Exhibit 99.11
FINAL DATED MAY 26, 1998
OWNER AGREEMENT
THIS OWNER AGREEMENT (this "Agreement") is dated as of ________ ___, 1998,
by and between [Patriot American Hospitality Partnership, L.P., a Virginia
limited partnership with an address of 0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 or the name of the joint venture ownership entity for those
properties not owned solely by Patriot ] (together with its successors and/or
assigns, "Owner"), Patriot American Hospitality Operating Partnership, L.P., a
Delaware limited partnership with an address of 0000 Xxxxxxxx Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 75207(together with its successors and/or assigns,
"Lessee"), and IHC II, LLC, a [Delaware] limited liability company with an
address of ___________ (together with its successors and/or assigns, "Primary
Manager"), and [Marriott International, Inc./Marriott Hotel Services, Inc.], a
Delaware corporation, having an address at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, XX
00000 (together with its successors and/or assigns, "Submanager" or "Marriott")
WITNESSETH:
WHEREAS, Owner represents and warrants that it holds fee title [leasehold
interest for Atlanta North Marriott] to the parcel of real property described or
shown on Exhibit A attached to this Agreement containing a hotel building or
buildings and certain related facilities (collectively, the "Hotel");
WHEREAS, simultaneously with the execution of this Agreement, Owner and
Lessee have entered into a lease (the "Lease") of the Hotel to Lessee;
WHEREAS, simultaneously with the execution of this Agreement, Lessee has
entered into a management agreement (the "Primary Management Agreement") with
Primary Manager for the management of the Hotel by Primary Manager;
WHEREAS, simultaneously with the execution of this Agreement, Primary
Manager and Marriott have entered into a Submanagement Agreement (the
"Submanagement Agreement") for the management of the Hotel by Marriott on behalf
of Primary Manager;
WHEREAS, the management of the Hotel pursuant to the Primary Management
Agreement and the Submanagement Agreement is of material benefit to Lessee and
Owner, and Lessee and Owner desire that the Hotel be so managed;
WHEREAS, Primary Manager and Submanager would not enter into the
management arrangements provided for in the Primary Management Agreement and the
Submanagement Agreement without Owner and Lessee entering into this Owner
Agreement, and Owner and Lessee desire to so enter into this Owner Agreement;
WHEREAS, all of the above transactions are being entered into pursuant to
a Settlement Agreement dated as of __________ by and among Patriot American
Hospitality, Inc., Lessee, Marriott and others relating to litigation involving
matters relating to the Hotel and other properties (the "Settlement Agreement");
and
WHEREAS, Owner, Lessee, Primary Manager and Marriott desire to set forth
certain obligations of the parties with respect to the operation of the Hotel.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency which is hereby acknowledged by the parties, the parties hereto
agree as follows:
1. Termination of the Lease. If the Lease is terminated for any reason (a
"Lease Termination"), Owner shall at the time of or prior to such Lease
Termination either (i) designate another party to succeed to and assume Lessee's
rights and obligations under the Lease, the Primary Management Agreement and
this Agreement, or (ii) enter into a new Lease with such designated party, and
in each such case shall require that such designated party expressly succeed to
and assume the rights and obligations of Lessee under the Primary Management
Agreement and this Agreement. Notwithstanding the foregoing, any such successor
to Lessee shall be subject to Marriott's approval (Primary Manager hereby
agreeing that as long as the Submanagement Agreement remains in effect, Primary
Manager shall have no approval right with respect to such successor to Lessee),
which approval shall not be unreasonably withheld or delayed if such successor
to Lessee meets the criteria set forth below. Such approval or disapproval will
be made within ten (10) business days of request by Owner, provided Owner has
previously provided to Marriott all information reasonably necessary (or as
reasonably requested by Marriott) in order for Marriott to make its decision.
Such successor shall (x) have the financial capability to provide adequate
financial support for the Hotel (Marriott hereby agreeing that a successor which
has the same financial capability as Lessee as of the date of this Agreement
shall be deemed to have such financial capability), (y) be of good character and
reputation, and (z) agree to assume in writing the obligations of Lessee under
the Primary Management Agreement. Marriott's failure to approve or disapprove
such successor to Lessee within ten (10) business days shall be deemed to
constitute Marriott's approval of such replacement to Lessee. If such successor
to Lessee is disapproved by Marriott, Owner shall within thirty (30) days after
such disapproval designate another successor to Lessee, subject to Marriott's
approval rights as stated above. Until such time as a new successor Lessee is
approved and in place as such successor, the disapproved successor shall
continue as successor to Lessee and such continuation shall not constitute a
default under
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this Agreement, the Primary Management Agreement or the Submanagement Agreement;
so long as Owner is diligently continuing to exercise Owner's reasonable best
efforts to designate a successor which is acceptable to Submanager. If required
by Primary Manager, any such successor shall enter into a new management
agreement on the same terms and conditions as the Primary Management Agreement
for the unexpired term of the Primary Management Agreement. Any replacement of
Lessee or any new Lease pursuant to this Section 1 shall be effected without any
interruption or disturbance of rights of Primary Manager under the Primary
Management Agreement or Marriott under the Submanagement Agreement,
respectively, as long as at such time the applicable agreement has not been
terminated in accordance with its terms.
2. Termination of Primary Management Agreement. If the Primary Management
Agreement is terminated for any reason other than as a result of termination of
the Submanagement Agreement (a "Primary Management Agreement Termination"),
Lessee shall at the time of or prior to such Primary Management Agreement
Termination either (i) designate a third party to succeed to and assume the
rights and obligations of Primary Manager under the Primary Management
Agreement, the Submanagement Agreement and this Agreement or (ii) designate
another third party to enter into a new management agreement in the form of the
Primary Management Agreement. Notwithstanding the foregoing, if a Primary
Management Agreement Termination has occurred and, for reasons beyond the
reasonable control of Lessee, the Lessee has not, notwithstanding the exercise
of its reasonable best efforts, been able to designate a successor to Primary
Manager to assume the Primary Management Agreement, the Submanagement Agreement,
and this Agreement or a successor Primary Manager has not entered into a new
management agreement prior to such Primary Management Agreement Termination as
set forth above, then Lessee shall automatically succeed to and assume the
rights and obligations of Primary Manager under the Submanagement Agreement, and
Lessee hereby accepts assignment of Primary Manager's rights and obligations
under the Submanagement Agreement. In such circumstances, it shall not be a
default of Lessee hereunder so long as Lessee, while acting as successor to
Primary Manager, diligently continues to exercise its reasonable best efforts to
designate a third party to succeed to and assume the rights and obligations of
Primary Manager under this Agreement, the Primary Management Agreement and the
Submanagement Agreement or enter into a new management agreement consistent with
the provisions hereof. In addition, Marriott shall have the right to direct
Lessee to cause a Primary Management Agreement Termination and to cause lessee
to designate a successor to the Primary Manager as set forth above if a change
of control of Primary Manager or its parent occurs which would entitle Lessee to
terminate Primary Manager under Section 10.03 of the Primary Management
Agreement, and Lessee and Marriott agree to cooperate to accomplish the
completion of the designation and acceptance of a successor to Primary Manager
hereunder if the Primary Manager is so terminated pursuant to such Section 10.03
of the Primary Management Agreement. Notwithstanding anything to the contrary
set forth above, any successor to Primary Manager shall be subject to Marriott's
approval, which approval shall not be unreasonably withheld or delayed if such
replacement to
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Primary Manager meets the criteria set forth below. Such approval or disapproval
will be made within ten (10) business days of a request by Lessee, provided
Lessee has previously provided to Marriott all information reasonably necessary
(or as reasonably requested by Marriott) in order for Marriott to make its
decision. Such successor shall (v) have at least the same level of financial and
managerial independence as Primary Manager currently has from Owner, Lessee and
Marriott and Marriott shall have or been given the opportunity to have, at
nominal cost, the same level of ownership interest and control as Marriott has
directly with respect to Primary Manager as of the date of the Primary
Management Agreement Termination, (w) have the operational capability to perform
its obligations under the Primary Submanagement Agreement, (x) be of good
character and reputation, (y) be a person in good standing as an operator of
Marriott-brand hotels of the brand for which the Hotel is currently operated, or
approved to enter into franchise or license agreements with Marriott, as
determined in accordance with Marriott's then existing standards, and (z) agree
to assume in writing the obligations of Primary Manager under the Submanagement
Agreement. Marriott shall be deemed to have approved such successor to Primary
Manager if it fails to approve or disapprove such successor within ten (10)
business days. If and when Marriott approves such successor to Primary Manager,
Lessee shall (subject to the occurrence of a subsequent Primary Management
Agreement Termination), cause such approved successor to become the successor to
Primary Manager under the Submanagement Agreement. If despite reasonable best
efforts Lessee has failed to designate a third party to succeed to and assume
the rights and obligations of Primary Manager which has been approved by
Marriott within sixty (60) days of a Primary Management Agreement Termination,
then Owner and Marriott shall act reasonably and in good faith to organize a new
entity to act as successor to Primary Manager which is independent from Owner
and Marriott but with respect to which Owner and Marriott will own equity
interests and have control rights commensurate with their respective ownership
interests and control rights in Primary Manager as of the date of this
Agreement. If required by Marriott, any successor to Primary Manager shall enter
into a new submanagement agreement on the same terms and conditions as the
Submanagement Agreement for the unexpired term of the Submanagement Agreement.
Notwithstanding anything to the contrary set forth above in this Section
2, as long as [NEWCO] does not itself engage in the business of operating,
franchising or managing its own hotel brand, or the functional equivalent of a
hotel brand, and there is not hereafter a change in control of Primary Manager
or its parent which would entitle Lessee to terminate Primary Manager under
Section 10.03 of the Primary Management Agreement, Marriott shall approve a
subsidiary of [NEWCO] (in which Marriott otherwise has the same level of control
or ownership as it owns directly in the Primary Manager as of the date of any
designation of the subsidiary as a successor Primary Manager) as a successor
Primary Manager.
Without limiting the provisions set forth in Sections 1 and 2 of this
Agreement, the parties acknowledge that the intent of the provisions in such
Sections is that the Submanagment Agreement and the rights and benefits of the
Submanager thereunder shall not be terminated or
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disturbed in any respect except upon termination of the Submanagment Agreement
in accordance with the terms of the Submanagment Agreement, and not as a result
of any default, termination, action or failure to act by or with respect to any
of the parties to or under the Lease or the Primary Management Agreement.
3. Owner's Option to Cure Lessee's Default. Subject to the provisions of
this Agreement, including Section 1 above, Owner shall have the option, within a
reasonable time, but not less than thirty (30) days in the case of monetary
defaults and ninety (90) days in the case of non-monetary defaults following
receipt by Owner of notice from Primary Manager or Submanager of a default under
the Primary Management Agreement by Lessee, to cure any such breach or default
of Lessee under the Primary Management Agreement, including, if necessary, the
commencement and prosecution of eviction proceedings and the replacement of
Lessee as tenant, and Primary Manager agrees to accept the performance of Owner
in lieu of the performance of Lessee and to keep the Primary Management
Agreement in full force and effect. Any default which is not, by its nature,
susceptible of being cured by Owner irrespective of having possession of the
Hotel shall be deemed cured by Owner terminating the Lease and assuming all of
the rights and obligations of the Lessee thereunder and under the Primary
Management Agreement. Primary Manager shall not exercise any right to terminate
the Primary Management Agreement or any other rights or remedies available under
the Primary Management Agreement or at law or in equity for breach of the
Primary Management Agreement unless and until Primary Manager has notified Owner
of such breach or default and given Owner the time described above to cure such
breach or default.
4. Lessee's Option to Cure Primary Manager's Default. Lessee shall have
the option to cure any breach or default of Primary Manager under the
Submanagement Agreement, including if necessary, the commencement and
prosecution of termination proceedings and replacement of Primary Manager under
the Primary Management Agreement, and Marriott agrees to accept the performance
of Lessee in lieu of the performance of Primary Manager and to keep the
Submanagement Agreement in full force and effect if such performance occurs
within the applicable grace period provided for in the Submanagement Agreement,
subject, however, to the provisions of Section 2 above. Any breach or default
which is not, by its nature, susceptible of being cured by Lessee irrespective
of having terminated the Primary Management Agreement shall be deemed cured by
Lessee terminating the Primary Management Agreement and replacing the Primary
Manager as permitted under Section 2 above. Marriott shall provide Lessee with a
copy of any notice of such breach or default at the time any such notice is
given to the Primary Manager, and if Lessee shall thereafter (but prior to the
expiration of any applicable grace period under the Primary Management
Agreement) give Submanager written notice of Lessee's intent to take curative
action, Submanager shall not exercise any right to terminate or any other rights
or remedies available under the Submanagement Agreement, the Settlement
Agreement or at law or in equity for breach of the Submanagement Agreement until
the expiration of the applicable cure period under the Submanagement Agreement
plus five (5) business days.
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5. Lease Modification. Primary Manager and Marriott agree that the Lease
may be amended, restated, replaced, renewed, extended and/or modified from time
to time by agreement between Owner and Lessee, and Owner may exercise any one or
more of its rights under the Lease from time to time at Owner's discretion, all
without consent of Primary Manager or Marriott, and this Agreement shall
continue in full force and effect as to all such renewals, extensions and/or
modifications and all such exercise of rights; provided, however, that the prior
consent of Primary Manager and Marriott shall be required for any amendment or
modification to the Lease with respect to (a) any provisions which require the
Lessee or the Owner to provide funds or to pay any obligations with respect to
the operation, improvement or repairs to the Hotel (including reimbursement of
costs, capital expenditures, funding of FF&E reserves, paying costs incurred in
connection with the operation of the Hotel for which Primary Manager is
obligated to pay or fund under the Submanagement Agreement, or the provision of
working capital), or (b) any provisions which require performance by Lessee
under the Primary Management Agreement or hereunder, or (c) any provision which,
if amended, would be inconsistent with the obligations of the Owner or Lessee
hereunder. Lessee agrees to deliver copies of any amendments or modifications of
the Lease promptly following the execution and delivery thereof to Primary
Manager and Marriott.
6. Primary Management Agreement and Submanagement Agreement Modification.
(a) Any amendment, modification, waiver, replacement, extension or renewal of
the Primary Management Agreement shall not be effective without the prior
written consent of Marriott, except that no such consent will be required to (a)
extend the term of the Primary Management Agreement, or (b) to modify the
provisions relating to the payment of fees to be retained by the Primary
Manager. Lessee may exercise any one or more of its rights under the Primary
Management Agreement from time to time at Lessee's discretion, and without
notice to or consent of Marriott except as required under this Agreement;
provided Lessee shall not terminate the Primary Management Agreement without the
consent of Marriott, which consent shall not be unreasonably withheld and which
consent shall in any event be granted if an acceptable successor has been
approved under Section 2 hereof. Lessee agrees to deliver copies of any
amendments, modifications, waivers, replacements or extensions of the Primary
Management Agreement following the execution and delivery thereof to Marriott
which do not require the consent of Marriott.
(b) Any amendment, replacement, extension, renewal, termination,
surrender or other modification of the Submanagement Agreement (other than a
termination by Marriott in accordance with the provisions of the Submanagement
Agreement) shall not be effective without the prior written consent of Owner.
(c) Marriott acknowledges and agrees that Owner is a third-party
beneficiary of the provisions of Section 11.22 of the Submanagement Agreement.
Without limiting the foregoing, if Primary Manager fails to terminate the
Submanagement Agreement pursuant to
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such Section 11.22 notwithstanding notice by Owner or Lessee to Primary Manager
to so terminate the Submanagement Agreement, then Owner shall have the right to
cause the termination of the Submanagement Agreement directly by notice to such
effect to Marriott and to bring an action directly against Marriott to cause
such termination; provided notice of such termination is delivered within sixty
(60) days after receipt by Primary Manager (and Owner pursuant to this
Agreement) of written notice from Marriott under Section 11.22 of the
Submanagement Agreement.
7. Obligations of Owner and Lessee; Title; Provisions on Mortgages; Liens
and Other Encumbrances; Recordation. Owner or Lessee shall maintain and comply
with all obligations which are contemplated or provided to be maintained or
performed by Owner or Lessee under Sections 8.01, 8.02, 8.03, 8.04, 8.05 and
11.05 of the Submanagement Agreement.
8. Approval Rights. The parties hereto acknowledge that the Lessee has
retained Primary Manager to be solely responsible for providing all instructions
and approvals to Submanager and monitoring the performance of Submanager under
the Submanagement Agreement, including the making of any elections which Primary
Manager may be entitled to make under the Primary Management Agreement, subject
to the following provisions for participation by Owner. Primary Manager has
personnel with experience in the management of hotels and is familiar with the
Hotel. Lessee hereby delegates and appoints Primary Manager as Lessee's agent to
exercise all rights of Lessee under the Lease in circumstances in which the
Lessee is required to obtain the approval or decision of the Owner under the
Lease or consult with Owner with respect to any matter related to the Hotel,
which delegation and appointment shall not be revoked and shall remain in place
so long as the Primary Management Agreement (or a successor Primary Management
Agreement) remains in force. It is the intent of the parties that pursuant to
such delegation and appointment all Owner approval, consent rights and
consultations which are set forth in the Lease and all elections to be made
under the Lease, the Primary Management Agreement and the Submanagement
Agreement shall be given or made by Primary Manager, with the approval or
participation of the Owner if required under the Lease, but without the
participation of Lessee or any person who reports to a person employed by
Lessee. Owner agrees to designate an individual employed by Owner as the person
responsible for processing and granting all such approvals and with respect to
any consultation with Primary Manager. Such representative shall in no event be
employed by Lessee or report to, or be supervised by, an employee of Lessee.
Owner and Primary Manager shall process all decisions (whether for the granting
of approvals, the making of elections, giving instructions or otherwise) based
on their respective good faith judgment as to the best interests of the Hotel
(i.e. the maximization of the long term operating profit of the Hotel). Without
limiting the foregoing, Primary Manager may consult with or shall obtain the
approval of Owner, if required under the terms of the Lease but Lessee will not
be involved in any review, approval or consent process on the following matters:
(a) Business Plans
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(b) Building Estimates
(c) FF&E Estimates
(d) Capital Expenditures in excess of amounts in the FF& E Reserve
(e) Increases in deposits to FF&E Reserve
(f) Changes to 5-Year Plans
(g) Designation of arbitrators or Experts and submittals made to
any arbitrator or Expert
(h) Decision to restore or terminate in the event of Casualty
(i) Approval of insurance companies
(j) Decision of Owner to obtain property insurance
(k) Consent to Assignment or transfer of Primary Manager's or
Submanager's interest
(l) Audits of Annual Operating Statements
(m) Agreement on any alternative "Competitive Set" or source of
information regarding the same under the Submanagement
Agreement.
The parties hereto understand and agree that Submanager shall, in
any event, be entitled to rely and act on all approvals obtained or received
from, or elections made by, Primary Manager without any obligation to confirm
the granting of any approval or consent by Owner or to obtain the signature of
any representative of Owner and that, notwithstanding the above, the Submanager
shall not be required to grant any additional time for Owner to instruct Primary
Manager with respect to such matters. Lessee acknowledges and agrees that
pursuant to its delegation of authority to the Primary Manager, it will not
participate in any approval, consent or election process and will rely on the
experience and judgment of the Owner and the Primary Manager. In connection with
any dispute resolution procedures under the Submanagement Agreement, Submanager
shall be entitled to rely upon, and act on, decisions and selections made by
Primary Manager, but Submanager shall not be required to permit Lessee to
participate in any such dispute resolution procedures. Submanager shall permit
Owner to participate in any such dispute resolution procedures for which the
Owner has a right of approval or consultation under the Lease.
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9. Notices of Default. From and after the date hereof, (i) Primary Manager
shall send a copy of any notice of default on the Primary Management Agreement
or any notices of any intention to terminate the Primary Management Agreement to
each of Owner and Submanager (i. e., in addition to Lessee) in accordance with
the notice provisions set forth herein, and (ii) Marriott shall send a copy of
any notice of default under the Submanagement Agreement or any notices of any
intention to cancel or terminate the Submanagement Agreement or any notice to
Primary Manager pursuant to Section 11.22 of the Submanagement Agreement to each
of Owner and Lessee (i.e. in addition to Primary Manager) in accordance with the
notice provisions set forth herein.
10. Limitation of Actions Against Submanager. The parties hereto recognize
that this Agreement has been entered into to provide certain assurances to
Marriott and to provide for certain obligations of Primary Manager to Owner and
Lessee. In addition, Marriott has executed this Agreement to acknowledge certain
matters, subject to the understanding that Marriott's obligations with respect
to the management of the Hotel are governed solely by the Submanagement
Agreement and that except as provided in Section 6(c) of this Agreement nothing
in the Submanagement Agreement or this Agreement is intended to give rise to any
right, claim, action, causes of action, suit, proceeding, damages, demand or any
other liability, of any kind or nature of or against Marriott in favor of the
Owner or Lessee. To that end, Owner and Lessee acknowledge and agree that except
as provided in Section 6(c) of this Agreement they release, acquit, exonerate
and forever discharge Marriott and its current and future parents, subsidiaries,
affiliates, assigns, trustees, directors, officers, partners, stockholders,
agents, representatives and employees of any of the foregoing from any right,
claim, action, causes of action, suit, proceeding, damages, demand or any other
liability, of any kind or nature, hereafter arising, which Owner or Lessee may
have the right to bring directly, whether as a third party beneficiary or
otherwise, against any of the foregoing for breach of fiduciary duty,
mismanagement, failure to comply with the terms of the Submanagement Agreement
with respect to Marriott's duties as Submanager. Notwithstanding the above,
nothing contained herein shall in any way or manner affect the rights of Primary
Manager to maintain any cause of action Primary Manager may have against
Marriott under or related to Marriott's performance under the Submanagement
Agreement, including any right of contribution or indemnification or any right
or obligation of Marriott to Owner or Lessee under the Settlement Agreement, or
affect the rights of Owner or Lessee to maintain any cause of action Owner or
Lessee may have against the Primary Manager.
11. Limitation of Recourse Against Owner and Lessee. In the event of any
default by Owner or Lessee pursuant to the terms of this Agreement, the
aggregate liability of the Owner and Lessee, jointly and severally, shall be
limited to an amount which is the greater of (a) thirty percent (30%) of the
fair market value of the Hotel, or (b) the fair market value of their respective
interest (whether fee simple or leasehold, or both) in the Hotel. Fair market
value shall be determined in accordance with the process set forth on Exhibit B
hereto.
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Nothing set forth in this Section shall in any way limit, prevent or affect any
right of Marriott to seek any remedy other than money damages.
12. Control of Restoration and Capital Expenditures. Lessee, Primary
Manager and Submanager acknowledge and agree that any restoration of Hotel
following a casualty pursuant to the provisions of Section 6.03 of the
Submanagement Agreement and any Capital Expenditures (other than replacements,
renewals and additions to FF&E (as defined in the Submanagement Agreement) at
the Hotel) shall be performed by and under the direction of Owner; provided,
however, that unless otherwise agreed by Marriott, Marriott shall be retained to
provide technical services in order to assure that the restoration or such
expenditures are in accordance with the current System Standards. Marriott shall
be paid a reasonable technical services fee for such services.
13. Publicity. Each party agrees that in the event of any press release or
any public announcement concerning the Hotel which is material and out of the
ordinary course (e.g. in connection with a major casualty or accident at the
Hotel), the parties shall consult with each other and act in good faith to agree
on such press release or announcement; provided, however, that any party shall
have the right to make such announcement as it reasonably deems necessary in
order to comply with applicable securities laws.
14. General
A. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.
B. Modification. This Agreement may not be modified orally or in any
other manner other by an agreement in writing signed by the parties hereto
or their respective successors in interest. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and their
respective heirs, successors and assigns.
C. Notices. Notices under this Agreement shall be delivered via
prepaid, nationally recognized overnight courier or U.S. Certified Mail,
return receipt requested, to the parties as follows:
if to Owner:
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
if to Lessee:
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0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
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If to Primary Manager:
IHC II, LLC
--------------------
--------------------
--------------------
if to Marriott:
Marriott Hotel Services, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
ATTN: Law Department (Hotel Operations)
and shall be effective on the earlier to occur, the first business day after
having been deposited with the said overnight courier or three business days
after being deposited with the U.S. Postal Service. Any party may change its
address for notices in the manner for giving notice under this paragraph.
15. Environmental Representations. Lessee and Owner hereby each
represent and warrant to Submanager that, to the best of their respective
knowledge and except as set forth in any environmental assessment reports
provided by Owner, Lessee or Primary Manager to Submanager, as of the Effective
Date, there are no Hazardous Materials on any portion of the Site or the Hotel,
nor have any Hazardous Materials been released or discharged on any portion of
the Site or the Hotel. In addition, Owner or Lessee each hereby represent and
warrant to have delivered to Submanager copies of all reports concerning
environmental conditions which have been received by Owner or Lessee or any of
its Affiliates.
16. Confidentiality
(a) The parties hereto agree that the matters set forth in
this Agreement and the Submanagement Agreement and all statements, reports,
projections, and other information relating to the operation of the Hotel are
strictly confidential and each party will make every effort to ensure that the
information is not disclosed to any outside person or entities (including the
press) without the prior written consent of the other parties except as may be
required by law and as may be reasonably necessary to obtain licenses, permits,
and other public approvals necessary for the refurbishment or operation of the
Hotel, or in connection with Owner's or Lessee's financing of the Hotel, a Sale
of the Hotel, or a sale of a controlling interest in Owner, Lessee, Submanager,
or Marriott (except any financing or sale involving a private or public offering
of securities).
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(b) Owner and Lessee shall not include any reference to
Submanager or to any Affiliate of Submanager in any prospectus, private
placement memorandum, offering circular or offering documentation related
thereto (collectively referred to as the "Lessee and Owner Prospectus"), issued
by Owner or Lessee or by one of their respective Affiliates or by one or more
Mortgagees, which is designated to interest potential investors in debt or
equity securities related to the Hotel, unless Submanager has previously
received a copy of all such references. However, regardless of whether
Submanager does or does not so receive a copy of all such references, neither
Submanager nor any Affiliate of Submanager will be deemed a sponsor of the
offering described in the Owner and Lessee Prospectus, nor will it have any
responsibility for the Owner and Lessee Prospectus. Unless Submanager agrees in
advance, the Owner and Lessee Prospectus will not include any Marriott Trade
Names or Marriott Trademarks. Owner and Lessee shall indemnify, defend and hold
Submanager harmless from and against all loss, costs, liability and damage
(including attorneys' fees and expenses, and the cost of litigation) arising out
of any Owner and Lessee Prospectus or the offering described therein; and this
obligation of Owner and Lessee shall survive Termination of this Agreement.
17. Projections. Owner and Lessee acknowledge that any written or
oral projections, proformas, or other similar information that has been (prior
to execution of this Agreement) or will (during the Term of this Agreement) be
provided by Submanager or Marriott (or any Affiliate of either) to Primary
Manager is for information purposes only, and that Submanager, Marriott, and any
such Affiliate do not guarantee that the Hotel will achieve the results set
forth in any such projections, proformas, or other similar information. Any such
projections, proformas, or other similar information are based on assumptions
and estimates. Unanticipated events may occur subsequent to the date of
preparation of such projections, proformas, and other similar information.
Therefore, the actual results achieved by the Hotel are likely to vary from the
estimates contained in any such projections, proformas, or other similar
information and such variations might be material.
18. Trademarks, Trade Names and Intellectual Property. Owner and
Lessee agree and acknowledge that the provisions of Section 11.12 of the
Submanagement Agreement shall apply to Lessee and Owner and that Owner and
Lessee shall comply with the provisions thereof.
19. Defaults
(a) Each of the following shall constitute a "Default" by
Owner or Lessee, as applicable, under this Agreement.
(i) The filing of a voluntary petition in bankruptcy
or insolvency or a petition for reorganization under any bankruptcy law by Owner
or Lessee, or the admission by either party that it is unable to pay its debts
as they become due. Upon the occurrence of any Default by Owner or Lessee
(referred to as the "defaulting party") as described
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under this subsection (I), said Default shall be deemed an "Event of Default"
under this Agreement.
(ii). The consent to an involuntary petition in
bankruptcy or the failure to vacate, within ninety (90) days from the date of
entry thereof, any order approving an involuntary petition by Owner or Lessee.
Upon the occurrence of any Default by either party as described under this
subsection (ii), said Default shall be deemed an "Event of Default" under this
Agreement.
(iii). The entering of an order, judgment or decree by
any court of competent jurisdiction, on the application of a creditor,
adjudicating either party as bankrupt or insolvent or approving a petition
seeking reorganization or appointing a receiver, trustee, or liquidator of all
or a substantial part of either the Lessee's and Owner's assets, and such order,
judgment or decree's continuing unstayed and in effect for an aggregate of sixty
(60) days (whether or not consecutive). Upon the occurrence of any Default Owner
or Lessee as described under this subsection (iii), said Default shall be deemed
an "Event of Default".
(iv). The failure of Lessee or Owner to perform, keep or
fulfill any of the other covenants, undertakings, obligations or conditions set
forth in this Agreement, and the continuance of such default for a period of
thirty (30) days after the defaulting party's receipt of written notice from a
non-defaulting party of said failure. Upon the occurrence of any Default by
either party as described under this subsection (iv), said Default shall be
deemed an "Event of Default" under this Agreement if the defaulting party fails
to cure the Default within thirty (30) days after receipt of written notice from
the non-defaulting party demanding such cure, or, if the Default is such that it
cannot reasonably be cured within said thirty (30) day period of time, if the
defaulting party fails to commence the cure of such Default within said thirty
(30) day period of time or thereafter fails to diligently pursue such efforts to
completion.
(b) Upon the occurrence of an Event of Default of the Owner or
Lessee hereunder, the non-defaulting party shall be entitled to specific
enforcement of the obligations hereunder and to injunctive relief and to any
other right or remedy available at law or under the terms of the Primary
Management Agreement or the Submanagement Agreement, as applicable, and the
provisions hereunder shall survive a termination of the Submanagement Agreement
and the Primary Management Agreement, as applicable.
20. General
(a) The term of this Agreement shall commence on the dates set forth
above and shall terminate on the date of termination of the Submanagment
Agreement in accordance with its terms.
(b) Except as otherwise expressly provided in this Agreement,
whenever in this Agreement the consent or approval of any party is required,
such consent or approval shall
14
not be unreasonably withheld, delayed or conditioned, shall be in writing, and
shall be executed by a duly authorized officer or agent of the party granting
such consent or approval, and if a party fails to respond to such request within
thirty (30) days, such consent of approval shall be deemed to have been given.
21. Definitions. All capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Submanagement Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
OWNER:
------------------
------------------
By:
By:
--------------------------- ------------------------------
Name: Name:
Title: Title:
LESSEE: PATRIOT AMERICAN HOSPITALITY
PARTNERSHIP, L.P.
WITNESS:
By:
--------------------------- ------------------------------
Name: Name:
Title: Title:
PRIMARY MANAGER
IHC II, LLC
By:
By:
--------------------------- ------------------------------
Name: Name:
Title: Title:
16
MARRIOTT:
MARRIOTT HOTEL SERVICES, INC.
[Marriott International, Inc.]
ATTEST:
By:
--------------------------- ------------------------------
Name: Name:
Title: Title: Vice President
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EXHIBIT A - PROPERTY DESCRIPTION
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EXHIBIT B - DETERMINATION OF FAIR MARKET VALUE
The Owner and Marriott may agree to a fair market value for the Hotel. In
the event that pursuant to such negotiations, the parties hereto do not agree
upon the fair market value of the Hotel, Marriott and Owner each shall, at its
own expense and within thirty (30) days thereafter, obtain an appraisal of the
fair market value of such Hotel from a nationally recognized appraiser of hotel
properties comparable to such hotel. In determining the fair market value of
such hotel, the appraisers shall be instructed to assume that the Hotel is not
subject to a management agreement but is subject to the existing Franchise
Agreement. If such appraisals differ, then the determination of the purchase
price for such Hotel shall be submitted to arbitration in Washington, D.C. in
accordance with the arbitration rules of the American Arbitration Association
then in effect. The parties shall jointly select a single arbitrator. If the
parties are unable to agree upon an arbitrator within ten (10) days following
the 30-day period during which the appraisals were obtained, the arbitrator
shall be selected by the respective appraisers selected by each party within ten
(10) days of such initial 10-day period. Such arbitrator whether selected by the
parties or by their appraisers, shall be knowledgeable with respect to the
appraisal of hotel properties and shall be instructed and obligated to decide,
within thirty (30) days after such submission, whether the appraisal submitted
by Marriott or the appraisal submitted by Owner most accurately reflects the
fair market value of the Hotel, and the written decision of the arbitrator shall
be conclusive and binding on the parties and enforceable by a court of competent
jurisdiction. The expenses of the arbitration shall be borne equally by the
parties to the arbitration.
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