
however, reserves the right to affect any such protest, appeal or other action
and, upon notice to Lessee, shall control any such activity, which shall then
go forward at Lessor's sole expense. Upon such notice, Lessee, at Lessor's
expense, shall cooperate fully with such activities.
4.2 Notice of Impositions. Lessor shall give prompt Notice to
Lessee of all Impositions payable by Lessee hereunder of which Lessor at any
time has knowledge, provided that Lessor's failure to give any such Notice
shall in no way diminish Lessee's obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Lessee receives Notice of any Imposition which it is
obligated to pay during the first taxing period applicable thereto.
4.3 Adjustment of Impositions. Impositions imposed in respect of
the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after
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termination shall survive such termination.
4.4 Utility Charges. Lessee will be solely responsible for obtaining
and maintaining utility services to the Leased Property and will pay or cause
to be paid all charges for electricity, gas, oil, water, sewer and other
utilities used in the Leased Property during the Term.
4.5 Insurance Premiums. Lessee will pay or cause to be paid all
premiums for the insurance coverages required to be maintained by it under
Article XIII.
ARTICLE V
5.1 No Termination, Abatement, etc. Except as otherwise
specifically provided in this Lease, and except for loss of Franchise Agreement
solely by reason of any action or inaction by Lessor, Lessee, to the extent
permitted by law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the written consent of Lessor to
modify, surrender or terminate the same, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of the Rent, or setoff against the
Rent, nor shall the obligations of lessee be otherwise affected by reason of
(a) any damage to, or destruction of, any Leased Property or any portion
thereof from whatever cause for any Taking of the Leased Property or any
portion thereof, (b) the lawful or unlawful prohibition of, or restriction
upon, Lessee's use of the Leased Property, or any portion thereof, or the
interference with such use by any Person, corporation, partnership or other
entity, or by reason of eviction by paramount title, (c) any claim which Lessee
has or might have against Lessor by reason of any default or breach of any
warranty by Lessor under this Lease or any other agreement between Lessor and
Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceeding affecting Lessor or any assignee or
transferee of Lessor, or (e) for any other cause whether similar or dissimilar
to any of the foregoing other than a discharge of Lessee from any such
obligations as a matter of law. Lessee hereby specifically waives all rights,
arising from any occurrence whatsoever, which may now 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
Lessee to any abatement, reduction, suspension or deferment of the Rent or
other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessee hereunder shall be separate
and independent covenants and agreements and the Rent and all other sums
payable by Lessee hereunder shall continue to be payable in all events unless
the obligations to pay the same shall be terminated pursuant to the express
provisions of the Lease or by termination of this Lease other than by reason of
an Event of Default.
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5.2 Abatement Procedures. In the event of a partial Taking as
described in Section 15.5, the Lease shall not terminate, but the Base Rent
shall be abated in the manner and to the extent that is fair, just and
equitable to both Lessee and Lessor, taking into consideration, among other
relevant factors, the number of usable rooms, the amount of square footage, or
the revenues affected by such partial Taking. If Lessor and Lessee are unable
to agree upon the amount of such abatement within 30 days after such partial
Taking, the matter may be submitted by either party to a court of competent
jurisdiction for resolution.
ARTICLE VI
6.1 Ownership of the Leased Property. Lessee acknowledges that
the Leased Property is the property of Lessor and that Lessee has only the
right to the possession and use of the Leased Property upon the terms and
conditions of this Lease.
6.2 Lessee's Personal Property. Lessee will acquire and maintain
throughout the Term such Inventory as is required to operate the Leased
Property in the manner contemplated by this Lease. Lessee may (and shall as
provided hereinbelow), at its expense, install, affix or assemble or place on
any parcels of the Land or in any of the Leased Improvements, any items of
personal property (including Inventory) owned by Lessee. Lessee, at the
commencement of the Term, and from time to time thereafter, shall provide
Lessor with an accurate list of all such items of Lessee's personal property
(collectively, the "Lessee's Personal Property"). Lessee may, subject to the
first sentence of this Section 6.2 and the conditions set forth below, remove
any of Lessee's Personal Property set forth on such list at any time during the
Term or upon the expiration or any prior termination of the Term. All of
Lessee's Personal Property, other than Inventory, not removed by Lessee within
ten days following the expiration or earlier termination of the Term shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving Notice thereof to Lessee,
without any payment to Lessee and without any obligation to account therefor.
Lessee will, at its expense, restore the Leased Property to the condition
required by Section 9.1(d), including repair of all damage to the Leased
Property caused by the removal of Lessee's Personal Property, whether effected
by Lessee or Lessor. Upon the expiration or earlier termination of the Term,
Lessee shall sell and Lessor, or its designee, shall have the option to
purchase all Inventory on hand at the Leased Property at the time of such
expiration or termination for a sale price equal to the lesser of Lessee's
actual cost of such Inventory, as evidenced by invoices, receipts, or other
reasonable documentation, or the then Fair Market Value thereof. The option
provided for herein shall be exercised by written notice to Lessee which Lessor
shall give on or before the date of such expiration or earlier termination.
Lessee
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may make such financing arrangements, title retention agreements, leases or
other agreements with respect to the Lessee's Personal Property as it sees fit
provided that Lessee first advises Lessor of any such arrangement and such
arrangement expressly provides that in the event of Lessee's default
thereunder, Lessor (or its designee) may assume Lessee's obligations and rights
under such arrangement.
6.3 Lessor's Lien. To the fullest extent permitted by applicable
law, Lessor is granted a lien and security interest on all Lessee's personal
property now or hereinafter placed in or upon the Leased Property, and such
lien and security interest shall remain attached to such Lease's personal
property until payment in full of all Rent and satisfaction of all of Lessee's
obligations hereunder; provided, however, Lessor shall subordinate its lien and
security interest to that of any non-Affiliate of Lessee which finances such
Lessee's personal property or any non-Affiliate conditional seller of such
Lessee's personal property, the terms and conditions of such subordination to
be satisfactory to Lessor in the exercise of reasonable discretion. Lessee
shall, upon the request of Lessor, execute such financing statements or other
documents or instruments reasonably requested by Lessor to perfect the lien and
security interests herein granted.
ARTICLE VII
7.1 Condition of the Leased Property. Lessee acknowledges receipt
and delivery of possession of the Leased Property. Lessee has examined and
otherwise has knowledge of the condition of the Leased Property and has found
the same to be satisfactory for its purposes hereunder. Lessee is leasing the
Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property.
LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.
Provided, however, to the extent permitted by law, Lessor hereby assigns to
Lessee all of Lessor's rights to proceed against any predecessor in title other
than Lessee (or an Affiliate of Lease which conveyed the Property to Lessor)
for breaches of warranties or representations or for latent defects in the
Leased Property. Lessor shall fully cooperate with Lessee in the prosecution
of any such claim, in Lessor's or Lessee's name, all at Lessee's sole cost and
expense. Lessee hereby agrees to indemnify, defend and hold harmless Lessor
from and against any claims, obligations and liabilities against or incurred by
Lessor in connection with such cooperation.
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7.2 Use of the Leased Property.
(a) Lessee covenants that it will proceed with all due
diligence and will exercise its best effort to obtain and to maintain all
approvals needed to use and operate the Leased Property and the Facility under
applicable local, state and federal law.
(b) Lessee shall use or cause to be used the Leased Property
only as a hotel facility, and for such other uses as may be necessary or
incidental to such use or such other use as otherwise approved by Lessor (the
"Primary Intended Use"). Lessee shall not use the Leased Property or any
portion thereof for any other use without the prior written consent of Lessor,
which consent may be granted, denied or conditioned in Lessor's sole
discretion. No use shall be made or permitted to be made of the Leased
Property, and no acts shall be done, which will cause the cancellation or
increase the premium of any insurance policy covering the Leased Property or
any part thereof (unless another adequate policy satisfactory to Lessor is
available and Lessee pays any premium increase), nor shall Lessee sell or
permit to be kept, used or sold in or about the Leased Property any article
which may be prohibited by law or fire underwriter's regulations. Lessee
shall, at its sole cost, comply with all of the requirements pertaining to the
Leased Property of any insurance board, association, organization or company
necessary for the maintenance of insurance, as herein provided, covering the
Leased Property and Lessee's Personal Property.
(c) Subject to the provisions of Articles XIV, XV, XXI
and XXII, Lessee covenants and agrees that during the Term it will (1) operate
continuously the Lease Property as a hotel facility, (2) keep in full force
and effect and comply with all the provision of the Franchise Agreement, (3)
not terminate or amend the Franchise Agreement without the consent of Lessor,
(4) maintain appropriate certifications and licenses for such use and (5) will
seek to maximize the gross revenues generated therefrom consistent with sound
business practices.
(d) Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Lessee cause or
permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased
Property or any portion thereof, or Lessee's Personal Property, to be used in
such a manner as (1) might reasonably tend to impair Lessor's (or Lessee's, as
the case may be) title thereto or to any portion thereof, or (2) may reasonably
make possible a claim or claims of adverse usage or adverse possession by the
public, as such, or of implied dedication of the Lease Property or any portion
thereof, except as necessary in the ordinary and prudent operation of the
Facility on the Leased Property.
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(f) Neither Lessee or an Affiliate of Lessee shall
operate or manage any hotel or motel that is within the greater of (i) a 10
mile radius of the Leased Property or (ii) the area surrounding the Leased
Property defined as the Protected Area in the Franchise Agreement other than
pursuant to this Lease or another lease, agreement or arrangement with Lessor
or an Affiliate of Lessor.
7.3 Lessor to Grant Easements, etc. Lessor will, from time to
time, so long as no Event of Default has occurred and is continuing, at the
request of Lessee and at Lessee's cost and expense (but subject to the approval
of Lessor, which approval shall not be unreasonably withheld or delayed), (a)
grant easements and other rights in the nature of easements with respect to the
Leased Property to third parties, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, (c) dedicate or transfer unimproved portions of the Leased Property
for road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property and (f) execute and deliver to any person any instrument appropriate
to confirm or effect such grants, releases, dedications, transfers, petitions
and amendments (to the extent of its interests in the Leased Property), but
only upon delivery to Lessor of an Officer's Certificate stating that such
grant, releases, dedication, transfer, petition or amendment is not detrimental
to the proper conduct of the business of Lessee on the Leased Property and does
not materially reduce the value of the Leased Property.
ARTICLE VIII
8.1 Compliance with Legal and Insurance Requirements, etc.
Subject to Section 8.3(b) below and Article XII relating to permitted contests,
Lessee, at its expense, will promptly (a) comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property, and (b) procure,
maintain and comply with appropriate licenses and other authorizations required
by any use of the Leased Property and Lessee's Personal Property than being
made, and for the proper erection, installation, operation and maintenance of
the Leased Property or any part thereof.
8.2 Legal Requirement Covenants. Subject to Section 8.3(b) below,
Lessee covenants and agrees that the Leased Property and Lessee's Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not
permit or suffer to exist any unlawful use of the Leased Property by others.
Lessee shall acquire and maintain all appropriate licenses, certifications,
permits ad other authorizations and approvals needed to operate the
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Leased Property in its customary manner for the Primary Intended Use, and any
other lawful use conducted on the Leased Property as may be permitted from time
to time hereunder. Lessee further covenants and agrees that Lessee's use of
the Leased Property and maintenance, alteration, and operation of the same, and
all parts thereof, shall at all times conform to all Legal Requirements, unless
the same are finally determined by a court of competent jurisdiction to be
unlawful (and Lessee shall cause all such sub-tenants, invitees or others to so
comply with all Legal Requirements). Lessee may, however, upon prior Notice to
Lessor, contest the legality or applicability of any such Legal Requirement or
any license or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights hereunder, and
at Lessee's sole expense. If by the terms of any such Legal Requirement
compliance therewith pending the persecution of any such proceeding may legally
be delayed without the incurrence of any lien, charges or liability of any kind
against the Facility or Lessee's leasehold interest therein and without
subjecting Lessee or Lessor to any liability, civil or criminal, for failure so
to comply therewith, Lessee may delay compliance therewith until the final
determination of such proceeding. If any lien, charge or civil or criminal
liability would be incurred by reason of any such delay, Lessee, on the prior
written consent of Lessor, which consent shall not be unreasonably withheld,
may nonetheless contest as aforesaid any delay as aforesaid provided that such
delay would not subject Lessor to criminal liability and Lessee both (a)
furnishes to Lessor security reasonably satisfactory to Lessor against any loss
or injury by reason of such contest or delay and (b) prosecutes the contest
with due diligence and in good faith.
8.3 Environmental Covenants. Lessor and Lessee (in addition to,
and not in diminution of, Lessee's covenants and undertakings in Sections 8.1
and 8.2 hereof) covenant and agree as follows:
(a) At all times hereafter until such time as all
liabilities, duties or obligations of Lessee to the Lessor under the Lease have
been satisfied in full, Lessee shall fully comply with all Environmental Laws
applicable to the Leased Property and the operations thereon. Lessee agrees to
give Lessor prompt written notice of (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 known by
Lessee at, on, in or under any property adjacent to the Leased Property; and
(4) all facts, events or conditions that could reasonably lead to the
occurrence of any of the above-referenced matters.
(b) Lessor hereby agrees to defend, indemnify and save
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harmless any and all Lessee Indemnified Parties from and against any and all
Environmental Liabilities other than Environmental Liabilities which were
caused by the acts or grossly negligent failures to act of Lessee.
(c) Lessee hereby agrees to defend, indemnify and save
harmless any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities caused by the acts or grossly negligent failures to
act of Lessee.
(d) If any Proceeding is brought against any Indemnified
Party in respect of an Environmental Liability with respect to which such
Indemnified Party may claim indemnification under either Section 8.3(b) or (c),
the Indemnifying Party, upon request, shall at its sole expense resist and
defend such 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.
(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 information 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) wit respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on
claims the Indemnified
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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
of realization of insurance proceeds or income tax benefits or recoveries from
third parties shall be taken into account in determining the amount of
reduction of damages. Each Indemnified Party agrees to use its reasonable
efforts to pursue, or assign to Lessee or Lessor, as the case may be, any
claims or rights it may have against any third party which would materially
reduce the amount of damages otherwise incurred by such Indemnified Party.
Notwithstanding anything to the contrary contained in this
Agreement, if Lessor shall become entitled to the possession of the Leased
Property by virtue of the termination of the Lease or repossession of the
Leased Property, then Lessor may assign its indemnification rights under
Section 8.3 of this Agreement (but not any other rights hereunder) to any
Person to whom the Lessor subsequently transfers the Leased Property, subject
to the following conditions and limitations, each of which shall be deemed to
be incorporated into the terms of such assignment, whether or not specifically
referred to therein:
(1) The indemnification rights referred to in
this section may be assigned only if a known Environmental
Liability then exists or if a Proceeding is then pending or,
to the knowledge of Lessee or Lessor, then threatened with
respect to the Leased Property;
(2) Such indemnification rights shall be limited
to Environmental Liabilities relating to or specifically
affecting the Leased Property; and
(3) Any assignment of such indemnification rights
shall be limited to the immediate transferee of Lessor, and
shall not extend to any such transferee's successors or
assigns.
ARTICLE IX
9.1 Maintenance and Repair. (a) Lessee, at its sole expense,
will keep the Leased Property and all private roadways, sidewalks and curbs
appurtenant thereto that are under Lessee's control, including windows and
plate glass, parking lots, mechanical, electrical and plumbing systems and
equipment (including conduit and ductware), and non-load bearing interior
walls, in good order and repair, except for ordinary wear and tear (whether or
not the need for such repairs occurred as a result of Lessee's use, any prior
use, the elements or the age of the Leased Property, or any portions thereof),
and, except as otherwise provided in Section 9.1(b), Article XIV or Article XV,
with reasonable promptness, make all necessary and appropriate repairs,
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replacements, and improvements thereto of every kind and nature, whether
interior or exterior ordinary or extraordinary, foreseen or unforseen or
arising by reason of a condition existing prior to the commencement of the Term
of this Lease (concealed or otherwise), or required by any governmental agency
having jurisdiction over the Leased Property, except as to the structural
elements of the Leased Improvements. Lessee, however, shall be permitted to
prosecute claims against Lessor's predecessor in title for breach of any
representation or warranty or for any latent defects in the Leased Property to
be maintained by Lessee unless Lessor is already diligently pursuing such a
claim. All repairs shall, to the extent reasonably achievable, be at least
equivalent in quality to the original work. Lessee will not take or omit to
take any action, the taking or omission of which might materially impair the
value or the usefulness of there Leased Property or any part thereof for its
Primary Intended Use.
(b) Notwithstanding Lessee's obligations under Section
9.1(a) above, unless caused by Lessee's negligence or willful misconduct or
that of its employees or agents, Lessor shall be required to bear the cost of
painting (or repainting) the exterior of the Leased Property and maintaining
any underground utilities and the structural elements of the Leased
Improvements, including the roof of the Facility (but excluding windows and
plate glass, parking lots, mechanical, electrical and plumbing systems and
equipment, including conduit and ductware, and non-load bearing walls). Except
as set forth in the preceding sentence and in Article XL, Lessor shall not
under any circumstances be required to build or rebuild any improvement on the
Leased Property, or to make any repairs, replacements, alterations, restoration
or renewals of any nature or description to the Leased Property, whether
ordinary or extraordinary, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto, in connection with this Lease, or to maintain
the Leased Property in any way. Lessee hereby waives, to the extent permitted
by law, the right to make repairs at the expenses of Lessor pursuant to any law
in effect at the time of the execution of this Lease or hereafter enacted.
Lessor shall have the right to give, record and post, as appropriate, notices
of nonresponsibility under any mechanic's lien laws now or hereafter existing.
(c) Nothing contained in this Lease and no action or
inaction by Lessor shall be construed as (1) constituting the request of
Lessor, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property or any part
thereof, or (2) giving Lessee any right, power or permission to contract for or
permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Lessor in
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respect thereof or to make any agreement that may create, or in any way be the
basis for any right, title, interest, lien, claim or other encumbrance upon the
estate of Lessor in the Leased Property, or any portion thereof.
(d) Lessee will, upon the expiration or prior termination
of the Term, vacate and surrender the Leased Property to Lessor in the
condition in which the Leased Property was originally received from Lessor,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Lease and except for ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased Property in good
order and repair, as would a prudent owner, during the entire Term of the
Lease), or damage by casualty or Condemnation (subject to the obligations of
Lessee to restore or repair as set forth 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 Lessor or at the behest of any
person affected by an such encroachment, violation or impairment, Lessee shall,
at its expense, subject to its right to contest the existence of any
encroachment, violation or impairment and 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 Lessor or
Lessee or (b) make such changes in the Leased Improvements, and take such other
action, as Lessee in the good faith exercise of its judgment deems reasonably
practicable to remove such encroachment, and to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased Improvements for the
Primary Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation, impairment
or encroachment. Any such alteration shall be made in conformity with the
applicable requirements of Article X. Lessee's obligations under this Section
9.2 shall be in addition to and shall in no way discharge or diminish any
obligation of any insurer under any policy of title or other insurance held by
Lessor.
ARTICLE X
10.1 Alterations. Subject to the provisions hereinafter provided
for Lessor's consent, Lessee shall have the right to make
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additions, modifications or improvements to the Leased Property from time to
time as Lessee, in its discretion, 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 Lessee
to comply with the provisions of this Lease. The cost of such additions,
modifications or improvements to the Leased Property shall be paid by Lessee,
and all such additions, modifications and improvements shall, without payment
by Lessor at any time, be included under the terms of this Lease and upon
expiration or earlier termination of this Lease shall pass to and become the
property of Lessor.
Notwithstanding the foregoing, Lessee shall not make any additions,
modifications or improvements to the Leased Property without Lessor's prior
written consent if any such addition, modification or improvement involves
puncturing, relocating or removing the roof or any existing walls or the cost
thereof exceeds $10,000. If Lessor's consent is required, Lessee shall present
to Lessor, in written form, detailed plans for any such proposed addition,
modification or improvement, together with cost estimates and the name of the
contractor who will perform the work and the name of the architect, if any.
All consents by Lessor shall be deemed conditioned upon: (i) Lessee's acquiring
all applicable permits required by governmental authorities; (ii) the
furnishing of copies of such permits, together with a copy of the plans and
specifications to Lessor prior to commencement of work thereon and (iii) the
compliance by Lessee of all conditions of said permits in a prompt and
expeditious manner. Lessor, at its option, may require that a lien and
completion bond be furnished in an amount equal to 1-1/2 times the estimated
cost of the work. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to be furnished to or for Lessee at or for use
on the Leased Property, which claims are or may be secured by any mechanics' or
materialmen's lien against the Leased Property or any interest therein. Lessee
shall give Lessor not less than ten days notice prior to the commencement of
any work in, on, or about the Leased Property and Lessor shall have the right
to post notices of non-responsibility in or on the Leased Property, as provided
by law.
10.2 Salvage. All materials which are scrapped or removed
in connection with the making of repairs required by Articles IX or X shall be
or become the property of Lessor or Lessee depending on which party is paying
for or providing the financing for such work; provided, however, Lessee shall
not be entitled to retain any salvaged materials to the extent the value
thereof exceeds the cost of any repairs or replacements made by Lessee.
10.3 Joint Use Agreements. If Lessee constructs additional
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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
Liens. Subject to the provision of Article XII relating to permitted
contests, Lessee will not directly or indirectly create or allow to remain and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, included as exceptions in the title policy
insuring Lessor's interest in the Leased Property, (c) restrictions, liens and
other encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for
those taxes upon Lessor which Lessee is not required to pay hereunder (e)
subleases permitted by Article XXV hereof, (f) liens for Impositions or for
sums resulting from noncompliance with Legal Requirements so long as (1) the
same are not yet payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, (g) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due provided that (1) the payment
of such sums shall not be postponed under any related contract for more than 60
days after the completion of the action giving rise to such lien and such
reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII hereof, and (h) any liens which are the responsibility of Lessor pursuant
to the provisions of Article XXXIV of this Lease.
ARTICLE XII
Permitted Contests. Lessee shall have the right to contest the
amount or validity of any Imposition to be paid by Lessee or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy,
encumbrance, charge or claim ("Claims") not otherwise permitted by Article XI,
by appropriate legal proceedings in good faith and with due diligence (but this
shall not be deemed or construed in any way to relieve, modify or extend
Lessee's covenants to pay or its covenants to cause to be paid any such charges
at the time and in the manner as in this Article provided),
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on condition, however, that such legal proceedings shall not operate to relieve
Lessee from its obligations hereunder and shall not cause the sale or risk the
loss of the Leased Property, or any part thereof, or cause Lessor or Lessee 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 Lessor,
Lessee shall either (a) provide a bond or other assurance reasonably
satisfactory to Lessor that all Claim which may be assessed against the Leased
Property together with interest and penalties, if any, thereon will be paid, or
(b) deposit within the time otherwise required for payment with a bank or trust
company as trustee upon terms reasonably satisfactory to Lessor, as security
for the payment of such Claims, money in an amount sufficient to pay the same,
together with interest and penalties in connection therewith, as to all Claims
which may be assessed against or become a Claim on the Leased Property, or any
part thereof, in said legal proceedings. Lessee shall furnish Lessor and any
lender of Lessor with reasonable evidence of such deposit within five days of
the same. Lessor agrees to join in any such proceedings if the same be
required to legally prosecute such contest of the validity of such Claims;
provided however, that Lessor shall not thereby be subjected to any liability
for the payment of any costs or expenses in connection with any proceedings
brought by Lessee; and Lessee covenants to indemnify and save harmless Lessor
form any such costs or expenses. Lessee shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Lessee or paid by Lessor and for which Lessor has been fully reimbursed. In
the event that Lessee fails to pay any Claims when due or to provide the
security thereof as provided in this paragraph and to diligently prosecute any
contest of the same, Lessor may, upon ten days advance Notice to Lessee, pay
such charges together with any interest and penalties and the same shall be
payable by Lessee to Lessor as Additional Charges at the next Payment Date
provided for in this Lease. Provided, however, that should Lessor reasonably
determine that the giving of such Notice would risk loss to the Leased Property
or cause damage to Lessor, then Lessor shall give such Notice as is practical
under the circumstances. Lessor reserves the right to contest any of the
Claims as its expense not pursued by Lessee. Lessor and Lessee agree to
cooperate in coordinating the contest of any claims.
ARTICLE XIII
13.1 General Insurance Requirements. During the Term of this
Lease, Lessor, as hereinafter provided in subparagraph (a) below, and Lessee,
as hereinafter provided in subparagraph (b) below, shall at all time keep the
Leased Property insured with the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to use
insurance in the State. The policies must name Lessor as the insured or as an
additional named insured, as the case may be. Losses shall be payable to
Lessor or Lessee as provided in this Lease. Any loss adjustment shall
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require the written consent of Lessor and Lessee, each acting reasonably and in
good faith. Evidence of insurance shall be deposited with Lessor. The
policies on the Leased Property, including the Leased Improvements, Fixtures
and Lessee's Personal Property, shall include:
(a) Lessor shall obtain the following insurance and pay all
premiums associated therewith:
(1) Building insurance on the "Special From"
(formerly "All Risk" form)(including earthquake and flood in reasonable amounts
as determined by Lessor) in an amount not less than 100% of the then full
replacement cost thereof (as defined in Section 13.2) or such other amount
which is acceptable to Lessor, and personal property insurance on the "Special
Form" in the full amount of the replacement cost thereof;
(2) Insurance for loss or damage (direct and
indirect) from steam boilers, pressure vessels or similar apparatus, now or
hereafter installed in the Facility, in the minimum amount of $5,000,000 or in
such greater amounts as are then customary or as may be reasonably requested by
Lessor from time to time;
(3) Loss of income insurance on the "Special
Form", in the amount of one year Base Rent for the benefit of Lessor, and
unless otherwise agreed by the parties, without duplication, business
interruption insurance on the "Special Form" in the amount of one year's gross
revenues of the Facility for the benefit of Lessor and Lessee to the extent of
their respective interests in such revenues;
(4) Insurance covering such other hazards and in
such amounts as may be customary for comparable properties in the area of the
Leased Property and is available from insurance companies, insurance pools or
other appropriate companies authorized to do business in the State at rates
which are economically practicable in relation to the risks covered as may be
reasonably requested by Lessor;
(b) Lessee shall obtain the following insurance and, except
as hereinafter provided, pay all premiums associated therewith;
(1) Commercial general liability insurance, with
amounts not less than $10,000,000 covering each of the following: bodily
injury, death, or property damage liability per occurrence, personal and
advertising injury, general aggregate, products and completed operations, with
respect to Lessor, and "all risk legal liability" (including liquor law or
"dram shop" liability) with respect to Lessor and Lessee;
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(2) Fidelity bonds with limits and deductibles as
may be reasonably requested by Lessor, covering Lessee's employees in job
classifications normally bonded under prudent hotel management practices in the
United States or otherwise required by law;
(3) Workmen's compensation insurance to the
extent necessary to protect Lessor and the Leased Property against Lessee's
xxxxxxx'x compensation claims;
(4) Vehicle liability insurance for owned,
non-owned, and hired vehicles, in the amount of $1,000,000;
(5) Such other insurance as Lessor may reasonably
request for facilities such as the Leased Property and the operation thereof;
and
Lessee shall keep in force the foregoing insurance coverages
at its expense and any other "casualty" coverages required by Lessor.
13.2 Replacement Cost. The term "full replacement cost" as
used herein shall mean the actual replacement cost of the Leased Property
requiring replacement from time to time including an increased cost of
construction endorsement, if available, and the cost of debris removal. In the
event either party believes that full replacement cost (the then-replacement
cost less such exclusions) has increased or decreased at any time during the
Lease Term, it shall have the right to have such full replacement cost
re-determined.
13.3 Worker's Compensation. Lessee, at its sole cost, shall at
all times maintain adequate worker's compensation insurance coverage for all
persons employed by Lessee on the Leased Property. Such worker's compensation
insurance shall be in accordance with the requirements of applicable local,
state and federal law.
13.4 Waiver of Subrogation. All insurance policies carried by
Lessor or Lessee covering the Leased Property, the Fixtures, the Facility,
Lessee's Personal Property and Worker's Compensation, including, without
limitation, contents, fire and casualty insurance, shall expressly waive any
right of subrogation on the party of the insurer against the other party. The
parties hereto agree that their policies will include such waiver clause or
endorsement so long as the same are obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may pay the
same, but shall not be obligated to do so.
13.5 Form Satisfactory, etc. All of the policies of insurance
referred to in this Article XIII shall be written in a form, with deductibles
and by insurance companies satisfactory to Lessor.
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Subject to the right to reimbursement or credit specified in Section 13.1 (b),
Lessor and Lessee, in a timely manner, shall pay all of the premiums for the
insurance coverage provided for in this Article XIII in the manner provided in
Section 13.1 (a) and Section 13.1 (b), and the party responsible for obtaining
such insurance shall deliver such policies or certificates thereof to the other
party prior to their effective date (and, with respect to any renewal policy,
30 days prior to the expiration of the existing policy), and in the event of
the failure of the party responsible for obtaining any such insurance coverage
either to effect such insurance as herein called for or to pay the premiums
therefor, or to deliver such policies or certificates thereof to the other
party at the times required, such other party shall be entitled, but shall have
no obligation, to affect such insurance and pay the premiums therefor, and the
party responsible for obtaining any such insurance coverage shall reimburse
such other party for any premium or premiums paid by such other party for the
coverages required under Sections 13.1(a) and 13.1(b) upon written demand
therefor. Lessee's failure to repay the same within 30 days after Notice of
such failure from Lessor shall constitute an Event of Default within the
meaning of Section 16.1(a). Each insurer mentioned in this Article XIII shall
agree, by endorsement to the policy or policies issued by it, or by independent
instrument furnished to Lessor and Lessee, that it will give to Lessor and
Lessee 30 days' written notice before the policy or policies in question shall
be materially altered, allowed to expire or canceled.
13.6 Increase in Limits. If either Lessor or Lessee at any
time deems the limits of the personal injury or property damage under the
comprehensive public liability insurance then carried to be either excessive or
insufficient, Lessor or Lessee shall endeavor in good faith to agree on the
proper and reasonable limits for such insurance to be carried and such
insurance shall thereunder be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section.
13.7 Blanket Policy. Notwithstanding anything to be contrary
contained in this Article XIII, Lessor or Lessee may bring the insurance
provided for herein to be obtained by Lessor or Lessee, as the case may be,
within the coverage of a so called blanket policy or policies of insurance
carried and maintained by Lessor or Lessee, as the case may be; provided,
however, that the coverage afforded by such policy or policies will not be
reduced or diminished or otherwise be different form that which would exist
under a separate policy meeting all other requirements of this Lease by reason
of the use of such blanket policy of insurance, and provided further that the
requirements of this Article XIII are otherwise satisfied.
13.8 No Separate Insurance. Lessee shall not on Lessee's own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or
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contributing in the event of loss with that required in this Article to be
furnished, or increase the amount of any then existing insurance by securing an
additional policy or additional policies, unless all parties have an insurable
interest in the subject matter of the insurance, including in all cases Lessor,
are included therein as additional insureds, and the loss is payable under such
additional separate insurance in the same manner as losses are payable under
this Lease. Lessee shall immediately notify Lessor that Lessee has obtained
any such separate insurance or of the increasing of any of the amounts of the
then existing insurance.
ARTICLE XIV
14.1 Insurance Proceeds. Subject to the provisions of Section
14.6, all proceeds payable by reason of any loss or damage to the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article XIII of this Lease shall be paid to Lessor and held in
trust by Lessor in an interest-bearing account, shall be made available, if
applicable, for reconstruction or repair, as the case may be, of any damage to
or destruction of the Leased Property, or any portion thereof, and, if
applicable, shall be paid out by Lessor from time to time for the reasonable
costs of such reconstruction or repair upon satisfaction of reasonable terms
and conditions specified by Lessor. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased
Property shall be paid to Lessee. If neither Lessor nor Lessee is required or
elects to repair and restore, and the Lease is terminated without purchase by
Lessee as described in Section 14.2, all such insurance proceeds shall be
retained by Lessor. All salvage resulting from any risk covered by insurance
shall belong to Lessor.
14.2 Reconstruction in the Event of Damage or Destruction Covered
by Insurance.
(a) Except as provided in Section 14.6, if during the Term
the Leased Property is totally or partially destroyed by a risk covered by the
insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for its Primary Intended Use, Lessee shall, at Lessee's option,
within 30 days after the occurrence of such event notify Lessor that Lessee has
elected to either (1) restore the Facility to substantially the same condition
as existed immediately before the damage or destruction and otherwise in
accordance with the terms of the Lease, or (2) offer to acquire the Leased
Property from Lessor for a purchase price equal to the Rejectable Offer Price
of the Leased Property. If Lessee elects to restore the Facility, it shall
proceed to do so in a prompt and diligent manner and the insurance proceeds
shall be paid out by Lessor from time to time for the reasonable costs of such
restoration upon satisfaction of reasonable terms and conditions, and any
excess proceeds remaining after such
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restoration shall be paid to Lessor. If Lessee offers to acquire title to the
Leased Property and such offer is accepted by Lessor, Lessee shall receive the
insurance proceeds. If Lessee offers to acquire title to the Leased Property,
Lessor shall have a period of 60 days to accept Lessee's offer to purchase the
Leased Property. If Lessor does not accept the Lessee's offer, the Lease shall
terminate five days after the expiration of said 60 day period (or five days
after such earlier date as Lessor shall notify Lessee that it has rejected such
offer with respect to the Leased Property) without further liability hereunder
and Lessor shall be entitled to retain all insurance proceeds.
(b) Except as provided in Section 14.6, if during the
Term the Leased Property is partially destroyed by a risk covered by the
insurance described in Article XIII, but the Facility is not thereby rendered
Unsuitable for its Primary Use, Lessee shall restore in a prompt and diligent
manner 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. Such damage or destruction shall not terminate this Lease;
provided, however, that if Lessee cannot within a reasonable time obtain all
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 existed immediately prior to such damage or
destruction and otherwise in accordance with the terms of the Lease, Lessee may
offer to purchase the Leased Property for a purchase price equal to the
Rejectable Offer Price of the Leased Property determined without regard to such
damage or destruction. If Lessee makes such offer and Lessor does not accept
the same, Lessee shall withdraw such offer, in which event this Lease shall
remain in full force and effect and Lessee shall immediately proceed to restore
the Facility to substantially the same condition as existed immediately before
such damage or destruction and otherwise in accordance with the terms of the
Lease. If Lessee restores the Facility, the insurance proceeds shall be paid
out by Lessor form time to time for the reasonable costs of such restoration
upon satisfaction of reasonable terms and conditions specified by Lessor, and
any excess proceeds remaining after such restoration shall be paid to Lessor.
(c) If the cost of the repair or restoration exceeds the
amount of proceeds received by Lessor from the insurance required under Article
XIII, Lessee shall be obligated to contribute any excess amounts needed to
restore the Facility prior to commencing work thereon. Such difference shall
be paid by Lessee to Lessor to be held in trust, together with any other
insurance proceeds, for application to the cost of repair and restoration.
(d) If Lessor accepts Lessee's offer to purchase the
Leased Property under this Article, this Lease shall terminate as
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to the Leased Property upon payment of the purchase price, and Lessor shall
remit to Lessee all insurance proceeds pertaining to the Leased Property being
held in trust by Lessor.
14.3. Reconstruction in the Event of Damages 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 damages or destruction renders the Facility Unsuitable for
its Primary Intended Use, Lessee at its option, within 30 days after the
occurrence of such event, shall notify Lessor that Lessee has elected to either
(a) restore the Facility to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction
shall not terminate this Lease which Lessee shall proceed to do in a prompt and
diligent manner, or (b) terminate this Lease with respect to the Leased
Property, in which event the Lease shall terminate five days after the date of
such notice without further penalty hereunder. If such damage or destruction
is not material, Lessee shall restore the Facility to substantially the same
condition as existed immediately before the damage or destruction and otherwise
in accordance with the terms of the Lease, which Lessee shall proceed to do in
a prompt and diligent manner.
14.4 Lessee's Property. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property shall be paid to
Lessee; provided however, no such payments shall diminish or reduce the
insurance payments otherwise payable to or for the benefit of Lessor hereunder.
14.5 Abatement of Rent. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect and Lessee's
obligation to make rental payments and to pay all other charges required by
this Lease shall remain unabated during the first six months of any period
required for the applicable repair and restoration. Thereafter Base Rent shall
be equitably abated.
14.6 Damage Near End of Term. Notwithstanding any provisions of
Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction of
the Facility renders it unsuitable for its Primary Intended Use occurs during
the last 12 months of the Term, the Lessee shall have the right to terminate
the Lease by giving written notice to Lessor within 30 days after the
occurrence of such event, whereupon all secured Rent shall be paid immediately,
and this Lease shall automatically terminate five days after the date of such
notice.
14.7 Waiver. Lessee hereby waives any statutory rights of
termination that ma arise by reason of any damage or destruction of the
Facility that Lessor is obligated to restore or may restore
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under any of the provisions of this Lease.
ARTICLE XV
15.1 Definitions.
(a) "Condemnation" means a Taking resulting from (a) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any
Condemnor, either under threat of condemnation or while legal proceeds for
condemnation are pending.
(b) "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
Condemnation.
15.2 Parties' Rights and Obligations. If during the Term there is
any Condemnation of all or any part of the Leased Property or any interest in
this Lease, the rights and obligations of Lessor and Lessee shall be determined
by this Article XV.
15.3 Total Taking. If title to the fee of the whole of the Leased
Property is condemned by any Condemnor, subject to the provisions of Section
15.7, this Lease shall cease and terminate as the Date of Taking by the
Condemnor. If title to the fee of less than the whole of the Leased Property
is so taken or condemned, which nevertheless renders the Leased Property
Unsuitable or Uneconomic for its Primary Intended Use, Lessee and Lessor shall
each have the option, by notice to the other, at any time prior to the Date of
Taking, to terminate this Lease as of the Date of Taking. Upon such date, if
such Notice has been given, this Lease shall thereupon cease and terminate.
All Base Rent, Percentage Rent and Additional Charges paid or payable by Lessee
hereunder shall be apportioned as of the Date of Taking, and Lessee shall
promptly pay Lessor such amounts. In the event of any such termination, the
provisions of Section 15.7 shall apply.
15.4 Allocation of Award. The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor's loss of business beyond
the Term, shall be solely the property of and payable to Lessor. Any Award
made for loss of business during the remaining Term, if any, for the taking of
Lessee's Personal Property, or for removal and relocation expenses of Lessee in
any such proceedings shall be the sole property of and payable to Lessee. In
any Condemnation proceedings Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective
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expense; provided, however, Lessee shall not initiate, prosecute or acquiesce
in any proceedings that may result in a diminution of any Award payable to
Lessor.
15.5 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
Lessee or Lessor is entitled but neither elects to terminate this Lease as
provided in Section 15.3, Lessee at its cost shall with all reasonable dispatch
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.
Lessor shall contribute to the cost of restoration that part of its Award
specifically allocated to such restoration, if any, together with severance and
other damages awarded for the taken Leased Improvements; provided, however,
that the amount of such contribution shall not exceed such cost.
15.6 Temporary Taking. If the whole or any part of the Leased
Property or of Lessee's interest under this Lease is condemned by any Condemnor
for its temporary use or occupancy, the Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the terms
herein specified, the full amount of Base Rent and Additional Charges. In
addition, Lessee shall pay Percentage Rent at a rate equal to the average
Percentage Rent during the last three preceding Fiscal Years (or if three
Fiscal Years shall not have elapsed, the average during the preceding Fiscal
Years). Except only to the extend that Lessee may be prevented from so doing
pursuant to the terms of the order of the Condemnor, Lessee shall continue to
perform and observe all of the other terms, covenants, conditions and
obligations hereof on the part of the Lessee to be performed and observed, as
though such Condemnation had not occurred. In the event of any Condemnation as
in this Section 15.6 described, the entire amount of any Award made for such
Condemnation allocable to the Term of this Lease, whether paid by way of
damages, rent or otherwise, shall be paid to Lessee. Lessee covenants that
upon the termination of any such period of temporary use or occupancy it will,
at its sole cost and expense (subject to Lessor's contribution as set forth
below), promptly restore the Leased Property as nearly as may be reasonably
possible to the condition in which the same was immediately prior to such
Condemnation, unless such period of temporary use or occupancy extends beyond
the expiration of the Term, in which case Lessee shall not be required to make
such restoration. If restoration is required hereunder, Lessor shall
contribute to the cost of such restoration that portion of its entire Award
that is specifically allocated to such restoration in the judgment or order of
the court, if any, and Lessee shall fund the balance of such costs in advance
of restoration in a manner reasonably satisfactory to Lessor.
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Notwithstanding the foregoing, if the temporary taking is to be for a
period of more than 30 days pursuant to the terms of the order providing
therefor, Lessee, upon 30 days prior written notice to Lessor given at any time
on or after the Date of Taking by the Condemnor in connection with such
temporary taking, may terminate this Lease if the temporary taking renders the
hotel Uneconomic or Unsuitable for its Primary Intended Purpose.
15.7 Lessee's Offer. In the event of the termination of this Lease
as provided in Section 15.3, Lessee shall offer to acquire the Leased Property
without regard to such taking and, if accepted, Lessee shall receive the entire
Award. If Lessor does not accept Lessee's offer to purchase the Leased
Property, Lessee shall withdraw its offer to purchase the Leased Property and,
if so withdrawn, Lessee may terminate the Lease with respect to the Leased
Property without further liability hereunder, except for payment of Rent as
provided in the penultimate sentence of Section 15.3 or for matters which by
their express terms survive termination of this Lease, and Lessor shall be
entitled to retain the Award except as provided in Section 15.4.
ARTICLE XVI
16.1 Events of Default. If any one or more of the following events
individually, an "Event of Default") occurs:
(a) if Lessee fails to make payment of the Base Rent when
the same becomes due and payable for a period of ten days after receipt by the
Lessee of Notice form the Lessor thereof;
(b) if Lessee fails to make payment of annual Percentage
Rent when the same becomes due and payable and such condition continues for a
period of 90 days after the end of the applicable Fiscal Year;
(c) if Lessee fails to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within a period of 30 days after receipt by the Lessee of Notice thereof from
Lessor, 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 Lessee
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 the Lessee 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 Lessee as a bankrupt or its
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reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and the Lessee 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 Lessee or the whole or substantially all of the assets of the
Lessee shall be appointed in any proceeding brought by the Lessee or if any
such receiver, trustee or liquidator shall be appointed in any proceeding
brought against the Lessee and shall not be vacated or set aside or stayed
within 60 days after such anointment; or
(e) if Lessee 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 Lessee in the Leased
Property or any part thereof is voluntarily or involuntarily transferred,
assigned, conveyed, levied upon or attached in any proceeding (unless Lessee is
contesting such lien or attachment in good faith in accordance with Article XII
hereof); or
(g) if, except as a result of damage, destruction or
partial or complete Condemnation, Lessee voluntarily causes operations on the
Leased Property for a period in excess of 30 days; or
(h) if an event of default has been declared by the
franchisor under the Franchise Agreement with respect to the Facility on the
Leased Property as a result of any action or failure to act by the Lessee or
any Person with whom the Lessee contracts for management services at the
Facility;
then, and in any such event, Lessor may exercise one or more
remedies available to it herein or at law or in equity, including but not
limited to its right to terminate the Lease by giving Lessee 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, Lessee remedies such default or Event of Default
without further delay.
16.2 Surrender. If an Event of Default occurs (and the event
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giving rise to such Event of Default has not been cured within the curative
period relating thereto as set forth in Section 16.1) and is continuing,
whether or not this Lease has been terminated pursuant to Section 16.1, Lessee
shall, if requested by Lessor so to do, immediately surrender to Lessor the
Leased Property including, without limitation, any and all books, records,
files, licenses, permits and keys relating thereto, and quit the same and
lessor may enter upon and repossess the Leased Property by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Lessee and all
other persons and any and all personal property from the Leased Property,
subject to rights of any hotel guests and to any requirement of law. Lessee
hereby waives any and all requirements of applicable laws for service of notice
to re-enter the Leased Property. Lessor shall be under no obligation to, but
may if it so chooses, relet the Leased Property or otherwise mitigate Lessor's
damages.
16.3 Damages. Neither (a) the termination of this Lease, (b) the
repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.
Lessee shall forthwith pay to Lessor, at Lessor's option, as
and for liquidated and agreed current damages for Lessee's default, either:
(1) Without termination of Lessee's right to possession
of the Lease Property, each installment of Rent and other sums payable by
Lessee to Lessor under the Lease as the same becomes due and payable, which
Rent and other sums shall bear interest at the Overdue Rate, and Lessor may
enforce, by action or otherwise, any other term or covenant of this Lease; or
(2) the sum of:
(A) the unpaid Rent which had been earned at
the time of termination, repossession or reletting, and
(B) the worth at the time of termination,
repossession or reletting of the amount by which the unpaid
Rent for the balance of the Term after the time of
termination, repossession or reletting, exceeds the amount of
such rental loss that Lessee proves could be reasonably
avoided, and
(C) any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's
failure to perform its obligations under this Lease or
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which in the ordinary course of things, would be likely to
result therefrom. The worth at the time of termination,
repossession or reletting of the amount referred to in
subparagraph (B) is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of New York at the
time of award plus 1%.
Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to
(i) the average of the annual amounts of the Percentage Rent for the three
Fiscal Years immediately preceding the Fiscal Year in which the termination,
re-entry or repossession takes place, or (ii) if three Fiscal Years shall not
have elapsed, the average of the Percentage Rent during the preceding Fiscal
Years during which the Lease was in effect, or (iii) if one Fiscal Year has not
elapsed, the amount derived by annualizing the Percentage Rent from the
effective date of this Lease.
16.4 Waiver. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (a) any right to a
trial by jury in the event of summary proceedings to enforce the remedies set
forth in this Article XVI, and (b) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt and Lessor waives
any right to "xxxxxx the corporate vail" of Lessee other than to the extent
funds shall have been inappropriately paid any Affiliate of Lessee following a
default resulting in an Event of Default.
16.5 Application of Funds. Any payments received by Lessor under any
of the provisions of this Lease during the existence or continuance of any
Event of Default shall be applied to Lessee's obligations in the order that
Lessor may determine or as may be prescribed by the laws of the State.
ARTICLE XVII
Lessor's Right to Cure Lessee's Default. If Lessee fails to make
any payment or to perform any act required to be made or performed under this
Lease including, without limitation, Lessee's failure to comply with the terms
of any Franchise Agreement, and fails to cure the same within the relevant time
periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation of Lessee, and without waiving or releasing any obligation or
default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Lessee,
and may, to the extent permitted by law, enter upon the Leased Property for
such purpose and, subject to section 16.4, take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of Lessee. All sums so paid by Lessor and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses, in each case to the extent
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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 Lessors, shall be paid by Lessee to Lessor
on demand. The obligations of Lessee and rights of Lessor contained in this
Article shall survive the expiration or earlier termination of this Lease.
ARTICLE XVIII
Provisions Relating to Purchase of the Leased Property. If Lessee
purchases the Leased Property from Lessor pursuant to any of the terms of this
Lease, Lessor shall, upon receipt from Lessee of the applicable purchase price,
together with full payment of any unpaid Rent due and payable with respect to
any period ending on or before the date of the purchase, deliver to Lessee an
appropriate limited or special warranty deed or other conveyance conveying the
entire interest of Lessor in and to the Leased Property to Lessee free and
clear of all encumbrances other than (a) those that Lessee has agreed hereunder
to pay or discharge, (b) those mortgage liens, if any, that Lessee has agreed
in writing to accept and to take title subject to, (c) those liens and
encumbrances subject to which the Leased Property was conveyed to Lessor, (d)
encumbrances, easements, licenses or rights of way required to be imposed on
the Leased Property under Section 7.3, and (e) any other encumbrances permitted
to be imposed on the Leased Property under the provisions of Section XXXIV that
are assumable at no cost to Lessee or to which Lessee may take subject without
cost to Lessee. The difference between the applicable purchase price and the
total of the encumbrances assumed or taken subject tot shall be paid in cash to
Lessor or as Lessor may direct. in federal or other immediately available
funds, except as otherwise mutually agreed by Lessor and Lessee. All expenses
of such conveyance, including, without limitation the cost of title examination
or title insurance, if desired by Lessee, Lessee's attorneys' fees incurred in
connection with such conveyance and release, and transfer taxes and recording
fees, shall be paid by Lessee. Lessor shall pay its attorney's fees.
ARTICLE XIX
19.1 Personal Property Limitation. Anything contained in this Lease
to the contrary notwithstanding, the average of the adjusted tax bases of the
items of personal property that are leased to the Lessee under this Lease at
the beginning and at the end of any Fiscal Year shall not exceed 15% of the
average of the aggregate adjusted tax bases of the Leased Property at the
beginning and at the end of such Fiscal Year. This Section 19.1 is intended to
ensure that the Rent qualifies as "rents from real property," within the
meaning of Section 856(d) of the Code, or any similar or successor provisions
thereto, and shall be interpreted in a manner consistent with such intent.
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19.2 Sublease Rent Limitation. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublet the Leased Property on
any basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee, or (b) any other formula such that any
portion of the Rent would fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor
provision thereto.
19.3 Sublease Tenant Limitation. Anything contained in this Lease
to the contrary notwithstanding, Lessee shall not sublease the Leased Property
to any Person in which Glenborough Realty Trust Incorporated owns, directly or
indirectly, a 10% or more interest, within the meaning of Section 856(d)(2)(B)
of the Code, or any similar or successor provisions thereto.
19.4 Lessee Ownership Limitation. Anything contained in this Lease
to the contrary notwithstanding, neither Lessee or an Affiliate of the Lessee
shall acquire, directly or indirectly, a 10% or more interest in Glenborough
Realty Trust Incorporated, within the meaning of Section 856(d)(2)(B) of the
Code, or any similar or successor provision thereto.
19.5 Lessee Officer and Employee Limitation. Anything contained in
this Lease to the contrary notwithstanding, except with the prior written
approval of Glenborough Realty Trust Incorporated, none of the officers or
employees of the Lessee (or any Person who furnishes or renders services to the
tenants of the Leased Property, or manages or operates the Lease Property)
shall be officers or employees to Glenborough Realty Trust Incorporated (or any
Person who serves as an advisor of Glenborough Realty Trust Incorporated). In
addition, if a Person serves as both (a) a director of the Lessee (or any
Person who furnishes or renders services to the tenants of the Leased Property,
or manages or operates the Leased Property) and (b) a director and officer (or
employee) of Glenborough Realty Trust Incorporated (or any Person who serves as
an advisor of Glenborough Realty Trust Incorporated) that Person shall not
receive any compensation for serving as a director of the Lessee (or any Person
who furnishes or renders services to the tenants of the Leased Property, or
manages or operates the Leased Property).
19.6 Payments to Affiliates of Lessee. During the term, Lessee shall
not pay any fees to any Affiliate of Lessee in connection with the Facility.
ARTICLE XX
Holding Over. If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination
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of the Term, such possession shall be as a tenant at sufferance during which
time Lessee shall pay as rental each month two times the aggregate of (a)
one-twelfth of the aggregate Base Rent and Percentage Rent payable with respect
to the last Fiscal Year of the Term, (b) all Additional Charges accruing during
the applicable month and (c) all other sums, if any, payable by Lessee under
this Lease with respect to the Leased Property. During such period, Lessee
shall be obligated to perform and observe all of the terms, covenants and
conditions of this Lease, but shall have no rights hereunder other than the
right, to the extent given by law to tenancies of sufferance, to continue its
occupancy and use of the Leased Property. Nothing contained herein shall
constitute the consent, express or implied, of Lessor to the holding over of
Lessee after the expiration or earlier termination of this Lease.
ARTICLE XXI
Risk of Loss. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the
damage or destruction thereof by fire, the elements, casualties, theft, riots,
wars or otherwise, or in consequence of foreclosure, attachments, levies or
executions (other than those caused by Lessor and those claiming from, through
to under Lessor) is assumed by Lessee, and, in the absence of gross negligence,
willful misconduct or breach of this Lease by Lessor pursuant to Section 34.3,
Lessor shall in no event be answerable or accountable therefor, nor shall any
of the events mentioned in this Section entitle Lessee to any abatement of Rent
except as specifically provided in this Lease.
ARTICLE XXII
22.1 Indemnification. Notwithstanding the existence of any
insurance, and without regard to the policy limits of any such insurance or
self-insurance, but subject to Section 16.4 and Article VIII, Lessee will
protect, indemnify, hold harmless and defend Lessor from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon or incurred by or
asserted against Lessor Indemnified Parties by reason of: (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about the Leased Property or adjoining sidewalks, including without limitation
any claims under liquor liability, "dram shop" or similar laws, (b) any past,
present or future use, misuse, non-use, condition, management, maintenance or
repair by Lessee or any of its agents, employees or invitees of the Leased
Property or Lessee's Personal Property or any litigation, proceeding or claim
by governmental entities or other third parties to which a Lessor Indemnified
Party is made a
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party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee or any of its agents
employees or invitees, including any failure of Lessee or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law (other than arising out of Condemnation proceedings), (c) any
Impositions that are the obligations of Lessee pursuant to the applicable
provisions of this Lese, (d) any failure on the part of Lessee to perform or
comply with any of the terms of this Lease, and (e) the non-performance of any
of the terms and provisions of any and all existing and future subleases of the
Leased Property to be performed by the landlord thereunder.
Lessor shall indemnify, save harmless and defend Lessee Indemnified
Parties from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses imposed upon or incurred by or
asserted against Lessee Indemnified Parties as a result of (a) the gross
negligence or willful misconduct of Lessor arising in connection with this
Lease or (b) any failure on the xxx of Lessor 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 xxx 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 expenses, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against the Indemnified
Party. The Indemnified Party, at its expense, shall be entitled to participate
in any such claim, action, or proceeding, and the Indemnifying Party may not
compromise or otherwise dispose of the same without the consent of the
Indemnified Party, which may not be unreasonably withheld. Nothing herein
shall be construed as indemnifying a Lessor Indemnified Party against its own
grossly negligent acts or omissions or wilful misconduct.
Lessee's or Lessor's liability for a breach of the provisions of this
Article shall survive any termination of this Lease.
ARTICLE XXIII
23.1 Subletting and Assignment. Subject to the provision of
Article XIX and Section 23.2 and any other express conditions or limitation set
forth herein, Lessee may, but only with the consent of Lessor, (a) assign this
Lease or sublet all or any part of the Leased Property to an Affiliate of
Lessee, or (b) sublet any retail or restaurant portion of the Leased
Improvements in the normal course of the Primary Intended Use; provided that
any subletting shall not individually as to any one such subletting, or in the
aggregate, materially diminish the actual or potential Percentage
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Rent payable under this Lease. In the case of 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 Lessee to be kept and performed and shall
be, and become, jointly and severally liable with Lessee for the performance
thereof. Notwithstanding the above, Lessee may assign the Lease to an
Affiliate without the consent of Lessor; provided that any such assignee
assumes in writing and agrees to keep and perform all of the terms of the Lease
on the part of Lessee to be kept and performed and shall be and become jointly
and severally liable with Lessee for the performance thereof. In case of
either an assignment or subletting made during the Term, Lessee shall remain
primarily liable, as principal rather than as surety, for the prompt payment of
the Rent and for the performance and observance of all of the covenants and
conditions to be performed by Lessee hereunder. An original counterpart of
each such sublease and assignment and assumption, duly executed by Lessee and
such sublessee or assignee, as the case may be, in form and substance
satisfactory to Lessor, shall be delivered promptly to Lessor.
23.2 Attornment. Lessee shall insert in each sublease permitted
under Section 23.1 provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of Lessor hereunder,, (b) if this Lease terminates before the
expiration of such sublease, the sublessee thereunder will, at Lessor's option,
attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder as a result of the termination
of this Lease, and (c) if the sublessee receives a written Notice from Lessor
or Lessor's assignees, if any, stating that an uncured Event of Default exists
under this Lease, the sublessee shall thereafter be obligated to pay all
rentals accruing under said sublease directly to the party giving such Notice,
or as such party may direct. All rentals received from the sublessee by Lessor
or Lessor's assignees, if any, as the case may be, shall be credited against
the amounts owing by Lessee under this Lease.
ARTICLE XXIV
Officer's Certificates; Financial Statements;
Lessor's Estoppel Certificates and Covenants.
(a) At any time and from time to time upon not less than 20 days
Notice by Lessor, Lessee will furnish to Lessor an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, whether to the
knowledge of Lessee any existing default or Event of Default exists thereunder
by Lessor or Lessee, and such other information as may be reasonably requested
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by Lessor. Any such certificate furnished pursuant to this Section may be
relied upon by Lessor, any lender and any prospective purchaser of the Leased
Property.
(b) Lessee will furnish the following statements to
Lessor:
(1) with reasonable promptness, such
information respecting the financial condition and
affairs of Lessee including audited financial
statements prepared by the sums certified independent
accounting firm that prepares the returns for Lessor
or such other accounting firm as may be approved by
Lessor, as Lessor may reasonably request from time to
time; and
(2) the most recent Consolidated
Financials of Lessee within 45 days after each
quarter of any Fiscal Year (or, in the case of the
final quarter in any Fiscal Year, the most recent
audited Consolidated Financials of Lessee within 90
days); and
(3) on or about the 15th day of each
month, a detailed profit and loss statement for the
Leased Property for the preceding month, a balance
sheet for the Leased Property as of the end of the
preceding month, and a detailed accounting of
revenues for the Leased Property for the preceding
month, each in form acceptable to Lessor.
(c) At any time and from time to time upon not less than
20 days notice by Lessee, Lessor will furnish to Lessee or to any person
designated by Lessee an estoppel certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force
and effect as modified and setting forth the modifications), the date to which
Rent has been paid, whether to the knowledge of Lessor there is any existing
default or Event of Default on Lessee's part hereunder, and such other
information as may be reasonably requested by Lessee.
(d) Lessee covenants that during the Term it will
maintain a ratio of recourse debt-to-Consolidated Net Worth of 50% or less,
exclusive of capitalized leases.
ARTICLE XXV
Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives as frequently as reasonably requested by Lessor to
inspect the Leased Property and Lessee's accounts and records pertaining
thereto and make copies thereof, during usual
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business hours upon reasonable advance notice, subject only to any business
confidentiality requirements reasonably requested by Lessee.
ARTICLE XXVI
No Waiver. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XXVII
Remedies Cumulative. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
ARTICLE XXVIII
Acceptance of Surrender. No surrender to Lessor of this Lease or of
the Leased Property or any part thereof, or of any interest therein, shall be
valid or effective unless agreed to and accepted in writing by Lessor and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.
ARTICLE XXIX
No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person or
entity may acquire, own or hold directly or indirectly (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
ARTICLE XXX
Conveyance by Lessor. If Lessor or any successor owner of the
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Leased Property conveys the Lease Property in accordance with the terms hereof
other than as security for a debt, and the grantee or transferee of the Lease
Property expressly assumes all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, Lessor or such
successor owner, as the case may be, shall thereupon be released from all
future liabilities and obligations of Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
ARTICLE XXXI
Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes
due and complies with all of the terms of this Lease and performs its
obligations hereunder, in each case within the applicable grace periods, if
any, Lessee shall peaceably and quietly have, hold and enjoy the Lease Property
for the Term hereof, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all liens and encumbrances
subject to which the Leased Property was conveyed to Lessor hereafter consented
to by Lessee or provided for herein. Notwithstanding the foregoing, Lessee
shall have the right by separate and independent action to pursue any claim it
may have against Lessor as a result of breach by Lessor of the covenant of
quiet enjoyment contained in this Section.
ARTICLE XXXII
Notices. All notices, demands, requests, consents approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to Lessor in care of Glenborough
Realty Trust Incorporated, at its principal office, Attention: President, and
addressed to Lessee as set forth in this Lease, or to such other address or
addresses as either party may hereafter designate. Personally delivered Notice
shall be effective upon receipt, and Notice given by mail shall be complete at
the time of deposit in the U.S. Mail system, but any prescribed period of
Notice and any right or duty to do any act or make any responses within any
prescribed period or on a date certain after the service of such Notice given
by mail shall be extended five days.
ARTICLE XXXIII
Appraisers. If it becomes necessary to determine the Fair Market
Value or Fair Market Rent of the Leased Property for any purpose of this Lease,
the party required or permitted to give
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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, Lessor (or Lessee, as the case may be) shall by Notice to Lessee (or
Lessor, 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 appraise the Leased Property to
determine the Fair Market Value or Fair Market Rent thereof as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to relevant date); provided, however, that if only one appraiser shall
have been so appointed, then the determination of such appraiser shall be final
and binding upon the parties. To the extent consistent with sound appraisal
practice as then existing at the time of any such appraisal such appraisal
shall be made on a basis consistent with the basis on which the Leased Property
was appraised for purposes of determining its Fair Market Value at the time the
Leased Property was acquired by Lessor. If two appraisers are appointed and if
the difference between the amounts so determined does not exceed 5% of the
lesser of such amounts, then the Fair Market Value or Fair Market Rent 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 appraiser 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 determination of Fair Market
Value or Fair Market Rent, whichever is earlier, either Lessor or Lessee may
apply to any court having jurisdiction to have such appointment made by such
court. Any appraiser appointed by the original appraisers or by such court
shall be instructed to determine the Fair Market Value or Fair Market Rent
within 45 days after appointment of such appraiser. The determination of the
appraiser which differs most in the terms of dollar amount from the
determinations of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Lessor
and Lessee as the Fair Market Value or Fair Market Rent of the Leased Property,
as the case may be. This provision for determining by appraisal shall be
specifically enforceable to the extent such remedy is available under
applicable law, and any determination hereunder shall be final and binding upon
the parties except as otherwise provided by applicable law. Lessor and Lessee
shall each pay the fees and expenses of the appraiser appointed by it and each
shall pay one-half of the fees and expenses of the third appraiser and one-half
of all other costs and expenses incurred in connection with each appraisal.
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ARTICLE XXXIV
34.1 Lessor May Grant Liens. Without the consent of Lessee, Lessor
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 (a) contain the right to prepay (whether or not subject to a prepayment
penalty); (b) provide that it is subject to the rights of Lessee under this
Lease, (c) contain the Agreement by the holer of the Encumbrance that it will
(1) give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure under Encumbrance, (2) permit Lessee to cure any such default on
Lessor's behalf within any applicable cure period, and Lessee shall be
reimbursed by Lessor for any and all costs incurred in effecting such cure,
including without limitation out-of-pocket costs incurred to affect any such
cure (including reasonable attorneys' fees) and (3) permit Lessee to appear by
its representative and to bid at any sale in foreclosure made with respect to
any such encumbrance. Upon the request of Lessor, Lessee shall subordinate
this Lease to the lien of a new mortgage on the Leased Property, on the
condition that the proposed mortgagee executes a non-disturbance agreement
recognizing this Lease, and agreeing, for itself and its successors and
assigns, to comply with the provisions of this Article XXXIV.
34.2 Lessee's Right to Cure. Subject to the provisions of Section
34.3, if Lessor breaches any covenant to be performed by it under this Lease,
Lessee, after Notice to and demand upon Lessor, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Lessee, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Lessor.
All sums so paid by Lessee and all costs and expenses (including, without
limitation, reasonable attorneys' fees) so incurred, together with interest
thereon at the Overdue Rate from the date on which such sums or expenses are
paid or incurred by Lessee, be paid by Lessor to Lessee on demand or, following
entry of a final, nonappealable judgment against Lessor for such sums, may be
offset by Lessee against the Base Rent payments next accruing or coming due.
The rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Section 34.2 shall survive the termination of this Lease
with respect to the Leased Property.
34.3 Breach by Lessor. It shall be a breach of this Lease if Lessor
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 Lessee, unless such failure cannot with due diligence
be cured within a
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period of 30 days, in which case such failure shall not be deemed to continue
if Lessor, 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 Lessor shall be obligated to cure and such failure also shall be
subject to extension of time due to the occurrence of any Unavoidable Delay.
If Lessor fails to cure any such breach within the grace period described above
and the amount of damage, as determined by entry of a final nonappealable
judgment as provided in Section 34.2 above, exceeds the Base Rent payable for
the balance of the Term, and the amount of such judgment is not paid within 60
days of the date as of which it becomes final, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee at law or in equity, may purchase the Leased Property from
Lessor for a purchase price equal to the then Fair Market Value. If Lessee
elects to purchase the Leased Property it shall deliver a Notice thereof to
Lessor specifying a settlement date to occur not less than 90 days subsequent
to the date of such Notice in which it shall purchase the Leased Property, and
the same shall be thereupon conveyed in accordance with the provisions of
Article XVIII.
ARTICLE XXXV
35.1 Miscellaneous. Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of, Lessee or
Lessor arising prior to any date of termination of this Lease shall survive
such termination. If any term or provision of this Lease or any application
thereof is invalid or unenforceable, the remainder of this Lease and any other
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 or any provision hereof may be changed,
waived, discharged or terminated except by a written instrument in recordable
form signed by Lessor and Lessee. All the terms and provisions of this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and 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 conflict of laws rules.
35.2 Transfer of Licenses. Upon the expiration or earlier
termination of the Term, Lessee shall use its best efforts (i) to transfer to
Lessor or Lessor's nominee all 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
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(collectively, "Licenses"), or (ii) if such transfer is prohibited by law or
Lessor otherwise elects, to cooperate with Lessor or Lessor's nominee in
connection with the processing by Lessor or Lessor's nominee of any
applications for, all Licenses; provided, in either case, that the costs and
expenses of any such transfer or the processing of any such application shall
be paid by Lessor or Lessor's nominee.
35.3 Waiver of Presentment, etc.. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance and waives
all notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.
ARTICLE XXXVI
Lessor's Option to Purchase Assets of Lessee. 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, Lessor shall have the option to
purchase all (but not less than all) of the assets of Lessee, 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, Lessor 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 XXXVII
Lessor's Option to Terminate Lease. In the event Lessor enters into a
bona fide contract to sell the Leased Property to a non- Affiliate, Lessor may
terminate the Lease by giving not less than 30 days prior Notice to Lessee of
Lessor's election to terminate the Lease effective upon the closing under such
contract. Effective upon such closing, this Lease shall terminate and be of no
further fore 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 XXXVII, Lessor
shall within 90 days of such closing either (a) pay to Lessee the fair market
value of Lessee's leasehold estate hereunder as of the closing of the sale
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of the Leased Property or (b) offer to lease to Lessee one or more substitute
hotel facilities pursuant to one or more leases that would create for the
Lessee leasehold estates that have an aggregate fair market value of no less
then the fair market value of the original leasehold estate, both such values
as determined as of the closing of the sale of the Leased Property. The fair
market value of Lessee's leasehold estate shall exclude any unexercised option
to extend the term, whether or not the option is then exercisable. If Lessor
elects and complies with the option described in (b) above, regardless of
whether Lessee entered into the lease(s) described therein, Lessor shall have
no further obligations to Lessee with respect to compensation for the early
termination of this Lease. In the event Lessor and Lessee are unable to agree
upon the fair market value of an original or replacement leasehold estate, it
shall be determined by appraisal using the appraisal procedure set forth in
Article XXXIII.
For this purpose of this Section, fair market value of the leasehold
estate means, as applicable, an amount equal to the price that a willing buyer
not compelled to buy would pay a willing seller not compelled to sell for
Lessee's leasehold estate under this Lease or an offered replacement leasehold
estate.
ARTICLE XXXVIII
Compliance with Franchise Agreement. To the extent any of the
provisions of the Franchise Agreement impose a greater obligation on Lessee
than the corresponding provisions of the Lease, then Lessee shall be obligated
to comply with the provisions of the Franchise Agreement, it being the intent
of the parties hereto that Lessee comply in every respect with the provisions
of the Franchise Agreement so as to avoid any default thereunder.
ARTICLE XXXIX
Furniture Fixture and Equipment Allowance. Lessor shall be obligated
to pay Lessee for each quarter in any Fiscal Year during the Term, an amount
equal to the quarterly FF&E Allowance set forth on Exhibit B hereto. For the
first and last quarter of the term, the FF&E Allowance shall be prorated as to
any partial quarter. The FF&E Allowance shall be adjusted annually as of the
first day of each Fiscal Year, commencing January 1, 1998, for any increase,
but not because of any decrease, in the CPI, from the beginning of the previous
Fiscal Year. Upon written request by Lessee to Lessor stating the specific use
to be made and the reasonable approval thereof by Lessor, such funds shall be
made available by Lessor for use by Lessee for replacement or refurbishing of
furniture, fixtures and equipment that constitute Leased Property in connection
with the Primary Intended Use; provided, however, that no amounts made
available under this Article shall be used to
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purchase property (other than "real property" within the meaning of Treasury
Regulations Section 1.856-3(d)), to the extent that doing so would cause the
Lessor to recognize income other than "rents from real property" as defined in
Section 856(d) of the Code. Lessor's obligation 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. Lessee shall have no interest in any accrued obligation of Lessor
hereunder after the termination of this Lease.
ARTICLE XL
Subordination. This Lease and the rights and interests of the parties
hereunder shall be and become subject and subordinate to the lien of any
mortgage, deed of trust or other encumbrance (together with any interest
thereon, advances made thereunder and any conditions, renewals, extensions or
replacements thereof), now or hereafter placed, charged or enforced against the
Leased Property are a part, or any portion or portions thereof. It is the
intention of the parties that this provision shall be self-executing and no
further instrument shall be required to effect such subordination. Lessee
agrees to execute any and all documents and other agreements requested by any
lender which may be requested to evidence the foregoing.
IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
"LESSOR"
GLENBOROUGH PROPERTIES, L.P., a
California limited partnership.
By: Glenborough Realty Trust Incorporated
Its: General Partner
By: ____________________________
Title: ________________________
"LESSEE"
GLENBOROUGH HOTEL GROUP
By: ____________________________
Title: _________________________
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EXHIBIT A
The Land, as Defined in Section 1.1 of the Attached
Lease Agreement is described as follows:
That certain real property commonly known as the Country Suites Hotel,
00000 Xxxxx 00xx Xxxxx, Xxxxxxxxxx, XX 00000, which is more particularly
described as follows:
The North 470 feet of Xxx 0, Xxxxxxx Xxxxxxxx Xxxx, a subdivision
recorded in Book 257 of Maps, Page 20, records of Maricopa County,
Arizona, as measured perpendicular to the North line of said Xxx 0.
00
00
XXXXXXX X
The rent payment for the Leased Property equals the sum of (i) the
greater of the Base Rent or the Percentage Rent from Room Revenues
plus (ii) the Percentage Rent from Other Revenues.
Calculation of Base Rent and Percentage Rent from Room Revenues:
The annual Base Rent will be $360,000 vs. Percentage Rent
equal to 45% of the first $3,200,000 in Room Revenues plus 60%
of the Room Revenues over $3,200,000.
The quarterly FF&E Allowance for 1997 shall be as follows:
First Quarter $ 8,150
Second through Fourth Quarter $24,450
The quarterly FF&E Allowsnce for the following calendar years shall be
as follows:
Quarterly
Year Allowance
---- ---------
1998 28,525
1999 32,600
2000 36,675
2001 40,750
2002 44,825
2003 48,900
2004 52,975
2005 57,050
2006 61,125
1st 2 mos. 2007 43,467
Notwithstanding any provision to the contrary in Article XXXIX, there
will be no CPI adjustment for the FF&E Allowance.
THE THRESHOLD FOR THE CALCULATION OF PERCENTAGE RENT FROM ROOM
REVENUES HAS BEEN ADJUSTED FOR INCREASES IN THE CPI FOR THE CALENDAR
YEAR 1996. THE FIRST ADJUSTMENT WILL BE MADE RETROACTIVE TO JANUARY 1,
1998, WHEN THE CPI IS AVAILABLE THROUGH DECEMBER, 1997. AS OF JANUARY
1, 1998, THE THRESHOLD WILL BE ADJUSTED FOR ANY INCREASE IN THE CPI
DURING THE ENTIRE CALENDAR YEAR 1997, AND NOT JUST FROM THE
COMMENCEMENT OF THE LEASE.
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