Section C Agreement of Lease
I
,"
AGREEMENT OF LEASE
between
MIAMI BEACH REDEVELOPMENT AGENCY
Owner
and
RDP ROYAL PALM HOTEL LIMITED PARTNERSIDP
Tenant
Dated as of gerOMfZ.rJ I, 1997
. PREPARED llY AND RECORD AND RETURN TO:
Joel N. Minsker, Esq.
Joel N. Minsker, P.A.
Bloom & Minsker
800 Brickell Avenue, Suite 1100
Miami, Florida 33131
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TABLE OF CONTENTS
Page
TERMS OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 1.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2.
DEMISEOFLANDANDTERMOFLEASE .......................16
Section 2.1. Demise of Land for Term. .......................... 16
Section 2.2. No Encumbrances. ............................... 16
Section 2.3. Sale of Entire Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3.
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
RENTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
17
17
18
19
21
24
Method and Place of P~yment. .......................
Base Rent. ....................................
Additional Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incentive Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impositions. ...................................
Net {.ease. ....................................
ARTICLE 4.
LATE CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
. ARTICLE 5. _
~LATIONADJUST~NT ..................................25
ARTICLE 6.
USE ................................................... 25
Section 6.1. llse.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.2. Prohibited Use&. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.3. Prohibition of COIIlPetin~ Projects. . . . . . . . . . . . . . . . . . . . . . 26
Section 6.4. Quality Standards. ............................... 28
Section 6.5. Convention Center ............................... 36
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Section 6.6.
ARTICLE 7.
INSURANCE
Section 7.1.
Section 7.2.
Section 7.3.
Section 7.4.
Section 7.5.
Section 7.6.
Section 7.7.
Section 7.8.
Section 7.9.
Section 7.10.
Section 7.11.
Section 7.12.
Section 7.13.
Section 7.14.
ARTICLE 8.
TABLE OF CONTENTS
(continued)
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Page
Exceptions to Use Covenants. ........................ 37
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Insurance ReQ}lirements. ........................... 37
Treatment of Proceeds. ............................ 38
General Provisions Applicable to All Policies. ............. 39
Additional Covera~e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
No Representation as to AdeQ}lacy of Covera~e. ............ 41
Blanket or Umbrella Policies. ........................ 41
Liability Insurance ReQ}lirements. ..................... 41
Property Insurance Requirements. ..................... 42
Other Insurance Requirements. ....................... 44
Construction Insurance ReQ}lirements. . . . . . . . . . . . . . . . . '.' . 45
Annual A~~re~ates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Determination of Replacement Value. ................... 46
Subleases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Additional Interests. .............................. 46
DAMAGE, DESTRUCTION AND RESTORATION .................. 47
Section 8 .1. Notice to Owner. ................................ 47
Section 8.2. Casualty Restoration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.3. Restoration Funds. ............................... 47
Sectio~ 8.4. Effect of Casualty on this Lease. ...................... 49
ARTICLE 9.
CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.1. Substantial Takin~. ............................... 50
Section 9.2. Less than a Substantial Takin~. ....................... 51
Section 9.3. Restoration Funds. ............................... 52
Section 9.4. TemporaJY Takin~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.5. Governmental Action Not Resultin~ in a Takin~. . . . . . . . . . . . . 54
Section 9.6. Collection of Awards. ............................. 55
Section 9.7. Ne~otiated Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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Section 9.8.
Section 9.9.
Section 9.10.
ARTICLE 10.
TABLE OF CONTENTS
(continued)
.'
Page
Intention of Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Effect of Takin~ on this Lease. ....................... 55
SALE OF THE HOTEL AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.1. Sale of the Hotel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.2. Sublease Requirements. ............................ 64
ARTICLE 11.
MORTGAGES
Section 11.1.
Section 11.2.
Section 11.3.
Section 11.4.
Section 11.5.
Section 11.6.
Section 11.7.
Section 11.8.
Section 11.9.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13.
Section 11.14.
ARTICLE 12.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Ri~ht to Mort~C\ie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Definitions .................................. '. . 66
Effect of Mort~a~es. .............................. 67
Notice and Ri~ht to Cure Tenant's Defaults. . . . . . . . . . . . . . . . 67
Reco~nized Mortia~ee or its Desi2nee as Tenant
Under the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Execution of New Tenant's Documents. ................. 70
Application of Proceeds from Insurance
or Condemnation Awards. .......................... 73
Appearance at Condemnation Proceedin~s. . . . . . . . . . . . . . . . . 73
Ri~hts Limited to Reco~nized Mort~a~ees. . . . . . . . . . . . . . . . . 74
No Surrender or Modification . . . . . . . . . . . . . . . . . . . . . . . . 74
Reco~nition by Owner of Reco~nized
Mort2a~ee Most Senior in Lien. ...................... 74
Reco~nized Mort~a~ee's Assi~nment Ri2hts. .............. 74
Refinancin~ of Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Notices Under a Mort~aie .......................... 77
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.1. Subordination of Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.2. No Subordination of Owner's Proprietar:y Interest in the Land. . . . 77
Section 12.3. Tenant's Interest in the Premises SuQject to Title Matters. . . . . . . 78
Section 12.4. Priority of Lease ................................ 78
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ARTICLE 13.
TABLE OF CONTENTS
(continued)
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Page
HOTEL CONSTRUCTION AND FURNISHING . . . . . . . . . . . . . . . . . . . . . 78
Section 13.1. Tenant' s Obli~ation to Construct Hotel .................. 78
Section 13.2. Description of the Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.3. Shorecrest Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 14.
MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 14.1. Maintenance of Premises ........................... 79
Section 14.2. Removal of Buildini Equipment. ...................... 79
Section 14.3. No Obliiation to Repair or to Supply Utilities. ............. 80
Section 14.4 . Waste Disposal. ..............................:.. 80
Section 14.5. A~ency Maintenance Obli~ations. ..................... 80
Section 14.6. Alterations..................................... 80
ARTICLE 15.
REQU1RE~NTS ......................................... 82
Section 15.1. Tenant's Obliiation to Comply. . . . . . . . . . . . . . . . . . '. . . . . . 82
Section 15.2. Definition. ..................................... 83
Section 15.3. Owner's Obliiation to Comply. . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 16.
HOTEL MANAGER AND MANAGE~NT AGREE~NT . . . . . . . . . . . . . 83
Section 16.1.
Section 16.2.
Section 16.3.
Section 16.4.
Section 16.5.
Section 16.6.
Section 16.7.
Section 16.8.
Section 16.9.
Mana~ement A~reement. ........................... 83
Term of Manaiement Aireement. ..................... 84
Transfer of Hotel Mana~er's Interest in the
Manaiement A~reement. ........................... 85
Owner's Riihts and Remedies. ....................... 88
FF&E Reserve. ................................. 90
Mana~ement Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Hotel Manaier Fundini Operatin~ Deficits. ............... 92
One Hotel Mana~er. .............................. 92
Hotel Mana~er as Equity Owner of Tenant . . . . . . . . . . . . . . . . 92
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TABLE OF CONTENTS
(continued)
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Page
ARTICLE 17.
DISCHARGE OF LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 17.1. Creation of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 17.2. Discharge of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 17.3. No Authority to Contract in Name of Owner. ...... . . . . . . . . 94
ARTICLE 18.
REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 18.1. No Brokers. ................................... 95
Section 18.2. No Other Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE 19.
NO LIABILITY FOR INJURY OR DAMAGE, ETC. . . . . . . . . . . . . . . . " . . 96
Section 19.1. Liability of Owner or Tenant. ........................ 96
Section 19.2. Owner's Exculpation. ............................. 97
Section 19.3. Notice of Injury or Dama~e. . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 19.4. Tenant's ExculpatioQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 19.5. No Punitive Dama~es ."........................... 98
ARTICLE 20.
INDEMNIFICATION ....................................... 99
Section 20.1. Indemnification of Owner. .......................... 99
Section 20.2. Indemnification of Tenant. .......................... 99
Section 20.3. Contractual Liability. ............................ 100
Section 20.4. Defense of Claim. Etc. ........................... 100
Section 20.5. Notification and Payment. ......................... 101
Section 20.6. Survival...................................... 101
ARTICLE 21.
AGENCY IMPROVEMENTS " . . . . . . . . . . . . . . . . . . . . . . . . . . " . . . .. 101
Section 21.1. Gara2e. ..................................... 101
Section 21.2. Construction of Roadway Extension .. . . . . . . . . . . . . . . . .. 102
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TABLE OF CONTENTS
(continued)
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Page
Section 21.3. Cooperation................................... 102
ARTICLE 22.
OWNER'S SECURITY INTEREST
INBIDLDINGEQIDPMENTANDFF&E ........................102
ARTICLE 23.
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 103
ARTICLE 24.
RIGHT TO PERFORM THE OTHER PARTY'S COVENANTS ......... 103
Section 24.1. Ri~ht to Perform Other Party's Obli~ations. . . . . . . . . . . . . . '. 103
Section 24.2. Dischar~e of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 103
Section 24.3. Reimbursement for Amounts Paid Pursuant to this Article. .... 104
Section 24.4. Waiver. Release and Assumption of Obli~ations. . . . . . . . . . .. 104
EVENTS OF DEFAULT, CONDITIONAL
L~ITATIONS,REMEDIES,ETC. ............................
ARTICLE 25.
Section 25.1.
Section 25.2.
Section 25.3.
Section 25.4.
Section 25.5.
Section 25.6.
Section 25.7.
Section 25.8.
Section 25.9.
Section 25.10.
ARTICLE 26.
Definition. ...................................
Enforcement of Performance: Dama~es: and Termination. . . . . .
Expiration and Termination of Lease. ..................
Waiver of Ri~hts of Tenant and Owner. . . . . . . . . . . . . . . . . .
Receipt of Moneys after Notice or Termination. ...........
Strict Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ri~ht to Enjoin Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remedies Under BanknwtGY and Insolvency Codes. . . . . . . . . .
Funds Held by Tenant. ...........................
Inspection. ...................................
104
104
106
106
107
108
108
108
109
109
110
NOTICES, CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . .. 110
Section 26.1. Service of Notices and Other Communicatiops. . . . . . . . . . . .. 110
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TABLE OF CONTENTS
(continued)
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Page
Section 26.2. Consents and Approvals. .......................... 112
ARTICLE 27.
CERTIFICATES BY OWNER AND TENANT ..................... 114
Section 27.1. Certificates of Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 114
Section 27.2. Certificate of Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 115
ARTICLE 28.
FINANCIAL REPORTS AND RECORDS ........................ 116
ARTICLE 29.
SURRENDER AT END OF TERM ............................". 120
Section 29.1. Surrender of Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 120
Section 29.2. Delivery of Subleases. etc. ......................... 120
Section 29.3. Title to III\Provements. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 120
Section 29.4. Title to FF&E Reserve Account. ..................... 121
Section 29.5. Cash and Accounts Receivable. . . . . . . . . . . . . . . . . . . . . .. 121
Section 29.6. Personal Property. .............................. 121
Section 29.7. Survival Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 121
ARTICLE 30.
QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 122
ARTICLE 31.
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 122
ARTICLE 32.
ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS, CONTESTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 122
Section 32.1. Tax Contest Proceedin~s. . . . . . . . . . . . . . . . . . . . . . . . . .. 122
Section 32.2. Imposition Contest Proceedin~s. ..................... 122
Section 32.3. Requirement Contest. ............................ 123
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TABLE OF CONTENTS
(continued)
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Page
Section 32.4. Owner's Participation in Contest Proceedin~s. ............ 124
ARTICLE 33.
RESTAURANT .......................................... 124
ARTICLE 34.
INVESTIGATIONS, ETC. .................................. 126
ARTICLE 35.
HAZARDOUS MATERIALS ................................. 126
Section 35.1. Definitions.................................... 126
Section 35.2. Use of Hazardous Materials. ...................... .". 127
Section 35.3. Indemnification................................. 128
Section 35.4. Compliance. .................................. 129
Section 35.5. Notices...................................... 129
Section 35.6. Owner's Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 129
Section 35.7. Defaults...................................... 129
Section 35.8. Owner Responsibility ............................ 130
Section 35.9. Survival..................................... 130
ARTICLE 36.
PURCHASE; RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . . . .. 130
Section. 36.1. Purchase of Owner's Interest in the Premises by Tenant. . . . . " 130
Section 36.2. Tenant's Ri~ht of First Offer. ....................... 133
Section 36.3. Assiinment. .................................. 135
Section 36.4. No Mer~er ................................... 135
ARTICLE 37.
MISCELLANEOUS ....................................... 135
Section 37.1. Govemini Law and Exclusive Venue. . . . . . . . . . . . . . . . . .. 135
Section 37.2. References.................................... 135
Section 37.3. Entire Aireement_ etc. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 136
Section 37.4. Invalidity of Certain Provisions. ..................... 131
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Section 37.5.
Section 37.6.
Section 37.7.
Section 37.8.
Section 37.9.
Section 37.10.
Section 37.11.
Section 37.12.
Section 37.13.
Section 37.14.
Section 37.15.
Section 37.16.
Section 37.17.
Section 37.18.
Section 37.19.
TABLE OF CONTENTS
(continued)
Page
Mer~er. ..................................... 137
Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 137
Performance at Each Party's Sole Cost and Expense. ........ 137
Recognized Mort~a~ee Charges and Fees. ............... 137
Successors and Assi~ns. . . . . . . . . . . . . . . . . . . . . . . . . . .. 138
Recordin~ of Lease. ............................. 138
Notice of Defaults. .............................. 138
COl:porate Obli~ations ............... . . . . . . . . . . . .. 138
Nonliability of Officials and Employees. ................ 139
No Conflict of Interest. ........................... 139
No Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 139
Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 140
Radon Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 140
No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . .. 140
Relationship of this Lease to Tenant Document. ............ 140
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TABLE OF CONTENTS
(continued)
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Page
EXHIBITS
EXHIBIT A
DESCRIPTION OF THE LAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 143
EXHIBIT 2.1
TITLE MATTERS ........................................ 144
EXHIBIT 6.3(a)-1
DESCRIPTION OF TERRITORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 145
EXHIBIT 6.3(a)-2
DESCRIPTION OF TEN (1m YEAR TERRITORY . . . . . . . . . . . . . . . . .. 146
EXHIBIT 6.4(b)
BENCHMARK HOTELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 147
EXHIBIT 6.4(c)
OPERATIONAL AND PHYSICAL STANDARDS .................. 148
EXHIBIT 8.2
ARTICLE 2 OF HOTEL DEVELOPMENT AGREEMENT ............ 162
EXHIBIT 10.Hc)(i)(I)
SOURCES AND USES OF CASH. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 165
'. EXHffiIT 14.5
TERMS OF CONCESSION AGREEMENT (the "Concession Agreement") .. 166
ExmBIT 25.1~)
LIST OF PROJECT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .. 170
EXHIBIT 36.1(d)
PURCHASE PRICE CALCULATION. . . . . . . . . . . . . . . . . . . . . . . . . .. 171
EXHIBIT 36.2(a)
TERMS OF RIGHT OF FIRST OFFER TRANSACTION ............. 173
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AGREEMENT OF LEASE
.'
THIS AGREEMENT OF LEASE, dated as of this day of
1997 (the "Commencement Date"), between MIAMI BEACH REDEVELOPMENT AGENCY,
a public body corporate and politic, as Owner, and RDP ROYAL PALM HOTEL LIMITED
PARTNERSHIP, a Florida limited partnership, as Tenant.
RECITALS:
A. In February 1993, the City Center/Historic Convention Village Redevelopment and
Revitalization Area was officially established by the adoption of a Redevelopment Plan. The
Redevelopment Plan was the result of the combined efforts of the City of Miami Beach (the
"City"), Owner, Metropolitan Dade County and the State of Florida. The Redevelopment Plan
represents the effort and commitment of Owner and the City to foster the development of
convention quality hotels, ancillary improvements and facilities, and necessary linkages to the
Miami Beach Convention Center (the "Convention Center"). Pursuant to the Redevelopment
Plan, Owner has acquired the property commonly known as the Royal Palm Hotel which has a
street address of 1535 Collins Avenue, Miami Beach, Florida and the Shorecrest Hotel which has
a street address of 1545 Collins Avenue, Miami Beach, Florida, both of which Owner has-agreed
to make available for a convention center hotel which will serve as a part of the Redevelopment
Plan.
B. The City and Owner also have determined to make a substantial commitment to
provide the African-American community with an opportunity in the hospitality industry. In
connection with that commitment, Owner has agreed to make available the Royal Palm Hotel and
the Shorecrest Hotel and additional financial incentives for a hotel owned by African-American
Persons.
C. In furtherance of the Redevelopment Plan and the commitment to the African-
American community referred to in the preceding paragraph, the Agency published Request for
Proposals Number 45-9596 (the "RFP"), entitled "City Center/Historic Convention Village
Redevelopment and Revitalization Area African-American Hotel Development Opportunity",
dated December 27, 1995 and amended on January 2, 1996, January 3, 1996 and March 5, 1996.
The RFP sought bids for the development and operation of a convention center hotel owned by
African-American Persons.
D. On June 5, 1996, after a public review process, the Chairman and Members of
Owner selected an Affiliate of Tenant from among the groups that submitted proposals pursuant
to the RFP and directed representatives of Owner to negotiate the terms under which Tenant or
its Affiliate would develop, own and operate the convention center hotel referred to above (the
"Hotel", as further defined below) in accordance with the requirements of the RFP.
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E. Owner and Affiliates of Tenant entered into a Letter of Intent (the "Letter of
Intent"), dated March 5, 1997, and approved by the City, which, among other things, provides
for the development, construction, furnishing and equipping of tlle Hotel.
F. Owner, the City (to the extent provided therein) and Tenant (acting as
"Developer") have entered into that certain Hotel Development Agreement (the "Hotel
Development Agreement") dated as of the date hereof, pursuant to which Tenant (acting as
"Developer") has agreed to construct the Hotel and related Improvements (as defined below) in
accordance with the terms thereof.
G. By that certain bill of sale from Owner to Tenant dated as of the date hereof,
Owner has conveyed to Tenant Owner's right, title and interest in and to the Improvements
existing as of the date hereof.
H. Owner and Tenant desire to enter into a definitive agreement for the lease of the
Land (as defined below) and the ownership, management and operation of the Hotel.
TERMS OF AGREEMENT
NOW, THEREFORE, it is hereby mutually covenanted and agreed by and between
the parties hereto that this Lease is made upon the terms, covenants and conditions hereinafter set
forth.
ARTICLE 1.
DEFINITIONS
For all purposes of this Lease the terms defined in this Article 1 shall have the following
meanings and the other provisions of this Article 1 shall apply:
"Accounting Principles" means the Uniform System of Accounts for Hotels Eighth
Revised Edition 1986 (as in effect on the Commencement Date), except as otherwise provided by
this Lease, with such changes as Owner and Tenant shall mutually agree are consistent with this
Lease in order to reflect technologies and methodologies not addressed in the Accounting
Principles.
"Additional Equity" has the meaning provided in Section 10.1(c)(i)(3).
"Additional Rent" has the meaning provided in Section 3.3(a).
" Additional Reserve Deposit" has the meaning provided in Section 6.4(j).
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" Affiliate" or "Affiliates" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person. For purposes hereof, the term "control" (including the terms
"controlled by" and "under common control with") shall mean the possession of a Controlling
Interest. Unless the context otherwise requires, any reference to "Affiliate" in this Lease shall
be deemed to refer to an Affiliate of Tenant.
"African-American Person" means (i) an individual (a) who is a citizen of the United
States of America and (b) whose blood-lines originate with one of the indigenous peoples of Africa
or (ii) a Person with regard to which the Substantial Controlling Interest is held, directly or
indirectly, by one or more individuals (y) who are citizens of the United States of America and
(z) whose blood-lines originate with one of the indigenous peoples of Africa.
" Agency" means the Miami Beach Redevelopment Agency.
"Alterations" has the meaning provided in Section 14.6(a).
"Annual Financial Statements" has the meaning provided in Section 28.1(c)(i).
"Annual Report" has the meaning provided in Section 27.1(b).
"Assignee" has the meaning provided in Section 10.1(a).
"Assignment" has the meaning provided in Section 10.I(a).
"Back Rent" has the meaning provided in Section 10.1(a)(iii).
"Balance" has the meaning provided in Section 11.13(a).
"Base Rent" has the meaning provided in Section 3.2(a).
"Benchmark Anniversary" has the meaning provided in Section 6.4(b)(i).
"Benchmark Hotels" has the meaning provided in Section 6.4(b)(i).
"Building Equipment" means all installations incorporated in, located at or attached to
and used or usable in the operation of, or in connection with, the Premises and shall include, but
shall not be limited to, machinery, apparatus, devices, motors, engines, dynamos, compressors,
pumps, boilers and burners, heating, lighting, plumbing, ventilating, air cooling and air
conditioning equipment; chutes, ducts, pipes, tanks, fittings, conduits and wiring; incinerating
equipment; elevators, escalators and hoists; washroom, toilet and lavatory plumbing equipment;
window washing hoists and equipment; and all additions or replacements thereof, excluding,
A:\JNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\ 1 0-16-97
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014
however, any personal property which is owned by Subtenants, licensees, concessionaires or
contractors (except to the extent any of the foregoing are Affiliates of Tenant), FF&E and
Operating Equipment..
"Building Index" has the meaning provided Section 7.12(b).
"Business Day" or "business day" means a day other than Saturday, Sunday or a day on
which banking institutions in the State of Florida are authorized or obligated by law or executive
order to be closed.
"Capital Transaction" has the meaning provided in Section 10.1(a).
"Casualty Restoration" has the meaning provided in Section 8.2(a).
"Chairman" means the chairman of the governing body of the Agency.
"City" has the meaning provided in the Recitals to this Lease.
"Commissioner" means a duly elected or appointed member of the City Commission of
the City of Miami Beach.
"Commencement Date" has the meaning provided in the preamble of this Lease.
"Condemnation Restoration" has the meaning provided in Section 9.2(b).
"Condominium" means the condominium regime. created by a Declaration of
Condominium executed pursuant to Chapter 718, Florida Statutes, as amended from time to time.
"Condominium Association" means the "Association" under the Declaration of
Condominium.
"Connection Fees" has the meaning provided in the Hotel Development Agreement.
"Consenting Party" has the meaning provided in Section 26.2(c).
"Construction Agreements" means all agreements executed in connection with any
Construction Work affecting the Premises and the Improvements, including, without limitation,
a Restoration, Alteration or other Construction Work performed in connection with the use,
maintenance or operation of the Premises.
"Construction Commencement Date" has the meaning provided m the Hotel
Development Agreement.
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015
"Construction Work" means any construction work performed under any provision of
this Lease affecting the Premises and the Improvements, including, without limitation, the initial
construction of the Hotel, a Restoration, Alteration or other construction work performed in
connection with the use, maintenance or operation of the Premises.
"Controlling Interest" means the ownership of greater than fifty percent (50%) of the
voting Equity Interests in a Person or the ownership of greater than fifty percent (50%) of the
votes necessary to elect a majority of the Board of Directors or other governing body of such
Person.
"Convention Center" shall have the meaning provided in Section 6.5.
"Convention Center Agreement" has the meaning provided in Section 6.6.
"Date of Taking" has the meaning provided in Section 9.1(c).
"Debt" has the meaning provided in Section 11.2(a).
"Debt Service" has the meaning provided in Section 3.4(c).
"Declarant" means any "Declarant" or "Co-Declarant" under the Declaration of
Condominium.
"Declaration of Condominium" means a declaration of condominium, if and when
created, for the Hotel, consisting only of two (2) units, and with regard to which the declarant is
the Tenant.
"Default" means any condition or event, or failure of any condition or event to occur,
which constitutes, or would after the giving of notice and lapse of time (in accordance with the
terms of this Lease) constitute, an Event of Default.
"Default Notice" has the meaning provided in Section 25.1(b).
"Delay Date" has the meaning provided in Section 3.2(a).
"DEP" means the State of Florida Department of Environmental Protection.
"DERM" means the Dade County Department of Environmental Resources Management.
"Designated Components" has the meaning provided in Section 6.4(c).
"Designated Component Deficiency" has the meaning provided in Section 6.4(d).
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016
~~.J
"Designated Holder" has the meaning provided in Section 10.1(1).
"Designee" has the meaning provided in Section 1l.12(d).
"Development Budget" has the meaning provided in the Hotel Development Agreement.
"Environment" has the meaning provided in Section 35.1(c).
"Environmental Complaint" has the meaning provided in Section 35.5.
"Environmental Condition" has the meaning provided in Section 35.1(d).
"Environmental Damages" has the meaning provided in Section 35.1(e).
"Environmental Laws" has the meaning provided in Section 35.1(b).
"EPA" means the Environmental Protection Agency of the United States.
"Equity Interest" has the meaning provided in Section 10.I(a).
"Event of Default" has the meaning provided in Section 25.1.
"Event of Default Notice" has the meaning provided in Section 25.1(j).
"Expiration of the Term" means the expiration of this Lease and the Term on the Fixed
Expiration Date or on such earlier date as this Lease may be terminated as provided herein.
"Extension Period" has the meaning provided in Section 6.4(g).
"Facilities and Services" has the meaning provided in Section 6.4(a).
"FF&E" means all furniture, wall, floor and ceiling coverings, fIxtures and equipment
(other than Building Equipment and Operating Equipment) located at or used in connection with
the Hotel, including (without limitation): (a) all furniture, furnishings, built-in serving or service
furniture, carpeting, draperies, decorative millwork, decorative lighting, doors, cabinets,
hardware, partitions (but not permanent walls), television receivers and other electronic
equipment, interior plantings, interior water features, artifacts and artwork, and interior and
exterior graphics; (b) office furniture; (c) communications equipment; (d) all fIxtures and
specialized hotel equipment used in the operation of kitchens, laundries, dry cleaning facilities,
bars and restaurants; (e) telephone and call accounting systems; (f) rooms management systems,
point-of-sale accounting equipment, front and back office accounting, computer, duplicating
systems and office equipment; (g) cleaning and engineering equipment and tools; (h) vehicles; (i)
A:\JNM\CMB\GLEASE.15(EXECUTION.I)\ 1 0-16-97 6
017
recreational equipment; and (j) all other similar items which are used in the operation of the Hotel,
excluding, however, any personal property which is owned by Subtenants, licensees,
concessionaires or contractors (except to the extent any of the for~going are Affiliates of Tenant).
"FF&E Reserve Account" has the meaning provided in Section 16.6(a).
"Final CO" means a certificate(s) of occupancy issued by the City's Building Department
for all or a portion of the Improvements, other than a Temporary CO(s).
"Fixed Expiration Date" means the date which is the last day of the month in which the
one-hundredth (lOOth) anniversary of the Commencement Date shall occur.
"Foreclosure Transferee" and "Foreclosure Transfer" have the meanings provided in
Section 1l.12(d).
"Foreign Instrumentality" has the meaning provided in Section 16.3(b).
"Funded Deficit" has the meaning provided in Section 16.7.
"Funded Equity" has the meaning provided in Section 10.I(c)(i)(I).
"Garage" means the Garage described in the Garage Easement Agreement.
"Gara~~e Development Agreement" has the meaning provided in Section 21.1.
"Garage Easement Agreement" means that certain Garage Easement Agreement, dated
as of the date hereof, between Owner and Tenant.
"GDP Implicit Price Deflator Index" means the implicit price deflator index for gross
domestic product as published by the U.S. Department of Commerce (1987 = 100), or any
successor index thereto, appropriately adjusted.
"Governmental Authority or Authorities" means the United States of America, the State
of Florida, the City, Metropolitan Dade County, the Agency (in its governmental as opposed to
proprietary capacity) and any agency, department, commission, board, bureau, instrumentality
or political subdivision (including any county or district) of any of the foregoing, now existing
or hereafter created, having jurisdiction over Tenant, or any owner, tenant or other occupant of,
or over or under the Premises or any portion thereof or any street, road, avenue or sidewalk
comprising a part of, or in front of, the Premises, or any vault in or under the Premises, or
airspace over the Premises.
"Guarantor" means R. Donahue Peebles, individually.
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018
"Hazardous Materials" has the meaning provided in Section 35.1(a).
"Hotel" has the meaning provided in Section 13.1.
."
"Hotel Chain" has the meaning provided in Section 6.3(b).
"Hotel of Comparable Size" has the meaning provided in Section 6.3(a).
"Hotel Construction Costs" has the meaning provided in the Hotel Development
Agreement.
"Hotel Development Agreement" has the meaning provided in the Recitals to this Lease.
"Hotel Documents" has the meaning provided in Section 28.1(e).
"Hotel Flag" has the meaning provided in Article 31.
"Hotel Manager" means Holiday Hospitality Corporation, a Delaware corporation, the
manager and operator of the Hotel, or any successor, substitute or assign thereof permitted by the
terms of this Lease.
"Hotel Opening Date" means the date on which the Hotel is opened to the public for
business in accordance with the Management Agreement, but not later than the date that is thirty
(30) days following the date of Substantial Completion of the Hotel in accordance with the Hotel
Development Agreement.
"Hotel Operating Profit" has the meaning provided in Section 3.4(c).
"Hotel of Comparable Quality" has the meaning provided in Section 6.3(a).
"Hotel Revenue" has the meaning provided in Section 3.4(c).
"Immediate Family Member" has the meaning provided in Section 10.I(a)(vi)A.
"Imposition" or "Impositions" has the meaning provided in Section 3.5(b).
"Improvement(s)" means any building (including footings and foundations), Building
Equipment, FF&E, and other improvements and appurtenances of every kind and description now
existing or hereafter erected, constructed, or placed upon the Land (whether temporary or
permanent), and any and all alterations and replacements thereof, additions thereto and
substitutions therefor.
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"Incentive Rent" has the meaning provided in Section 3.4(a).
"Incentive Rent Cap" has the meaning provided in Section 3.4(a).
"Incentive Rent Threshold" has the meaning provided in Section 3.4(a).
"Initial Equity" has the meaning provided in Section 10.I(c)(i)(I).
"Installment Payment" has the meaning provided in Section 36.1(1).
"Institutional Lender" means a Person which, at the time it becomes an Institutional
Lender, is a state or federally chartered savings bank, savings and loan association, credit union,
commercial bank or trust company or a foreign banking institution (in each case whether acting
individually or in a fiduciary or representative (such as an agency) capacity); an insurance
company organized and existing under the laws of the United States of America or any state
thereof or a foreign insurance company (in each case whether acting individually or in a fiduciary
or representative (such as an agency capacity); an institutional investor such as a publicly held real
estate investment trust, an entity that qualifies as a "REMIC" under the Internal Revenue Code
of 1986, as amended, or other public or private investment entity (in each case whether acting as
principal or agent); a brokerage or investment banking organization (in each case whether-acting
individually or in a fiduciary or representative (such as an agency) capacity as principal or agent);
an employees' welfare, benefit, pension or retirement fund; an institutional leasing company; a
financing subsidiary or division of a New York Stock Exchange listed company; any governmental
agency or entity insured by a governmental agency or any combination of Institutional Lenders;
provided that each of the above entities shall qualify as an Institutional Lender only if (at the time
it becomes an Institutional Lender) it shall (a) have assets of not less than One Hundred Million
Dollars ($100,000,000) adjusted for inflation and (b) not be an Affiliate of Tenant (it being further
agreed that none of the standards set forth in this definition shall be applicable to participants or
co-lenders in a loan secured by a Mortgage which is held by an Institutional Lender (whether
acting individually or in a fiduciary or representative (such as an agency) capacity). The term
"Institutional Lender" also includes an Affiliate of an Institutional Lender as described in this
paragraph.
"Land" means the real property described on Exhibit A attached hereto and incorporated
by reference herein.
"Late Charge Rate" has the meaning provided in Article 4.
"Lease" means, collectively, this Agreement of Lease and all exhibits and attachments
hereto, as any of the same may hereafter be supplemented, amended, restated, severed,
consolidated, extended, revised and otherwise modified, from time to time, either in accordance
with the terms of this Lease or by mutual agreement of the parties.
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"Lease Year" means (a) the period commencing on the Hotel Opening Date and expiring
on the last day of the next occurring December which is at least twelve (12) months thereafter;
(b) each succeeding 12-month period during the Term; and (c) the final shorter period, if any,
ending on the last day of the Term.
"Letter of Intent" means that certain letter of intent with respect to the development and
operation of the Hotel dated March 5, 1997, executed by the Agency, the City, and Affiliates of
Tenant, and any replacements, substitutions, restatements or amendments thereof.
"Loews Hotel Land" has the meaning provided in Section 19.1(c).
"Major Alteration" has the meaning provided in Section 14.6(a).
"Management Agreement" means a written agreement between Tenant and Hotel
Manager pursuant to which Hotel Manager has agreed to manage and operate the Hotel in
accordance with the terms thereof, and any replacements, substitutions, restatements or
modifications thereof.
"Management Engagement" has the meaning provided in Section 16.3(a).
"Management Transfer" has the meaning provided in Section 16.3(c).
"Management Transferee" has the meaning provided in Section 16.3(c).
"Manager's Parent" has the meaning provided in Section 16.3(c).
"Mayor" means the Mayor of the City.
"Member" means a member of the governing body of the Agency.
"Mortgage" has the meaning provided in Section 1l.2(b).
"Mortgagee" means the holder of a Mortgage.
"Net Cash Flow After Debt Service" has the meaning provided in Section 3.4(c).
"Net Condemnation Award" has the meaning provided in Section 9.1(c).
"Net Insurance Proceeds" has the meaning provided in Section 8.2(a).
"Net Refinancing Proceeds" has the meaning provided in Section 1l.13(b)(2).
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O:ll
"Net Sale Proceeds" has the meaning provided in Section 10.1(j)(vi).
"New Tenant" shall have the meaning provided in Section 1l.6(b).
"New Tenant's Documents" has the meaning provided in Section 1l.6(b).
"Notice" has the meaning provided in Section 26.1.
"Notice of Failure to Cure" has the meaning provided in Section 1l.4(a).
"Offer Notice" has the meaning provided in Section 36.2(a).
"Operating Deficits" has the meaning provided in Section 16.7(a).
"Operating Equipment" means all chinaware, glassware, linens, silverware, uniforms
and menus.
"Operating Expenses" has the meaning provided in Section 3.4(c).
"Operational Standards" has the meaning provided in Section 6.4(c).
"Original Subordinated Amount" has the meaning provided in Section 12.1.
"Owner" means the Agency (or the City if the City shall succeed to the interest of the
Agency hereunder), acting in its proprietary capacity, and any assignee or transferee of the entire
Owner's Interest in the Premises, from and after the date of the assignment or transfer pursuant
to which the entire Owner's Interest in the Premises was assigned or transferred to such assignee
or transferee.
"Owner Indemnified Parties" means, collectively, the Agency (and any successor
Owner), the City and their respective elected and appointed officials (including the Agency's
Chairman and Members and the City's Mayor and City Commissioners), directors, officials,
officers, shareholders, members, partners, holders of other ownership interests, employees,
successors, assigns, agents, contractors, subcontractors, experts, licensees, lessees, mortgagees,
trustees, partners, principals, invitees and Affiliates. An "Owner Indemnified Party" shall mean
any of the foregoing.
"Owner's Interest in the Premises" means Owner's interest in the Land and Owner's
interest in this Lease.
"Permit" has the meaning provided in Section 35.1(1).
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"Permitted Operator" has the meaning provided in Section 16.3(d).
"Permitted Transfer" has the meaning provided in Section 16.3(c).
"Person" means an individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, estate, trust, unincorporated association or other entity;
any Federal, state, county or municipal government or any bureau, department, political
subdivision or agency thereof; and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Physical Standards" has the meaning provided in Section 6.4(c).
"Plans and Specifications" has the meaning given to such term in the Hotel Development
Agreement.
"Premises" means, collectively, the Land and the Improvements.
"Prohibited Uses" has the meaning provided in Section 6.2(a).
"Project Agreements" means all of the agreements between Tenant and Owner and/or the
City listed on Exhibit 25.1(c) attached hereto and incorporated by reference herein.
"Public Company" means a Person that is required to comply with the reporting
requirements under the Securities Exchange Act of 1934, as amended, or any successor statute.
"Purchase Price" has the meaning provided in Section 36.1(d).
"Quality Deficiency" has the meaning provided in Section 6.4(d).
"Quality Report" has the meaning provided in Section 6.4(d).
"Quality Review" has the meaning provided in Section 6.4(e).
"Quality Standard" has the meaning provided in Section 6.4(c).
"Quality Standard Anniversary" has the meaning provided in Section 6.4(c).
"Rater" has the meaning provided in Section 6.4(1).
"Rater Qualifications" has the meaning provided in Section 6.4(k).
"RDP" means RDP Royal Palm Hotel Limited Partnership, a Florida limited partnership.
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023
. -'
"Recognized Accounting Firm" means Ernst & Young/Kenneth Leventhal; Coopers &
Lybrand; Arthur Andersen; Price Waterhouse; Deloitte & Touche; KPMG Peat Marwick; Pannell,
Kerr & Foster; or any successor entity of any of the foregoing. or any other national certified
public accountants mutually acceptable to Tenant and Owner.
"Recognized Mortgage" has the meaning provided in Section 1l.2(c).
"Recognized Mortgagee" means the holder of a Recognized Mortgage; provided,
however, that, except to the extent permitted by Section 1l.2(c), a Recognized Mortgagee may
not be an Affiliate of Tenant (except if Tenant is an Affiliate of a Recognized Mortgagee that has
caused the Lease to be assigned to such Affiliate in lieu of foreclosure of the Recognized
Mortgage of such Recognized Mortgagee).
"Redevelopment Plan" means that certain plan addressing the rehabilitation, conservation
and redevelopment of that certain City Center/Historic Convention Village Redevelopment and
Revitalization Area described therein, of which the Land forms a part, as the same was adopted
in February of 1993 by the Agency and the City and approved by the Board of County
Commissioners of Dade County, Florida in March, 1993, and expiring on March 31, 2023. As
used herein, except in the Recitals, references to the "Redevelopment Plan" shall not include any
extensions or amendments thereof.
"Refinancing Times" has the meaning provided in Section 1l.13(a).
"Reinstatement Date" has the meaning provided in Section 1l.5(a).
"Release" has the meaning provided in Section 35.1(g).
"Remediation Percentage" has the meaning provided in Section 6.4(k).
"Rental" means Base Rent, Additional Rent, Incentive Rent, Impositions, and any other
sums, costs or expenses which Tenant is obligated, pursuant to any of the provisions of this Lease,
to pay to-Owner or to pay into the FF&E Reserve Account.
"Replacement Value" has the meaning provided in Section 7.12(a).
"Requesting Party" has the meaning provided in Section 26.2(c).
"Requirements" has the meaning provided in Section 15.2.
"Restoration" means either a Casualty Restoration or a Condemnation Restoration, or
both.
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024
"Restriction" has the meaning provided in Section 6.3(a).
"Restaurant" has the meaning provided in Article 33. .~o
"Restaurant Agreement" has the meaning provided in Article 33.
"Restaurant Operator" means the operator of the Restaurant or any substitute therefor
pursuant to Article 33.
"RFP" has the meaning provided in the Recitals.
"Right of First Offer Transaction" has the meaning provided in Section 36.2(a).
"Roadway Extension" has the meaning provided in Section 21.2(b).
"Rooms Revenue" means such part of the Hotel Revenue as is derived from the sale or
rental of rooms, suites or other sleeping accommodations.
"Royal Palm Portion of the Purchase Price" has the meaning provided in Section
36.1(d)(ii).
"RP Improvements" has the meaning provided in Section 13.2.
"Sale of the Hotel" has the meaning provided in Section 10.1(a).
"Shorecrest Improvements" has the meaning provided in Section 13.2.
"Shorecrest Portion of the Purchase Price" has the meaning provided in Section
36.1(d)(iv).
"Significant Alteration" has the meaning provided in Section 14.6(a).
"Sublease" has the meaning provided in Section 10.1(a).
"Subordinated Amount" has the meaning provided in Section 12.1(b).
"Substantial Completion" has the meaning provided in the Hotel Development
Agreement.
"Substantial Controlling Interest" means the ownership of greater than fifty percent
(50%) of the Equity Interests in a Person and the ownership of greater than fifty percent (50%)
A:\JNM\CMB\GLEASE.l5(EXECUTION.l )\10-16-97 14
025
of the votes necessary to elect a majority of the Board of Directors or other governing body of
such Person.
."
"Substantially All of the Premises" has the meaning provided in Section 9.1(c).
"Subtenant" has the meaning provided in Section 10.I(a).
"Temporary CO" means a temporary certificate of occupancy, as the same may be
amended from time to time, issued by the City's Building Department for all or a portion of the
Improvements.
"Tenant" means RDP and any assignee, transferee or subtenant of the entire Tenant's
Interest in the Premises that is permitted under this Lease from and after the date of the permitted
assignment, transfer or sublease pursuant to which the entire Tenant's Interest in the Premises was
assigned, transferred or sublet to such assignee, transferee or subtenant.
"Tenant Document" has the meaning provided in Section 27.1(b).
"Tenant Indemnified Parties" means Tenant and its directors, officers, shareholders,
employees, successors, assigns, subtenants, agents, contractors, subcontractors, experts, licensees,
lessees, mortgagees, joint venturers, members, holders of other ownership interests, partners of
a partnership constituting a partner of Tenant, trustees, partners, principals, invitees and
Affiliates.
"Tenant's Interest in the Premises" means Tenant's interest in this Lease and Tenant's
ownership of the Improvements as provided in Section 29.3.
"Term" means the term of years commencing on the Commencement Date and, subject
to earlier termination as provided hereunder, expiring at 11:59 p.m. on the Fixed Expiration Date.
"Territory" has the meaning provided in Section 6.3(a).
"Threat of Release" has the meaning provided in Section 3S.1(h).
"Title Matters" has the meaning provided in Section 2.1.
"Transfer" has the meaning provided in Section 10.1(a).
"Transferee" has the meaning provided in Section 10.I(a).
"Unavoidable Delays" means delays due to strikes, slowdowns, lockouts, acts of God,
inability to obtain labor or materials, war, enemy action, civil commotion, fIre, casualty,
A:\JNM\CMB\GLEASE. 15(EXECUTION. 1)\10-16-97 15
O~6
catastrophic weather conditions, a court order which causes a delay (unless resulting from disputes
between or among the party alleging an Unavoidable Delay, present or former employees,
officers, members, partners or shareholders of such alleging party or Affiliates (or present or
former employees, officers, partners, members or shareholders of such Affiliates) of such alleging
party), the application of any Requirement, or another cause beyond such party's control or
which, if susceptible to control by such party, shall be beyond the reasonable control of such
party. Such party shall use reasonable good faith efforts to notify the other party not later than
twenty (20) days after such party knows of the occurrence of an Unavoidable Delay; provided,
however, that either party's failure to notify the other of the occurrence of an event constituting
an Unavoidable Delay shall not alter, detract from or negate its character as an Unavoidable Delay
or otherwise result in the loss of any benefit or right granted to the delayed party under this Lease.
In no event shall (i) any party's financial condition or inability to fund or obtain funding or
financing constitute an "Unavoidable Delay" (except for an Institutional Lender's inability to
fund, which inability is not caused by Tenant) with respect to such party and (ii) any delay arising
from a party's (or its Affiliate's) default under this Lease or any of the Project Agreements
constitute an "Unavoidable Delay" with respect to such party's obligations hereunder. The times
for performance set forth in this Lease (other than for monetary obligations of a party) shall be
extended to the extent performance is delayed by Unavoidable Delay, except as otherwise
expressly set forth in this Lease.
"Weights" has the meaning provided in Section 6.4(c).
ARTICLE 2.
DEMISE OF LAND AND TERM OF LEASE
Section 2.1. Demise of Land for Term.
Owner does hereby demise and lease to Tenant, and Tenant does hereby lease and take
from Owner, the Land, together with all the appurtenances, rights, privileges and hereditaments
thereto, "AS IS" subject to (a) the terms and conditions of this Lease and (b) the matters set forth
in Exhibit 2.1.(the "Title Matters") attached hereto and incorporated by reference herein, to have
and to hold unto Tenant, its successors and assigns for a term commencing on the Commencement
Date and expiring on the Fixed Expiration Date, unless sooner terminated pursuant to the terms
hereof.
Section 2.2. No Encumbrances.
Owner will not permit or suffer any encumbrance, mortgage, pledge or hypothecation of
Owner's Interest in the Premises except with respect to those matters (such as utility easements
and nonmonetary reciprocal easement agreements) reasonably approved by Tenant and which do
not adversely affect the operation or development of the Hotel. Any such mortgage, pledge,
encumbrance or hypothecation in violation of this Section 2.2 is void. Notwithstanding the
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foregoing, Owner shall have the absolute right to pledge its interest in the Rental payable
hereunder so long as such pledge does not include a pledge of Owner's Interest in the Premises
(other than the Rental payable hereunder), and the pledgee shall have no rights under this Lease
other than the right to receive payments of Rental. Any pledge of Rental permitted hereunder
shall not create any rights in the pledgee thereunder to enforce any of the provisions of this Lease.
Owner shall deliver to Tenant and any Recognized Mortgagee, within fifteen (15) days after the
effective date thereof, a true and correct copy of any pledge instrument permitted hereunder.
Section 2.3. Sale of Entire Interest.
Owner shall not sell, transfer, conveyor assign Owner's Interest in the Premises, and the
holder of any Equity Interest in Owner shall not sell, convey, transfer or assign such Equity
Interest, except for a sale, transfer, conveyance or assignment of the entire Owner's Interest in
the Premises or the entire Equity Interest, as the case may be, subject to Tenant's rights under
Sections 36.1 and 36.2.
ARTICLE 3.
RENTAL
Section 3.1. Method and Place of Payment.
Except as otherwise specifically provided herein, all Rental shall be paid without notice
or demand. All Rental payable to Owner (except Impositions, if the Requirements governing such
payment are to the contrary) shall be paid by good checks (payable upon presentment) drawn on
a U.S. or state chartered bank, in currency of the United States of America. Rental that is payable
to Owner (other than Impositions) shall be payable at the address of Owner set forth herein or at
such other place as Owner shall direct by notice to Tenant. Impositions shall be payable in the
form and at the location provided by Requirements governing the payment of such. It is
acknowledged by the parties hereto that the FF&E Reserve Account payments, which are included
in the definition of Rental, are not in payment of the use and occupancy of the Premises.
Section 3.2. Base Rent.
(a) Base Rent. Tenant shall pay Owner annual base rent for each Lease Year (the
"Base Rent") during the Term in the amount of Two Hundred Twenty Thousand Dollars
($220,000) commencing on the earlier to occur of (i) the Hotel Opening Date and (ii) the date
which is twenty-four (24) months after the Construction Commencement Date (the "Delay Date").
Notwithstanding the foregoing, if Tenant is unable to cause the Hotel Opening Date to occur prior
to the Delay Date as a result of an Unavoidable Delay, Tenant shall be required to pay only fifty
percent (50 %) of the Base Rent set forth above from and after the Delay Date for a period equal
to the period of such Unavoidable Delay; provided, however, in all cases (notwithstanding any
Unavoidable Delay), the full amount of the Base Rent shall be payable by Tenant commencing on
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the earlier to occur of the Hotel Opening Date and the date which is forty-two (42) months after
the Construction Commencement Date. The initial Base Rent of Two Hundred Twenty Thousand
Dollars ($220,000) shall be increased at the beginning of the te.nth (lOth), fifteenth (15th) and
twentieth (20th) years from the Hotel Opening Date in the same proportion as the percentage
increase in the aDP Implicit Price Deflator Index from the Hotel Opening Date, or in the event
of increases after the tenth (10th) year, from the date of the prior increase, to the date of the
increase. In no event shall Base Rent during an escalation period be less than the Base Rent
during the prior period.
(b) Payment of Base Rent. Base Rent shall be paid in monthly installments equal to
one-twelfth of the then applicable annual Base Rent and shall be paid in advance, commencing on
the date provided in Section 3.2(a) and on the first day of each and every calendar month
thereafter during the Term. All Base Rent which is due for any period of less than a full month
or a full calendar year shall be appropriately apportioned.
Section 3.3. Additional Rent.
(a) Additional Rent. Tenant shall pay Owner annual additional rent for each Lease
Year (the" Additional Rent") during the Term in the amount of Two Hundred Seventy Thousand
Dollars ($270,000) commencing on the earlier to occur of (i) the Hotel Opening Date and {ii) the
Delay Date. Notwithstanding the foregoing, if Tenant is unable to cause the Hotel Opening Date
to occur prior to the Delay Date as a result of an Unavoidable Delay, Tenant shall be required to
pay only fifty percent (50%) of the Additional Rent set forth above from and after the Delay Date
for a period equal to the period of such Unavoidable Delay; provided, however, in all cases
(notwithstanding any Unavoidable Delay), the full amount of the Additional Rent shall be payable
by Tenant commencing on the earlier to occur of the Hotel Opening Date and the date which is
forty-two (42) months after the Construction Commencement Date. The initial Additional Rent
of Two Hundred Seventy Thousand Dollars ($270,000) shall be increased at the beginning of the
tenth (10th), fifteenth (15th) and twentieth (20th) years from the Hotel Opening Date in the same
proportion as the percentage increase in the GDP Implicit Price Deflator Index from the Hotel
Opening Date, or in the event of increases after the tenth (10th) year, from the date of the prior
increase, -to th~ date of the increase. In no event shall Additional Rent during an escalation period
be less than the Additional Rent during the prior period.
(b) P<\yment of Additional Rent. Additional Rent shall be paid in monthly installments
equal to one-twelfth of the then applicable annual Additional Rent and shall be paid in advance,
commencing on the date provided in Section 3.3(a) and on the first day of each and every
calendar month thereafter during the Term. All Additional Rent which is due for any period of
less than a full month or a full calendar year shall be appropriately apportioned.
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Section 3.4. Incentive Rent.
(a) Tenant shall pay Owner annual incentive rent for e;lch Lease Year (the "Incentive
Rent") during the Term in an amount equal to twenty percent (20%) of that amount of annual
Hotel Revenue that exceeds Seventeen Million Nine Hundred Thousand Dollars ($17,900,000)
(the "Incentive Rent Threshold") for such Lease Year commencing on the Hotel Opening Date;
provided, however, the Incentive Rent shall not exceed Two Hundred Thousand Dollars
($200,000) (the "Incentive Rent Cap") per Lease Year; provided further, however, for the initial
and fmal Lease Years, the Incentive Rent Threshold and the Incentive Rent Cap shall be prorated
according to the actual number of days in such Lease Year. Except as provided in the previous
sentence, if the calculation of Incentive Rent in any particular Lease Year produces an amount that
exceeds the applicable Incentive Rent Cap, the excess Incentive Rent for that particular Lease
Year shall not be carried forward for the calculation of Incentive Rent due in any future Lease
Year.
The Incentive Rent Threshold and the Incentive Rent Cap shall each be increased at the
beginning of the tenth (lOth), fifteenth (15th) and twentieth (20th) years from the Hotel Opening
Date in the same proportion as the percentage increase in the GDP Implicit Price Deflator Index
from the Hotel Opening Date, or in the event of increases after the tenth (10th) year, from the date
of the prior increase, to the date of the increase. In no event shall Incentive Rent dur.ing an
escalation period be less than the Incentive Rent during the prior period.
(b) Payment ofIncentive Rent. Tenant shall pay the full amount of Incentive Rent due,
if any, in annual installments, in arrears, within sixty (60) days after the end of each Lease Year,
for the preceding Lease Year. The obligation to pay Incentive Rent shall survive Expiration of
the Term as to any Incentive Rent (if any) which accrued prior to the Expiration of the Term,
subject to Article 28.
(c) Certain Definitions.
(i) "Debt Service" means all payments in respect of principal and interest on
Debt (including, without limitation, the net cost to Tenant of interest rate protection agreements
and arrangements, and any and all fees paid to the lender(s), administrative fees and charges,
extension fees, and the like).
(ii) "Hotel Operating Profit" means Hotel Revenue after deduction of
Operating Expenses on an annual basis.
(iii) "Hotel Revenue" means, without duplication, total revenue of any kind
(whether in cash or in kind) from the operation of the Hotel and all other portions of the Premises
from and after the Hotel Opening Date as determined under the Accounting Principles and shall
include, without limitation, all income of every kind (whether in cash or in kind) and all gross
proceeds of sales of any kind (whether in cash or on credit or otherwise) resulting from the
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030
operation of the Hotel, and all other portions of the Premises, and all of the facilities therein and
goods and services provided thereby, including, without limitation, all income and proceeds from
the rental of rooms, food and beverage sales, telephone revenues, parking revenues received by
Tenant from or with respect to parking facilities located on the Premises, the Garage or any other
parking facility or from valet or other parking services provided to Hotel guests and other patrons
of the Hotel, leasing, brokerage and management fees and commissions, or other compensation,
derived by Tenant or any Affiliate of Tenant under any leasing agreement, management
agreement, master lease or similar agreement regarding the leasing or management of any retail
space entered into by Tenant or any Affiliate of Tenant with the owner of the Garage, all revenues
derived by Tenant or any Affiliate of Tenant from the operation of any concession agreements
(including, without limitation, the concession agreement described in Section 14.5), any gross
vending income and commissions, all income and proceeds received from Restaurant Operator,
tenants, lessees, licensees, concessionaires and other persons occupying space at the Hotel and or
rendering services to Hotel guests or other patrons of the Hotel (but not including the gross
receipts of such tenants, lessees, licensees, concessionaires and other persons), interest income
(except as expressly excluded below) and the proceeds (after deducting all necessary expenses
incurred in the adjustment or collection thereof) of business interruption insurance actually
received by Tenant which replace lost revenues with respect to the operation of the Hotel or any
other portion of the Premises. The following shall, however, be excluded from Hotel Revenue:
(1) Federal, state and municipal excise, sales, resort, use, and other taxes collected
from patrons or guests as a part of or based upon the sales price of any goods or
services, including with limitation, gross receipts, room, bed, admission, cabaret,
or similar taxes;
(2) Any gratuities collected;
(3) Allowances, rebates and refunds not included in Hotel Revenue in accordance with
the Accounting Principles;
(4) The proceeds of any financing or refinancing;
(5) Interest on funds in the FF&E Reserve Account;
(6) Proceeds from the sale of any Building Equipment or FF&E; and
(7) Proceeds from the Sale of the Hotel.
Notwithstanding anything to the contrary contained herein, the funds described in clauses
(5) and (6) above shall be deposited into the FF&E Reserve Account upon receipt thereof, and
such deposit shall be in addition to, and not in lieu of, the deposits otherwise required pursuant
to Section 16.6.
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031
(iv) "Net Cash Flow After Debt Service" means Hotel Operating Profit after
deduction of Debt Service and receipt of Funded Deficit.
(v) "Operating Expenses" means, without duplication, all costs and expenses
incurred in owning, maintaining, conducting and operating the Hotel and all other portions of the
Premises, other than Debt Service and any other payments of principal or interest (whether or not
permitted hereunder (and this reference thereto not constituting consent or approval thereot)),
Rental, depreciation, amortization and the original costs of constructing and furnishing the Hotel
pursuant to the Hotel Development Agreement. Operating Expenses shall include, without
limitation, all operating costs; all wages and benefits and payroll taxes; the cost of all food,
beverages, Operating Equipment and other goods, supplies, utilities and services; all repairs and
maintenance; all professional fees and expenses; all costs of advertising, marketing and
promotion; all credit card discounts; all costs incurred by Tenant relating to parking facilities and
services (including, but not limited to, payments under the Garage Easement Agreement); all costs
incurred by Tenant or any Affiliate of Tenant under any leasing agreement, management
agreement, master lease or other similar agreement regarding the leasing or management of the
Retail Space entered into by Tenant or any Affiliate of Tenant with the owner of the Garage; all
costs incurred by Tenant or any Affiliate of Tenant in connection with the operation of any
concession agreements (including, without limitation, the concession agreement described in
Section 14.5); all Hotel Manager fees and payments to the extent permitted under Article,16; all
capital additions and improvements (including, without limitation, expenditures for Building
Equipment and FF&E, other than such expenditures funded through the FF&E Reserve Account)
except that no deduction shall be permitted for Alterations which under this Lease require the
consent of Owner (unless such consent has been obtained or is deemed to be obtained); all
insurance costs (including self-insured risks and deductibles); all payments under equipment
leases; all real estate, personal property and other taxes, assessments, governmental charges and
other Impositions (other than income taxes, unless imposed in lieu of any of the foregoing taxes,
assessments, charges or Impositions); all payments into the FF&E Reserve Account (including
without limitation, any Additional Reserve Deposit); and annual reimbursement of Connection
Fees, together with interest thereon, as provided in the Hotel Development Agreement. Any
Operating Expense payable to an Affiliate of Tenant or Hotel Manager shall be deemed an
Operating Expense only to the extent of the fair market value of the goods or services supplied
by such Affiliate. The immediately preceding sentence shall not apply, however, to amounts
payable under the Hotel Management Agreement in accordance with Article 16 hereunder.
Section 3.5. Impositions.
(a) Obli~ation to Pay Impositions. From and after the Commencement Date, Tenant
shall payor cause to be paid, in the manner provided in Section 3.5(c), all Impositions that at any
time thereafter are assessed, levied, confirmed, imposed upon, or charged to Owner or Tenant
with respect to (i) the Premises, or (ii) any vault, passageway or space in, over or under any
sidewalk or street in front of or adjoining the Premises, or (iii) any other appurtenances of the
Premises, or (iv) any personal property, FF&E, Building Equipment or other facility used in the
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operation thereof, or (v) any document to which Tenant is a party creating or transferring an
interest or estate in the Premises of, by or to Tenant, or (vi) the use and occupancy of the
Premises, or (vii) this transaction. .~'
(b) Definition.
"Imposition" or "Impositions" means the following imposed by a Governmental
Authority or the Condominium Association, if any, or any other governing body of any other
condominium regime, if any, comprising any portion of the Premises:
(i) real property taxes and general and special assessments (including, without
limitation, any special assessments for business improvements or imposed by any special
assessment district);
(ii) personal property taxes;
(iii) sales taxes on Rental;
(iv) real property taxes and general and special assessments, condominium
assessments, if any, and charges and other charges payable by Owner or
Tenant under any condominium regime, if any, comprising any portion of
the Premises;
(v) water, water meter and sewer rents, rates and charges;
(vi) excises;
(vii) levies;
(viii) license and permit fees;
_ (ix) any other governmental levies of general application, fees, rents,
assessments or taxes and charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, now or hereafter enacted of any kind whatsoever;
(x) service charges of general application with respect to police and fire
protection, street and highway maintenance, lighting, sanitation and water supply; and
(xi) any fines, penalties and other similar governmental charges applicable to
the foregoing, together with any interest or costs with respect to the foregoing.
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(c) pa,yment of Impositions.
(i) Subject to the proVISIOns of Section 32.2, from and after the
Commencement Date, Tenant shall pay each Imposition or installment thereof not later than the
date the same may be paid without interest or penalty (which is the date of delinquency).
However, if by law of the applicable Governmental Authority any Imposition may at the
taxpayer's option be paid in installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Tenant may exercise the option to pay the Imposition in such
installments and shall be responsible for the payment of such installments with interest, if any.
(ii) If Tenant twice fails within any thirty-six (36) month period to make any
payment of an Imposition (or installment thereof) on or before the date the same may be paid
without penalty, Tenant shall, at Owner's request, and notwithstanding paragraph (i) above, pay
all Impositions or installments thereof thereafter payable by Tenant not later than twenty (20) days
before the date of delinquency. However, if Tenant thereafter makes all such payments as
required in this paragraph (ii) for thirty-six (36) consecutive months without failure, the
Imposition payment date in paragraph (i) above shall again become applicable, unless and until
there are two further failures within a thirty-six (36) month period, in which case Tenant shall
again have the right to cure the failure so that the payment date in paragraph (i) above shall again
be applicable, and this provision shall continue to be applicable to each situation in which there
are two further failures within a thirty-six (36) month period. Nothing in this paragraph shall be
construed to limit Owner's Default remedies as set forth elsewhere in this Lease after failure by
Tenant timely to pay any Imposition.
(d) Evidence of Payment. Tenant shall furnish to Owner, within thirty (30) days after
the date of Owner's request therefor, an official receipt of the appropriate taxing authority or other
proof reasonably satisfactory to Owner, evidencing the payment thereof.
(e) Evidence of Non-Payment. Any certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any Imposition asserting
non-payment of such Imposition shall be prima facie evidence that such Imposition is due and
unpaid atthe t!me of the making or issuance of such certificate, advice or bill, at the time or date
stated therein. Tenant shall, immediately upon receipt of any such certificate, advice or bill,
deliver a copy of the same to Owner.
(f) Apportionment of Imposition. Any Imposition relating to a fiscal period of the
taxing authority, a part of which occurs after the Commencement Date and a part of which occurs
before the Commencement Date or after the Expiration of the Term, shall be apportioned pro rata
between Owner and Tenant.
(g) Exclusions from Impositions. Except as expressly set forth above, nothing
contained herein shall be construed to require Tenant to payor to be charged for any portion of
(i) municipal, state or federal income or gross receipts taxes assessed against Owner (other than
A:\JNM\CMB\GLEASE.15(EXECUTION.I)\ 10-16-97 23
034
sales taxes imposed on Rental); (ii) municipal, state or federal capital levy, estate, succession,
inheritance, transfer or gains taxes, of Owner; (iii) corporation or franchise taxes imposed on
Owner or any corporate owner of the fee of the Land; or (iv) any penalties or late charges
assessed against Owner (unless the same result from Tenant's failure to timely pay Impositions).
(h) Tax Abatements and Reductions. Tenant shall be entitled to the benefit of any tax
abatements and reductions as are, or may be, available under applicable law as if Tenant were the
fee owner of the Premises. Owner shall not be required to join in any action or proceeding in
connection with such abatement or reduction unless the provisions of any Requirement at the time
in effect require that such action or proceeding be brought by and/or in the name of Owner. If
so required, Owner shall join and cooperate in such proceedings or permit them to be brought by
Tenant in Owner's name, in which case Tenant shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and disbursements) incurred by Owner in connection
therewith.
Section 3.6. Net Lease.
It is the intention of Owner and Tenant that (a) Rental be absolutely net to Owner without
any abatement, diminution, reduction, deduction, counterclaim, setoff or offset whatsoever, except
to the extent expressly set forth in this Lease, and (b) Tenant pay all costs, expenses and charges
of every kind or nature (except as expressly provided for herein to the contrary) relating or
allocable to the Premises that may arise or become due or payable during or after (but attributable
to a period falling within) the Term.
ARTICLE 4.
LATE CHARGES
If Tenant shall fail to make any payment of Base Rent, Additional Rent, Incentive Rent or
other Rental within thirty (30) days after the same shall be due, the late payment shall bear interest
from the date due until the date paid at a rate (the "Late Charge Rate") equal to the lesser of (a)
four percent (4_%) per annum in excess of the prime rate in effect from time to time at Citibank,
N.A. (or The Chase Manhattan Bank, N.A., if Citibank, N.A. shall not then have an established
prime rate; or the prime rate of any major banking institution doing business in New York City,
as selected by Owner, if none of the aforementioned banks shall be in existence or have an
established prime rate) and (b) the maximum interest rate permitted by law. All interest payable
under this Section shall be deemed Rental (but shall not be compounded) and shall be due and
payable by Tenant on fifteen (15) days' demand. The collection by Owner of any interest under
this Section shall not be construed as a waiver of Tenant's default or of Tenant's obligation to
perform any term, covenant or condition of this Lease nor shall it affect any other right or remedy
of Owner under this Lease.
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ARTICLE 5.
INFLATION ADJUSTMENT.
Unless otherwise expressly provided hereunder, any dollar amount described in this Lease
as "adjusted for inflation" or "subject to adjustment for inflation" (or words of similar import)
shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the
aDP Implicit Price Deflator Index for the calendar year immediately preceding the date of such
adjustment, and the denominator of which shall be the aDP Implicit Price Deflator Index for the
calendar year during which the Hotel Opening Date occurred. All amounts subject to adjustment
hereunder shall be adjusted effective as of January 1 of each year pursuant to the formula
described above. If the GDP Implicit Price Deflator Index ceases to be published, and there is
no successor thereto, such other reasonably similar index as Owner and Tenant mutually designate
shall be substituted for the GDP Implicit Price Deflator Index.
ARTICLE 6.
USE
Section 6.1. lls.e.
(a) Continuous Le~al Use. Tenant shall use and operate the Premises throughout the
Term as required by this Lease. In any event, the Premises shall be used only in accordance with
the Final COs therefor (or Temporary COs, to the extent that Final COs have not been issued
therefor).
(b) Sco~e of Use. In accordance with Tenant's obligations to meet and comply with
the Quality Standards and other provisions of this Lease, Tenant shall, from and after the Hotel
Opening Date, operate the Premises as a first class convention center hotel with appropriate
ancillary uses and amenities, and for no other purpose, without interruption (except for
Unavoidable Delays and except in the ordinary course of business). Notwithstanding the
preceding sentence, Tenant reserves the right to close or restrict access to any portion of the
Premises in connection with Alterations undertaken in accordance with the provisions of this
Lease or to such extent as may, in the reasonable opinion of Tenant's counsel, be legally
necessary to prevent a dedication thereof or the accrual of prescriptive rights to any Person or
Persons.
Section 6.2. Prohibited Uses.
(a) Without limiting the provisions of Section 6.1, Tenant shall not use or occupy the
Premises or any part of the Premises, and neither permit nor suffer the Premises to be used or
occupied, for any of the following ("Prohibited Uses"):
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036
~.. ~.
(i) for any unlawful or illegal business, use or purpose;
(ii)
for any use which is a public nuisance;
.'
(iii) in such manner as may make void or voidable any insurance then in force
with respect to the Premises; or
(iv) . for any use involving any ownership structure such as time share, time
interval, cooperative or condominium (other than as may be contemplated by a Declaration of
Condominium creating only two (2) units consisting of the Restaurant and the remainder of the
Improvements which Tenant, at its sole option, reserves the right to create).
(b) Immediately upon its discovery of any Prohibited Use, Tenant shall take all
reasonably necessary steps, legal and equitable, to compel discontinuance of such business or use,
including, if necessary, the removal from the Premises of any Subtenants, licensees, invitees or
concessionaires, subject to applicable Requirements.
Section 6.3. Prohibition of Competing Projects.
(a) Operating and Franchisin~ Restrictions. Tenant hereby covenants for itself .and its
Affiliates, (i) not to own or operate, without the prior consent of Owner, and (ii) to cause Hotel
Manager and its Affiliates, not to own, operate or grant a franchise with regard to, without the
prior written consent of Owner, a Hotel of Comparable Size within the area described on Exhibit
6.3(a)-1 attached hereto and incorporated by reference herein (the "Territory"). In the event
Hotel Manager breaches the Management Agreement as to the foregoing provision, Tenant shall
diligently, in good faith and using its best efforts pursue all of its remedies under the Management
Agreement to enforce the terms of such agreement; provided, however, such breach shall not be
deemed a default under this Lease so long as Tenant is diligently and in good faith using its best
efforts to enforce the agreement as provided above; provided further, however, Tenant shall not
be required to perform or incur expenses to perform a futile act. For purposes hereof, a "Hotel
of Comparable Size" shall mean a hotel containing 600 or more rooms and 40,000 or more
square feet of meeting space (including any meeting space made available to such hotel on a long-
term basis pursuant to any license or shared facilities agreements or otherwise). However, for
the ten (10) year period commencing with the Commencement Date in addition to the foregoing
restriction (the "Restriction") and with regard only to the area described on Exhibit 6.3(a)-2
attached hereto and incorporated by reference herein a "Hotel of Comparable Size" shall mean
a full service hotel containing three hundred (300) or more rooms. For purposes of the
applicability of the definition of "Hotel of Comparable Size" to Hotel Manager and its Affiliates
only, for so long as the Hotel is a part of the Crowne Plaza Hotel Chain, the definition of "Hotel
of Comparable Size" as used in this Section 6.3(a) means a hotel that is part of the Crowne Plaza
Hotel Chain containing the number of rooms and amount of meeting space as described in the
immediate preceding two (2) sentences in this Section 6.3(a).
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037
(b) Exclusions from Restrictions. Notwithstanding anything to the contrary contained
in Subsection (a) above, the Restriction shall terminate or exclude certain properties, as described
below, as applicable, upon the occurrence of any of the following events:
(i) if (x) the Hotel Manager purchases or is acquired by a Person already
owning two (2) or more hotels as part of a chain (a "Hotel Chain"), (y) the Hotel Manager is
acquired by a Person who is an Affiliate of a Hotel Chain, or (z) Tenant or the Hotel Manager,
or an Affiliate of either, purchases a Hotel Chain, then in any such case the Restriction shall not
be applicable to any hotels comprising a portion of the Hotel Chain at the time the Hotel Manager
is purchased or the Hotel Chain is acquired, as applicable;
(ii) upon the purchase by Tenant of the Owner's Interest in the Premises, the
Restriction shall terminate;
(iii) upon the termination of the Redevelopment Plan (without regard to any
extensions thereof), the Restriction shall terminate;
(iv) to the extent Hotel Manager is operating or franchising any properties in
the Territory as of March 5, 1997, such properties shall be excluded from the Restriction;
(v) for so long as the Hotel is part of the Crowne Plaza Hotel Chain, with
regard to the Crowne Plaza Hotel located at 1601 Biscayne Boulevard, Miami, Florida, any
restoration or renovation at that location or any replacement of such hotel with another hotel,
which is part of the Crowne Plaza Hotel Chain, at a location outside the city limits of the City
shall be excluded from the Restriction; and
(vi) for so long as the Hotel is part of the Crowne Plaza Hotel Chain, with
regard to the Crowne Plaza Hotel located at 16701 Collins Avenue, Sunny Isles Beach, Florida,
any restoration or renovation at that location or any replacement of such hotel with another hotel,
which is part of the Crowne Plaza Hotel Chain, at a location outside the city limits of the City and
the town limits of the Town of Surfside, Florida shall be excluded from the Restriction.
(c) Enforcement. Tenant acknowledges that Owner will be irreparably harmed in the
event Tenant violates the Restriction and that money damages would be inadequate to compensate
Owner for such harm. Consequently, Tenant agrees that Owner, in addition to all of its rights
and remedies contained herein, shall have the right to apply for, seek and demand injunctive relief
to compel the cure of such violation.
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Section 6.4. Quality Standards.
(a)
First Class Hotel.
.'
(i) Tenant shall operate, maintain and manage, or shall cause the operation,
maintenance and management of, the Hotel as a first class, convention center hotel, which Hotel
shall contain first class facilities and services customarily found in convention center hotels,
including, without limitation, guest rooms, reservation services, front door and check-in services
and facilities, banquet facilities, convention and meeting services and facilities, multiple food and
beverage outlets, room service, bell service, laundry and valet service and a health and fitness
facility (the "Facilities and Services"), at the level of quality provided by the Benchmark Hotels,
as provided herein, consistent with the Hotel's physical facilities (as supplemented by FF&E
expenditures pursuant to this Lease).
(ii) Tenant will maintain the appearance (without regard to matters of taste as the
same relate to decor, styling and aesthetics) and quality of the Hotel, the Facilities and Services
and the FF&E therein, and will conduct the operation and management of the Hotel and its
Facilities and Services, or cause the same to be managed and operated, at a level of quality
comparable to that provided at the Benchmark Hotels as determined in accordance with this
Section 6.4(d). In order to measure the level of quality of the Hotel and the Benchmark Hotels,
the parties have established the Quality Standard, consisting of the Physical Standards and the
Operational Standards which are more fully described in Section 6.4(c).
(iii) The Quality Standards determined pursuant to this Section 6.4 shall be
applied to the operation of the entire Premises excluding the Restaurant. The Quality Standards
for the Restaurant are as set forth in Article 33.
(b) Benchmark Hotels.
(i) Prior to the date hereof, the parties have selected the comparable first class
hotels (which number at least three but no more than five) listed on Exhibit 6.4(b) attached hereto
and incorporated by reference herein (the "Benchmark Hotels") to be representative of the level
of Quality Standard to be achieved by Tenant with respect to the Hotel pursuant to Section 6.4(a)
above. The Benchmark Hotels shall, subject to the provisions of this Lease, be reestablished as
of the fifth (5th) anniversary of the Hotel Opening Date and every five (5) years thereafter (the
"Benchmark Anniversary") as follows:
commencing six (6) months prior to each Benchmark Anniversary, Owner
and Tenant shall, in order to determine the successor Benchmark Hotels by
the next occurring Benchmark Anniversary, meet and in good faith
negotiate the selection of at least three (3), but no more than five (5),
comparable first class hotels to serve as Benchmark Hotels until the same
shall be reselected pursuant to the terms hereof; provided, however, that
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if Owner and Tenant shall not have agreed on the successor Benchmark
Hotels within six (6) months after the applicable Benchmark Anniversary,
then either party may, not later than thirty (30) days thereafter, by written
notice to the other proceed to litigate such matter. Until such time as the
successor Benchmark Hotels have been determined pursuant to the terms
thereof, the previous Benchmark Hotels shall continue as such for all
purposes under this Lease.
(ii) The parties acknowledge that, unless otherwise agreed in writing, the
Benchmark Hotels shall consist of first class hotels in the continental United States which have
been designed and constructed generally at a level comparable to that of the Hotel and compete
generally for the same business at the same market-level as the Hotel.
(c) Physical and Operational Standards. The parties have set forth on Exhibit 6.4(c),
attached hereto and incorporated by reference herein, the components of the physical standards
(the "Physical Standards") and the operational standards (the "Operational Standards") (the
Operational Standards together with the Physical Standards are referred to herein collectively as
the "Quality Standard") which form the basis on which the Hotel and the Benchmark Hotels
shall be evaluated from time to time as set forth in this Lease. Also set forth on Exhibit 6.4(c)
are (i) the relative weights for each of the components of the Quality Standard (the "Weights"),
which Weights are to be taken into account by the Rater during its evaluation as provided below,
and (ii) certain components of the Quality Standard which the parties have designated as the
"Designated Components". In order to assure that the Hotel continues to be operated and
maintained as a first class hotel in accordance with this Lease, the parties recognize that the
components of the Quality Standard, as well as their respective Weights, may require modification
from time to time during the term of this Lease and hereby agree that subject to the provisions of
this Lease, the components of the Quality Standard shall be re-evaluated as of the tenth (lOth)
anniversary of the Hotel Opening Date and every ten (10) years thereafter (the "Quality Standard
Anniversary") as follows:
commencing six (6) months prior to each Quality Standard Anniversary,
.Owner and Tenant, in order to determine the need, if any, for re-evaluation
of the Quality Standard, and the Weights thereof, by the next occurring
Quality Standard Anniversary, shall meet and in good faith re-evaluate the
components of the Quality Standard and their respective Weights and make
such changes therein, if any, which are consistent with this Lease as they
may deem necessary, to serve as the Quality Standard until the same shall
be re-evaluated pursuant to the terms hereof; provided, however, that if
Owner and Tenant shall not have agreed with respect to the foregoing
within six (6) months after the applicable Quality Standard Anniversary,
then either party may, not later than 30 days thereafter, by written notice
to the other proceed to litigate such matter. Until such time as the
successor components of the Quality Standard and their respective Weights
A:\JNM\CMBIGLEASE.15(EXECUTION.1 )\ 1 0-16-97 29
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shall be determined pursuant to the terms hereof, the existing components
and their respective Weights shall remain in full force and effect.
Any such modification of the Quality Standard shall be consistent with this Lease and no such
modification shall require a re-evaluation of matters of taste as the same relate to the decor,
styling and aesthetics of the Hotel or of the Hotel's design (i.e., the design of the physical
structure (building and appurtenances and Building Equipment) which has been or will be
determined with the approval of Owner under the Hotel Development Agreement).
(d) Report on Quality Review.
(i) The Rater's report on Quality Review (the "Quality Report") shall (1)
address each component of the Quality Standard with specificity comparing the level of quality
at the Hotel with the level of quality at the Benchmark Hotels, (2) address whether a Quality
Deficiency or Designated Component Deficiency shall have occurred and (3) take into account the
age of the Hotel and such other matters as the Rater deems relevant to the evaluation of the Hotel
in accordance with this Lease. The Rater shall consult with Owner and Tenant prior to issuing
the Quality Report.
(ii) In conducting its Quality Review and measuring the Hotel's Quality Standard,
the Rater shall not take into account matters (x) of taste as the same relate to the decor, styling
and aesthetics of the Hotel, or (y) relating to the design, construction or operation of the Garage.
In addition, the Rater shall recognize that the Quality Standard is not intended to evaluate the
Hotel's design (i.e., the design of the physical structure (building and appurtenances and Building
Equipment) which has been or will be determined with the approval of Owner under the Hotel
Development Agreement).
(iii) If the Rater determines that the Hotel has failed to provide to its guests a level
of quality with respect to the Quality Standard substantially comparable to that provided at the
Benchmark Hotels (on average), then there shall be deemed to have occurred a "Quality
Deficiency" .
(iv) If the Rater determines that no Quality Deficiency has occurred, but has
determined that the level of quality of any Designated Component is unacceptable as a component
of a first-class hotel based on the level of quality of any such Designated Component at the
Benchmark Hotels (on average), then there shall be deemed to have occurred a "Designated
Component Deficiency" .
(v) In the event Tenant or Owner, each acting reasonably, contests the
determination of the Rater with respect to the existence of a Quality Deficiency or a Designated
Component Deficiency as contained in the Quality Report, a dispute shall be deemed to have
arisen which shall be subject to litigation.
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30
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041
(e) Ratin~ of Hotel
(i) Commencing on the first (1st) anniversary of the Hotel Opening Date and
annually thereafter, Owner shall have the right to cause the Rater to conduct an evaluation of the
Hotel and the Benchmark Hotels in accordance with the provisions of this Lease (a "Quality
Review"). However, if the most recent Quality Review indicates that there has been no Quality
Deficiency, or in the event of a Designated Component Deficiency such Designated Component
Deficiency has been cured within twelve (12) months of the determination of the existence of such
Designated Component Deficiency, then, in either of these events, Owner may not cause Rater
to conduct a subsequent Quality Review prior to two (2) years from the date of the most recent
Quality Review. Provided, however, the immediately preceding sentence shall not be applicable
during any period in which a foreclo~ure is pending.
(ii) In addition, notwithstanding the foregoing, during the twelve (12) month period
commencing six (6) months after any Sale of the Hotel by Tenant or a Management Transfer or
a Management Engagement, Owner shall have the right to require one additional Quality Review.
(iii) Before requiring a Quality Review, if Owner believes Tenant has failed to
meet the Quality Standard, Owner shall endeavor to give Tenant sixty (60) days prior written
notice during which time the parties shall meet in a good faith effort to attempt to resolve any
claim by Owner that Tenant has failed to meet the Quality Standard.
(iv) All costs of a Quality Review shall be borne as follows:
(l) By Tenant, if the Quality Review determines that there has been a
Quality Deficiency, and such costs shall not be an Operating Expense or
deductible in determining Hotel Operating Profit; provided, however, that,
if following a foreclosure of a Recognized Mortgage or an assignment of
lease in lieu of the foreclosure of a Recognized Mortgage, Tenant is a
Recognized Mortgagee or an Affiliate of a Recognized Mortgagee, then
during the period in which such Recognized Mortgagee or Affiliate of a
Recognized Mortgagee is Tenant such costs shall be an Operating Expense
in determining Hotel Operating Profit.
(2) By Tenant, if the Quality Review determines that there has been no
Quality Deficiency, but that there has been a Designated Component
Deficiency, and such costs shall be an Operating Expense and deducted in
determining Hotel Operating Profit.
(3) By Owner, if the Quality Review determines that there has been no
Quality Deficiency or Designated Component Deficiency, and such costs
shall be paid by Owner from its own funds.
A:\JNM\CMB\GLEASE.15(EXECUTION.1 )\ 1 0-16-97 31
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042
(v) Notwithstanding anything to the contrary in this Lease, in the event the
Recognized Mortgagee does not maintain the FF&E Reserve Account continually funded pursuant
to Section 16.S(d) during the pendency of the foreclosure, then, in that event, a Foreclosure
Transferee, other than a Recognized Mortgagee or its Designee, shall be required to cure all existing
Quality Deficiencies and all existing Designated Component Deficiencies by no later than one (I)
year from the date such Foreclosure Transferee becomes the Tenant under this Lease.
(f) Desi~nated Component Deficiency: Remedy. If the Quality Report concludes that
a Designated Component Deficiency has occurred, then:
(i) Tenant shall, within sixty (60) days after the receipt of the Quality Report,
prepare, commence and diligently pursue implementation of a Remediation Plan which in the
opinion of the Rater is designed to remedy such Designated Component Deficiency within a
reasonable amount of time given the nature of such Designated Component Deficiency; but in all
events (i) to the extent the Remediation Plan addresses deficiencies in the Operational Standards,
the Remediation Plan shall be designed to remedy such deficiencies within a period of six (6)
months to twelve (12) months (as determined by the Rater taking into account the adverse impact
of the deficiency on the Hotel and the amount of time reasonably required to remedy the same as
well as any adverse impact on the on-going operations of the Hotel (such as bookings and Tenant's
ability to have access to the area(s) to be repaired)) from establishment of the Remediation Plan
and (ii) to the extent the Remediation Plan addresses deficiencies in the Physical Standards, the
Remediation Plan shall be designed to remedy such deficiencies within four (4) years from
establishment of the Remediation Plan. If Tenant and the Rater cannot reasonably agree upon a
Remediation Plan, a Dispute shall be deemed to have arisen, which shall be subject to litigation.
(ii) If the remediation of the Designated Component Deficiency relates to a
Physical Standard which requires the expenditure of funds from the FF&E Reserve Account, then,
at Tenant's election, Hotel Manager may be required to deposit the Additional Reserve Deposit
into the FF&E Reserve Account in the manner set forth in Article 16 hereof until such time as
the Designated Component Deficiency is remedied; provided, however, that if such Designated
Component Deficiency is not remedied within three (3) years from establishment of the
Remediation Plan, Hotel Manager shall be required, until such deficiency is cured, to deposit the
Additional Reserve Deposit into the FF&E Reserve Account pursuant to Article 16 and Tenant
shall cause an amount equal to the Remediation Percentage multiplied by the funds in the FF&E
Reserve Account (on an annual basis) to be expended on remediation of the deficiencies in the
Physical Standards addressed in the Remediation Plan; provided such use of FF&E Reserve
Account funds is otherwise permitted under this Lease.
(iii) Owner shall have the right to cause Rater to monitor the implementation of
such Remediation Plan (the cost of which shall be an Operating Expense) and, to the extent Tenant
shall fail to implement such plan in accordance with its terms, no Event of Default shall be
deemed to occur, but Owner shall be entitled to specific performance to ensure such
implementation.
A:\JNM\CMB\GLEASE.15(EXECUTION.1 )\ 1 0-16-97 32
043
(g) Quality Deficiency: Remedy. If the Quality Report concludes that a Quality
Deficiency has occurred, then:
(i) Tenant shall, within sixty (60) days after receipt of the Quality Report, prepare,
commence and diligently pursue implementation of a Remediation Plan which in the opinion of
the Rater is designed to remedy such Quality Deficiency within a reasonable amount of time given
the nature of such Quality Deficiency; but in all events (i) to the extent the Remediation Plan
addresses deficiencies in the Operational Standards, the Remediation Plan shall be designed to
remedy such deficiencies within a period of six (6) months to twelve (12) months (as determined
by the Rater after taking into account the adverse impact of the deficiency on the Hotel and the
amount of time reasonably required to remedy the same as well as any adverse impact on the on-
going operations of the Hotel (such as bookings and Tenant's ability to have access to the area(s)
to be repaired)) from establishment of the Remediation Plan and (ii) to the extent the Remediation
Plan addresses deficiencies in the Physical Standards, the Remediation Plan shall be designed to
remedy such deficiencies within four (4) years from establishment of the Remediation Plan. If
Tenant and the Rater cannot reasonably agree upon a Remediation Plan, a Dispute shall be deemed
to have arisen, which shall be subject to litigation.
(ii) Until such time as the Quality Deficiency is remedied, if the Remediation Plan
provides for the expenditure of funds for FF&E, then the Additional Reserve Deposit shall be
deposited into the FF&E Reserve Account pursuant to Article 16 and Tenant shall cause an
amount equal to the Remediation Percentage multiplied by the funds in the FF&E Reserve
Account (on an annual basis) to be expended on remediation of the deficiencies in the Physical
Standards addressed in the Remediation Plan; provided such use of funds in the FF&E Reserve
Account is otherwise permitted under this Lease.
(iii) If the Rater shall determine that Tenant has failed to remedy the deficiencies
in the Operational Standards addressed by the Remediation Plan as provided above within the
appropriate time period provided above, Owner shall provide Tenant with notice of such failure.
If the Rater thereafter determines that Tenant has failed to remedy such deficiencies within three
(3)-months after Tenant's receipt of such notice, the same shall constitute an Event of Default
hereunder, but in all cases subject to the provisions of Article 25.
(iv) If the Rater shall determine that Tenant has failed to remedy the deficiencies
in the Physical Standards addressed by the Remediation Plan within four (4) years, Owner shall
provide Tenant with notice of such failure. If the Rater thereafter determines that Tenant has
failed to remedy such deficiencies within one (1) year after Tenant's receipt of Owner's notice (the
"Extension Period"), the same shall constitute an Event of Default hereunder, but in all cases
subject to the provisions of Article 25. To the extent funds in the FF&E Reserve Account are not
sufficient to accomplish the remediation of the deficiencies in the Physical Standards addressed
by the Remediation Plan during the Extension Period, Tenant shall provide the funds necessary
to complete such remediation by the expiration of the Extension Period. For so long as RDP is
A:\JNM\CMB\GLEASE. 15(EXECUTION. 1)\10-16-97 33
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044
the Tenant, any funds so expended by Tenant pursuant to a Remediation Plan in excess of the
funds available in the FF&E Reserve Account shall be amortized over the useful life of the FF&E
(as determined in accordance with the Code) to which such monies are allocable and deducted as
an Operating Expense in accordance with such amortization schedule. If a Person other than RDP
shall be the Tenant hereunder, any such excess funds shall not be amortized or otherwise deducted
as an Operating Expense; provided, however, that if following the foreclosure or assignment of
lease in lieu of the foreclosure of a Recognized Mortgage, Tenant is a Recognized Mortgagee or
an Affiliate of a Recognized Mortgagee, then during the period in which such Recognized
Mortgagee or Affiliate of a Recognized Mortgagee is Tenant any such excess funds may be
amortized or otherwise deducted as an Operating Expense.
(v) Owner shall have the right to cause Rater to monitor the implementation of the
Remediation Plan (the cost of which shall be an Operating Expense) and, to the extent Tenant
shall fail to implement such plan in accordance with its terms, Owner shall be entitled, in addition
to any other remedy available to Owner under this Lease, to specific performance to ensure such
implementation.
(h) Remediation Plan. Any Remediation Plan pursuant to Section 6.4(1) or Section
6.4(g) shall be subject to and consistent with the requirements of Section 6.4(d)(ii) and the other
provisions of this Lease. Accordingly, except as provided in the next sentence, a Remediation
Plan may not require structural changes or the construction of additions to, or the removal of any
portion of, the Hotel. Subject to the foregoing, a Remediation Plan to cure a Quality Deficiency
may provide, in addition to FF&E expenditures in accordance with Section 6.4(g)(ii), for
reconfigurations which may involve structural changes to portions of the Hotel other than the
guest rooms which (i) in the aggregate will not cost more than ten percent (10%) of the value of
the expenditures required by such Remediation Plan; (ii) do not require modifications to the
Hotel's certificate of occupancy; and (iii) do not conflict with any Requirements. Except as
otherwise provided in the last sentence of Section 6.4(g)(iv) and subject to the penultimate
sentence of such subsection, all costs incurred in complying with any Remediation Plan shall be
an Operating Expense (except to the extent expenditures made pursuant to the Remediation Plan
are out of the FF&E Reserve Account).
(i) Cooperation. Tenant shall cooperate with Owner (and the Rater) in order to enable
Owner to exercise its rights pursuant to this Article, which cooperation shall include (subject to
the provisions of Section 28.1(f)), without limitation, the inspection by Owner (and the Rater) of
all records relating to customer satisfaction (i.e., complaints) and the inspection of the Premises
by Owner, the Rater and their representatives, upon reasonable advance notice to Tenant and no
such inspection shall unreasonably interfere with the operations of the Hotel. No advance notice
shall be necessary in connection with the inspection of those areas of the Premises accessible to
the general public.
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045
(j) Certain Definition&.
(i) "Additional Reserve Deposit" shall mean one,percent (1 %) of Hotel Revenue
or, if Net Cash Flow After Debt Service is inadequate to fund such amount, then such lesser
amount as is available from Net Cash Flow After Debt Service.
(ii) "Remediation Percentage" shall mean the percentage obtained by dividing
three and one-half percent (3.5 %) by the aggregate percentage obtained by adding the Additional
Reserve Deposit percentage equivalent to four percent (4%). By way of example, if the
Additional Reserve Deposit is equivalent to one percent (l %) of Hotel Revenue, then the
Remediation Percentage shall equal the quotient obtained by dividing three and one-half percent
(3.5%) by five percent (5%), i.e., seventy percent (70%).
(iii) "Rater Qualifications" shall mean the following qualifications required for
any Person to be qualified to be a Rater:
(I) The Rater shall have extensive experience in evaluating the qualitative
performance of hotels;
(II) The Rater shall not have been employed or engaged by a party-hereto
or its hotel consultants within the previous five (5) year period, except as a "Rater" pursuant to
the terms of this Lease; and
(III) The Rater shall (w) be neutral and independent of the parties to this
Lease and their then current respective hotel consultants; (x) not be affiliated with either party's
auditors; (y) not have a conflict of interest with (including, without limitation, any bias towards
or against) a party hereto or its then current hotel consultants; and (z) have (l) experience in
evaluating the qualitative performance of hotels and (2) a business reputation, in each case
comparable to that as of the date hereof of the Persons listed in Section 6.4(k) or any other Person
employed as a Rater hereunder as of the date such Person was designated to serve as a Rater
hereunder.
(k) Rater: Desi~nation of Rater.
Prior to the commencement of a Quality Review, Owner shall notify Tenant of Owner's
choice for the "Rater" to perform the Quality Review. Such notice shall include a statement
describing how such proposed Rater has all of the Rater Qualifications in accordance with the
standards set forth herein (including, without limitation, a statement from the Owner that its
selected Rater is willing and able to perform the functions contemplated by this Lease, and is
otherwise qualified to serve as the Rater hereunder, including, without limitation, that Owner
knows of no conflict of interest between its selected Rater and a party hereto and/or its hotel
consultants). Within ten (10) business days after receipt of Owner's notice, Tenant shall notify
Owner either that Tenant (i) approves of Owner's choice for the Rater, or (ii) believes that the
A:\JNM\CMB\GLEASE.15(EXECUTION.l)\10-16-97 . 35
t;. .,
046
Rater selected by Owner is not qualified to serve as the Rater hereunder (including, without
limitation, as a result of a conflict of interest with a party hereto and/or its hotel consultants), and
such notice shall state Tenant's reasons for disapproval with reasonable specificity. Failure of
Tenant to so notify Owner within such ten (10) business day period shall be deemed to constitute
Tenant's approval of the Rater selected by Owner. If Tenant so disapproves of Owner's selection
for the Rater, the parties shall, within ten (10) business days after Owner's receipt of Tenant's
notice, meet and endeavor in good faith to select an alternate Rater having all of the Rater's
Qualifications.
If the parties are unable to mutually designate an alternate Rater within such ten (10)
business days after the receipt of Tenant's notice as provided above, Tenant shall, within five (5)
business days thereafter, give notice to Owner of its choice for such alternate Rater. Within ten
(10) business days after Owner's receipt of such notice, Owner's choice for the Rater and Tenant's
choice for the Rater shall mutually select the Rater who shall act as the sole Rater for such Quality
Review. Tenant and Owner agree not to (i) designate or approve any Rater of which such party
has knowledge of an actual or potential conflict of interest and (ii) employ any Rater (except as
the "Rater" pursuant to the terms of this Lease) within the three (3) year period after such Rater
has performed a Quality Review.
As of the date hereof, the parties agree that the Persons listed below qualify- as an
acceptable Rater; provided, however, that Tenant may object to Owner's designation of such Rater
if Owner selects such Rater for a Quality Review and at such time Tenant believes that the Rater
is not qualified to serve as the Rater hereunder (including, without limitation, as a result of a
conflict of interest with a party hereto):
(1) The Gettys Group; and
(2) Linda Novey Enterprises, Inc.
Section 6.5. Convention Center.
Tenant has entered into an agreement with the City (or its designated nominee) (the
"Convention Center Agreement"), pursuant to which, among other things, (i) Hotel Facilities
and Services shall be made available for support of the City of Miami Beach Convention Center
events and (ii) Tenant and the City shall undertake joint marketing efforts, in accordance with the
terms thereof. The term of the aforesaid agreement shall terminate upon the earlier to occur of
(x) March 31,2023 and (y) subject to Unavoidable Delays, (i) the City's failure to maintain the
location of the Miami Beach Convention Center at the site bounded by the streets in Miami Beach,
Florida that as of the date hereof bear the following names: Convention Center Drive, Dade
Boulevard, Washington A venue and 17th Street, with a gross building area of no less than one
million (l,OOO,OOO) square feet and exhibit hall capacity aggregating not less than five hundred
thousand (500,000) square feet (the "Convention Center"); and (ii) the City's failure to maintain
the Convention Center with no material adverse change in its present condition or, if there exists
A:\JNM\CMB\GLEASE.15(EXECUTION.1)\ 1 0-16-97 36
047
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such a material adverse change, the City's failure to make arrangements for an imminent
renovation and diligently implement and complete such renovation.
Section 6.6. Exceptions to Use Covenants.
Notwithstanding the foregoing provisions of this Article 6, if, at any time during the
Term, the Convention Center ceases to be open and available for business (except for Unavoidable
Delays), including, without limitation, as a result of a condemnation or casualty, then (a) during
such period of time, Tenant shall be required to operate the Premises as a hotel (but shall not be
required to operate the Premises as a fust-class convention center hotel), and for no other purpose
(except as permitted hereunder), without interruption (except for Unavoidable Delays and except
in the ordinary course of business), and (b) the provisions of Section 6.4 shall be inapplicable
during such period of time and for twelve (l2) months thereafter. In addition, if within ninety
(90) days following the date that the Convention Center ceases to be open and available for
business (except for Unavoidable Delays), the City does not elect, by Notice to Tenant, to restore
and/or re-open the Convention Center, and, thereafter, diligently pursue the completion of any
such restoration or re-opening, then for the remainder of the Term, the provisions of Sections 6.4
and 6.5 shall be inapplicable and, notwithstanding the provisions of Section 6.1(b), Tenant shall
be required to operate the Premises as a hotel (but shall not be required to operate the Premises
as a fust class convention center hotel), and for no other purpose (except as permitted hereunder),
without interruption (except for Unavoidable Delays and except in the ordinary course of
business).
ARTICLE 7.
INSURANCE
Section 7.1. Insurance Req.uirements.
(a) Liability Insurance. At all times during the Term, Tenant, at its sole cost and
expense (as an Operating Expense), shall carry or cause to be carried insurance against liability
with respect to the Premises and the operations related thereto, whether conducted on or off the
Premises in an amount of not less than Ten Million Dollars ($10,000,000) per occurrence,
combined single limit, and designating Tenant as a named insured and Owner, the City and, if
required by a Recognized Mortgage, a Recognized Mortgagee as additional insureds. Such
insurance shall meet all of the standards, limits, minimums and requirements described in Section
7.7.
(b) Property Insurance. At all times during the Term, Tenant at its sole cost and
expense, as an Operating Expense, shall carry or cause to be carried" All Risk" (or its equivalent)
property damage insurance protecting Tenant, Owner and the City as their interests may appear
against loss to the Premises and Improvements and meeting all of the standards, limits, minimums
and requirements described in Section 7.8.
A:\JNM\CMB\GLEASE.15(EXECUTION.1 )\10-16-97 37
048
(c) Other Insurance. At all times during the Term, Tenant shall procure and carry
insurance meeting all of the standards, limits, minimums, and requirements described in Section
7.9.
(d) Construction Insurance. Prior to the commencement of any Construction Work,
Tenant shall procure or cause to be procured, and after such dates shall carry or cause to be
carried, until final completion of such work, in addition to and not in lieu of the insurance
required by the foregoing subsections (a), (b), and (c), the insurance described in Section 7.10.
Section 7.2. Treatment of Proceeds.
(a) Proceeds of Casualty Insurance in General. Insurance proceeds payable with
respect to a property loss shall be payable either to a Recognized Mortgagee or other Institutional
Lender pursuant to a mutually acceptable insurance trust agreement, either of which shall hold
such proceeds in trust for the purpose of paying the cost of the Casualty Restoration, or shall be
payable to Tenant with respect to insurance proceeds not exceeding One Million Dollars
($1,000,000) (adjusted for inflation) per occurrence, and such proceeds shall be applied to the
payment in full of the cost of such Casualty Restoration in accordance with the provisions of
Article 8.
(b) Proceeds of Rent Insurance. Rent Insurance referred to in Section 7.9 shall be
carried in the name of Tenant as named insured and shall be payable to Owner and Tenant to be
applied to Rental for the period from the occurrence of the damage or destruction until
completion of the Restoration as determined in accordance with the provisions of Article 8.
Without limiting the foregoing provisions of this Section 7.2(b), if required by a Recognized
Mortgage, such amounts shall be paid to a Recognized Mortgagee so long as all Rental is first
paid to Owner subject to the provisions of Article 12.
(c) Cooperation in Collection of Proceeds. Tenant, Owner and any Recognized
Mortgagee shall cooperate in connection with the collection of any insurance proceeds that may
be due in the event of a loss, and Tenant, Owner and any Recognized Mortgagee shall as soon as
practicable execute and deliver such proofs of loss and other instruments as may be required of
Tenant, Owner or any Recognized Mortgagee, respectively, for the purpose of obtaining the
recovery of any such insurance proceeds.
(d) A<ljustments for Claims. All property insurance policies required by this Article
shall provide that all adjustments for claims with the insurers involving a loss in excess of One
Million Dollars ($1,000,000) adjusted for inflation be made jointly with Tenant, Owner and the
Recognized Mortgagee.
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Section 7.3. General Provisions Applicable to All Policies.
(a) Insurance Companies. All of the insurance policies required by this Article shall
be procured from companies licensed or authorized to do business in the State of Florida that have
a fating in the latest edition of "Best's Key Rating Guide" of "A:X" or better or another
comparable rating reasonably acceptable to Owner, considering market conditions.
(b) Required Forms. All references to forms and coverages in this Article shall be
those used by the Insurance Services Organization (ISO) or equivalent forms reasonably
satisfactory to Owner in all material respects.
(c) Required Certificates. Certificates of insurance evidencing the issuance of all
insurance required by this Article to the extent then required, describing the coverage and
providing for thirty (30) days prior notice to Owner by the insurance company of cancellation or
non-renewal, shall have been delivered to Owner by the Commencement Date, and in the case of
any policies replacing or renewing any policies expiring during the Term, not later than thirty (30)
days before the expiration dates of any expiring policies. The certificates of insurance shall be
issued by or on behalf of the insurance company and shall bear the original signature of an officer
or duly authorized agent having the authority to issue the certificate. The insurance company
issuing the insurance shall also deliver to Owner, together with the certificates, proof reasonably
satisfactory to Owner that the premiums for at least the first year of the term of each policy (or
installment payments to the insurance carrier then required to have been paid on account of such
premiums) have been paid. During the performance of any Construction Work, Tenant shall
deliver to Owner an entire duplicate original or a copy (certified by Tenant to be true, complete
and correct) of each policy. At all other times, Tenant shall deliver to Owner an entire duplicate
original or a copy (certified by Tenant to be true, complete and correct) of each policy within a
reasonable period of time after Owner's request therefor. Tenant shall notify Owner of any
material changes in the coverage provided under any policy promptly after requesting an insurance
company to make such change or receiving any notice from an insurance company advising
Tenant of any such change; provided, however, that no such change may reduce or otherwise
modify the insurance coverage required under this Lease. Tenant's failure to provide certificates
of insurance no later than thirty (30) days prior to the expiration of any insurance policies shall
not constitute a Default so long as all insurance coverages required under this Lease remain in full
force and effect and such certificates are provided prior to the expiration of such existing policies.
(d) Compliance with Policy Requirements. Tenant shall not violate or permit to be
violated any of the conditions, provisions or requirements of any insurance policy required by this
Article, and Tenant shall perform, satisfy and comply with, or cause to be performed, satisfied
and complied with, all conditions, provisions and requirements of all insurance policies.
(e) ReQJlired Insufance Policy Clauses. Each policy of insurance required to be carried
pursuant to the provisions of this Article and each certificate issued by or on behalf of the insurer
shall contain (i) a provision stating substantially that no act or omission of Tenant (or any other
A:\JNM\CMB\GLEASE.15(EXECUTION.1 )\1 0-16-97 39
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050
~:',: ~ -'
Person) or any use or occupation of the Premises for purposes more hazardous than are permitted
by the policy shall invalidate the policy as to Owner or affect or limit the obligation of the
insurance company to pay to Owner the amount of any loss sustained and that no act or omission
of Owner shall invalidate the policy as to Tenant or affect or limit the obligation of the insurance
company to pay to Tenant the amount of any loss; (ii) a written waiver of the right of subrogation
against all of the named insureds and additional insureds, including Owner in its capacity as owner
of the Land and any Recognized Mortgagee named in such policy, with respect to losses payable
under such policy; (iii) a clause designating Owner, the City and any Recognized Mortgagee as
loss payee or additional insured, as their interests may appear for losses in excess of One Million
Dollars ($1,000,000), adjusted for inflation; and (iv) an agreement by the insurer that such policy
shall not be canceled, materially modified, or denied renewal without at least thirty (30) days prior
written notice to Owner and the holder of the Recognized Mortgage named under a standard New
York form of mortgagee endorsement or its equivalent, specifically covering, without limitation,
cancellation or non-renewal for non-payment of premium, except that ten (10) days notice or
statutory notice, whichever is greater, shall be given with respect only to non-payment of
premium.
(f) Separate Insurance. Tenant shall not carry separate liability or property insurance
concurrent in form or contributing in the event of loss with that required by this Lease to be
furnished by Tenant, unless Owner, the City and any Recognized Mortgagee are included therein
as additional insureds with respect to liability or loss payee with respect to property, as their
interests may appear, with loss payable as in this Lease provided. Tenant shall immediately notify
Owner of the carrying of any such separate insurance and shall cause the same to be delivered as
in this Lease hereinbefore required. Unintentional duplication of coverage shall not constitute a
Default.
(g) Duration of Policies. Tenant shall procure policies for all insurance required by
any provision of this Lease for periods of not less than one (I) year and shall procure renewals
thereof from time to time at least thirty (30) days before the expiration thereof, except that
Builders' Risk Insurance shall only be renewed for the term of any construction period.
Section 7.4. Additional Coverage.
(a) Other Insurance. Tenant shall maintain such other insurance, in such
amounts as from time to time reasonably may be required by Owner, against such other insurable
hazards as at the time are commonly insured against in the case of oceanfront hotels in South
Florida of a size, nature and character similar to the size, nature and character of the Hotel.
(b) Adjustment of Limits. All of the limits of insurance required pursuant to
this Article 7 shall be subject to review by Owner and, in connection therewith, Tenant shall carry
or cause to be carried such additional amounts as Owner may reasonably require from time to
time, but Owner may not impose such new limits any more frequently than once in every five (5)
year period from the date of Substantial Completion of the Hotel. Any request by Owner that
A:\JNM\CMB\GLEASE.1 5(EXECUTION .1)\ 1 0-16-97 40
051
Tenant carry or cause to be carried additional amounts of insurance shall not be deemed
reasonable unless such additional amounts are commonly carried in the case of oceanfront hotels
in South Florida of a size, nature and character similar to the size, nature and character of the
Hotel; provided, however, that the provisions of this subsection (b) shall not relieve Tenant of its
obligation to carry or to cause to be carried All Risk insurance in an amount not less than the
Replacement Value as provided in Section 7.12(a). Except as otherwise provided herein, Owner
shall also have the right, throughout the Term, to approve the amount of any loss deductible
contained in any insurance policy required pursuant to the provisions hereof. Tenant shall be
responsible for all deductibles.
Section 7.5. No Representation as to AdeqJlacy of Covera~e.
The requirements set forth herein with respect to the nature and amount of insurance
coverage to be maintained or caused to be maintained by Tenant hereunder shall not constitute a
representation or warranty by Owner or Tenant that such insurance is in any respect adequate.
Section 7.6. Blanket or Umbrella Policies.
The insurance required to be carried by Tenant pursuant to the provisions of this Lease
may, at Tenant's election, be effected by blanket, wrap-up and/or umbrella policies issued to
Tenant covering the Premises and other properties owned or leased by Tenant or its Affiliates,
provided such policies otherwise comply with the provisions of this Lease and allocate to the
Premises the specified coverage, including, without limitation, the specified coverage for all
insureds required to be named as insureds or additional insureds hereunder, without possibility
of reduction or coinsurance by reason of, or because of damage to, any other properties named
therein. If the insurance required by this Lease shall be effected by any such blanket or umbrella
policies, Tenant shall furnish to Owner, upon Owner's request, certificates of insurance and
copies (certified by Tenant to be true, complete and correct) of such policies as provided in
Section 7.3(c), together with schedules annexed thereto setting forth the amount of insurance
applicable to the Premises.
Section 7.7. Liability Insurance ReqJlirements.
The insurance required by Section 7.1(a) shall consist of commercial general liability
insurance protecting against liability for bodily injury, death, property damage and personal
injury. Such insurance shall (within the limits of the insurance required by Section 7.1(a)):
(a) include a broad form property damage liability endorsement with fIre legal
liability limit of not less than One Hundred Fifty Thousand Dollars ($150,000), subject to
adjustment for inflation;
(b) contain blanket contractual liability insurance covering written and oral
contractual liability;
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(c) contain contractual liability insurance specifically covering Tenant's
indemnification obligations under Article 20, to the extent such indemnification obligation is for
an insurable risk;
(d) contain independent contractors coverage;
(e) contain a notice of occurrence clause;
(f) contain a knowledge of occurrence clause;
(g) contain an errors and omissions clause;
(h) contain coverage for suits arising from the use of reasonable force to protect
persons and property;
(i) contain an endorsement providing that excavation and foundation work are
covered and the "XCU" exclusions have been deleted;
U> contain a waiver of completion and occupancy condition; and
(k) contain Products Liability/Completed Operations coverage.
Section 7.8. Property Insurance Requirements.
The insurance required by Section 7.1(b) shall consist at least of property damage
insurance under an "All Risk" policy or its equivalent covering the Premises and all
Improvements with replacement cost valuation and a stipulated value endorsement (to be provided
not later than promptly following the Substantial Completion of the Hotel) in an amount not less
than the full Replacement Value (determined in accordance with Section 7.12) and including the
following coverages or clauses:
(a) coverage for physical loss or damage to the Improvements;
(b) a replacement cost valuation without depreciation or obsolescence clause;
(c) debris removal coverage;
(d) provision for a deductible determined by Tenant, but not more than One
Hundred Fifty Thousand Dollars ($150,000) per loss (for other than flood or windstorm, with
regard to which the deduction shall be a commercially reasonable amount), subject to adjustment
for inflation;
A:\lNM\CMB\GLEASE.15(EXECUTION.1 )\ 1 0-16-97 42
053
(e) contingent liability from operation of building laws;
(f) demolition cost for undamaged portion co-yerage;
(g) increased cost of construction coverage;
(h) an agreed or stipulated amount endorsement (to be provided not later than
promptly following the Substantial Completion of the Hotel) in an amount not less than the full
Replacement Value negating any coinsurance clauses;
(i) flood coverage (to the extent available at commercially reasonable rates,
limits and deductibles);
(j) windstorm coverage (to the extent available at commercially reasonable
rates, limits and deductibles);
(k) coverage for explosion caused by steam pressure-fIred vessels (which
coverage may be provided under a separate policy reasonably approved by Owner);
(1) business interruption coverage in accordance with Section 7.9;
(m) a clause designating Owner, the City and a Recognized Mortgagee as
additional insureds, as their interests may appear; and
(n) contain no exclusions unless approved in writing by Owner, other than the
industry standard exclusions for hotels of similar size and location.
Tenant shall be named insured, and Owner, the City and any Recognized Mortgagee shall
be additional Lrlsureds, as their interests may appear. The Recognized Mortgagee or Owner shall
be designated loss payee on such All Risk policy for the benefit of Owner, Tenant and any
Recognized Mortgagee. If not included within the All Risk coverage above, Tenant shall also
carry or cause to be carried coverage against damage due to (i) water and sprinkler leakage and
collapse, which shall be written with limits of coverage of not less than the full Replacement
Value per occurrence, with a deductible of not more than One Hundred Fifty Thousand Dollars
($150,000), subject to adjustment for inflation and (ii) flood, which shall be written with limits
of coverage of not less than Ten Million Dollars ($10,000,000), with a deductible of not more
than Five Hundred Thousand Dollars ($500,000), subject to adjustment for inflation, to the extent
available at commercially reasonable rates and deductibles.
If Tenant elects to insure Tenant's personal property used in connection with the Premises,
the replacement value of such personal property shall be added to the amount of insurance
required by this Section.
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054
For the purposes of this Section 7.8, any rate, limit or deductible shall be "commercially
reasonable" if such rate, limit or deductible is comparable to the rates, limits or deductibles in the
insurance carried by oceanfront hotels in South Florida of a size,.nature and character similar to
the size, nature and character of the Hotel.
Section 7.9. Other Insurance ReQ.Uirements.
The insurance required by Section 7.1(c) shall consist at least of the following:
(a) Business Interruption Insurance to include Rent Insurance on an "AIl Risk"
basis in an amount equal to (i) prior to the Substantial Completion of the Hotel, not less than the
annual Base Rent and annual Additional Rent, to the extent any is due, and (ii) following the
Substantial Completion of the Hotel, not less than the aggregate amount of annual Base Rent,
annual Additional Rent and annual Incentive Rent, if any (based upon the then current budget
prepared by Tenant). The insurance specified in this subsection shall:
(i) provide coverage against all reasonably insurable risks of physical
loss or damage to the Improvements;
(ii) Extra Expense coverage, with a limit of at least One Million Dollars
($1,000,000) to cover overtime and other extra costs incurred to expedite repairing or rebuilding
the damaged portion of the Premises;
(iii) provide for coverage through the attainment of pre-existing business
levels;
(iv) contain flood and windstorm coverage to the extent available at
commercially reasonable rates, limits and deductibles;
(v) contain explosion caused by steam pressure fired vessels coverage
(which coverage may be provided under a separate policy reasonably approved by Owner);
(vi) provide for a deductible determined by Tenant, but for not more than
One Hundred Fifty Thousand Dollars ($150,000) per loss (other than for flood or windstorm, with
regard to which the deductible shall be a commercially reasonable amount), subject to adjustment
for inflation;
(vii) designate Owner, Tenant and any Recognized Mortgagee as loss
payee but shall be payable only to Tenant with respect to Business Interruption proceeds not
exceeding Five Hundred Thousand Dollars ($500,000) per occurrence; and
(viii) contain no exclusions, unless approved by Owner, other than
industry standard exclusions for hotels of similar size and location.
A:\JNM\CMB\GLEASE. 1 5(EXECUTION. 1)\10-16-97 44
055
(b) Statutory Workers' Compensation and Disability Benefits Insurance and any
other insurance required by law covering all persons employed by Tenant, contractors,
subcontractors, or any entity performing work on or for the Premises or the Improvements (unless
and to the extent provided by such other parties), including Employers Liability coverage, all in
amounts not less than the statutory minimum, except that Employers Liability coverage shall be
in an amount not less than One Million Dollars ($1,000,000).
(c) After Substantial Completion, Boiler and Machinery Insurance, covering
the entire heating, ventilating and air-conditioning systems, in all its applicable forms, including
Broad Form, boiler explosion, extra expense and loss of use in an amount not less than the
replacement cost of such heating, ventilating and air conditioning systems, located on any portion
of the Premises and other machinery located on any portion of the Premises, which shall designate
Tenant as named insured and loss payee and designate Owner, the City and any Recognized
Mortgagee as additional insureds.
Section 7.10. Construction Insurance ReqJIirements.
The insurance required by Section 7.1(d) shall consist at least of the following:
(a) Builder's Risk Insurance (standard" All Risk" or equivalent coverage) in
an amount not less than the cost of reconstruction, written on a completed value basis or a
reporting basis, for property damage protecting Tenant, Owner, the City, the general contractor,
and any Recognized Mortgagee, with a deductible determined by Tenant of not more than One
Hundred Fifty Thousand Dollars ($150,000), subject to adjustment for inflation (except as to flood
and windstorm, with regard to which the deductible shall be a commercially reasonable amount),
to include rental payment coverage from the date of projected completion and extending for at
least twelve (l2) months following such date of projected completion.
(b) Automobile liability insurance covering any automobile or other motor
vehicle used in connection with work being performed on or for the Premises in an amount not
less than One .Million Dollars ($1,000,000) per occurrence, with a deductible determined by
Tenant of not more than One Hundred Fifty Thousand Dollars ($150,000), subject to adjustment
for inflation.
(c) The insurance required pursuant to Section 7.7.
Section 7. 11. Annual A~~re~ates.
Excluding Umbrella/Excess Liability Insurance, if there is imposed under any liability
insurance policy required hereunder an annual aggregate which is applicable to claims other than
products liability and completed operations, such an annual aggregate shall not be less than two
(2) times the per occurrence limit required for such insurance.
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Section 7.12. Determination of Replacement Value.
(a) Definition. The current replacement value of the Improvements (the
"Replacement Value") shall be the full cost of replacing the Improvements according to
Requirements in effect at that time, including, without limitation, all hard costs of construction
as well as the costs of post-casualty debris removal, and soft costs, including without limitation,
architects' , engineers', surveyors', assessors' and other professional fees and development fees.
Upon Substantial Completion of the Premises, Replacement Value of the Improvements shall be
deemed to be an amount equal to the actual costs incurred or expended in connection with the
construction of the Premises as certified by the architect upon completion of the Premises, other
than foundations and financing and other soft costs not applicable to replacement, adjusted for
each year after completion of the Premises in accordance with the percentage change in the
Building Index. If the insurance required by Section 7.8 above is not sufficient to cover the
Replacement Value, then within fifteen (l5) days after such adjustment, said insurance shall be
increased or supplemented to fully cover such Replacement Value. In no event shall such
Replacement Value be reduced by depreciation or obsolescence of the Improvements.
(b) Buildin~ Index. As used herein, the "Building Index" shall mean the
Marshall and Swift Cost Index or such other published index of construction costs which shall be
selected from time to time by Owner and reasonably agreed to by Tenant, provided that such
index shall be a measure of construction costs widely recognized in the insurance industry and
appropriate to the type and location of the Improvements.
Section 7.13. Subleases.
All Subleases shall require the Subtenant to carry liability insurance naming Tenant,
Owner, the City and any Recognized Mortgagee as additional insureds with limits reasonably
prudent under the circumstances.
Section 7.14. Additional Interests.
All liability policies shall contain a provision substantially to the effect that the insurance
provided under the policy is extended to apply to Owner and the City. Any holder of a
Recognized Mortgage which, pursuant to the Recognized Mortgage, is required to be named under
any of the insurance carried hereunder shall be named under a standard New York form of
mortgagee endorsement or its equivalent.
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ARTICLE 8.
DAMAGE, DESTRUCTION AND RESTORATION
Section 8 .1. Notice to Owner.
If the Premises are damaged or destroyed in whole or in any material part by fIre or other
casualty, Tenant shall notify Owner of same as soon as reasonably possible after Tenant's
discovery of same.
Section 8.2. Casualty Restoration.
(a) Obli~ation to Restore. If all or any portion of the Premises are damaged
or destroyed by fIre or other casualty, ordinary or extraordinary, foreseen or unforeseen, whether
prior to or after completion of the initial construction of the Hotel, Tenant shall, in accordance
with the provisions of this Article 8 and Article 2 of the Hotel Development Agreement (a copy
of which is attached hereto and incorporated by reference herein as Exhibit 8.2; the provisions
of which shall be deemed to apply to all Construction Work necessary to complete the Casualty
Restoration, to the extent the same are not inconsistent with the terms hereof) restore the Premises
to the condition thereof as it existed immediately before such casualty (a "Casualty
Restoration"), regardless of whether the Net Insurance Proceeds shall be sufficient therefor;
provided, however, this provision shall not create any liability on the part of the Guarantor if, and
only if, the Completion Guarantee has expired by its terms before the occurrence of any such
damage or destruction. "Net Insurance Proceeds" shall mean the actual amount of insurance
proceeds paid following a fire or other insured casualty.
(b) Commencement of Construction Work. Subject to Unavoidable Delays,
Tenant shall commence the Construction Work in connection with a Casualty Restoration within
ninety (90) days after receipt of the Net Insurance Proceeds by the Recognized Mortgagee or
Owner arising from the damage or destruction which caused the need for such Casualty
Restoration and shall diligently pursue the completion of such Casualty Restoration.
(c) Paydown of Mort~a~es Prohibited. No Mortgagee (Recognized or
otherwise) shall have the right to apply any insurance proceeds paid in connection with any
casualty toward payment of the sum secured by its Mortgage to the extent that this Lease requires
that Tenant effect a Casualty Restoration with such proceeds.
Section 8.3. Restoration Funds.
(a) Except as may otherwise be required by any Recognized Mortgage but
subject to Section 8.2(c), all Net Insurance Proceeds shall, if in an amount equal to Five Hundred
Thousand Dollars ($500,000), adjusted for inflation, or less per occurrence, be paid to Tenant and
applied as provided herein. If greater than Five Hundred Thousand Dollars ($500,000), adjusted
A:\JNM\CMB\GLEASE. 15(EXECUTION. 1)\10-16-97 47
058
for inflation, then all Net Insurance Proceeds shall be deposited with the Recognized Mortgagee,
or, if none, with another Institutional Lender pursuant to a mutually acceptable trust agreement.
Provided Tenant is conducting the Casualty Restoration in accordance with this Lease, the Net
Insurance Proceeds shall be paid out from time to time as the Casualty Restoration progresses,
upon the written request of Tenant, which request shall be accompanied by the following:
(i) A certificate signed by Tenant and the architect or engineer in charge
of the Casualty Restoration, reasonably satisfactory to Owner, dated not more than fifteen (15)
days prior to such request, setting forth:
(1) that the sum then requested either has been paid by Tenant
or is justly due to contractors, subcontractors, materialmen, engineers, architects
or other persons who have rendered services or furnished materials for the work
specified, and stating that no part of such expenditures has been or is being made
the basis of any previous or then pending request for the withdrawal of the Net
Insurance Proceeds;
(2) a brief description of the services and materials;
(3) that, except for the amount described in Section 8.3(a)(i)(I),
there is no outstanding indebtedness actually known to the persons signing such certificate,
after due inquiry, which is then due for labor, materials, or services in connection with
the Casualty Restoration;
(4) that the cost, as estimated by the persons signing such
certificate, of the work required to complete the Casualty Restoration does not exceed the
amount of the remaining Net Insurance Proceeds, plus any amount deposited by Tenant
to defray the expenses of the Casualty Restoration; and
. -
(5) that the work described has been completed in accordance
with the plans and specifications applicable thereto, in a good and workerlike manner and
in accoJdance with all Requirements;
(ii) Lien waivers, title insurance company reports or such other
evidence, reasonably satisfactory to Owner, to the effect that there has not been filed with respect
to the Premises, any vendor's, mechanic's, laborer's, materialman's or other lien which has not
been discharged of record, except such as will be discharged by payment of the amount then
requested; and
(iii) Such other documentation regarding the Casualty Restoration as
Owner or the Recognized Mortgagee shall reasonably require.
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059
(b) Tenant shall, prior to the commencement of the Casualty Restoration,
furnish to Owner an estimate of the total cost of the Casualty Restoration certified by the architect
or engineer in charge of the Casualty Restoration. If such cost estimate or any subsequent
estimate provided pursuant to Section 8.3(a)(i)(4) shall show that the cost of completing the
Casualty Restoration is in excess of the amount of the Net Insurance Proceeds then available,
Tenant shall promptly deposit with the holder of the Net Insurance Proceeds an amount equal to
such excess. The amount so deposited shall be included in the Net Insurance Proceeds for all
purposes of this Article.
(c) Upon compliance by Tenant with the foregoing provisions of this Article,
the holder of the Net Insurance Proceeds shall pay to Tenant or the persons named in the
certificate referred to in Section 8.3(a), from the Net Insurance Proceeds, an amount equal to
ninety percent (90 %) of the cost of the Casualty Restoration which is evidenced by the request.
At the completion of each contract or subcontract in connection with the Casualty Restoration, the
balance of the Net Insurance Proceeds relating to that portion of the work, to the extent of and as
required to complete the payment of Casualty Restoration costs relating to that portion of the
work, shall be paid to Tenant and Tenant shall, promptly following the release of the retainage,
provide to Owner reasonable evidence that the Casualty Restoration relating to that portion of the
work has been paid for in full.
(d) If the amount of any Net Insurance Proceeds, excluding deposits made by
Tenant pursuant to Section 8.3(b) above, shall exceed the entire cost of the Casualty Restoration,
such excess, upon completion of the Casualty Restoration, shall, (i) if this Lease shall not be in
default, be disbursed to Owner as an Installment Payment pursuant to the terms of Section 36.1(f)
or (ii) if this Lease shall be in default, be disbursed to Owner as Rental hereunder or as other
monies due under this Lease, as applicable. Any amounts deposited by Tenant pursuant to
Section 8.3(b) above shall be returned to Tenant to the extent the same are not necessary to fund
the cost of the Casualty Restoration.
Section 8.4. Effect of Casualty on this Lease.
This Lease shall not terminate, be forfeited or be affected in any manner, and there shall
be no reduction or abatement of Rental (except to the extent Owner receives the net proceeds of
the insurance described in Section 7.9(a)), by reason of damage to, or total or partial destruction
of, or untenantability of, the Premises or any part thereof resulting from such damage or
destruction. Tenant's Rental obligations hereunder shall continue as though the Premises had not
been damaged or destroyed and shall continue without abatement, suspension, diminution or
reduction whatsoever. Subject to Unavoidable Delays and taking into account Tenant's Casualty
Restoration obligations (including, without limitation, the effect of the casualty and the Casualty
Restoration on the Tenant's ability to comply with the Quality Standard), Tenant's non-Rental
obligations hereunder shall continue as though the Premises had not been damaged or destroyed
and shall continue without abatement, suspension, diminution or reduction whatsoever.
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060
ARTICLE 9.
CONDEMNATION
Section 9.1. Substantial Takin~.
(a) Termination of Lease for Substantial Takin~. If all or Substantially All of
the Premises are taken (excluding a taking of the fee interest in the Premises if, after such taking,
Tenant's rights under this Lease are not affected and no rights of any Recognized Mortgagee are
affected) for any public or quasi-public purpose by any lawful power or authority by the exercise
of the right of condemnation or eminent domain or by agreement among Owner, Tenant,
Recognized Mortgagee and those authorized to exercise such right, this Lease shall terminate on
the Date of Taking and the Rental payable by Tenant hereunder shall be apportioned and paid to
the Date of Taking.
(b) Disbursement of Award. If all or Substantially All of the Premises are
taken or condemned as provided in Section 9.1(a), the Net Condemnation Award paid or payable
to Owner, Tenant or any lender or mortgagee claiming through either of them in connection with
such taking or condemnation shall be paid as follows: (1) there shall first be paid to Owner that
portion of the Net Condemnation Award equal to the Purchase Price on the date of such taking;
(2) there shall next be paid to the Recognized Mortgagee so much of the Net Condemnation
A ward as shall equal the unpaid principal indebtedness secured by such Recognized Mortgagee
with interest thereon at the rate specified therein to the date of payment (including any prepayment
fees thereon and any so-called "yield maintenance" or "make-whole" amounts or other sums
intended to assure to the Recognized Mortgagee a certain rate of return under the loan secured by
the Recognized Mortgage, if any, as well as any costs payable by Tenant in connection with such
Recognized Mortgage pursuant to any "swap" or other interest rate protection or hedging
mechanism); and (3) the remaining Net Condemnation Award shall be disbursed to Tenant.
(c) Definitions.
.(i) "Date of Taking" means the earlier of (1) the date on which actual
possession of all or Substantially All of the Premises, or any part thereof, as the case may be, is
acquired by any lawful power or authority pursuant to the provisions of applicable law or (2) the
date on which title to all or Substantially All of the Premises, or any part thereof, as the case may
be, has vested in any lawful power or authority pursuant to the provisions of applicable law.
(ii) "Substantially All of the Premises" means such portion of the Premises
as, when so taken, would leave, in Tenant's good faith determination, a balance of the Premises
that, due either to the area so taken or the location of the part so taken in relation to the part not
so taken, would not, under economic conditions, physical constraints, zoning laws, building
regulations and other Requirements then existing, readily accommodate a new or reconstructed
building or buildings and other improvements of a type fully comparable to the Improvements
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existing at the Date of Taking. Tenant shall notify Owner, on or about the Date of Taking, in
writing of its determination as to whether or not "Substantially All of the Premises" has been
taken. If Tenant does not determine that "Substantially All of. the Premises" has been taken,
then this Lease shall not terminate and expire but shall continue in force and effect, subject to the
other provisions of this Article 9. If Tenant determines that "Substantially All of the Premises"
has been taken, then this Lease shall terminate and expire on the Date of Taking pursuant to
Section 9.1(a).
(iii) "Net Condemnation Award" shall mean the actual amount of the award
paid in connection with or arising from the acquisition or other taking of all or Substantially All
of the Premises or any portion of the Premises by any authority, less all reasonable out-of-pocket
expenses incurred by Owner, Tenant or Recognized Mortgagee in connection with obtaining such
award, including, without limitation, all reasonable attorneys' fees and disbursements incurred
in connection therewith.
Section 9.2. Less than a Substantial Takin~.
(a) Takin2 of Less than Substantially All of the Premises. If less than
Substantially All of the Premises are taken for any public or quasi-public purpose by any lawful
power or authority by the exercise of the right of condemnation or eminent domain' or by
agreement among Owner, Tenant, any Recognized Mortgagee and the entity authorized to exercise
such right, whether prior to or after the completion of the initial construction of the Hotel, this
Lease shall continue for the remainder of the Term (subject to paragraph (b) below) without
diminution of any of Tenant's obligations hereunder, but with a fair and equitable abatement of
Rental.
(b) Obli~ation to Restore the Premises. If less than Substantially All of the
Premises are taken as provided in Section 9.2(a), whether prior to or after the completion of the
initial construction of the Hotel, Tenant shall, in accordance with the provisions of this Article
9 and Article 2 of the Hotel Development Agreement (a copy of which is attached hereto and
incorporated by reference herein as Exhibit 8.2; the provisions of which shall be deemed to apply
to" all Construction Work necessary to complete the Condemnation Restoration, to the extent the
same are not inconsistent with the terms hereof) restore the remaining portion of the Premises,
to the extent feasible, to the condition thereof as it existed immediately before such taking (a
"Condemnation Restoration"), regardless of whether the Net Condemnation Award shall be
sufficient therefor.
(c) Disbursement. If less than Substantially All of the Premises are taken as
provided in Section 9.2(a), the Net Condemnation Award payable to Owner, Tenant and any
lender or mortgagee claiming through either of them shall be paid as follows: (1) first to the cost
of the Condemnation Restoration; (2) second to Owner for payment of the Purchase Price, or if
the Net Condemnation Award is less than the then Purchase Price, then said Net Condemnation
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Award shall be applied to the Purchase Price as an Installment Payment; and (3) third to Tenant
(subject to the rights of any Recognized Mortgagee).
(d) Commencement of Construction Work. Subject to Unavoidable Delays,
Tenant shall commence the Construction Work in connection with a Condemnation Restoration
within ninety (90) days after receipt of the Net Condemnation Award arising from the taking
which caused the need for such Condemnation Restoration and shall diligently pursue the
completion of such Condemnation Restoration.
(e) Paydown of Mort~a~es Prohibited. No Mortgagee (Recognized or
otherwise) shall have the right to apply any award proceeds paid in connection with any taking
toward payment of the sum secured by its Mortgage to the extent that this Lease requires that
Tenant effect a Condemnation Restoration with such proceeds.
Section 9.3. Restoration Funds.
(a) If in connection with a taking the Net Condemnation Funds are in excess
of Five Hundred Thousand Dollars ($500,000), adjusted for inflation, then the Net Condemnation
Award shall be deposited with the Recognized Mortgagee, or, if none, with an Institutional
Lender pursuant to a mutually acceptable trust agreement. Except as may otherwise be required
by a Recognized Mortgagee, if such Net Condemnation Funds are less than or equal to Five
Hundred Thousand Dollars ($500,000), adjusted for inflation, the same shall be paid directly to
Tenant to be applied as provided herein. Provided Tenant is conducting the Condemnation
Restoration in accordance with this Lease, the Net Condemnation Award shall be paid out from
time to time as the Condemnation Restoration progresses, upon the written request of Tenant,
which request shall be accompanied by the following:
(i) A certificate signed by Tenant and the architect or engineer in charge
of the Condemnation Restoration, reasonably satisfactory to Owner, dated not more than fifteen
(l5) days prior to such request, setting forth:
(l) that the sum then requested either has been paid by Tenant
or is justly due to contractors, subcontractors, materialmen, engineers, architects
or other persons who have rendered services or furnished materials for the work
specified, and stating that no part of such expenditures has been or is being made
the basis of any previous or then pending request for the withdrawal of the Net
Condemnation Award;
(2) a brief description of the services and materials;
(3) that, except for the amount described in Section 9.3(a)(i)(I),
there is no outstanding indebtedness actually known to the persons signing such
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certificate, after due inquiry, which is then due for labor, materials, or services in
connection with the Condemnation Restoration;
.'
(4) that the cost, as estimated by the persons signing such
certificate, of the work required to complete the Condemnation Restoration does
not exceed the amount of the remaining Net Condemnation Award, plus any
amount deposited by Tenant to defray the expenses of the Condemnation
Restoration; and
(5) that the work described has been completed in accordance
with the plans and specifications applicable thereto, in a good and workerIike
manner and in accordance with all Requirements;
(ii) Lien waivers, title company reports or such other evidence,
reasonably satisfactory to Owner, to the effect that there has not been filed with respect to the
Premises, any vendor's, mechanic's, laborer's, materialman's or other lien which has not been
discharged of record, except such as will be discharged by payment of the amount then requested;
and
(iii) Such other documentation regarding the Condemnation Reste>ration
as Owner or the Recognized Mortgagee shall reasonably require.
(b) Tenant shall, prior to the commencement of the Condemnation Restoration,
furnish to Owner an estimate of the total cost of the Condemnation Restoration certified by the
architect or engineer in charge of the Condemnation Restoration. If such cost estimate or any
subsequent estimate provided pursuant to Section 9.3(a)(i)(4) shall show that the cost of
completing the Condemnation Restoration is in excess of the amount of the Net Condemnation
Award then available, Tenant shall promptly deposit with the holder of the Net Condemnation
Award an amount equal to such excess. The amount so deposited shall be included in the Net
Condemnation Award for all purposes of this Article.
.(c) Upon compliance by Tenant with the foregoing provisions of this Article,
the holder of the Net Condemnation Award shall pay to Tenant or the persons named in the
certificate referred to in Section 9.3(a)(i), from the Net Condemnation Award, an amount equal
to ninety percent (90 %) of the cost of the Condemnation Restoration which is evidenced by the
request. At the completion of each contract or subcontract in connection with the Condemnation
Restoration, the balance of the Net Condemnation Award relating to that portion of the work, to
the extent of and as required to complete the payment of Condemnation Restoration costs relating
to that portion of the work, shall be paid to Tenant and Tenant shall, promptly following the
release of the retainage, provide to Owner reasonable evidence that the Condemnation Restoration
relating to that portion of the work has been paid for in full.
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(d) If the amount of any Net Condemnation Award, excluding deposits made
by Tenant pursuant to Section 9.3(b) above, shall exceed the entire cost of the Condemnation
Restoration, such excess, upon completion of the Condemnation Restoration, shall, (i) if this
Lease shall not be in default, be disbursed to Owner as an Installment Payment pursuant to the
terms of Section 36.1(f) or (ii) if this Lease shall be in default, be disbursed to Owner as Rental
hereunder or as other monies due under this Lease, as applicable. Any amounts deposited by
Tenant pursuant to Section 9.3(b) above shall be returned to Tenant to the extent the same are not
necessary to fund the cost of the Condemnation Restoration.
Section 9.4. Temporat:)' Taking.
(a) Notice of Temporat:y Takin~. If the temporary use of the whole or any
portion of the Premises is taken for a public or quasi-public purpose by a lawful power or
authority by the exercise of the right of condemnation or eminent domain or by agreement
between Tenant and those authorized to exercise such right, Tenant shall give Owner notice within
five (5) business days thereof. The Term shall not be reduced or affected in any way by reason
of such temporary taking and Tenant shall continue to pay to Owner the Rental without reduction
or abatement; provided, however, if such temporary taking is for a period in excess of ninety (90)
days, then such taking shall be deemed a permanent taking and the provisions of Sections 9.1 and
9.2, as applicable, shall apply.
(b) Temporat:)' Takin~ Not Extendin~ Beyond the Term. If the temporary
taking is for a period not extending beyond the Term (including a taking restricted entirely to
Tenant's Interest in the Premises and not affecting Owner's Interest in the Premises in any way),
Tenant shall apply the award it receives in compensation therefor toward a Condemnation
Restoration in accordance with Section 9.3, and Tenant shall, subject to the rights of any
Recognized Mortgagee, pay any remaining amount of such award to Owner as an Installment
Payment pursuant to the terms of Section 36.1(f).
(c) Temporat:)' Takin2 Extendin~ Beyond the Expiration of the Term. If the
temporary taking is for a period extending beyond the Expiration of the Term, the award or
payment shall fIrst be disbursed pursuant to Section 9.3 to be applied toward such restoration of
the Improvements as may have been necessitated by such taking, and the remainder shall be
equitably apportioned between Owner and Tenant as of the Expiration of the Term.
Section 9.5. Governmental Action Not Resultin~ in a Takin~.
In case of any governmental action not resulting in the taking or condemnation of any
portion of the Premises but creating a right to compensation therefor, such as the changing of the
grade of any street upon which the Premises abut, then this Lease shall continue in full force and
effect without reduction or abatement of Rental. Any award payable thereunder shall be applied
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065
first to reimburse Tenant for any Construction Work performed by Tenant resulting from such
governmental action and any balance shall be distributed in accordance with Section 9.2(c).
.'
Section 9.6. Collection of Awards.
Each of the parties shall execute such documents as may be reasonably required to
facilitate collection of any awards made in connection with any condemnation proceeding referred
to in this Article.
Section 9.7. N e~otiated Sale.
In the event of a negotiated sale of all or a portion of the Premises in lieu of condemnation,
the proceeds shall be distributed as provided in cases of condemnation.
Section 9.8. Intention of Parties.
The existence of any present or future law or statute notwithstanding, Tenant and Owner
waive all rights to quit or surrender the Premises or any part thereof by reason of any
condemnation or taking of less than Substantially All of the Premises.
Section 9.9. Intentionally Omitted.
Section 9.10. Effect of Takin~ on this Lease.
Except as provided in Section 9.1, this Lease shall not terminate, be forfeited or be
affected in any manner, and there shall be no reduction or abatement of Rental, by reason of any
taking of the Premises or any part thereof. Except as provided in Section 9.2(a), Tenant's Rental
obligations hereunder shall continue as though the Premises had not been taken and shall continue
without abatement, suspension, diminution or reduction whatsoever. Subject to Unavoidable
Delays and taking into account Tenant's Condemnation Restoration obligations (including, without
limitation, the effect of the taking and the Condemnation Restoration on the Tenant's ability to
c0mply with the Quality Standard), Tenant's non-Rental obligations hereunder shall continue as
though the Premises had not been taken and shall continue without abatement, suspension,
diminution or reduction whatsoever.
ARTICLE 10.
SALE OF THE HOTEL AND SUBLETTING
Section 10.1. Sale of the Hotel.
(a) Definitions.
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(i) "Assignment" means a sale, exchange, assignment, transfer or other
disposition by Tenant of all or a portion of Tenant's Interest in the Premises, whether by operation
of law or otherwise, which is not a Transfer or a Sublease. . The creation or granting of a
Mortgage shall not constitute an Assignment or a Transfer.
(ii) "Assignee" means a purchaser, assignee, transferee, or other Person
which acquires all or any portion of Tenant's Interest in the Premises.
(iii) "Back Rent" means the amount of unpaid Rental as of the
Reinstatement Date, including accrued simple interest on the unpaid Rental from the date due at
the default rate specified in the Recognized Mortgage, as well as reasonable attorneys' fees and
costs at the trial court and all appellate levels and other expenses incurred by Owner in connection
with enforcing this Lease.
(iv) "Capital Transaction" means an Assignment, Transfer, Sublease
or refinancing of the Debt.
(v) "Equity Interest" means, with respect to any entity, (l) the legal
(other than as a nominee) or beneficial ownership of outstanding voting or non-voting stock of
such entity if such entity is a business corporation, a real estate investment trust or a ~imilar
entity, (2) the legal (other than as a nominee) or beneficial ownership of any partnership,
membership or other voting or non-voting ownership interest in a partnership, joint venture,
limited liability company or similar entity, (3) a legal (other than as a nominee) or beneficial
voting or non-voting interest in a trust if such entity is a trust and (4) any other voting or non-
voting interest that is the functional equivalent of any of the foregoing.
(vi) "Sale of the Hotel" means any Assignment by Tenant of fifty
percent (50%) or more of Tenant's Interest in the Premises, a Transfer, a Sublease or a sale of
the Restaurant so long as the proceeds or substantially all of the proceeds of such sale of the
Restaurant are not required by the terms of a Recognized Mortgage to be applied to the reduction
of such Recognized Mortgage. "Sale of the Hotel" does not mean, and does not include, any of
the following:-
A. A transfer from the holder of an Equity Interest in Tenant (1) to a
mother, father, spouse, brother, sister or child (an "Immediate Family Member"), or any
combination thereof, of that holder; (2) to a trust whose sole beneficiary(ies) is (y) a holder of an
Equity Interest in Tenant or (z) an Immediate Family Member of a holder of an Equity Interest
in Tenant; (3) to a personal representative of the estate of a deceased holder of an Equity Interest
in Tenant; (4) to a Person in which a holder of an Equity Interest in Tenant holds, directly or
indirectly, the Substantial Controlling Interest; or (5) to any other holder of an Equity Interest in
Tenant; (for purposes of this Section 10.1(vi)A only, the term "transfer" shall include a transfer
of an Equity Interest in a Person or Persons having an Equity Interest, directly or indirectly, in
Tenant).
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B. A Foreclosure Transfer to a Person that is not a Foreign
Instrumentality; provided, however, prior to the Hotel Opening Date, any sale by a Recognized
Mortgagee or its Designee shall be subject to Owner's approval.
C. Subject to the provisions of Article 33, the sale, lease or other
disposition of the Restaurant so long as the proceeds of the sale or other disposition of the
Restaurant are required by the terms of a Recognized Mortgage to be applied directly to the
reduction of such Recognized Mortgage.
Any Transfer pursuant to Section lO.l(a)(vi)A shall (1) not be to a Foreign Instrumentality and
(2) satisfy the provisions of Section 10.I(e).
(vii) "Sublease" means any sublease (including a sub-sublease or any
further level of subletting) of all or any portion of the Premises, but does not include subleases
serving the functional equivalent of a Recognized Mortgage or subleases in the ordinary course
of business (e.g., subleases for restaurants (except as provided in Article 33 as to the sale, lease
or other disposition of the Restaurant), parking, retail space or other space at the Premises;
provided, however, that in the event of a sublease of greater than fifty percent (50%) of the
parking on the Premises, Owner shall have the right to approve the subtenant).
(viii) "Subtenant" means any party granted rights by Tenant under a
Sublease or by any other Subtenant (immediate or remote) under a Sublease.
(ix) "Transfer" means (i) any change, by operation of law or otherwise,
in ownership of an Equity Interest in Tenant, where such change in ownership directly or
indirectly produces any change in the Substantial Controlling Interest of Tenant, or (ii) any
transaction or series of transactions, by operation of law or otherwise, including, without
limitation, the issuance of additional Equity Interests or the direct or indirect revision of the
beneficial ownership or control structure of the management or operation of Tenant or any direct
or indirect constituent entity of Tenant, which, in either case, produces any change, by operation
of law or otherwise, in the Substantial Controlling Interest in Tenant.
(x) "Transferee" means a Person to which a Transfer is made.
(b) No Sale of the Hotel Prior to the Hotel Openin~ Date. Notwithstanding
anything in this Lease to the contrary, there shall not be any Sale of the Hotel prior to the Hotel
Opening Date.
(c) Sale of the Hotel to an African-American Person.
(i) After the Hotel Opening Date, Tenant may effect a Sale of the Hotel
to an African-American Person, approved by Owner, that is not a Foreign Instrumentality,
provided that the Net Sale Proceeds are distributed, to the extent available, in the following order:
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(1) to Tenant, in an amount equal to the funded equity as shown
on Exhibit 10.1(c)(i)(1) entitled "Sources and Uses of Cash" attached hereto and incorporated by
reference herein (the "Funded Equity") plus any additional equity funded by Tenant to complete
the Hotel after the Commencement Date not to exceed an amount equal to ten percent (10%) of the
Development Budget (collectively, the "Initial Equity");
(2) to Tenant, in an amount equal to a return of eighteen percent
(18%) per annum, simple interest, on the Initial Equity;
(3) to Tenant, in an amount equal to the aggregate cash advances
made by Tenant to cover Operating Deficits and to pay for replacements and repairs and restoration
after any casualty which are not Operating Expenses and which are in excess of the amount available
in the FF &E Reserve Account or available insurance proceeds, as the case may be, not to exceed,
in the aggregate, Five Million Dollars ($5,000,000) (the "Additional Equity");
(4) to Tenant, in an amount equal to a return of fifteen percent
(15%), per annum, simple interest, on the Additional Equity;
(5) to Owner, in an amount equal to the Purchase Price; and
(6) any remaining sums shall be paid to Tenant.
(ii) In the event of a Sale of the Hotel to such African-American Person,
the amount of any new fInancing in connection with such sale shall not exceed the market loan-to-
value ratio, pertaining to existing hotels, then prevailing among Institutional Lenders at the time
of such financing; provided, however, Owner shall not be entitled to participate in the proceeds
of any such financing in connection with such sale as provided in Section 1l.13(b).
(d) Sale of the Hotel to a Person Who is Not an African-American Person.
(i) Tenant may not effect a Sale of the Hotel to a Person who is not an
African-American Person prior to the expiration of five (5) years from the Hotel Opening Date.
(ii) Tenant may effect a Sale of the Hotel to a Person who is not an
African-American Person that is not a Foreign Instrumentality after the expiration of five (5) years
from the Hotel Opening Date; provided, however, that Tenant first purchases or simultaneously
purchases all of Owner's Interest in the Premises.
(iii) F or so long as P ADC Hospitality Corporation I, a Florida corporation,
or its AffIliate has an Equity Interest in Tenant, in the event that, at any time, R. Donahue Peebles
or the General Partner of Tenant becomes insolvent (which, for the purposes hereof, shall be defmed
as the occurrence of any of the events described in Sections 25.1(e)-(h) with the word "Tenant"
being replaced by "R. Donahue Peebles" or "P ADC Hospitality Corporation I, a Florida
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corporation", whichever is applicable), then, in that event, Tenant may effect a Sale of the Hotel to
Holiday Hospitality Corporation, a Delaware corporation, provided that, within one (I) year from
such Sale of the Hotel, Holiday Hospitality Corporation shall sell all of the Equity Interest it
acquired from Tenant from such Sale of the Hotel to another African-American Person, failing
which, Holiday Hospitality Corporation shall pay the entire Purchase Price stated in this Lease to
Owner.
(e) Additional Restriction on Sale of the Hotel. Except as specified in Sections
10.I(c) and (d), Tenant may not effect a Sale of the Hotel. Notwithstanding anything in this Lease
to the contrary, Tenant may not effect a Sale of the Hotel by selling individual hotel room
condominium units, cooperative units or time-share units.
(f) African-American Person Ownership Requirements Re~ardin~ Tenant's
Interest in the Premises. Consistent with (1) Owner's and the City's decision to make a
substantial commitment to provide the African-American community with a significant opportunity
in the hospitality industry, and (2) the intent and language of the RFP issued by Owner, at all
times during the Term an African-American Person or African-American Persons collectively
shall hold, directly or indirectly, the Substantial Controlling Interest in Tenant.
(g) Subordinated Amount. Notwithstanding anything in this Lease' to the
contrary, the new amount to which Owner's interest in the Rental shall be subordinate after any
Sale of the Hotel shall never exceed the Subordinated Amount as of the time of such Sale of the
Hotel.
(h) Payment of Purchase Price after Twenty-Five (25) Years. Notwithstanding
anything in this Lease to the contrary, Tenant must pay to Owner no later than the expiration of
twenty-five (25) years from the Hotel Opening Date, the full Purchase Price of Owner's Interest
in the Premises.
(i) Distribution of Net Sale Proceeds from the Sale of the Hotel by a
Recognized Mort~a~ee. If a Recognized Mortgagee becomes the Tenant under this Lease as a
result of a Foreclosure Transfer and subsequently sells its interest in the Hotel, then, in that event,
unless such Recognized Mortgagee, in connection with such sale, pays to Owner Back Rent and
the Purchase Price in full, such Recognized Mortgagee shall be obligated to apply the Net Sale
Proceeds in the following order:
(1) to itself, in an amount equal to the Subordinated Amount as of the
time of such sale, including all accrued interest thereon at the time of such sale;
(2) to Owner, in an amount equal to all the Back Rent (excluding
interest, attorneys' fees, costs and other expenses included as part of Back Rent) then outstanding
as of the time of such sale;
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(3) to itself, in an amount equal to the Balance as of the time of such
sale, including all accrued interest thereon (including all post-judgment interest), and costs and
expenses related thereto as of the time of such sale, less the amount specified in Section
10.I(i)(I);
(4) to Owner, in an amount equal to all accrued interest owing as of the
time of such sale on the Back Rent plus that portion of Back Rent not required to be paid under
Section 10.I(i)(2);
(5) to Owner, in an amount up to the amount of the Purchase Price. If
the amount paid to Owner under this Section 10.1(i)(5) is insufficient to equal the Purchase Price,
such payment shall be deemed to be an Installment Payment; and
(6) any remaining sums shall be paid to itself.
For purposes of this Section 10.1(i), in the event that a Recognized Mortgagee becomes a Tenant
under this Lease as a result of a foreclosure sale, the Balance shall presumptively be deemed to
equal the amount of such Recognized Mortgagee's foreclosure judgment, together with all costs
and expenses incurred by such Recognized Mortgagee in connection with taking title to Tenant's
Interest in the Premises (but only to the extent such costs and expenses are not already included
in such foreclosure judgment) and interest on such foreclosure judgment at the applicable statutory
post-judgment rate.
(j) The term "Net Sale Proceeds" means, with respect to an arms-length
transaction with unrelated third parties, the actual selling price less brokerage commissions, taxes
and other prorations and all reasonable and customary closing and selling costs (includirig without
limitation, all reasonable attorneys' fees and costs) actually paid in connection with the sale.
(k) Notice to Owner. Subject to Requirements, Tenant shall provide notice to
Owner of any Capital Transaction not requiring Owner's consent not later than two (2) Business
Days after the occurrence of such Capital Transaction or promptly after becoming aware of a
Capital Transaction to which Tenant is not a party. The notice required by this Section 10.1(k)
shall contain the following information:
(i) the name and address of the Assignee or Transferee;
(ii) the nature of the Capital Transaction and the percent interest
conveyed; and
(iii) if the applicable Capital Transaction is a sale of the Restaurant, then
Tenant shall provide Owner with (x) if the Assignee or Transferee is not a Public Company,
disclosure of the ownership of the Controlling Interest of the Assignee or Transferee, but only to
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the extent that such information is reasonably available to Tenant after making reasonable inquiry,
and (y) a copy of the instrument described in Section lO.I(n) as it applies to the Restaurant.
.'
(I) Approvals. In any instance in which a Sale of the Hotel requires Owner's
consent, Tenant shall submit to Owner a written request for Owner's consent to such Sale of the
Hotel, which request shall include the following information:
(i) the name, address and a description of the nature and character of
the business operations of the proposed Assignee or Transferee, including, without limitation, the
name and address of the Person that the proposed Assignee or Transferee intends to engage as the
Hotel Manager;
(ii) (A) if the proposed Assignee or Transferee (or its parent, if such
parent owns, directly or through its subsidiaries, all or substantially all of such proposed Assignee
or Transferee) is a Public Company, Tenant shall provide a copy of the security ownership
information disclosed in the most recent filing for such company (or any Person filing with respect
to such company) under the Securities Exchange Act of 1934, as amended, or its successor, with
the Securities and Exchange Commission or its successor;
(B) if the proposed Assignee or Transferee is not a Public Company
and is a partnership, Tenant shall provide a certificate from the managing general partner or other
authorized Person of the proposed Assignee or Transferee, which certificate shall contain the
names of (i) any general partners holding (whether individually or together with their respective
Affiliates) more than five percent (5 %) of the general partnership interests in such proposed
Assignee or Transferee (a "Designated Holder") and (ii) any limited partners holding (whether
individually or together with their respective Affiliates) more than ten percent (10%) of the limited
partnership interests in such proposed Assignee or Transferee (also, a "Designated Holder");
provided, however, that if the general partnership interests disclosed pursuant to the foregoing
provisions of this paragraph (B) aggregate to less than fifty-one percent (51 %) of the general
partnership interests in such proposed Assignee or Transferee, then there shall be disclosed the
names of the President, Chief Operating Officer, Chief Executive Officer (or the individuals
holding the equivalent positions), and members of the Board of Directors (or other governing
body) of the proposed Assignee or Transferee;
(C) if the proposed Assignee or Transferee is not a Public
Company and is a limited liability company ("LLC"), trust or other entity (other than a
partnership or corporation), Tenant shall provide a certificate from the managing member, trustee
or other authorized Person of the proposed Assignee or Transferee, which certificate shall contain
the names of (i) any Person holding (whether individually or together with its Affiliates) a voting
interest which voting interest comprises more than five percent (5 %) of the total voting interests
in such LLC, trust or other entity (a "Designated Holder") and (ii) any Person holding (whether
individually or together with its Affiliates) a non-voting interest which non-voting interest
comprises more than ten percent (10%) of the total non-voting interests in such LLC, trust or
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other entity (also, a "Designated Holder"); provided, however, that if the voting interests
disclosed pursuant to the foregoing provisions of this paragraph (C) aggregate to less than fifty-
one percent (51 %) of the total voting interests in such LLC, trust-or other entity, then there shall
be disclosed the names of the President, Chief Operating Officer, Chief Executive Officer (or the
individuals holding the equivalent positions), and members of the Board of Directors (or other
governing body) of the proposed Assignee or Transferee;
(D) if the proposed Assignee or Transferee is a corporation that
is not a Public Company, Tenant shall provide a certificate from an authorized officer or other
authorized Person of the proposed Assignee or Transferee, which certificate shall contain the
names of (i) any holder (whether individually or together with its Affiliates) of voting stock which
voting stock comprises more than five percent (5 %) of any class of the outstanding voting stock
of such corporation (a "Designated Holder"), and (ii) any holder (whether individually or
together with its Affiliates) of more than ten percent (10%) of any class of the outstanding
nonvoting stock of such corporation (also a "Designated Holder"); provided, however, that if the
voting interests disclosed pursuant to the foregoing provisions of this paragraph (D) aggregate to
less than fifty -one percent (51 %) of each class of the outstanding voting stock of such corporation,
then there shall be disclosed the names of the President, Chief Operating Officer, Chief Executive
Officer (or the individuals holding the equivalent positions), and members of the Board of
Directors (or other governing body) of the proposed Assignee or Transferee;
(E) with respect to any Designated Holder disclosed pursuant to
paragraphs (B), (C) or (D), there shall also be disclosed the name of the natural person or Public
Company holding, directly or indirectly through one or more intermediaries, a Controlling Interest
in such Designated Holder; provided, however, that if no natural person or Public Company holds
a Controlling Interest in such Designated Holder, then there shall be disclosed the names of the
President, Chief Operating Officer, Chief Executive Officer (or the individuals holding the
equivalent positions), and members of the Board of Directors (or other governing body) of the
Designated Holder;
(iii) a certificate of an authorized officer, managing general partner,
managing member, trustee, or other authorized Person, whichever shall be applicable, of the
proposed Assignee or Transferee stating whether the Substantial Controlling Interest in the
proposed Assignee or Transferee is held by an African-American Person or African-American
Person collectively if then applicable;
(iv) the principal terms and conditions of the proposed Sale of the Hotel;
(v) a proposed form of the applicable instrument described in Section
10.I(n);
(vi) banking and financial information with respect to the proposed
Assignee or Transferee reasonably sufficient to enable Owner to determine the financial
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responsibility of the proposed Assignee or Transferee, to the extent reasonably available to
Tenant; and
(vii) such other additional information as Owner shall reasonably request
in connection with its evaluation of the proposed Sale of the Hotel, to the extent reasonably
available to Tenant; provided Owner shall make such request within ten (10) Business Days after
receipt of Tenant's request for consent.
(m) Owner's Approval. Owner shall consent or refuse to consent to any
transaction proposed pursuant to Section 10.1(1) in accordance with Article 26 hereof within ten
(10) Business Days after receipt of Tenant's request for consent or Owner's receipt of such
additional information. Notwithstanding the foregoing, if any change in circumstances prior to
the closing of the proposed Sale of the Hotel renders the information provided in Section 10.10)
materially incomplete or materially incorrect, any consent previously given by Owner shall be
deemed null and void and Tenant shall notify Owner of the change. Upon the receipt of such
notice, Owner shall thereupon have ten (l0) Business Days to notify Tenant whether Owner's
consent to such changed Sale of the Hotel is given or denied.
Notwithstanding anything to the contrary contained herein, Owner's decision
whether to consent or refuse to consent to a proposed Sale of the Hotel pursuant to Section -10.10)
shall be based only upon the following factors: (i) whether the proposed Assignee or Transferee
has the capability to carry out the remaining fmancial obligations of Tenant under this Lease; (ii)
if the proposed Assignee or Transferee is not (and does not intend to engage) a Permitted
Operator, whether the proposed Hotel Manager which such proposed Assignee or Transferee
intends to engage for the Hotel has the capability to carry out the obligations of the Hotel Manager
under this Lease; (iii) whether the proposed Assignee or Transferee is an African-American
Person if then applicable; and (iv) such other reasonable matters relating to the proposed Sale of
the Hotel.
(n) Sale of the Hotel Instruments. In the case of a Sale of the Hotel, Tenant
shall deliver to Owner, or shall cause to be delivered to Owner, within ten (10) Business Days
after the execution and delivery thereof, a true and correct copy of the instrument(s) effectuating
such transfer, including an instrument of assignment and assumption, if applicable.
(0) Assumption of Liability. If Tenant does not survive a Sale of the Hotel as
the tenant under this Lease and the holder of the Tenant's Interest in the Premises, then the
successor to Tenant shall assume and be deemed to assume this Lease, the other Project
Documents and the Declaration of Condominium (if any) to the extent that Tenant (or any
Assignee, Transferee or Subtenant) is a party (or a successor-in-interest to a party) thereto and
shall be liable for the payment of Rental and the performance of and compliance with all the
terms, covenants, conditions and agreements contained in this Lease, the Project Documents and
the Declaration of Condominium (if any) on the part of Tenant (or any successor-in-interest to
Tenant) to be performed accruing from and after the date of such Assignment, Transfer or
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Sublease (provided, however, that such Assignee, Transferee or Subtenant shall be liable for any
Defaults of Tenant continuing after the date of Assignment, Transfer or Sublease). No
Assignment, Transfer or Sublease shall be binding on Owner unless and until such Assignee,
Transferee or Subtenant shall enter into a written agreement containing a covenant of assumption
as aforesaid. Upon Owner's receipt of such assumption instrument from such Assignee,
Transferee or Subtenant, Tenant shall, to the extent Tenant has conveyed the entire Tenant's
Interest in the Premises be released from liability accruing after the date of such Assignment,
Transfer or Sublease.
(p) Invalidity of Transactions. Any Sale of the Hotel entered into without
Owner's consent as and if required in this Article 10 or sought to be entered into without the
execution, and delivery to Owner within ten (to) Business Days thereafter, of the instruments
provided in Section 10.I(n) (unless such Capital Transaction is effected by operation of law, in
which case no such instrument shall be required), shall have no validity and shall be null and void
and without effect until such time as such consent (if required) is obtained and/or such instruments
are delivered.
Section to.2. Sublease Requirements.
(a) Required Sublease Clauses. Each Sublease shall provide as follows:
(i) It is subordinate and subject to this Lease.
(ii) Except for security deposits and any other amounts deposited with
Tenant or with any Recognized Mortgagee in connection with the payment of insurance premiums,
real property taxes and assessments and other similar charges or expenses, and any rent paid in
advance upon execution of the Sublease (but not to exceed an amount equal to two (2) months'
rent), the Subtenant shall not pay rent or other sums payable under the Sublease to Tenant for
more than one (l) month in advance (unless Owner gives its consent to a longer period).
(iii) At Owner's option, on the termination of this Lease pursuant to
Article 25, the Subtenant shall attorn to, or shall enter into a direct lease (on terms identical to
its Sublease, consistent, however, with the terms hereof) with, Owner for the balance of the
unexpired term of the Sublease.
(iv) With respect to those Subleases providing for the payment of
percentage rent by such Subtenants to Tenant, Subtenant shall maintain full and accurate books
of account and records of Subtenant's business operations at the Premises, which books and
records shall be so kept and maintained for at least three (3) years after the end of each Lease
Year during the term of such Sublease.
(v) Its terms and conditions are subject to Owner's approval.
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(b) Subtenant Obligations. During the Term, Tenant shall use commercially
reasonable efforts to cause all Subtenants to comply with their obligations under their Subleases.
A violation or breach of any of the terms, provisions or conditions of this Lease that results from,
or is caused by, an act or omission by a Subtenant shall not relieve Tenant of Tenant's obligation
to cure such violation or breach.
(c) Schedule of Subleases. etc. At any time upon Owner's demand, Tenant
shall deliver to Owner, within ten (10) business days following such demand, (l) a schedule of
all Subleases (and licensees, franchises and concession agreements), giving the names of all
Subtenants (and licenses, franchisees and concessionaires), a description of the space that has been
sublet or licensed, expiration dates, rentals and other fees, and such other information as Owner
reasonably may request, and (2) photostatic copies of all Subleases (including licenses, franchises
and concession agreements) which have not been previously delivered (unless modified subsequent
to such delivery). Upon reasonable request of Owner, Tenant shall permit Owner and its agents
and representatives to inspect original counterparts of all Subleases (and licenses, franchises and
concession agreements) available to Tenant. Owner agrees to act reasonably with respect to the
frequency of its requests for schedules and investigation of documents as provided above.
(d) Restaurant A~reement. The Restaurant Agreement shall be deemed a
Sublease under this Lease subject to the provisions of Section 10.I(a)(vi)(C).
(e) Licensin~ Sublease. Upon notice to Owner, Tenant shall have authority to
sublease the Premises to the general partner of Tenant, or to an Affiliate of said general partner, to
the extent necessary and for the sole purpose of complying with applicable Requirements regarding
licensing for the service of alcoholic beverages. Such sublease shall not modify or otherwise affect
any of Tenant's obligations to Owner under this Lease and shall otherwise comply with the
provisions of this Lease. This Section 10.2(e) shall be applicable only during the period that
Holiday Hospitality Corporation, a Delaware corporation, or its Affiliate has an Equity Interest
in Tenant.
ARTICLE 11.
MORTGAGES
Section 11.1. Right to Mortga~e.
(a) Except as otherwise expressly provided for in this Lease, Tenant shall not
mortgage, pledge, hypothecate or otherwise encumber Tenant's Interest in the Premises. In
connection with the condominium regime described in the Declaration of Condominium that may
be created upon Tenant's leasehold estate hereunder, the provisions of this Article 11 shall also
apply to any mortgage of Tenant's Interest in the Premises.
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(b) Tenant shall have the right to secure Debt without Owner's approval by a
Recognized Mortgage(s).
.'
Section 11.2. Definitions.
(a) "Debt" means the principal amount of debt secured by Tenant's Interest in
the Premises. In addition, Debt shall include any debt obtained in connection with (I) a required
Casualty Restoration or Condemnation Restoration, as applicable, if the Net Insurance Proceeds
are, or the Net Condemnation Award is, inadequate to achieve the required Casualty Restoration
or Condemnation Restoration, as applicable and (II) any advances made by a Recognized
Mortgagee with respect to Tenant's Interest in the Premises for the payment of taxes, assessments,
insurance premiums or other costs incurred for the protection of Tenant's Interest in the Premises
or the liens created by the Recognized Mortgage, and reasonable expenses incurred by such
Recognized Mortgagee, by reason of a default by Tenant under such Recognized Mortgage,
together with any sums payable by Tenant (as Grantee) under the Garage Easement Agreement.
Notwithstanding the provisions of this Section 1l.2(a), upon and after a Foreclosure Transfer,
if the Recognized Mortgagee (or an Affiliate thereof) is the successful bidder and by operation of
law the applicable Recognized Mortgage is extinguished, then the applicable Recognized Mortgage
and the advances described in the preceding clause (II) shall be deemed to be applicable to
Tenant's Interest in the Premises for all purposes of this Lease, which purposes shall include,
without limitation, the deduction of the Debt Service that would have been payable on the
applicable Recognized Mortgage (had the Recognized Mortgage not been extinguished as a matter
of law) from Hotel Operating Profit in determining Net Cash Flow After Debt Service.
(b) "Mortgage" means any mortgage or deed of trust, and all extensions,
spreaders, splitters, consolidations, restatements, replacements, modifications and amendments
thereof, that constitutes a lien on all or a portion of Tenant's Interest in the Premises, and any
security interest in or assignment of the Lease or the rents, issues or profits related thereto.
(c) "Recognized Mortgage" means a Mortgage (i) that is held by a Person
(other than an Affiliate) which is an Institutional Lender, (ii) which expressly provides that it is
subject and subordinate to the terms of this Lease and, except as expressly set forth herein
regarding Owner's subordination in certain circumstances of its right to Rental and its lien rights
on Tenant's personal property to the Debt Service on the Subordinated Amount, to Owner's
Interest in the Premises, and (iii) a photostatic copy of which is, following the execution and
delivery thereof, delivered to Owner, together with a certification by Tenant confirming that the
photostatic copy is a true copy of the Mortgage and a certification by the Recognized Mortgagee
thereunder confirming the address of such Recognized Mortgagee for notices. Notwithstanding
anything contained herein to the contrary, an Affiliate may be part of a lending group constituting
a Recognized Mortgagee for so long as such Affiliate (i) does not own more than a forty-nine
percent (49%) beneficial interest in the debt held by such Recognized Mortgagee with respect to
Tenant or the Hotel and (ii) is not the lead lender or agent for the lending group.
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Section 11.3. Effect of Mort~a~es.
(a) Owner's Interest. No Mortgage shall extend to or be a lien or encumbrance
upon, Owner's Interest in the Premises or any part thereof or any appurtenant rights thereto which
have not been granted to Tenant under this Lease. A Mortgage may extend to and be a lien or
encumbrance upon the entire Tenant's Interest in the Premises.
(b) Mortgagee's Ri~hts Not Greater than Tenant's. The execution and delivery
of a Recognized Mortgage shall not give or be deemed to give a Recognized Mortgagee any
greater rights against Owner than those granted to Tenant hereunder, except as otherwise
expressly provided in this Lease.
Section 11.4. Notice and Right to Cure Tenant's Defaults.
(a) Notice to Recognized Mort~a~ee. Owner shall give to the Recognized
Mortgagee, in the manner provided by the provisions of Section 26.1 at such address as such
Recognized Mortgagee may confirm to Owner in the certification delivered to Owner pursuant
to Section 1l.2(c) or given by notice to Owner in accordance with Section 26.1, a copy of each
notice of Default at the same time as it gives notice of Default to Tenant, and no such notice of
Default shall be deemed effective with respect to any Recognized Mortgagee unless and'until a
copy thereof shall have been so received by or refused by such Recognized Mortgagee, as
applicable. Owner shall also give the Recognized Mortgagee notice ("Notice of Failure to
Cure") in the event Tenant fails to cure a Default within the period, if any, provided in this Lease
for such cure, promptly following the expiration of such period (i.e., an Event of Default). Only
Events of Default expressly described in the Notice of Failure to Cure may give rise to a
termination of the Lease by Owner pursuant to its termination rights hereunder.
(b) Ri~ht and Time to Cure. The Recognized Mortgagee shall have a period
of sixty (60) days after receipt of the Notice of Failure to Cure, in the case of any Event of
Default, to (l) cure the Event of Default referred to in the Notice of Failure to Cure or (2) cause
it to be cured, subject to the provisions of Section 25.1(b). Nothing contained herein shall be
construed as imposing any obligation upon any Mortgagee to so perform or comply on behalf of
Tenant. Anything contained in this Lease to the contrary notwithstanding, Owner shall have no
right to terminate this Lease prior to the delivery of a Notice of Failure to Cure or following the
delivery of a Notice of Failure to Cure if, within sixty (60) days after receipt of Owner's Notice
of Failure to Cure, any Recognized Mortgagee shall:
(l) notify Owner of such Recognized Mortgagee's desire to cure the matter
described in such Notice of Failure to Cure;
(2) payor cause to be paid all Rental then due and in arrears as specified in the
Default Notice from Owner to such Recognized Mortgagee (provided,
however, that such Recognized Mortgagee shall not be required to payor
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cause to be paid any amounts payable by Tenant under Section 28.1(b) to
the extent such amounts relate to any Lease Year other than the Lease Year
for which the most recent Annual Financial Statements have been made
available to Owner; provided further, however, in the event that the
Recognized Mortgagee (A) provides notice to Owner pursuant to Section
1l.4(b)(1), and (B) files a foreclosure within sixty (60) days of its receipt
of the Notice of Failure to Cure and diligently prosecutes such foreclosure,
the Recognized Mortgagee's curative obligations with regard to an Event
of Default as provided in this Section 1l.4(b)(2) shall be excused, subject
to the provisions of Section 1l.4(b)(4), which shall be applicable during
the pendency of a foreclosure);
(3) cure all Defaults by Tenant in the observance or performance of any term,
covenant or condition of this Lease on Tenant's part to be observed or
performed (other than the payment of Rental), or if any such Default is of
such a nature that it cannot reasonably be remedied within such sixty (60)
day period (but is otherwise reasonably susceptible to cure), Recognized
Mortgagee shall, (i) within sixty (60) days after the giving of such Notice
of Failure to Cure, advise Owner of such Recognized Mortgagee's intention
to institute all steps (and from time to time, as reasonably requested by
Owner, such Recognized Mortgagee shall advise Owner of the steps being
taken) necessary to remedy such Default (which such steps shall be
reasonably designed to effectuate the cure of such Default in a professional
manner), and (ii) thereafter diligently prosecute to completion all such steps
necessary to remedy the same, it being acknowledged by Owner that, if
possession or control of the Premises is required to effect such cure, the
diligent prosecution of a foreclosure of a Recognized Mortgage, and the
continuing efforts by such Recognized Mortgagee to effect such cure
following completion of such foreclosure, shall constitute a part of the steps
necessary to remedy such Default. Nothing in this Lease shall require a
Recognized Mortgagee or its Designee or Foreclosure Transferee to cure
any default of Tenant not reasonably susceptible of being cured by such
Person (e.g., a bankruptcy-related default); and
(4) if such Recognized Mortgagee files a foreclosure, during the pendency of
such foreclosure, payor cause to be paid all current monthly Rental due
beginning upon the filing of such foreclosure but only to the extent
sufficient funds are received by such Recognized Mortgagee from Hotel
Revenue after deducting Debt Service on the Subordinated Amount and
Operating Expenses on a monthly non-cumulative basis.
Notwithstanding the foregoing provisions of this Section 1l.4(b), following
the delivery of a Notice of Failure to Cure, within five (5) Business Days following the written
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request of any Recognized Mortgagee (which request may be contained in the notice from such
Recognized Mortgagee to Owner given pursuant to Section 11.4(b)(1)), Owner shall deliver to
such Recognized Mortgagee a statement certifying the aggregate -amount of Rental then due and
in arrears hereunder and the estimated per diem increase in such amount, but no such request shall
increase any of the time periods provided for in this Section 11.4(b).
(c) Acceptance of Mort2a~ee' s Performance. Owner shall accept performance
by a Mortgagee of any covenant, condition or agreement on Tenant's part to be performed
hereunder with the same force and effect as though performed by Tenant.
(d) Other Rights of Mortga~ees. Notwithstanding any other provision of this
Lease, no payment made to Owner by any Mortgagee shall constitute the Mortgagee's agreement
that such payment was, in fact, due under the terms of this Lease.
(e) Owner's Self-Help Ri~hts. Notwithstanding the foregoing provisions of this
Section 11.4, if a Recognized Mortgagee fails (for any reason) to cure any Default by Tenant
described in paragraph (3) of Section 1l.4(b) within sixty (60) days following receipt of the
Notice of Failure to Cure regarding such Default, then Owner may upon notice, but shall be under
no obligation to, perform the obligation of Tenant the breach of which gave rise to such Default,
without waiving or releasing Tenant from its obligations with respect to such Default. Tenant
hereby grants Owner access to the Premises in order to perform any such obligation. Any amount
paid by Owner in performing Tenant's obligations as provided in this Section 11.4(e), including
all costs and expenses incurred by Owner in connection therewith, shall constitute Rental
hereunder and shall be reimbursed to Owner within thirty (30) days following Owner's demand
therefor, together with a late charge on amounts actually paid by Owner, calculated at the Late
Charge Rate from the date of notice of any such payment by Owner to the date on which payment
of such amounts is received by Owner.
(f) Acceptance of Owner's Performance. Tenant shall cause all Mortgages to
contain a provision requiring that all Mortgagees shall accept performance by Owner, within the
applicable grace periods available to Tenant, to cure defaults under any covenant, condition or
agreement on Tenant's part to be performed under such Mortgages with the same force and effect
as though performed by Tenant.
Section 11.5. Reco~nized Mort~a~ee or its Desi~nee as Tenant Under the Lease. If a
Recognized Mortgagee or its Designee becomes the Tenant under the Lease, then, in that event,
such Recognized Mortgagee or such Designee shall, during the period of its tenancy:
(a) pay all current Rental commencing as of the date such Recognized
Mortgagee or such Designee becomes the Tenant (the "Reinstatement Date");
(b) comply with all the covenants and conditions of the Lease, except that the
payment of Rental shall be as specified in this Section 11.5 and Section 16.5(d);
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(c) pay all Back Rent as of the Reinstatement Date in the following manner:
."
(i) During the period in which the Subordinated Amount is greater than
zero, such Recognized Mortgagee or such Designee shall pay Back Rent monthly, but only to the
extent sufficient funds are received by such Recognized Mortgagee or such Designee from Hotel
Revenue after deducting Debt Service on the Subordinated Amount, Operating Expenses and
current Rental;
(ii) At such time as the Subordinated Amount is not greater than zero,
such Recognized Mortgagee or such Designee shall pay Back Rent monthly, but only to the extent
sufficient funds are received by such Recognized Mortgagee or such Designee from Hotel
Revenue after deducting Operating Expenses;
(iii) Back Rent shall continue to accrue until paid in full; and
(d) not be required to fund Operating Deficits of the Hotel.
Section 11.6. Execution of New Tenant's Documents.
(a) Notice of Termination. If this Lease is terminated by reason of an Event
of Default, or by reason of the rejection thereof by or on behalf of the Tenant in bankruptcy or
for any other reason, Owner shall give prompt notice thereof to each Recognized Mortgagee.
(b) Request for and Execution of New Tenant's Documents. If, within sixty
(60) days of receipt of the notice referred to in Section 11.6(a), the Recognized Mortgagee shall
request, in writing, a new lease and Declaration of Condominium, if any (collectively, "New
Tenant's Documents"), to the Recognized Mortgagee or to a Designee or Foreclosure Transferee
identified in such request (other than a Foreign Instrumentality (if the Premises are owned by the
Agency or the City or any instrumentality of the Agency or the City) or an Affiliate of Tenant),
then, subject to the provisions of Sections 11.6(c) and 11.7, within ninety (90) days after Owner
shall'have rec-eived such request, Owner shall execute and deliver New Tenant's Documents
covering the remainder of the Term to the Recognized Mortgagee or to any Designee or
Foreclosure Transferee that has satisfied the requirements set forth in Sections 10.I(n) and (0),
and such Recognized Mortgagee (or its Designee or Foreclosure Transferee) shall execute and
deliver such New Tenant's Documents to Owner within thirty (30) days following receipt thereof
by such Recognized Mortgagee (or Designee or Foreclosure Transferee). Such New Tenant's
Documents shall be effective upon the execution thereof by both Owner and such Recognized
Mortgagee or its Designee or Foreclosure Transferee. The New Tenant's Documents shall be at
the then current Rental and otherwise contain all of the covenants, conditions, limitations and
agreements, and all of Tenant's rights and remedies, contained in this Lease (including, without
limitation, a conveyance by Owner of all then-existing Improvements) and the Declaration of
Condominium, if any; provided, however, Owner shall not be deemed to have represented or
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covenanted that such New Tenant's Documents are superior to claims of Tenant, its other
creditors or a judicially appointed receiver or trustee for Tenant; provided further, however, such
New Tenant's Documents will have the same priority over any. encumbrances on the estate of
Owner which Tenant has or had by virtue of this Lease and the Declaration of Condominium, if
any, and the Recognized Mortgagee (or its Designee or Foreclosure Transferee) will not have any
obligation to perform any acts under the Lease which shall at such time have already been
performed by Tenant. Simultaneously with the making of such New Tenant's Documents, the
party obtaining such New Tenant's Documents and all other parties junior in priority of interest
in the Premises shall, at the option the Recognized Mortgagee or its Designee or Foreclosure
Transferee, execute, acknowledge and deliver such new instruments, including new mortgages
and new Subleases, as applicable, and shall make such payments and adjustments among
themselves, as shall be necessary and proper for the purposes of restoring to each of such parties
as nearly as reasonably possible, the respective interest and status with respect to the Premises
which was possessed by the respective parties prior to the termination of the Lease as aforesaid.
Concurrently with the execution and delivery of such New Tenant's Documents, Owner
shall assign to the tenant, declarant or co-declarant (the "New Tenant") named therein all of its
right, title and interest in and to moneys (including, without limitation, (i) subrents collected
which have not been applied or are not being held for application to rent and the costs incurred
by Owner to operate, maintain and repair the Premises and (ii) insurance and condemnation
proceeds which have not been applied or are not being held for application to the costs incurred
by Owner to restore the Premises), if any, then held by or payable to Owner which Tenant would
have been entitled to receive but for termination of this Lease or Owner's exercise of its rights
upon the occurrence of an Event of Default; provided, however, that Owner shall not be required
to assign such moneys to such New Tenant unless and until such New Tenant shall have cured all
Events of Default that existed under the this Lease prior to the execution of such New Tenant's
Documents to the extent such Events of Default are reasonably susceptible to cure by such New
Tenant.
Upon the execution and delivery of New Tenant's Documents under this Section 1l.6(b),
all Subleases which theretofore may have been assigned to Owner shall be assigned and
transferred, w.ithout recourse, representation or warranty, by Owner to the New Tenant named
in such New Tenant's Documents. Between the date of termination of this Lease and the date"Of
execution and delivery of the New Tenant's Documents (but not later than thirty (30) days
following receipt of such New Tenant's Documents by such Recognized Mortgagee, as provided
in Section 1l.6(b)), if a Recognized Mortgagee shall have requested such New Tenant's
Documents as provided in this Section 1l.6(b), Owner shall not enter into any new Subleases,
cancel or modify any then existing Subleases or accept any cancellation, termination or surrender
thereof (unless such termination shall be effected as a matter of law on the termination of this
Lease) without the written consent of a Recognized Mortgagee, except as permitted in the
Subleases.
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For so long as the Recognized Mortgagee (or its Designee or Foreclosure Transferee) shall
have the right to enter into a new ground lease with Owner pursuant to this Section 1l.6(b),
Owner shall not enter into a new lease of the Land with any Person other than the Recognized
Mortgagee (or its Designee or Foreclosure Transferee), without the prior written consent of the
Recognized Mortgagee. The provisions of Section 1l.6(b) shall survive the termination, rejection
or disaffirmance of this Lease and shall continue in full force and effect thereafter to the same
extent as if Section 11.6(b) were a separate and independent contract made by Owner, Tenant and
any Recognized Mortgagee and, from the effective date of such termination, rejection or
disaffirmance of this Lease to the date of execution and delivery of such new ground lease if such
Recognized Mortgagee (or its Designee or Foreclosure Transferee) has requested the New
Tenant's Documents within sixty (60) days after receipt of the aforesaid notice from Owner, the
Recognized Mortgagee may use and enjoy the leasehold estate created by this Lease without
hindrance by Owner. The aforesaid agreement of Owner to enter into a new ground lease with
the Recognized Mortgagee shall be deemed a separate agreement between Owner and such
Recognized Mortgagee, separate and apart from this Lease as well as a part of this Lease, and
shall be unaffected by the rejection of this Lease in any bankruptcy proceeding by any party.
(c) Conditions Precedent to Owner's Execution of New Tenant's Documents.
The provisions of Section 1l.6(b) notwithstanding, Owner shall not be obligated to enter into
New Tenant's Documents with a Recognized Mortgagee or its Designee or Foreclosure Transferee
unless:
(i) the Recognized Mortgagee or its Designee or Foreclosure Transferee
shall pay to Owner, concurrently with the execution and delivery of the New Tenant's Documents,
all unpaid Rental due under this Lease up to and including the date of the commencement of the
term of the New Tenant's Documents and all reasonable out-of-pocket expenses, as evidenced by
receipted bills.therefor, including, without limitation, reasonable attorneys' fees and disbursements
and court costs, incurred in connection with the Default or Event of Default, the termination of
this Lease and the preparation of such New Tenant's Documents, less the net revenue of the
Premises actually received by Owner from the date of termination of this Lease to the date of
execution of the New Tenant's Documents, with any excess of the total of such sums and expenses
to be applied -by Owner to the payment of fixed rent and additional rent due under such New
Tenant's Documents;
(ii) in the case of a Default or Event of Default, the Recognized
Mortgagee or its Designee or Foreclosure Transferee shall promptly after execution of the New
Tenant's Documents, satisfy all obligations and cure all Events of Defaults existing or continuing
under this Lease at the time of its termination (as though the Term had not been terminated) and
which are reasonably susceptible to cure by such Recognized Mortgagee (or its Designee or
Foreclosure Transferee); and
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(iii) Notwithstanding anything contained in this Lease to the contrary,
Owner's subordination of its right to Rental shall be at the Subordinated Amount as of the
effective date of the New Tenant's Documents.
(d) No Waiver of Default. The execution of New Tenant's Documents shall
not constitute a waiver of any Default existing or continuing immediately before termination of
this Lease and, except as to a Default which is not reasonably susceptible of being cured by the
Recognized Mortgagee or its Designee or Foreclosure Transferee (e.g., the insolvency of Tenant),
the New Tenant under the New Tenant's Documents shall cure, within the applicable periods in
such New Tenant's Documents (which periods shall be identical to the periods set forth in Section
25.1), all Defaults existing under this Lease immediately before its termination. Nothing in this
Lease shall require a Recognized Mortgagee or its Designee or Foreclosure Transferee, as a
condition to the exercise of its right to enter into New Tenant's Documents, to cure any default
of Tenant not reasonably susceptible of being cured by such Person (e.g., a bankruptcy-related
default).
(e) Payments under Lease. If the Recognized Mortgagee or its Designee or
Foreclosure Transferee shall enter into New Tenant's Documents pursuant to this Article and if,
upon such termination of this Lease, Tenant, but for such termination, would have been entitled
to receive any amount pursuant to the provisions of this Lease, then Owner agrees that, subject
to any rights of setoff Owner may have, the same shall be paid to the Recognized Mortgagee or
its Designee or Foreclosure Transferee, as the New Tenant under the New Tenant's Documents,
in the same manner and to the same extent as it would have been paid or apply the same to or for
the benefit of the Recognized Mortgagee or its Designee or Foreclosure Transferee as if this Lease
had not been terminated.
(f) The provisions of this Section 11.6 shall survive the Expiration of the
Term.
Section 11.7. Application of Proceeds from Insurance or Condemnation Awards.
To the_extent that this Lease requires that insurance proceeds paid in connection with any
damage or destruction to the Premises, or the proceeds of an award paid in connection with a
taking referred to in Article 9, be applied to restore any portion of the Premises, no Mortgagee
shall have the right to apply the proceeds of insurance or awards toward the payment of the sum
secured by its Mortgage, except for the reasonable costs of collection thereof.
Section 11.8. Appearance at Condemnation Proceedin~s.
A Recognized Mortgagee shall have the right to appear in any condemnation proceedings
and to participate in any and all hearings, trials and appeals in connection therewith.
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Section 11.9. Ri~hts Limited to Reco~nized Mort~a~ees.
The rights granted to a Recognized Mortgagee under the provisions of this Lease shall not
apply in the case of any Mortgagee that is not a Recognized Mortgagee.
Section 11.10. No Surrender or Modification.
Owner agrees not to accept a voluntary surrender, termination or modification of this
Lease at any time while such Recognized Mortgage(s) shall remain a lien on Tenant's leasehold
estate. It is further understood and agreed that any such Recognized Mortgagee(s) shall not be
bound by any surrender, termination or modification of this Lease unless such surrender,
termination or modification is made with the prior written consent of such Recognized Mortgagee,
and this Lease shall not terminate by merger or otherwise as long as the lien of the Recognized
Mortgage(s) remains undischarged. The foregoing is not meant to and shall not prohibit a sale
of the fee to Tenant so long as no merger of estates shall result therefrom unless all Recognized
Mortgagees are satisfied concurrently therewith. Notwithstanding the foregoing, Owner's waiver
or postponement of any obligation of Tenant or any remedy Owner may have under this Lease
shall not constitute a modification for purposes hereof.
Section 11.11. Reco~nition by Owner of Reco~nized Mort2a~ee Most Senior in Lien.
If there is more than one Recognized Mortgagee, only that Recognized Mortgagee,
to the exclusion of all other Recognized Mortgagees, whose Recognized Mortgage is most senior
in lien shall be recognized as having rights under Sections 11.4, 11.5 or 11.6, unless such first
priority Recognized Mortgagee has designated in writing to Owner a Recognized Mortgagee
whose Mortgage is junior in lien to exercise such right.
Section 11.12. Reco~nized Mortga~ee's Assi~nment Ri~hts.
(a) Notwithstanding anything contained in Article 10 or elsewhere in this Lease to the
contrary, a Foreclosure Transfer (other than to a Foreign Instrumentality for so long as the
Agency or the City is the Owner) shall not require the consent of Owner or constitute a breach
of any provision of or a Default under this Lease. Upon any such Foreclosure Transfer, Owner
shall recognize the Foreclosure Transferee as Tenant hereunder, provided, however, that such new
Tenant shall deliver to Owner, or shall cause to be delivered to Owner, within thirty (30) days
after the execution thereof, the appropriate instruments provided in Sections 10.I(n) and (0)
(subject to the provisions of Section 1l.12(b)).
(b) Except as expressly provided otherwise in this Lease, no Mortgagee or other
Foreclosure Transferee shall be liable under this Lease unless and until such time as it becomes
Tenant hereunder, and then only for so long as it remains Tenant hereunder.
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(c) Notwithstanding anything contained in this Lease to the contrary, Owner's
subordination of its right to Rental shall be at the Subordinated Amount as of the date of the
Foreclosure Transfer..
(d) Definitions:
(i) "Foreclosure Transfer" means a transfer occurring as a result of
the foreclosure ofa Recognized Mortgage, or any sale of Tenant's Interest in the Premises, or any
other transfer or assignment of Tenant's Interest in the Premises by judicial proceedings pertaining
to a Recognized Mortgage or by virtue of the exercise of any power contained in a Recognized
Mortgage, or by assignment-in-lieu or other consensual conveyance, or otherwise:
(x) by or on behalf of Tenant to a Recognized Mortgagee (or its
Designee or Foreclosure Transferee); or
(y) by or on behalf of Tenant or a Recognized Mortgagee (or its
Designee or Foreclosure Transferee) to a purchaser of Tenant's Interest in the
Premises at a foreclosure sale pursuant to a Recognized Mortgage or by a
Recognized Mortgagee (or its Designee or its Foreclosure Transferee) after
consummating a Foreclosure Transfer as described in clause (x) above or after such
foreclosure sale.
(ii) "Foreclosure Transferee" means the purchaser, transferee or other
assignee in a Foreclosure Transfer.
(Hi) "Designee" means an Affiliate of a Recognized Mortgagee that is
the designee or nominee of such Recognized Mortgagee.
Section 11.13. Refinancini of Debt.
(a) Required Refinancing by Tenant. Notwithstanding anything in this Lease to the
contrary ,except in the event that Tenant is unable to reftnance on a commercially reasonable basis
and obtain at least One Million Dollars ($1,000,000) in Net Refinancing Proceeds from such
refinancing for the period beginning with the Hotel Opening Date and ending ten (10) years from
the Hotel Opening Date and at least Five Hundred Thousand Dollars ($500,000) in Net
Refinancing Proceeds thereafter, Tenant shall refinance the outstanding principal balance (the
"Balance") of its Debt on each and every one of the following occasions: on or prior to the
beginning of the fifth (5th), tenth (10th) and twenty-fifth (25th) years after the Hotel Opening Date
and every ten (10) years thereafter (each such time period referred to as the "Refinancing Time"
and, collectively, all such time periods referred to as the "Refinancing Times"). Tenant, at its
option, may refinance the Balance of its Debt on other occasions in addition to the Reftnancing
Times.
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(b) Refinancin2 Not Related to a Default. If and when Tenant refinances the Balance
of its Debt in the ordinary course of business and not related to any Event of Default, the Net
Refinancing Proceeds shall be applied to the extent available in the following order:
(i) to Owner to pay the Purchase Price for Owner's Interest in the Premises;
and
(ii) to Tenant if any funds remain after paying Owner the full Purchase Price
for Owner's Interest in the Premises.
(l) Notwithstanding anything contained in this Lease to the contrary,
Owner's subordination of its right to Rental shall be at the Subordinated Amount as of the date
of such refinancing by Tenant.
(2) The term "Net Refinancing Proceeds" means the amount of the
refinancing of the Debt less (x) the Balance immediately before such refinancing of the Debt, (y)
the interest owing on such Balance, and (z) reasonable refInancing transaction expenses, brokerage
commissions and prepayment fees and yield maintenance charges relating to the Debt to be
refinanced.
(c) Amount of Refinancin~.
(i) In each instance in which Tenant refinances the Balance of its Debt,
including without limitation in connection with required refinancings as provided for herein, (1)
Tenant shall cause the amount of such Debt upon refinancing to be as large as Tenant is able to
obtain; provided, however, Tenant is not required to incur Debt in an amount that will exceed the
market loan-to-value ratio, pertaining to existing hotels, then prevailing among Institutional
Lenders at the time of such refInancing; and (2) Tenant shall make available for Owner's review
all financing packages or presentations prior to their submission to any Recognized Mortgagee.
Tenant shall provide to Owner Notice of the availability for review of each such fInancing package
or presentation. Within thirty (30) days of Owner's receipt of such Notice, Owner shall, based
on the criteri~ stated in Section 1l.13(c)(i), either approve or disapprove the amount of such
refinancing Debt Tenant is seeking, as stated in the particular fInancing package or presentation.
The failure of Owner to respond within such thirty (30) day time period shall be deemed an
approval.
(ii) Tenant agrees to hold Owner harmless from any and all losses, costs,
liability, claims, damages, lost profits, expenses (including, but not limited to, attorneys' fees and
costs at the trial court and all appellate levels and in any post-judgment proceedings), penalties
and fines in connection with Owner's review, approval or disapproval of Tenant's refinancing
application as referenced in Section 1l.13(c).
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(iii) The provisions of Section 1l.13(c)(ii) shall survive the Expiration of the
Term.
.'
Section 11.14. Notices Under a Mort~a~e. Tenant shall give to Owner copies of
all notices of default received from a Mortgagee within ten (10) days after receiving written notice
of same from Mortgagee.
(a) Notices. Tenant shall cause all Mortgages to contain a provision requiring that all
Mortgagees shall send to Owner and the City, simultaneously with the sending of such default
notices to Tenant or Guarantor, copies of all default notices or other notices relating to the failure
of Tenant to keep any Mortgage in good standing, which notices are sent pursuant to any loan
document or security document to Tenant and/or the Guarantor.
(b) Estoppel Req.uests. Tenant shall cause all Mortgages to contain a provision
requiring that the Mortgagee shall comply with all reasonable estoppel requests of Owner or the
City. Owner shall comply with all reasonable estoppel requests of any Mortgagee.
ARTICLE 12.
SUBORDINATION
Section 12.1. Subordination of Rental.
(a) Subordination. In the event of a Default, Owner's right to Rental shall be
subordinate, expressly as described in this Lease, only to the Debt Service on the fIrst Ten Million
Dollars ($10,000,000) of Debt existing as of the Commencement Date (the "Original
Subordinated Amount").
(b) Subordinated Amount. The current balance of the Original Subordinated Amount
(the "Subordinated Amount") shall be calculated by reducing the Original Subordinated Amount
on a mortgage amortization basis commencing on the Hotel Opening Date based upon a twenty-
five (25) year term at the interest rate, as it may exist from time to time, on the Debt; provided,
however, that the application of proceeds from the sale or lease of the Restaurant shall not be
included in the calculation of the Subordinated Amount.
Section 12.2. No Subordination of Owner's Proprietar.:y Interest in the Land.
Owner's proprietary interest in the Land, including, without limitation, Owner's interest
in this Lease, as the same may be modified, amended or renewed in accordance with the
provisions of this Lease, shall not be subject or subordinate to (a) any Mortgage now or hereafter
existing, (b) any other liens or encumbrances hereafter affecting Tenant's Interest in the Premises
or (c) any Sublease or any mortgages, liens or encumbrances now or hereafter placed on any
Subtenant's interest in the Premises.
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Section 12.3. Tenant's Interest in the Premises Subject to Title Matters. Tenant's Interest
in the Premises, including, without limitation, this Lease and the leasehold estate of Tenant
created hereby and all rights of Tenant hereunder are and shall be subject to the Title Matters.
Section 12.4. Priority of Lease. This Lease and any Recognized Mortgage of Tenant's
Interest in the Premises shall have priority over all liens and encumbrances on the fee estate of
Owner in the Land demised hereby including mortgages or liens on the fee estate which were
executed prior to the execution of this Lease or which are executed after the execution of this
Lease unless subordinated to such mortgages, liens or encumbrances in writing by Tenant or any
Recognized Mortgagee, except for the Title Matters and documents recorded contemporaneously
with, and contemplated by, this Lease,.
ARTICLE 13.
HOTEL CONSTRUCTION AND FURNISHING
Section 13.1. Tenant' s Obli~ation to Construct Hotel.
The parties acknowledge that Tenant shall construct on the Land a first class convention
center hotel as described in Section 13.2 and other improvements described in the Plans and
Specifications in accordance with the terms of the Hotel Development Agreement and the terms
hereof (together with any and all permitted additions thereto and replacements thereof, the
"Hotel"). If, with respect to a matter relating to the Construction Work for the initial
construction of the Hotel, a conflict arises between the terms of the Hotel Development
Agreement and the terms of this Lease, the terms of the Hotel Development Agreement shall
govern until the Hotel Opening Date, and thereafter the terms of this Lease shall govern.
Section 13.2. Description of the Hotel.
The Hotel will consist of the following: (i) restored portions of the Royal Palm Hotel
which has a street address of 1545 Collins Avenue, Miami Beach, Florida, and a new tower to
be developed to the east of the Royal Palm Hotel, as per the plans and specifications approved by
the joint Design Review and Historic Preservation Boards on December 3, 1996, as said plans and
specifications may be amended and approved, together comprising approximately two hundred
fifty-seven (257) hotel rooms (hereinafter collectively referred to as the "RP Improvements") and
(ii) restored portions of the Shorecrest Hotel which has a street address of 1535 Collins A venue,
Miami Beach, Florida, and a new tower to be developed to the east of the Shorecrest Hotel, as
per the plans and specifications approved by the joint Design Review and Historic Preservation
Boards on December 3, 1996, as said plans and specifications may be amended and approved,
together comprising approximately one hundred sixty-five (l65) hotel suites (hereinafter
collectively referred to as the "Shorecrest Improvements"). The Shorecrest Improvements will
be operated in conjunction with the RP Improvements as the Hotel. The Hotel will be a first
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class, upscale property with convention, conference and meeting space and amenities meeting the
standards set forth in this Lease.
.-
Section 13.3. Shorecrest Improvements.
(a) Opening. The completion of construction and the opening to the public for business
of both the Shorecrest Improvements and the RP Improvements shall occur no later than on the
Hotel Opening Date.
(b) One (l) Hotel Manager. At all times during the Term and without interruption,
both the Shorecrest Improvements and the RP Improvements shall be operated and managed by
one and the same Hotel Manager.
ARTICLE 14.
MAINTENANCE AND REPAIR; ALTERATIONS
Section 14.1. Maintenance of Premises.
(a) Maintenance and Repair. Tenant shall take good care of, and keep and maintain,
the Premises in good and safe order and condition, and shall make all repairs therein and thereon,
interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen, necessary to keep the Premises in good and safe order and condition and as a first
class convention center hotel, however the necessity or desirability therefor may arise.
(i) Tenant shall not commit, and shall use all reasonable efforts to prevent,
waste, damage or injury to the Premises.
(ii) All repairs made by Tenant shall be substantially equal in quality and class
to the original quality of the Improvements being repaired and shall be made in compliance with
the Requirements.
(b) Cleaning of Premises. Tenant shall keep clean and free from dirt, mud, standing
water, rubbish, obstructions and physical encumbrances all areas of the Premises.
Section 14.2. Removal of Buildin~ EQJ1ipment.
(a) Premises. Tenant shall not, without the consent of Owner, remove or dispose of
any Building Equipment and/or FF&E from the Premises unless such Building Equipment and/or
FF&E (i) is promptly replaced by Building Equipment and PF&E of at least equal utility and
quality, or (ii) is removed for repairs, cleaning or other servicing, provided Tenant reinstalls such
Building Equipment and FF&E with reasonable diligence; except, however, Tenant shall not be
required to replace any Building Equipment or FF&E that performed a function that has become
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obsolete, unnecessary or undesirable in connection with the operation of the Premises In
accordance with the terms of this Lease.
.'
(b) Other Areas. Tenant shall promptly rectify any damage or interference caused by
Tenant to any equipment, structures or vegetation located in the areas described on Exhibit 14.5
attached hereto and incorporated by reference herein.
Section 14.3. No ObIi~ation to Repair or to Supply Utilities.
Owner (in its proprietary capacity only) shall not be required to supply any facilities,
services or utilities whatsoever to the Premises. Owner shall not have any duty or obligation to
make any alteration, change, improvement, replacement, Restoration or repair with respect to the
Premises.
Section 14.4. Waste Disposal.
Tenant shall dispose of waste from all areas of the Premises In accordance with
Requirements and in a prompt and sanitary manner.
Section 14.5. A~ency Maintenance Obli~ations.
From and after the Hotel Opening Date, Owner shall, or shall cause the appropriate
Governmental Authority to, take good care of, and keep and maintain, the broadwalk adjacent to
the Premises and the beach area described in the last sentence of this Section 14.5 in good and
safe order and condition and shall make all repairs therein and thereon necessary to keep such
beach area and broadwaIk in good and safe order and condition as an amenity to the first class
nature of the Hotel. The provisions of this Section 14.5 shall suryiv~ any expiration or
termination of this Lease until March 31, 2023. In addition, prior to the Hotel Opening Date, the
City and Tenant shall enter into a concession agreement covering the area of the beach west and
east of the sand dunes immediately adjacent to the easterly boundary line of the Land and having
a width from the northerly boundary to the southerly boundary of the Land on the terms set forth
on Exhibit 14.5 attached hereto and incorporated by reference herein.
Section 14.6. Alterations.
(a) Subject to the terms and conditions of this Article 14 and the other applicable
provisions of this Lease, Tenant may, at any time and from time to time, at its sole cost and
expense, make alterations, additional installations, substitutions, improvements, renovations or
betterments (collectively, "Alterations"; but Alterations shall not encompass the addition, renewal
and replacement of FF&E) in and to the Premises or any portion thereof provided that:
(i) in connection with the performance of any Alterations (or series of related
Alterations) estimated to cost more than Two Hundred Fifty Thousand Dollars ($250,000),
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adjusted for inflation (as estimated by Tenant's architect or engineer) (a "Significant
Alteration"), Tenant shall provide broad form Builders All Risk insurance, on a completed value
(or reporting form) which insurance shall be effected by poli~ies complying with all of the
provisions of Article 7;
(ii) no Significant Alteration and no Alteration affecting the structural portions,
roofs or the heating, air conditioning, elevator, plumbing, electrical, sanitary, mechanical or other
service or utility systems shall be undertaken except under the supervision of a licensed architect
or licensed professional engineer;
(iii) the Alterations will not result in a violation of any Requirement or require
a material change in any certificate of occupancy applicable to the Premises;
(iv) the outside appearance, character or permitted use of the Premises shall not
be materially adversely affected, and the Alterations shall not materially (1) weaken or impair the
structure, (2) reduce the size or (3) lessen the value of, the Premises;
(v) the proper functioning of any of the heating, air conditioning, elevator,
plumbing, electrical, sanitary, mechanical and other service or utility systems of the Premises
shall not be materially adversely affected;
(vi) if any Alteration is (or related series of Alterations are) estimated to cost
more than Five Hundred Thousand Dollars ($500,000), adjusted for inflation (as estimated by
Tenant's architect or engineer), Tenant shall obtain the prior written consent of Owner for such
Alterations (a "Major Alteration") in accordance with the provisions of Section 14.6(d) below;
and
(vii) no Major Alteration shall be undertaken prior to Tenant delivering to
Owner, at Tenant's option, either (x) a performance bond and a labor and materials payment bond
(issued by a surety company reasonably satisfactory to Owner and licensed to do business in the
State of Florida), each in an amount equal to one hundred percent (l00%) of the estimated cost
. and. otherwise. in form reasonably satisfactory to Owner or (y) such other security for the
completion of the Major Alteration, as may be reasonably satisfactory to Owner; provided,
however, this Section 14.6(a)(vii) shall not apply to a Recognized Mortgagee or its Designee
during the period that it is the Tenant under this Lease.
(b) Reimbursement of Owner's Expenses. Tenant shall reimburse Owner for all actual
out-of-pocket architectural and engineering expenses for architectural and engineering review
reasonably incurred by Owner in connection with its decision to grant or withhold consent to a
proposed Major Alteration and inspecting the Major Alteration to determine whether the same is
being or has been performed in accordance with the terms of this Lease, including only the actual
reasonable fees and expenses of any architect or engineer employed for such purposes. Any
Major Alteration for which consent has been received shall be performed substantially in
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accordance with the approved plans and specifications, and no material amendments or material
additions to the plans and specifications shall be made without the prior consent of Owner in
accordance with the terms hereof..
(c) Approvals. Tenant, at its expense, shall obtain all necessary permits and
certificates from Governmental Authorities for the commencement and prosecution of any
Alterations and fmal approval from Governmental Authorities upon completion, promptly deliver
copies of the same to Owner and cause the Alterations to be performed in compliance with all
applicable Requirements and requirements of Mortgagees and insurers of the Premises, and any
Board of Fire Underwriters, Fire Insurance Rating Organization, or other body having similar
functions, and in good and workerlike manner, using materials and equipment at least equal in
quality and class to the original quality of the installations at the Premises that are being replaced.
(d) Submission and Review of Alterations.
(i) Tenant shall submit to Owner plans and specifications showing in reasonable
detail any proposed Major Alteration. Within forty-five (45) days after Owner's receipt of such
plans and specifications, Owner shall notify Tenant of its approval or disapproval thereof.
(ii) If Tenant desires to modify in any material respect previously approved
plans and specifications (as such may have been modified by approved plans and specifications),
Tenant shall submit any such proposed modifications to Owner for Owner's approval. Within
twenty (20) days of its receipt of the proposed modifications, Owner shall notify Tenant in writing
with specificity of any material inconsistencies of which Owner disapproves between the plans and
specifications as modified and the plans and specifications previously approved by Owner. Tenant
shall, at its election, have the option of (x) submitting Owner's disapproval to arbitration as to the
(i) materiality of the inconsistency and/or (ii) reasonableness of disapproval or (y) submitting
revised modifications to the plans and specifications to meet Owner's objections (which revised
plans and specifications shall be reviewed as hereinabove provided).
(e) Costs of Alterations. The costs of all Alterations shall be borne by Tenant and
accounted for.as an Operating Expense, subject to Section 3.4(c)(v).
ARTICLE 15.
REQUIREMENTS
Section 15.1. Tenant's Obli~ation to Comply. In connection with any Construction Work,
and with the maintenance, management, use and operation of the Premises and Tenant's
performance of its obligations hereunder, Tenant shall comply promptly with all Requirements,
without regard to the nature of the work required to be done, whether extraordinary or ordinary,
and whether requiring the removal of any encroachment (but Tenant may seek to obtain an
easement in order to cure an encroachment, if permitted by Requirements), or affecting the
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093
maintenance, management, use or occupancy of the Premises, or involving or requiring any
structural changes or additions in or to the Premises and regardless of whether such changes or
additions are required by reason of any particular use to which the Premises, or any part thereof,
may be put. No consent to, approval of or acquiescence in any plans or actions of Tenant by
Owner, in its proprietary capacity as landlord under this Lease, or Owner's designee shall be
relied upon or construed as being a determination that such are in compliance with the
Requirements, or, in the case of construction plans, are structurally sufficient, prudent or in
compliance with the Requirements.
Section 15.2. Definition.
"Requirements" means:
(i) any and all laws, rules, regulations, constitutions, orders, ordinances,
charters, statutes, codes, executive orders and requirements of all Governmental Authorities
having jurisdiction over a Person and/or the Premises or any street, road, avenue or sidewalk
comprising a part of, or lying in front of, the Premises or any vault in, or under the Premises
(including, without limitation, any of the foregoing relating to handicapped access or parking, the
Building Code of the City and the laws, rules, regulations, orders, ordinances, statutes, codes and
requirements of any applicable Fire Rating Bureau or other body exercising similar functions);
(ii) the temporary and/or permanent certificate or certificates of occupancy
issued for the Premises as then in force; and
(iii) any and all provisions and requirements of any property, casualty or other
insurance policy required to be carried by Tenant under this Lease.
Section 15.3. Owner's ObIi~ation to Comply. In connection with the performance of
Owner's obligations hereunder, Owner shall comply promptly with all Requirements.
ARTICLE 16.
HOTEL MANAGER AND MANAGEMENT AGREEMENT
Section 16.1. Mana~ement A~reement.
(a) Tenant shall cause the Hotel to be operated and managed exclusively by the Hotel
Manager in accordance with the terms and conditions of this Lease, including, without limitation,
Article 6 and this Article, pursuant to a written Management Agreement providing for services,
and containing terms and conditions, reasonable and customary for the operation of a first class
convention center hotel in accordance with the terms of this Lease. The services to be performed
by Hotel Manager shall include, without limitation, the following:
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(i) Hotel Manager will provide technical services to assist Tenant in the
construction, furnishing and equipping of the Hotel. These services will include, among other
things, (l) review and approval of architectural plans, plans for-design and decor and plans for
furnishing, all of which will be subject to Hotel Manager's approval to ensure that the Hotel will
meet the standards set forth in this Lease; (2) develop criteria for furniture and equipment and
assistance in obtaining sources of supply; and (3) assistance in coordinating purchases and
installation of furnishings and equipment.
(ii) Hotel Manager will provide required services to Tenant to prepare the Hotel
for opening, including, without limitation, (1) recruiting, training and employing Hotel staff; (2)
pre-opening marketing and advertising; (3) negotiating contracts for stores, concessions, leases,
supplies and similar items; (4) assistance in obtaining necessary licenses and permits; and (5)
assistance in purchasing initial operating supplies.
(b) Tenant shall provide in the Management Agreement that Hotel Manager shall
operate and manage the Hotel as part of the Crowne Plaza Resorts Hotel Chain and in accordance
with the provisions of this Lease, including without limitation, Article 6 hereof. Hotel Manager
shall have exclusive authority to operate the Hotel in the name of, and for the account of, Tenant.
(c) Tenant hereby agrees to incorporate the covenants and agreements contained in this
Article in the Management Agreement as covenants and agreements of the Hotel Manager.
(d) The Hotel Manager's interest in the Management Agreement shall be subject and
subordinate to (i) the Owner's Interest in the Premises; and (ii) the terms and conditions of this
Lease. As between Owner and Tenant, in the event of any conflict between the terms of this
Lease and the terms of the Management Agreement, the terms of this Lease shall govern. Tenant
shall remain responsible for performing all of its obligations hereunder notwithstanding the fact
that the Hotel is being managed by the Hotel Manager.
Section 16.2. Term of Mana~ement A~reement.
As long as Holiday Hospitality Corporation, a Delaware corporation, or its Affiliate,
maintains ownership of any Equity Interest in Tenant, the initial Management Agreement shall
provide for a term of fifteen (15) years from the Hotel Opening Date (with appropriate
commencement of pre-opening services prior to the Hotel Opening Date) with subsequent five (5)
year renewal periods unless canceled as provided in the next sentence of this Section 16.2. In the
event that Holiday Hospitality Corporation, a Delaware corporation, or its Affiliate fails to
maintain, for any reason whatsoever, ownership of any Equity Interest in Tenant , then in that
event the initial Management Agreement shall provide for a term of fifteen (15) years from the
Hotel Opening Date (with appropriate commencement of pre-opening services prior to the Hotel
Opening Date) with subsequent one (1) year renewal periods unless canceled upon Notice given
no later than ninety (90) days prior to the end of anyone (l) year period by either Tenant or the
Hotel Manager; provided, however, the Management Agreement shall not be canceled, without
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Owner's approval, if (i) Owner has not been paid the full Purchase Price for Owner's Interest in
the Premises or (ii) the Lease is in Default. In the case of an Event of Default, Owner and/or the
Recognized Mortgagee can terminate the Management Agreement at no cost to Owner and/or the
Recognized Mortgagee and without liability to Owner and/or the Recognized Mortgagee;
provided, however, Owner does not have the right to terminate the Management Agreement until
such time as the Event of Default has continued beyond any cure period applicable to a
Recognized Mortgagee under this Lease; provided further, however, Owner and/or the
Recognized Mortgagee shall give Notice of such termination no later than ninety (90) days after
such Event of Default at which time the Management Agreement shall be terminated without
liability to Owner and/or the Recognized Mortgagee. Notwithstanding the foregoing, Tenant may
cancel the Management Agreement for cause or as may otherwise be provided in the Management
Agreement. Any subsequent Management Agreement shall be for a term not greater than the
balance of the term remaining under the prior Management Agreement.
Section 16.3. Transfer of Hotel Mana~er's Interest in the Mana~ement A~reement.
(a) Approval Ri~hts. Except for a Permitted Transfer, any (i) Management Transfer,
(ii) termination of the Management Agreement subject to the provisions of Section 16.2 or (Hi)
engagement of a new manager for the Hotel (a "Management Engagement") shall be subject to
the prior written approval of Owner.
(b) Forei~n Instrumentality. Tenant acknowledges that for so long as the Premises are
owned by the Agency, the City or any other instrumentality of the Agency or the City, Owner
may disapprove a Management Transfer to or a Management Engagement of, a foreign (Le., non-
United States) government or instrumentality thereof or Person controlled thereby (a "Foreign
Instrumentality"), and such disapproval shall be conclusively deemed reasonable for purposes
hereof. A Person shall be deemed to be "controlled by" a foreign government or instrumentality
if such government or instrumentality, directly or indirectly, directs or causes the direction of the
management and policies of such Person.
(c) Definitions.
(i) "Management Transfer" means any transaction or series of transactions,
by operation of law or otherwise, with the result that (1) Hotel Manager has conveyed a fifty
percent (50%) or greater ownership interest in the Management Agreement to a Person in which
Hotel Manager does not have a Controlling Interest or (2) a Controlling Interest in the Hotel
Manager has been transferred, directly or indirectly, to any Person who is not an Affiliate of
Hotel Manager.
(ii)
Transfer is made.
"Management Transferee" means a Person to which a Management
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(iii) "Permitted Transfer" means (1) a Management Transfer to a Permitted
Operator or a Person that is an Affiliate of a Permitted Operator or the Hotel Manager or (2) a
Management Engagement of a new operator that is a Permitted Operator or a Person that is an
Affiliate of a Permitted Operator or the Hotel Manager.
(d) Permitted Operator. The term "Permitted Operator" shall mean a Person that (i)
is not a Foreign Instrumentality (for so long as the Agency, the City or any instrumentality of the
Agency or the City is the Owner hereunder); and (ii) together with its Affiliates (l) has been
engaged in the operation or management of hotels for at least the five years prior to the date such
Person will become the Hotel Manager hereunder and has operated or managed for such five year
period at least three (3) first-class hotels which meet the Quality Standard set forth in Article 6
of this Lease, and (2) has a national marketing operation under a "national flag" or has entered
into an agreement pursuant to which the Hotel shall be operated as part of a Hotel Chain which
has a national marketing operation under a "national flag".
(e) Notice to Owner. Tenant shall, and shall cause the Hotel Manager to, notify
Owner of any Management Engagement, Permitted Transfer or Management Transfer at least
ninety (90) days prior to such occurrence or promptly after becoming aware of such occurrence,
if later. The notice required by this Section 16.3(e) shall contain the following information:
(i) the name and address of the new Hotel Manager or transferee;
(ii) the nature of such transaction and the percent interest to be conveyed;
(iii) in the case of a Management Engagement, a true and complete copy of the
. instrument effectuating such transaction; and
(iv) a copy of any new Management Agreement or any modifications to an
existing Management Agreement.
(f) Approvals. In any instance in which a Management Transfer or Management
Engagement requires Owner's consent, Tenant shall, at least sixty (60) days prior to such
Management Transfer or Management Engagement, submit to Owner a written request for
Owner's consent to such transaction, which request shall contain or be accompanied by the
following information:
(i) the name, address and a description of the nature and character of the
business operations of the proposed Management Transferee or new Hotel Manager;
(ii) disclosure of the ownership of the Controlling Interest of such proposed
Management Transferee or new Hotel Manager (unless the Person that owns such Controlling
Interest is a Public Company;
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(iii) the principal terms and conditions of the proposed transaction;
(iv) a proposed form of the instrument effectuating such transaction;
(v) a copy of the proposed Management Agreement or any modifications to the
then existing Management Agreement; and
(vi) such other additional information as Owner shall reasonably request, which
information may include information regarding ownership, banking and financial matters, in
connection with its evaluation of such transaction to the extent reasonably available to Tenant,
provided Owner shall make such request within ten (10) business days after receipt of Tenant's
request for consent.
(g) Owner's Approval. Owner shall approve or disapprove any transaction proposed
pursuant to Section 16.3(1) in accordance with Article 26 hereof within ten (10) business days
after receipt of Tenant's request for consent or Owner's receipt of such additional information.
Notwithstanding the foregoing, if any change in circumstances prior to the closing of the proposed
Management Transfer or Management Engagement renders the information provided in this
Section materially incomplete or materially incorrect, any consent previously given by Owner
shall be deemed null and void and Tenant shall notify Owner of the change. Upon receipt cf such
notice, Owner shall thereupon have ten (10) business days to notify Tenant whether Owner's
consent to such changed Management Transfer or Management Engagement is given or denied.
(h) Transfer Instruments. Tenant shall deliver to Owner, or shall cause to be delivered
to Owner, within ten (10) business days after the execution thereof, a true and correct copy of the
instrument of transfer or engagement and a true and correct copy of (i) in the case of a
Management Transfer, the instrument of assumption by the assignee or transferee of Hotel
Manager's obligations under the Management Agreement accruing from and after the date of such
assignment or transfer and any modifications to the Management Agreement and (ii) in the case
of a Management Engagement, the new Management Agreement.
- .' . (i) . Invalidity of Transactions. Any Management Engagement or Management Transfer
which is not a Permitted Transfer and is (i) entered into without Owner's consent as and if
required in this Article or (ii) sought to be entered into without the execution, and delivery to
Owner within ten (l0) business days thereafter, of the instrument of transfer or engagement, if
applicable (unless such Management Transfer or Management Engagement is effected by operation
of law, in which case no instrument shall be required), shall have no validity and shall be null and
void and without effect until such time as such consent (if required) is obtained and/or the
applicable instrument is received. If Hotel Manager enters into any such transaction without
compliance with the terms of this Lease, Tenant shall diligently pursue its remedies against Hotel
Manager.
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Section 16.4. Owner's Ri~hts and Remedies.
(a) Tenant will (i) perform or cause to be performed Tenant's material obligations
under the Management Agreement, (ii) enforce the performance by Hotel Manager of all of Hotel
Manager's material obligations under the Management Agreement, (iii) give Owner prompt
written notice and a copy of any notice of default, event of default, termination or cancellation
sent or received by Tenant and (iv) promptly deliver to Owner executed copies of any amendment
or modification of the Management Agreement, or if applicable, any new Management
Agreement.
(b) Tenant shall cause Hotel Manager (and any new Hotel Manager, prior to the
engagement of any such Hotel Manager) to enter into an attornment agreement with Owner and
Tenant providing as follows: (i) Hotel Manager will give Owner prompt written notice and a
copy of any notice of default, event of default, termination or cancellation sent or received by
Hotel Manager, (ii) Hotel Manager will promptly deliver to Owner executed copies of any
amendment or modification of the Management Agreement, or if applicable, any new Management
Agreement, (iii) Hotel Manager will not assert any right it might have to terminate the
Management Agreement or performance of its services thereunder as the result of a default by
Tenant without giving written notice thereof to Owner, specifying the claimed default, and
notwithstanding the occurrence of any such default, Hotel Manager shall take no action to rescind
or terminate the Management Agreement and shall, at the request of Owner, continue performance
of its obligations thereunder, in accordance with the terms thereof, provided that the default shall
be cured in accordance with the terms hereof, and Hotel Manager shall be paid for its services in
accordance with the fee schedules set forth in the Management Agreement; in furtherance of the
foregoing, Hotel Manager shall afford Owner an opportunity to cure defaults under the
Management Agreement, which rights shall be coincident and coterminous with the right of
Tenant to effect such cure, except that Owner shall have an additional sixty (60) day period, after
the expiration of the period in which Tenant is required to effect such cure, to effect the same (and
performance by Owner shall be accepted by Hotel Manager as though the same had been
performed by Tenant), and there shall be no default deemed to exist under the Management
Agreement unless such cure shall not have been completed within such period, (iv) in the event
Owner shall terminate Tenant's leasehold interest in the Premises or shall otherwise succeed to
the rights of Tenant and no New Tenant's Documents are delivered, the Management Agreement
shall, at Owner's option, exercisable by written notice to Hotel Manager within fifteen (15)
business days after such termination or other succession, remain in full force and effect, and Hotel
Manager shall continue to perform its services thereunder for the benefit of Owner, provided,
however, that (x) if Owner fails to timely exercise such right, Owner shall have no right to cause
Hotel Manager to continue performance as described herein, and (y) if Owner timely exercises
such right, then the Management Agreement shall be deemed to have been amended in the
following respects (and, at the request of Owner, the parties shall enter into a modification of the
Management Agreement to evidence such amendments):
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(l) There shall be no payment by Owner of any administration fee, termination
fee or any other fee or charge under the Management Agreement in connection with termination
of Tenant's leasehold interest or Owner's succession to the rights of Tenant under the
Management Agreement;
(2) The term of the Management Agreement shall immediately convert to a
year-to-year term and Owner shall have the right to terminate the Management Agreement at the
beginning of each successive year, with or without cause, and without payment of any
administration fee, termination fee, or any other fee or charge, provided that in the event of a
termination Owner shall give Hotel Manager not less than ninety (90) days prior written notice
of such termination;
(3)
Manager shall:
Upon termination or expiration of the Management Agreement, Hotel
(A) to the extent of Hotel Manager's interest and to the extent permitted
by Requirements, surrender and assign to Owner or its designee any and all licenses, permits
and/or governmental authorizations required for the operation of the Hotel;
(B) deliver to Owner any and all of Owner's properties within the
possession of Hotel Manager, including, without limitation, all keys, locks and safe combinations,
reservation lists, ledgers, bank statements for the Hotel accounts, books and records, insurance
policies, bonds and other documents, agreements, leases and licenses required for the operation
of the Hotel; and
(C) remit to Owner the balance of any Hotel accounts, after computation
and disbursement to Hotel Manager of all accrued and unpaid management fees and reimbursable
costs;
(4) Hotel Manager shall not be permitted to undertake any actions not provided
for in the then-effective annual plan of the Hotel (other than in connection with the day-to-day
operations of the Hotel) without the prior written consent of Owner; and
(5) Owner shall not incur any liability to Hotel Manager under the Management
Agreement except to the extent Owner has liability under the Lease;
(v) if the Management Agreement shall terminate for any reason, or be rejected or disaffirmed
pursuant to any bankruptcy law or any other law affecting creditors' rights, Hotel Manager shall,
if notice has not theretofore been provided to Owner, immediately notify Owner of such
termination, rejection or disaffirmance, and Owner shall have the right, exercisable by notice to
Hotel Manager within sixty (60) days after Owner obtains possession of the Hotel, to enter into
a new Management Agreement for the management of the Hotel on the same terms and conditions
as are contained in the Management Agreement (as amended above) for the remainder of the term
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of the Management Agreement; the execution of such new Management Agreement shall be
subject to the curing by Owner of any outstanding defaults under the Management Agreement
which are reasonably susceptible to cure by Owner; in connection with any prospective sale of
Owner's Interest in the Premises and at the request of Owner, Hotel Manager will execute and
deliver to the party so requesting an estoppel certificate indicating that the Management
Agreement is unmodified (or, if modified, setting forth the modifications) and in full force and
effect, and that to the knowledge of Hotel Manager there is no default (or specifying any default
of which Hotel Manager has knowledge or notice), the date of expiration of the term of the
Management Agreement, and the date through which Hotel Manager has received payment under
the Management Agreement, it being understood that any such certificate may be relied upon by
Owner; and, Owner will give Hotel Manager a copy of any default notice under the Lease and
afford Hotel Manager the right to cure the same (provided such cure is effectuated within the time
period provided herein for Tenant to cure the same).
(c) The rights of Owner set forth in this Section 16.4 shall, to the extent in conflict
with the rights of any Recognized Mortgage, be subject to the rights of such Recognized
Mortgagee provided such Recognized Mortgagee is in the process of, and is diligently, exercising
its rights under the applicable Recognized Mortgage.
Section 16.5. FF&E Reserve.
(a) Tenant shall cause (and the Management Agreement shall so provide) the Hotel
Manager to establish, in Tenant's name and for the benefit of Tenant, a separate interest-bearing
account (the "FF&E Reserve Account") solely for the purpose of funding the renewal,
replacement and additions of FF&E and Building Equipment required for the operation of the
Hotel in accordance with the terms of this Lease from and after the Hotel Opening Date. To fund
the FF&E Reserve Account, Tenant shall deposit, or shall cause the Hotel Manager to deposit,
within thirty (30) days after the end of each month during the term of this Lease from and after
the Hotel Opening Date for such month an amount equal to the percentage of Hotel Revenues for
such month as set forth in the following schedule:
_Lease Year
Percenta~e of Hotel Revenues
1
2
3 and thereafter
3%
4%
5%
To the extent Net Cash Flow After Debt Service (without regard to the required FF&E Reserve
Account payments) for any month is insufficient to allow for the FF&E Reserve Account deposit
required above, Tenant shall, within sixty (60) days after the end of each Lease Year, deposit into
the FF&E Reserve Account an amount sufficient to cause the FF&E Reserve Account to be fully
funded as so required above. Owner, in its sole and absolute discretion, for any reason and for
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no reason whatsoever, may consider a reduction of the Percentages of Hotel Revenues as set forth
in this Section 16.5(a) above any time after the Hotel Opening Date.
.'
(b) Tenant shall cause the Hotel Manager to make expenditures from the FF&E
Reserve Account for the purposes permitted hereunder as is necessary to maintain the Hotel in
accordance with this Lease (including, without limitation, Section 6.4 hereof).
(c) Tenant hereby grants to Owner a security interest in the FF&E Reserve Account,
and all profits and proceeds thereof, in order to secure Tenant's obligations under this Section
16.5, which security interest in such FF&E Reserve Account shall be automatically fully subject
and subordinate only to the rights of the Recognized Mortgagee and any purchase money lender
with regard to FF&E. Tenant hereby agrees not to grant a security interest in the FF&E Reserve
Account to any Person other than a Recognized Mortgagee, Owner or a purchase money lender.
Owner shall execute and deliver all such instruments as any Recognized Mortgagee or purchase
money lender shall reasonably require in order to confirm Owner's subordination of its security
interest as aforesaid.
(d) Fundin~ of FF&E Reserve Account durin~ Foreclosure or while Reco~nized
Mort~a~ee or its Desi~nee is Tenant. During the period that (A) a Recognized Mortgagee is
pursuing a foreclosure against Tenant or (B) a Recognized Mortgagee or its Designee is the
Tenant under this Lease, such Recognized Mortgagee or its Designee shall have the option of (1)
not funding the FF&E Reserve Account; provided, however, such relief from funding shall not
be deemed to affect in any way the operational and maintenance standards imposed upon the Hotel
pursuant to this Lease (including, without limitation, Section 6.4 hereof); provided further,
however, such relief from funding, in any event, shall end upon the earlier to occur of (x) four
(4) years after the date of the earlier to occur of (i) the filing of such foreclosure, or (ii) the date
upon which such Recognized Mortgagee or its Designee becomes the Tenant under this Lease or
(y) the date a Foreclosure Transferee other than a Recognized Mortgagee or its Designee becomes
the Tenant under this Lease or (2) funding the FF&E Reserve Account as provided in this Section
16.5, in which event the Percentage of Hotel Revenue as set forth in Section 16.5(a) shall be five
percent (5 %) each and every year during such period.
Section 16.6. Mana~ement Personnel.
Tenant shall cause (and the Management Agreement shall so provide) that, at all times
during the Term, at least twenty-five percent (25 %) of the salaried management and supervisory
staff of the Hotel shall be African-American Persons; provided, however, this Section 16.6 shall
not apply (i) during the pendency of a foreclosure by a Recognized Mortgagee or (ii) to a
Foreclosure Transferee.
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Section 16.7. Hotel Mana~er Fundin~ Operatin~ Deficits.
(a) Fundin~. During the initial term and any extensions thereto of the Management
Agreement, Tenant shall cause the Hotel Manager to fund Operating Deficits of the Hotel up to
an aggregate amount of not less than One Million Dollars ($1,000,000) (the "Funded Deficit")
or Tenant shall otherwise cause the Operating Deficit to be so funded; provided, however, if the
initial Management Agreement is terminated prior to the expiration of its initial term, the
successor agreement shall provide that the provisions of this Section 16.7 will remain in effect
until the expiration of five (5) years from the Hotel Opening Date, unless waived by Owner.
(b) Definition of Operatin~ Deficit. The term "Operating Deficit" shall mean that
sum of money by which total Operating Expenses plus Debt Service and Rental exceed Hotel
Revenue.
(c) Maximum Annual Amount. The amount of the Operating Deficits funded by the
Hotel Manager in anyone (l) year shall be no more than Two Hundred Thousand Dollars
($200,000) provided, however, that that amount of Operating Deficits that exceeds Two Hundred
Thousand Dollars ($200,000); in anyone (l) year shall be carried forward to the next ensuing
year and included in the Operating Deficits for that year to be funded by the Hotel Manager.
(d) Repayment of Operatin~ Deficits by Tenant. To the extent of any repayments by
Tenant to Hotel Manager of Operating Deficits funded by the Hotel Manager pursuant to this
Section 16.7, (1) such repayments may be made only if funds are available after payment of all
Rental then due and payable and (2) the interest rate attributable to such repayment shall not
exceed ten (10) percent per annum; provided, however, this provision (i) shall terminate upon the
occurrence of a Foreclosure Transfer, and (ii) shall not be included in any New Tenant's
Documents.
(e) Proviso. As long as Holiday Hospitality Corporation, a Delaware corporation, or its
Affiliate, maintains ownership of any Equity Interest in Tenant, this Section 16.7 shall not be
applicable to the Hotel Manager; provided, however, that the definitions in this Section 16.7 shall
remain applicable, as necessary, in this Lease.
Section 16.8. One Hotel Mana~er.
Tenant shall cause (and the Management Agreement shall so provide) that, at all times
during the Term, the RP Improvements and the Shorecrest Improvements shall be managed and
operated exclusively by one and the same hotel manager; i.e., the Hotel Manager.
Section 16.9. Hotel Mana~er as Equity Owner of Tenant.
Holiday Hospitality Corporation, a Delaware corporation, the present Hotel Manager, is
one of the equity owners of Tenant. If Holiday Hospitality Corporation, as Hotel Manager,
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defaults under any of the provisions in the Management Agreement which are required under this
Lease, then, in that event, Tenant may replace Holiday Hospitality Corporation with another entity
as an equity owner of Tenant provided that the Substantial Controlling Interest in Tenant at all
times consists of African-American Persons and provided further, that all other provisions in this
Lease relating to Management Transfers have been satisfied.
ARTICLE 17.
DISCHARGE OF LIENS
Section 17.1. Creation of Liens.
(a) Tenant shall not create, cause to be created, or suffer or permit to exist (i) any lien,
encumbrance or charge upon this Lease, the leasehold estate created hereby, the income therefrom
or the Premises or any part thereof or appurtenance thereto, which is not removed within the time
period required pursuant to Section 17.2, (ii) any lien, encumbrance or charge upon any assets
of, or funds appropriated to, Owner, or (iii) any other matter or thing whereby Owner's Interest
in the Premises or any part thereof or appurtenance thereto might be materially impaired.
Notwithstanding the above, Tenant shall have the right to execute Mortgages, Subleases and other
instruments (including, without limitation, equipment leases) as provided by, and in accordance
with, the provisions of this Lease, including, without limitation, any liens on FF&E.
(b) Owner shall not create, cause to be created, or suffer or permit to exist (i) any lien,
encumbrance or charge upon this Lease, the leasehold estate created hereby, the income therefrom
(except as otherwise set permitted in Article 2) or the Premises or any part thereof or
appurtenance thereto, which is not removed within the time period req~ired pursuant to Section
17.2, (ii) any lien, encumbrance or charge upon any assets of, or funds appropriated to, Tenant,
or (iii) any other matter or thing whereby Tenant's Interest in the Premises or any part thereof or
appurtenance thereto might be materially impaired.
Section 17.2. Dischar~e of Liens.
(a) If any mechanic's, laborer's, vendor's, materialman's or similar statutory lien
(including, without limitation, tax liens, provided the underlying tax is an obligation of Tenant
by law or by a provision of this Lease) is filed against the Premises or any part thereof, or if any
public improvement lien created, or caused or suffered to be created by Tenant shall be filed
against any assets of, or funds appropriated to, Tenant or Owner, Tenant shall, within thirty (30)
days after Tenant receives notice of the filing of such mechanic's, laborer's, vendor's,
materialman's or similar statutory lien or public improvement lien, cause it to be discharged of
record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise.
However, Tenant shall not be required to discharge any such lien if Tenant shall have (i) furnished
Owner with, at Tenant's option, a cash deposit, bond, letter of credit from an Institutional Lender
(in form reasonably satisfactory to Owner) or other security (such as a personal guaranty or title
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company indemnity) reasonably satisfactory to Owner, in an amount sufficient to pay the lien with
interest and penalties; and (ii) brought an appropriate proceeding to discharge such lien and is
prosecuting such proceeding with diligence and continuity; except that if, despite Tenant's efforts
to seek discharge of the lien, Owner reasonably believes that a court judgment or order
foreclosing such lien is about to be entered or granted and so notifies Tenant, Tenant shall, within
ten (10) days after notice to such effect from Owner (but not later than three (3) business days
prior to the entry or granting of such judgment or order of foreclosure), cause such lien to be
discharged of record or Owner may thereafter discharge the lien in accordance with Section 24.2
and look to the security furnished by Tenant for reimbursement of its cost in so doing.
Notwithstanding anything to the contrary contained in this Section 17.2(a), in the case of a public
improvement lien which provides for installment payments as a means of satisfying such lien,
Tenant shall be required only to pay, on a timely basis, all installments when due.
(b) Notwithstanding anything to the contrary contained in Section 17.2(a), if any
mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including, without
limitation, tax liens, provided the underlying tax is an obligation of Owner by law or by a
provision of this Lease) is filed against the Premises or any part thereof or Tenant's Interest in
the Premises or Owner's Interest in the Premises as a result of any action of Owner, its officers,
employees, representatives or agents, Owner shall, within thirty (30) days after Owner receives
notice of the filing of such mechanic's, laborer's, vendor's, materialman's or similar statutory
lien, cause it to be discharged of record by payment, deposit, bond, order of a court of competent
jurisdiction or otherwise. However, Owner shall not be required to discharge any such lien if
Owner shall have (i) furnished Tenant with, at Owner's option, a cash deposit, bond, letter of
credit from an Institutional Lender (in form reasonably satisfactory to Tenant) or other security
(such as a personal guaranty or title company indemnity) reasonably satisfactory to Tenant, in an
amount sufficient to pay the lien with interest and penalties and (ii) brought an appropriate
proceeding to discharge such lien and is prosecuting such proceeding with diligence and
continuity; except that if, despite Owner's efforts to seek discharge of the lien, Tenant reasonably
. believes that a court judgment or order foreclosing such lien is about to be entered or granted and
so notifies Owner, Owner shall, within ten (10) days of notice to such effect from Tenant (but not
later than three (3) business days prior to the entry or granting of such judgment or order of
foreclosure), eause such lien to be discharged of record or Tenant may thereafter discharge the
lien in accordance with Section 24.2 and look to the security furnished by Owner for
reimbursement of its cost in so doing.
Section 17.3. No Authority to Contract in Name of Owner.
Nothing contained in this Article shall be deemed or construed to constitute the consent
or request of Owner, express or implied, by implication or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of any labor or the furnishing of any
materials for any specific improvement of, alteration to, or repair of, the Premises or any part
thereof, nor as giving Tenant any right, power or authority to contract for, or permit the rendering
of, any services or the furnishing of materials that would give rise to the filing of any lien,
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mortgage or other encumbrance against Owner's Interest in the Premises or any part thereof or
against assets of Owner, or Owner's interest in any Rental. Notice is hereby given, and Tenant
shall cause all Construction Agreements to provide, that to the eKtent enforceable under Florida
law, Owner shall not be liable for any work performed or to be performed at the Premises or any
part thereof for Tenant or any Subtenant or for any materials furnished or to be furnished to the
Premises or any part thereof for any of the foregoing, and no mechanic's, laborer's, vendor's,
materialman's or other similar statutory lien for such work or materials shall attach to or affect
Owner's Interest in the Premises or any assets of Owner, or Owner's interest in any Rental. The
foregoing shall not require Tenant to request advance waivers of lien from contractors or
subcontractors.
ARTICLE 18.
REPRESENTATIONS
Section 18.1. No Brokers.
Each of Owner and Tenant represents to the other that it has not dealt with any broker,
finder or like entity in connection with this Lease or the transactions contemplated hereby, and
each party shall indemnify the other against any claim for brokerage commissions, fees or other
compensation by any Person alleging to have acted for or dealt with the indemnifying party in
connection with this Lease or the transactions contemplated hereby.
Section 18.2. No Other Representation.
Tenant accepts the Premises in existing condition and state of repair and Tenant confirms
that: except for the representation contained in Section 18.1 (and any other representation
expressly set forth in this Lease), (i) no representations, statements, or warranties, express or
implied, have been made by, or on behalf of, Owner with respect to the Premises or the
transactions contemplated by this Lease, the status of title thereto (except as set forth in Exhibit
2.1 attached hereto and incorporated by reference herein), the physical condition thereof
(including but-not limited to subsurface conditions), the leases and occupancies thereof or with
respect thereto, if any, the zoning, wetlands or other laws, regulations, rules and orders applicable
thereto or the use that may be made of the Premises, or the presence or absence of "hazardous
substances" (as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 USCA ~9601 et seq.) on or under the Premises, (ii) Tenant
has relied on no such representations, statements or warranties, and (iii) Owner shall not be liable
to Tenant, in any event whatsoever, to correct any latent or patent defects in the Premises.
Notwithstanding anything contained in this Section 18.2 to the contrary, the provisions of this
Section 18.2 do not modify, alter or diminish any of the provisions of Section 35.3.
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ARTICLE 19.
NO LIABILITY FOR INJURY OR DAMAGE, ETC.
Section 19.1. Liability of Owner or Tenant.
(a) Owner Not Liable for IrijUl:Y or Dama~e. Etc. The Owner Indemnified Parties shall
not be liable to any Tenant Indenlnified Party for, and Tenant shall indemnify and hold the Owner
Indemnified Parties harmless from and against, any loss, cost, liability, claim, damage, expense
(including, without limitation, reasonable attorneys' fees and disbursements), penalty or fine
incurred in connection with or arising from any injury (whether physical (including, without
limitation, death), economic or otherwise) to Tenant or to any other Person in, about or
concerning the Premises or any damage to, or loss (by theft or otherwise) of, any of Tenant's
property or of the property of any other Person in, about or concerning the Premises, irrespective
of the cause of injury, damage or loss (including, without limitation, the acts or negligence of any
tenant or occupant of the Premises or of any owners or occupants of adjacent or neighboring
property or caused by any Construction Work or by operations in construction of any private,
public or quasi-public work) or any latent or patent defects in the Premises, except to the extent
any of the foregoing is due to the gross negligence or willful misconduct of any Owner
Indemnified Party. The Owner Indemnified Parties shall not be liable, to the extent of insurance
proceeds paid by insurance carriers under Tenant's insurance policies, for any loss or damage to
any Person or property even if due to the gross negligence or willful misconduct of any Owner
Indemnified Party and, to that extent, Tenant relieves the Owner Indemnified Parties from such
liability. Without limiting the generality of the foregoing, except to the extent caused by the gross
negligence or willful misconduct of any of the Owner Indemnified Parties (and then only in such
Owner Indemnified Party's proprietary capacity as opposed to its governmental capacity), the
Owner Indemnified Parties shall not be liable for (a) any failure of water supply, gas or electric
current, (b) any injury or damage to person or property resulting from gasoline, oil, steam, gas,
electricity, or hurricane, tornado, act of God, act of war, enemy action, flood, wind or similar
storms or disturbances, water, rain or ice, or (c) leakage of gasoline or oil from pipes, appliances,
sewer or plumbing works, except as otherwise provided in Article 35.
(b) Zonin~ Chan~es. Owner hereby assigns to Tenant any and all rights of Owner, as
owner of the Land, under Requirements to execute objections or waivers of objections to
applications for variances or other exceptions or exemptions from zoning or other Requirements
by (i) the owner of the Loews Hotel Land or (ii) the owner of any other property with respect to
which, under applicable Requirements, the owner of the Land would have the right to object or
consent to variances or other exceptions or exemptions from zoning or other Requirements. Such
assignment shall in no way limit or otherwise restrict any other rights of the City or the Agency,
any instrumentalities of the Agency or the City, or any elected or appointed officials or employees
of the Agency or the City, in their respective governmental capacities, from taking or refraining
from taking any action or expressing any views and opinions in connection with such application.
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If Owner is required to join in such application by Requirements, Owner shall do so provided
Tenant pays all costs, including reasonable attorneys' fees, for same.
."
(c) Cooperation. In connection with the development of that certain land located
adjacent to the Land at 1601 Collins Avenue (the "Loews Hotel Land"), Owner (and the City,
if the City succeeds to the interests of the Agency as owner of the Loews Hotel Land), as owner
of the Loews Hotel Land, and Tenant hereby covenant and agree to work together to attempt to
minimize any materially negative effect of shadows on the Premises and/or the adjacent beach
caused by any proposed improvements to the Loews Hotel Land.
(d) Survival. The provisions of this Section shall survive the Expiration of the Term.
Section 19.2. Owner's Exculpation.
(a) Except as such liability may be eliminated or reduced by any constitutional, statutory,
common law or other protections afforded to public bodies or governments (for such time as
Owner is the City, the Agency or any instrumentality of the City or the Agency), including, but
not limited to, sovereign immunity statutes, the liability of Owner (including, without limitation,
with respect to any gross negligence or willful misconduct), or of any other Person who has at any
time acted as Owner (for such time as Owner is the City, the Agency or any instrumentality of
the City or the Agency) hereunder, for damages or otherwise, arising out of or in connection with
any breach of this Lease or any injury (whether physical (including death) economic or otherwise)
incurred in connection with this Lease or the Premises, shall be limited to Two Million Dollars
($2,000,000), adjusted for inflation, under this Lease and the Project Agreements (which may not
include all the parties hereto), in the aggregate. As used in the preceding sentence, the terms
"breach" and "injury" shall include all breaches and injuries arising out of the facts and
circumstances resulting in such breach or injury.
(b) Except for conversion, fraud or willful misconduct (and then only to the extent such
party acted in its proprietary capacity as opposed to its governmental capacity), none of the Owner
Indemnified Parties (except Owner as provided in Section 19.2(a)) shall have any liability
(personal or otherwise) hereunder, and except for Owner's Interest in the Premises (to the extent
permitted by applicable Requirements), no property or assets of the Owner Indemnified Parties
shall be subject to enforcement procedures for the satisfaction of Tenant's remedies hereunder or
any other liability of the Owner Indemnified Parties arising from or in connection with this Lease
or the Premises. Nothing contained herein shall be deemed a waiver or limitation of any equitable
remedies available to Tenant.
(c) Nothing contained in this Section or elsewhere in this Lease is in any way intended
to be a waiver of the limitation placed upon Owner's and the City's liability as set forth in
~768.28, Fla.Stat., or of any other constitutional, statutory, common law or other protections
afforded to public bodies or governments; provided, however, that the limitation set forth in this
Section 19.2 shall not be applicable to Owner's indemnity pursuant to Section 35.3(b).
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Its
Section 19.3. Notice of IJljury or Dama~e.
Tenant shall notify Owner within thirty (30) days of any occurrence at the Premises of
which Tenant has notice and which Tenant believes could give rise to a claim of One Hundred
Twenty-Five Thousand Dollars ($125,000) (adjusted for inflation) or more, whether or not any
claim has been made, complaint filed or suit commenced; however, Tenant's failure to so notify
Owner shall not constitute or result in a breach or default of any of the terms or conditions of this
Lease or result in a loss of any benefit or right granted to Tenant under this Lease.
Section 19.4. Tenant's Exculpation.
Except for (a) Tenant's liability for conversion, willful misconduct, or fraud, (b) liabilities
of Tenant arising under applicable Requirements when Owner is acting in or pursuant to its
governmental capacity, (c) Tenant's indemnity pursuant to Section 35.3(a), and (d) liability with
respect to Tenant's obligation to pay Rental that is past due but not yet paid, and except with
respect to any rights or remedies for non-monetary relief (including, without limitation, equitable
relief), the liability of Tenant under this Lease and with respect to the Premises for damages or
other monetary amounts shall be limited to Two Million Dollars ($2,000,000), adjusted for
inflation, under this Lease and the Project Agreements (which may not include all the parties
hereto), in the aggregate. Notwithstanding anything to the contrary in this Lease, Owner's right
to terminate this Lease and force Tenant to surrender title to and possession of the Improvements
to Owner shall not be subject to the limitation of liability contained in this Section 19.4. Other
than Tenant's Interest in the Premises, no other property or assets of Tenant shall be subject to
levy of execution or enforcement procedure for the satisfaction of Owner's remedies hereunder
or any other liability of Tenant arising from or in connection with this Lease or the Premises.
Without limiting the preceding sentence, if, and only if, a Tenant Indemnified Party other than
Tenant engages in conversion, fraud or willful misconduct, then such Tenant Indemnified Party
shall have personal liability hereunder and the property and assets of such Tenant Indemnified
Party shall be subject to levy of execution or enforcement procedure for the satisfaction of
Owner's remedies hereunder with respect to such conversion, fraud or willful misconduct.
Nothing contained herein shall be deemed a waiver or limitation of any equitable remedies
available to Owner.
Section 19.5. No Punitive Dama~es.
Neither Owner, the City nor Tenant shall be liable to the other for any punitive damages
in connection with this Lease and Owner, the City and Tenant agree not to seek punitive damages
from each other in connection with any lawsuit or other claim relating to this Lease.
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ARTICLE 20.
INDEMNIFICATION
Section 20.1. Indemnification of Owner.
Tenant shall indemnify and hold the Owner Indemnified Parties harmless from all loss,
cost, liability, claim, damage and expense (including, without limitation, reasonable attorneys'
fees and disbursements), penalties and fines, incurred in connection with claims by a Person
against an Owner Indemnified Party arising from (a) the use or occupancy or manner of use or
occupancy of the Premises by Tenant or any Person claiming through or under Tenant or (b) any
acts, omissions or negligence of Tenant, the Condominium Association, if any, Tenant, as a
Declarant, if any, under the Declaration of Condominium, if any, or any Person claiming through
or under Tenant, the Condominium Association, if any, Tenant, as such a Declarant, if any, or
of the contractors, agents, servants, employees, guests, invitees or licensees of Tenant, the
Condominium Association, if any, or Tenant, as such Declarant, if any, or any Person claiming
through or under such Person, in each case to the extent in, about or concerning the Premises
either during or after the expiration or termination of the Term, including, without limitation, any
acts, omissions or negligence in connection with any Construction Work or in the making or
performing of any repairs, restoration, alterations or improvements, except to the extent'any of
the foregoing is caused by the gross negligence or willful misconduct of any of the Owner
Indemnified Parties.
Section 20.2. Indemnification of Tenant.
(a) Owner shall indemnify and hold the Tenant Indemnified Parties harmless from all
loss, cost, liability, claim, damage and expense (including, without limitation, reasonable
attorneys' fees and disbursements), penalties and fines, incurred in connection with claims by a
Person against a Tenant Indemnified Party arising from any acts, omissions or negligence of
Owner (only in its proprietary capacity) or of the contractors, agents, servants or employees of
Owner acting in the proprietary capacity of such Owner, in each case to the extent in, about or
concernirtg the- Premises either during, or after the expiration of, the Term, except to the extent
any of the foregoing is caused by the gross negligence or willful misconduct of any of the Tenant
Indemnified Parties.
(b) In the event that any suit, action or proceeding is brought against Owner to compel
disclosure of any document described in Article 27 or Article 28, whether such suit, action or
proceeding is brought under Chapter 119, Florida Statutes or any other provision of law, Tenant
agrees to defend, indemnify and hold the Owner Indemnified Parties harmless from and against any
loss, claim, damage, expense (including, without limitation, reasonable attorneys' fees and
disbursements, including both in-house and outside counsel, and also including any attorneys' fees
and disbursements which any court of competent jurisdiction may award to the plaintiff in such suit,
action or proceeding, in all cases including any appeals thereof or post-judgment proceedings
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relating thereto), penalty or fine incurred in connection with or arising from such suit, action or
proceeding. Owner shall notify Tenant of any such public records request but failure to give such
notice shall not impose any liability on Owner. Notwithstanding the foregoing, in the event that
Owner receives a proper notice under Chapter 119, Florida Statutes, as amended, to produce a
document, and Owner has such document in its possession and Owner fails to produce such
document due to Owner's own negligence, malfeasance or misfeasance, Tenant shall not be liable
for any loss, claim, damage, penalty or fine as aforesaid.
Section 20.3. Contractual Liability.
(a) The obligations of Tenant under this Article or Article 19 shall not be affected in
any way by the absence or presence of insurance coverage (or any limitation thereon, including
any statutory limitations with respect to Workers' Compensation insurance), or by the failure or
refusal of any insurance carrier to perform an obligation on its part under insurance policies
affecting the Premises; provided, however, that if Owner actually receives any proceeds of
Tenant's insurance with respect to an obligation of Tenant under this Article, the amount thereof
shall be credited against, and applied to reduce, any amounts paid and/or payable hereunder by
Tenant with respect to such obligation.
(b) The obligations of Owner under this Article or Article 19 shall not be affected in
any way by the absence or presence of insurance coverage, or by the failure or refusal of any
insurance carrier to perform an obligation on its part under insurance policies affecting the
Premises; provided, however, that if Tenant actually receives any proceeds of Owner's insurance
with respect to an obligation of Owner under this Article, the amount thereof shall be credited
against, and applied to reduce, any amounts paid and/or payable hereunder by Owner with respect
to such obligation.
Section 20.4. Defense of Claim. Etc.
(a) If any claim, action or proceeding is made or brought against any Owner
Indemnified Party by reason of any event to which reference is made in Section 20.1 or Article
19;'then, upon demand by Owner or such Owner Indemnified Party, Tenant shall either resist,
defend or satisfy such claim, action or proceeding in such Owner Indemnified Party's name, by
the attorneys for, or approved by, Tenant's insurance carrier (if such claim, action or proceeding
is covered by insurance) or such other attorneys as Owner shall reasonably approve. The
foregoing notwithstanding, such Owner Indemnified Party may at its own expense engage its own
attorneys to defend such Owner Indemnified Party, or to assist such Owner Indemnified Party in
such Owner Indemnified Party's defense of such claim, action or proceeding, as the case may be.
(b) If any claim, action or proceeding is made or brought against any Tenant
Indemnified Party by reason of any event to which reference is made in Section 20.2 or Article
19, then, upon demand by Tenant or such Tenant Indemnified Party, Owner, or any successor
owner, as applicable, shall either resist, defend or satisfy such claim, action or proceeding in such
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Tenant Indemnified Party's name, by the attorneys for, or approved by, Owner's insurance carrier
(if such claim, action or proceeding is covered by insurance) or by such other attorneys as Tenant
shall reasonably approve. The foregoing notwithstanding, sucb. Tenant Indemnified Party may
at its own expense engage its own attorneys to defend such Tenant Indemnified Party, or to assist
such Tenant Indemnified Party in such Tenant Indemnified Party's defense of such claim, action
or proceeding, as the case may be.
Section 20.5. Notification and Payment.
(a) Each Owner Indemnified Party shall promptly notify Tenant of the imposition of,
incurrence by or assertion against such Owner Indemnified Party of any cost or expense as to
which Tenant has agreed to indemnify such Owner Indemnified Party pursuant to the provisions
of this Article 20. Tenant agrees to pay such Owner Indemnified Party, as Rental hereunder, all
amounts due under this Article 20 within sixty (60) days after receipt of the notice from such
Owner Indemnified Party.
(b) Each Tenant Indemnified Party shall promptly notify Owner of the imposition of,
incurrence by or assertion against such Tenant Indemnified Party of any cost or expense as to
which Owner has agreed to indemnify such Tenant Indemnified Party pursuant to the provisions
of this Article 20. Owner agrees to pay such Tenant Indemnified Party all amounts due under this
Article 20 within sixty (60) days after receipt of the notice from such Tenant Indemnified Party.
Section 20.6. Survival.
The provisions of this Article shall survive the Expiration of the Term.
ARTICLE 21.
AGENCY IMPROVEMENTS
Section 21.1. Garal:e.
Subject to Unavoidable Delays, Owner shall, at Owner's expense, cause the construction
of the Garage in accordance with the "Development Drawings" and "Construction Plans" (as such
terms are defined in the Garage Development Agreement) provided for pursuant to that certain
Garage Development Agreement (the "Garage Development Agreement") dated September 20,
1996, between Owner and St. Moritz Hotel Corp., a Florida corporation, by the Hotel Opening
Date, notwithstanding any termination of the Garage Development Agreement.
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Section 21.2. Construction of Roadway Extension.
(a) Subject to Unavoidable Delays, the City, at the City's expense, shall construct, or
cause the construction of, the Roadway Extension by the Hotel Opening Date.
(b) "Roadway Extension" means the extension of 16th Street from Washington
Avenue to Collins Avenue.
Section 21.3. Cooperation.
Owner and Tenant shall cooperate with each other in the scheduling and construction of
the foregoing improvements described in this Article.
ARTICLE 22.
OWNER'S SECURITY INTEREST
IN BUILDING EQUIPMENT AND FF &E
Solely for the purpose of securing Tenant's obligations to deliver to Owner the
Improvements upon Expiration of the Term, Tenant hereby grants to Owner a security interest
in all of the Building Equipment and FF&E now or hereafter located on the Premises and owned
by Tenant, and in all products and proceeds thereof; provided, however, that Owner's security
interest shall be automatically fully subordinate and subject to any purchase money financing
permitted hereunder and any Recognized Mortgagee I s security interest in the Building Equipment
and FF&E. Upon the Expiration of the Term, Owner shall be entitled to all of the rights,
remedies, powers and privileges available to a secured party under (and subject to the provisions
of) the Uniform Commercial Code enacted by the State of Florida. Tenant shall execute and
deliver all such instruments and take all such action as Owner, from time to time, may reasonably
request in order to obtain the full benefits of the security interest described in this Section and of
the rights and powers herein created and to maintain and perfect the security interest granted
above. To the extent permitted by Requirements, Tenant irrevocably authorizes Owner to file
fInancing statements and continuation statements with respect to the foregoing collateral without
the signature of Tenant. Owner shall execute and deliver all such instruments as any Recognized
Mortgagee or permitted purchase money lender shall reasonably require in order to confirm
Owner's subordination of its security interest as aforesaid. Subject to Section 14.2(a), Tenant
may, during the Term, remove, replace and otherwise deal with the Building Equipment and
FF&E in the ordinary course of the operation of the Hotel. To the extent this Lease allows the
non-payment of Back Rent or current Rental, in whole or in part, Owner shall not enforce its
statutory landlord's lien for rent or the lien granted in this Article 22 for the period of time during
which such rent is not required to be paid by a Recognized Mortgagee.
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ARTICLE 23.
[RESERVED]'
ARTICLE 24.
RIGHT TO PERFORM THE OTHER PARTY'S COVENANTS
Section 24.1. Right to Perform Other Party's Obligations.
(a) If a Default shall occur and be continuing beyond any applicable grace period,
Owner may, but shall be under no obligation to, perform the obligation of Tenant the breach of
which gave rise to such Default, without waiving or releasing Tenant from any of its obligations
contained herein, provided that Owner shall exercise such right only in the event of a bona fide
emergency or after five (5) business days notice, and Tenant hereby grants Owner access to the
Premises in order to perform any such obligation.
(b) If a default by Owner under this Lease shall occur and be continuing beyond any
applicable grace period, Tenant may, but shall be under no obligation to, perform the obligations
of Owner (other than those described in Article 21 hereof and those which are governmental as
opposed to proprietary obligations) the breach of which gave rise to such default or event of
default, without waiving or releasing Owner from any of its obligations contained herein, provided
that Tenant shall exercise such right only in the event of a bona fide emergency or after five (5)
business days notice to Owner or the City, as applicable.
Section 24.2. Discharge of Liens.
(a) If Tenant fails to cause any mechanic's, laborer's, vendor's, materialman's or
similar statutory lien (including, without limitation, tax liens, providing the underlying tax is an
obligation of Tenant by law or by a provision of this Lease) to be discharged of record in
accordance with the provisions of Article 17, Owner may, but shall not be obligated to, discharge
such lien of record either by paying the amount claimed to be due or by procuring the discharge
of such lien by deposit or by bonding proceedings.
(b) If Owner fails to cause any mechanic's, laborer's, vendor's, materialman's or
similar statutory lien (including, without limitation, tax liens, providing the underlying tax is an
obligation of Owner by law or by a provision of this Lease) to be discharged of record in
accordance with the provisions of Article 17, Tenant may, but shall not be obligated to, discharge
such lien of record either by paying the amount claimed to be due or by procuring the discharge
of such lien by deposit or by bonding proceedings. If Tenant's Interest in the Premises (or any
portion thereof) is threatened or a material interest of Tenant is impaired, Tenant may also, if
Owner has not done so (or bonded such lien), compel the prosecution of an action for the
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foreclosure of such lien by the lienor and the payment of the amount of the judgment in favor of
the lienor with interest, costs and allowances.
."
Section 24.3. Reimbursement for Amounts Paid Pursuant to this Article.
(a) Any amount paid by Owner in performing Tenant's obligations as provided in this
Article, including, without limitation, all costs and expenses incurred by Owner in connection
therewith, shall constitute Rental hereunder and shall be reimbursed to Owner within thirty (30)
days of Owner's demand, together with a late charge on amounts actually paid by Owner,
calculated at the Late Charge Rate from the date of notice of any such payment by Owner to the
date on which payment of such amounts is received by Owner.
(b) Any amount paid by Tenant in performing Owner's obligations as provided in this
Article, including, without limitation, all costs and expenses incurred by Tenant in connection
therewith, shall be reimbursed to Tenant within thirty (30) days of Tenant's demand, together with
a late charge on amounts actually paid by Tenant, calculated at the Late Charge Rate from the date
of notice of any such payment by Tenant to the date on which payment of such amounts is
received by Tenant.
Section 24.4. Waiver. Release and Assumption of Obli~ations.
(a) Owner's payment or performance pursuant to the provisions of this Article shall
not be, nor be deemed to constitute, Owner's assumption of Tenant's obligations to payor
perform any of Tenant's past, present or future obligations hereunder.
(b) Tenant's payment or performance pursuant to the provisions of this Article shall
not be, nor be deemed to constitute, Tenant's assumption of Owner's obligations to payor
perform any of Owner's past, present or future obligations hereunder.
ARTICLE 25.
EVENTS OF DEFAULT, CONDITIONAL
LIMITATIONS, REMEDIES, ETC.
Section 25.1. Definition.
Each of the following events shall be an "Event of Default" hereunder:
(a) if Tenant fails to make any payment (or any part thereof) of Rental due hereunder
and such failure continues for a period of thirty (30) days after notice is given by Owner that the
same is past due;
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(b) if Tenant shall default in the observance or performance of any term, covenant or
condition of this Lease on Tenant's part to be observed or performed (other than the covenants
for the payment of Rental or as expressly set forth below) and Tenant shaU fail to remedy such
Default within thirty (30) days after notice by Owner of such Default (the "Default Notice"), or
if such a Default is of such a nature that it cannot reasonably be remedied within thirty (30) days
(but is otherwise susceptible to cure), Tenant shall not (i) within thirty (30) days after the giving
of such Default Notice, advise Owner of Tenant's intention to institute aU steps (and from time
to time, as reasonably requested by Owner, Tenant shall advise Owner of the steps being taken)
necessary to remedy such Default (which such steps shall be reasonably designed to effectuate the
cure of such Default in a professional manner), and (ii) thereafter diligently prosecute to
completion aU such steps necessary to remedy the same;
(c) if a default by Tenant under the Hotel Development Agreement and/or the Garage
Easement Agreement shall have occurred and be continuing beyond any applicable cure period,
including any cure period applicable to a Recognized Mortgagee;
(d) if a Quality Deficiency shall occur and Tenant shall not cure the same within the
applicable time periods provided for in Article 6;
(e) to the extent permitted by law, if Tenant admits, in writing, that it is generally
unable to pay its debts as such become due;
(f)
creditors;
to the extent permitted by law, if Tenant makes an assignment for the benefit of
(g) to the extent permitted by law, if Tenant files a voluntary petition under Title 11
of the United States Code, or if Tenant files a petition or an answer seeking, consenting to or
acquiescing in, any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future Federal bankruptcy code or any other
present or future applicable Federal, state or other bankruptcy or insolvency statute or law, or
seeks, consents to, acquiesces in or suffers the appointment of any trustee, receiver, custodian,
assignee, sequestrator, liquidator or other similar official of Tenant, of all or any substantial part
of its properties, or of all or any part of Tenant's Interest in the Premises, and the foregoing are
not stayed or dismissed within one hundred and fifty (l50) days after such filing or other action;
(h) to the extent permitted by law, if, within one hundred and fifty (l50) days after the
commencement of a proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the present or any future
Federal bankruptcy code or any other present or future applicable Federal, state or other
bankruptcy or insolvency statute or law, such proceeding has not been dismissed, or if, within one
hundred and eighty (180) days after the appointment, without the consent or acquiescence of
Tenant, of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar
official of Tenant, of aU or any substantial part of its properties, or of all or any part of Tenant's
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Interest in the Premises, such appointment has not been vacated or stayed on appeal or otherwise,
or if, within one hundred and eighty (l80) days after the expiration of any such stay, such
appointment has not been vacated;
(i) if a levy under execution or attachment in an aggregate amount of One Hundred
Twenty-Five Thousand Dollars ($125,000), adjusted for inflation, at anyone time, is made against
the Premises or any part thereof or rights appertaining thereto (except for a levy made in
connection with actions taken by Owner (other than solely as holder of Owner's Interest in the
Premises)), the income therefrom, this Lease or the leasehold estate created hereby and such
execution or attachment is not vacated or removed by court order, bonding or otherwise within
a period of sixty (60) days after Tenant becomes aware of such levy or attachment, subject to
Unavoidable Delays; or
(j) any event described in Section 35.7 which is not cured by Tenant as provided in
Section 35.7.
In the event of a Default which with the giving of notice to Tenant and the passage of time
would constitute an Event of Default, Owner's notice of such Default to Tenant shall state with
specificity the provision of this Lease under which the Default is claimed, the nature and character
of such Default, the facts giving rise to such Default, the date by which such Default must be
cured, and that the failure of Tenant to cure such Default by the date set forth in such notice will
result in Owner having the right to terminate this Lease.
Notwithstanding the foregoing, no Event of Default shall be deemed to have occurred until
such time as Owner shall have given Tenant notice of the occurrence of an Event of Default (an
"Event of Default Notice").
Section 25.2. Enforcement of Performance: Damages: and Termination.
If an Event of Default occurs and Owner chooses to pursue a remedy with respect to that
Event of Default, Owner shall elect to: (a) enforce performance or observance by Tenant of the
applicable provisions of this Lease; (b) recover damages for breach of this Lease; or (c) terminate
this Lease pursuant to Section 25.3(a). Owner's election of a remedy hereunder with respect to
an Event of Default shall not limit or otherwise affect Owner's right to elect any of the remedies
available to Owner hereunder with respect to any other Event of Default.
Section 25.3. Expiration and Termination of Lease.
(a) If an Event of Default occurs, provided Owner has elected the remedy of
termination, Owner may, within ten (10) Business Days after the date of entry by a court of a
final judgment that an Event of Default exists (but without Tenant waiving any rights it may have
to stay the termination pending appeal), give Tenant and any Recognized Mortgagee notice stating
that this Lease and the Term shall terminate on the date specified in such notice, which date shall
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not be less than ten (10) days after the giving of the notice, and this Lease and the Term and all
rights of Tenant under this Lease shall expire and terminate as if the date specified in the notice
were the Fixed Expiration Date, and Tenant shall quit and surrender Tenant's Interest in the
Premises and possession thereof forthwith. If such termination is stayed by order of any court
having jurisdiction over any case described in Sections 25.1(g) or (h) or by federal or state
statute, then, following the expiration of any such stay, or if the trustee appointed in any such
case, Tenant or Tenant as debtor-in-possession fails to assume Tenant's obligations under this
Lease within the period prescribed therefor by law or within thirty (30) days after entry of the
order for relief or as may be allowed by the court, Owner, to the extent permitted by law or by
leave of the court having jurisdiction over such case, shall have the right, at its election, to
terminate this Lease on five (5) days' notice to Tenant, Tenant as debtor-in-possession or the
trustee. Upon the expiration of the five (5) day period, this Lease shall expire and terminate and
Tenant, Tenant as debtor-in-possession and/or the trustee immediately shall quit and surrender
Tenant's Interest in the Premises and possession thereof forthwith.
(b) If this Lease is terminated as provided in Section 25.3(a), Owner may, without
notice, re-enter and repossess Tenant's Interest in the Premises (which may include, but not be
limited to, re-entering and repossessing the Premises) and may dispossess Tenant by summary
proceedings, writ of possession, proceedings in bankruptcy court or otherwise, subject to
applicable Requirements.
(c) If this Lease is terminated as provided in Section 25.3(a):
(i) Tenant shall pay to Owner all Rental payable under this Lease by Tenant
to Owner to the date upon which the Term shall have expired and come to an end and Tenant shall
surrender to Owner Tenant's Interest in the Premises (and possession thereof) in the manner
required by this Lease, and both parties shall be relieved of all further obligations hereunder,
except to the extent this. Lease expressly provides that an obligation hereunder shall survive the
Expiration of the Term; and
(ii) In no event shall Tenant be entitled to receive any credit or payment with
respect to the_value of the Land and Improvements, title to which shall automatically vest in
Owner upon such termination.
Section 25.4. Waiver of Ri~hts of Tenant and Owner.
To the extent not prohibited by law, Owner and Tenant hereby waive and release all rights
now or hereafter conferred by statute or otherwise that would have the effect of limiting or
modifying any of the provisions of this Article. Notwithstanding the foregoing, (i) neither party
shall be deemed to have waived the benefit of any automatic stay provisions under any present or
future bankruptcy code and (ii) Owner shall not be deemed to have waived or released any rights
conferred by any sovereign immunity conferred by statute or otherwise, as provi~ed in Section
19.2(c) hereof.
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Section 25.5. Receipt of Moneys after Notice or Termination.
No receipt of money by Owner from Tenant after the termination of this Lease, or after
the giving of any notice of the termination of this Lease, shall reinstate, continue or extend the
Term or affect any notice theretofore given to Tenant, or operate as a waiver of the right of
Owner to recover Tenant's Interest in the Premises (which may include, but not be limited to,
recovering possession of the Premises) by proper remedy. After the service of notice to terminate
this Lease or the commencement of any suit or summary proceedings or after a final order or
judgment for the possession of Tenant's Interest in the Premises (which may include, but not be
limited to, a judgement for possession of the Premises), Owner may demand, receive and collect
any moneys due or thereafter falling due without in any manner affecting the notice, proceeding,
order, suit or judgment, all such moneys collected being deemed payments on account of the use
and occupation of Tenant's Interest in the Premises (including, without limitation, the use and
occupation of the Premises) or, at the election of Owner, on account of Tenant's liability
hereunder.
Section 25.6. Strict Performance.
No failure by Owner or Tenant to insist upon strict performance of any covenant,
agreement, term or condition of this Lease or to exercise any right or remedy available to such
party by reason of the:: other party's default or an Event of Default, and no payment or acceptance
of full or partial Rental during the continuance (or with Owner's knowledge of the occurrence)
of any Default or Event of Default, shall constitute a waiver of any such Default or Event of
Default or of such covenant, agreement, term or condition or of any other covenant, agreement,
term or condition. Subject to Section 11.10, no covenant, agreement, term or condition of this
Lease to be performed or complied with by either party, and no default by either party, shall be
waived, altered or modified except by a written instrument executed by the other party. No waiver
of any Default or Event of Default shall affect or alter this Lease, but each and every covenant,
agreement, term and (;ondition of this Lease shall continue in full force and effect with respect to
any other then existing or subsequent Default. Payment by Tenant to Owner of any Rental shall
be without prejudice to, and shall not constitute a waiver of, any rights of Tenant against Owner
provided for under this Lease or at law or in equity. Tenant's compliance with any request or
demand made by Owner shall not be deemed a waiver of Tenant's right to contest the validity of
such request or demand.
Section 25.7. Ri~ht to Enjoin Defaults.
In the event of Tenant's Default or Event of Default, Owner shall be entitled to seek to
enjoin the Default or Event of Default and shall have the right to invoke any rights and remedies
allowed at law or in equity or by statute or otherwise, except to the extent Owner's remedies are
expressly limited by the terms hereof. In the event of any default by Owner of any term, Covenant
or condition under this Lease, Tenant shall be entitled to seek to enjoin the default and shall have
the right to invoke any rights and remedies allowed at law or in equity or by statute or otherwise,
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except to the extent Tenant's remedies are expressly limited by the terms hereof. Provided
however, in the event of any such default, Tenant shall be required to give Owner notice of such
default and Owner shall have thirty (30) days from receipt of such notice to effect a cure of such
default or if such default is not reasonably susceptible of being cured within such thirty (30) day
period, Owner shall have a reasonable time to effect a cure of such default so long as Owner is
diligently prosecuting such cure. Each right and remedy of Owner and Tenant provided for in
this Lease shall be cumulative and shall be in addition to every other right or remedy provided
for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise except
to the extent Owner's remedies and Tenant's remedies are expressly limited by the terms hereof,
and the exercise or beginning of the exercise by Owner or Tenant of anyone or more of the rights
or remedies provided for in this Lease or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by Owner or Tenant of
any or all other rights or remedies provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise, except to the extent Owner's remedies and Tenant's
remedies are expressly limited by the terms hereof.
Section 25.8. Remedies Under Bankruptcy and Insolvency Codes.
If an order for relief is entered or if any stay of proceeding or other act becomes effective
against Tenant or Tenant's Interest in the Premises or Owner or Owner's Interest in the Premises
as applicable, in any proceeding which is commenced by or against Tenant or Owner, as
applicable, under the present or any future Federal Bankruptcy Code or in a proceeding which is
commenced by or against Tenant or Owner, as applicable, seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any other present or
future applicable federal, state or other bankruptcy or insolvency statute or law, Owner or Tenant,
as applicable, shall be entitled to invoke any and all rights and remedies available to it under such
bankruptcy or insolvency code, statute or law or this Lease (except that Owner shall not be
allowed to accelerate Rental if any of the events stated in this Section 25.8 occur and except to
the extent Owner's remedies and Tenant's remedies are expressly limited by the terms hereof).
Notwithstanding anything in the foregoing to the contrary, Owner's maximum recovery in any
such proceeding shall be limited to the then outstanding balance of the Purchase Price and Back
Rent as of the-date of filing of such proceeding.
Section 25.9. Funds Held by Tenant.
From and after the date, if any, on which an Event of Default (including, without
limitation, any Event of Default that occurs during the course of the Construction Work for the
initial construction of the Hotel) has been deemed to have occurred and while such Event of
Default shall be continuing, Tenant shall not pay, disburse or distribute any rents, issues or profits
of the Premises, or portion thereof, the proceeds of any insurance policies covering or relating
to the Premises or any portion thereof, or any awards payable in connection with the
condemnation of the Premises or any portion thereof (except to the extent such insurance proceeds
or condemnation awards are required in connection with any Restoration to be performed pursuant
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to Article 8 or 9) or any undistributed proceeds from any sale or financing except to (i) creditors
which are not Affiliates, in payment of amounts then due and owing by Tenant to such creditors
with respect to work at the Premises, (ii) Affiliates, in payment of amounts then due and owing
by Tenant to such Affiliates for items and services provided to Tenant in connection with its
operations conducted at the Premises or any portion thereof, only to the extent such amounts do
not exceed that which is customarily and reasonably paid in arms-length transactions to Persons
who are not Affiliates for comparable items and services, and (iii) the holder of a Recognized
Mortgage, in payment of the principal amount of, and all unpaid and accrued interest then
outstanding under, such Recognized Mortgage and any other amounts payable pursuant to such
Recognized Mortgage and any instruments and documents related thereto.
Section 25.10.
Inspection.
Owner and its representatives shall have the right, upon twenty-four (24) hours prior notice
to Tenant, to enter upon the Premises (a) to inspect the operation, sanitation, safety, maintenance
and use of the same (but Owner shall not thereby assume any responsibility or liability for the
performance of Tenant's obligations hereunder, nor any liability arising from the improper
performance thereof) and (b) to conduct inspections for the purpose of determining whether a
Default or Event of Default has occurred, provided that Owner shall be accompanied by a
representative of Tenant (in areas of the Hotel other than areas readily available to the general
public), and provided further that such entry shall not unreasonably interfere with the operation
of the Premises. Tenant agrees to make a representative of Tenant available to accompany Owner
on any such inspection.
ARTICLE 26.
NOTICES, CONSENTS AND APPROVALS
Section 26.1. Service of Notices and Other Communications.
(a) In Writing. Whenever it is provided herein that notice, demand, request, consent,
approval or other communication shall or may be given to, or served upon, either of the parties
by the other (or any Recognized Mortgagee), or whenever either of the parties desires to give or
serve upon the other any notice, demand, request, consent, approval or other communication with
respect hereto or to the Premises, each such notice, demand, request, consent, approval or other
communication (referred to in this Section 26.1 as a "Notice") shall be in writing (whether or not
so indicated elsewhere in this Lease) and shall be effective for any purpose only if given or served
by certified or registered U.S. Mail, postage prepaid, return receipt requested, personal delivery
with a signed receipt or a recognized national courier service, addressed as follows:
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if to Tenant:
with a copy to:
if to Owner:
RDP Royal Palm Hotel Limited Partnership
c/o Peebles Atlantic Developmen(Corporation
Suite 2040
701 Brickell Avenue
Miami, Florida 33131
Attention: R. Donahue Peebles, President
RDP Royal Palm Hotel Limited Partnership
c/o Peebles Atlantic Development Corporation
2600 Virginia Avenue, N.W., Suite 606
Washington, DC 20037
Attention: S.P. Newell, Executive Vice-President
and to:
Holland & Knight LLP
Thirtieth Floor
701 Brickell Avenue
Miami, Florida 33131
Attention: Stuart K. Hoffman, Esq.
Miami Beach Redevelopment Agency
Executive Director
1700 Convention Center Drive
Miami Beach, Florida 33139
with a copy to:
Miami Beach Redevelopment Agency
General Counsel
1700 Convention Center Drive
Miami Beach, Florida 33139
and
City of Miami Beach
City Manager
1700 Convention Center Drive
Miami Beach, Florida 33139
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122
with a copy to:
City of Miami Beach
City Attorney
1700 Convention Center Drive
Miami Beach, Florida 33139
and with a copy to:
Bloom & Minsker
Suite 1100
800 Brickell A venue
Miami, Florida 33131
Attention: Joel N. Minsker, P.A.
Any such Notice may be given, in the manner provided in this Section 26.1, (x) on either party's
behalf by its attorneys designated by such party by notice hereunder, and (y) at Tenant's request,
on its behalf by any Recognized Mortgagee designated in such request.
(b) Effectiveness. Every Notice shall be effective on the date actually received, as
indicated on the receipt therefor or on the date delivery thereof is refused by the recipient thereof.
(c) References. All references in this Lease to the "date" of Notice shall mean the
effective date, as provided in the preceding subsection (b).
Section 26.2. Consents and Approvals.
(a) Effect of Grantin~ or Failure to Grant Approvals or Consents. All consents and
approvals which may be given under this Lease shall, as a condition of their effectiveness, be in
writing. The granting by a party of any consent to or approval of any act requiring consent or
approval"under the terms of this Lease, or the failure on the part of a party to object to any such
action taken without the required consent or approval, shall not be deemed a waiver by the party
whose consent was required of its right to require such consent or approval for any other act.
(b) Standard. All consents and approvals which may be given by a party under this
Lease shall not (whether or not so indicated elsewhere in this Lease) be unreasonably withheld
or conditioned by such party and shall be given or denied within the time period provided, and
if no such time period has been provided, within a reasonable time. Upon disapproval of any
request for a consent or approval, the disapproving party shall, together with notice of such
disapproval, submit to the requesting party a written statement setting forth with specificity its
reasons for such disapproval.
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(c) Deemed Approval.
(i) If a party entitled to grant or deny its consent or approval (the "Consenting
Party") within the specified time period shall fail to do so, then, except as otherwise provided in
Section 26.2(c)(ii) and (Hi), and provided that the request for consent or approval (and the
envelope in which such request is transmitted to the extent permitted by the carrier) bears the
legend set forth below in capital letters and in a type size not less than that provided below, the
matter for which such consent or approval is requested shall be deemed consented to or approved,
as the case may be:
"FAILURE TO RESPOND TO THIS REQUEST WITHIN THE TIME PERIOD
PROVIDED IN THE HOTEL LEASE AGREEMENT BETWEEN MIAMI BEACH
REDEVELOPMENT AGENCY AND RDP ROYAL PALM HOTEL LIMITED
COMPANY [NAME OF CURRENT TENANT] SHALL CONSTITUTE
AUTOMATIC APPROVAL OF THE MATTERS DESCRIBED HEREIN WITH
RESPECT TO SECTION [FILL IN APPLICABLE SECTION] OF SUCH HOTEL
LEASE AGREEMENT."
(ii) If the matter to which consent or approval is requested pertains to
ARTICLE 10 or ARTICLE 16, then such matter shall not be deemed consented to or approved
unless (i) the Consenting Party shall fail to timely respond to the other party's (the "Requesting
Party's") initial request, which request (and the envelope in which such request is transmitted to
the extent permitted by the carrier) shall bear the legend set forth above and (ii) the Requesting
Party shall thereafter send a second request to the Consenting Party which request (and the
envelope in which such request is transmitted to the extent permitted by the carrier) conspicuously
bears the legend set forth above, and Owner shall fail to timely respond to such second request.
(iii) Notwithstanding anything to the contrary contained in this Lease, including,
without limitation, Sections 26.2 (c)(i) and (ii) above, if the Agency, the City or any
instrumentality of the Agency or the City shall be the "Owner" hereunder and the matter (other
than a matter referred to in Section 26.2(c)(iv)) to be consented to or approved requires the
conSideration of the Agency's board of directors, the City Commission and/or the governing body
of such other instrumentality of the Agency or the City as applicable (whether pursuant to
Requirements or the written opinion of the City Attorney, the Agency I s General Counselor the
chief legal officer of such other instrumentality of the Agency or the City) then, provided Owner
gives Tenant notice of such requirement within the time period provided for such consent or
approval, such matter shall not be deemed approved or consented to unless the Owner shall fail
to respond to Tenant's request (or second request if the provisions of Section 26.2(c)(ii) are
applicable) by the date which is fifteen (l5) days after the first regular meeting of the Agency's
board of directors (and/or of the City Commission and/or such other instrumentality's governing
body, as applicable) which occurs no earlier than ten (10) days following the receipt of such
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1~4
request (or second request, as applicable); but in any event not later than sixty (60) days following
such request (or second request), as applicable.
(iv) Owner hereby agrees, for so long as the Agency, the City or any other
Governmental Authority shall be the "Owner" hereunder, that, subject to Requirements, the
Executive Director of the Agency, the City Manager or the chief operating officer of such other
Governmental Authority, as applicable, shall be authorized to grant consents or approvals on
behalf of the Agency, the City and/or other Governmental Authority as applicable, with respect
to the following Sections of this Lease: Article 7 and Sections 14.2(a), 14.6(a)(iii),
16.4(b)(iv)(4), 20.4, 32.2(b) and 32.3.
(v) The foregoing provisions of this Subsection shall not be construed to modify
or otherwise affect a party's right to litigate the failure of a party to act reasonably in granting or
denying a request for consent or to timely respond to a request for a consent, but such right to
litigate shall not serve to delay the time period within which a grant or denial of such request is
required hereunder.
(d) Remedy for Refusal to Grant Consent or Approval. If, pursuant to the terms of this
Lease, any consent or approval by Owner or Tenant is alleged to have been unreasonably
withheld, conditioned or delayed, then any dispute as to whether such consent or approval has
been unreasonably withheld, conditioned or delayed shall be settled by litigation. In the event
there shall be a final determination that the consent or approval was unreasonably withheld,
conditioned or delayed so that the consent or approval should have been granted, the consent or
approval shall be deemed granted and the Requesting Party shall be entitled to any and all
damages resulting therefrom, subject to the limitations provided in this Lease.
(e) No Fees. etc. Except as specifically provided herein, no fees or charges of any
kind or amount shall be required by either party hereto as a condition of the grant of any consent
or approval which may be required under this Lease (provided that the foregoing shall not be
deemed in any way to limit Owner acting in its governmental, as distinct from its proprietary,
capacity from charging governmental fees on a nondiscriminatory basis).
ARTICLE 27.
CERTIFICATES BY OWNER AND TENANT
Section 27.1. Certificates of Tenant.
(a) Tenant shall, within fifteen (15) days after request by Owner for reasonable
purposes, execute, acknowledge and deliver to Owner, or any other Person specified by Owner,
a written statement (which may be relied upon by such Person) (a) certifying (i) that this Lease
is unmodified and in full force and effect (or if there are modifications, that this Lease, as
modified, is in full force and effect and stating such modifications) (and, if so requested, that the
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125
annexed copy of this Lease is a true, correct and complete copy of this Lease), and (ii) the date
to which each item of Rental payable by Tenant hereunder has been paid, and (b) stating (i)
whether Tenant has given Owner written notice of any default, or: any event that, with the giving
of notice or the passage of time, or both, would constitute a default, by Owner in the performance
of any covenant, agreement, obligation or condition contained in this Lease, which default or
event has not been cured, and (ii) whether, to the actual knowledge of Tenant (but without
independent inquiry), Owner is in default in performance of any covenant, agreement, obligation
or condition contained in this Lease, and, if so, specifying in detail each such default.
(b) Tenant shall file with Owner at least annually, a certificate, signed by an authorized
officer or representative of Tenant, to the effect that since the date of the last certificate (or in the
case of the first such certificate, since the date of execution of this Lease) (I) no changes have been
made to the partnership agreement or other organic document under which Tenant is organized (the
"Tenant Document"), or, if changes shall have been made to the Tenant Document, a statement as
to the general nature of the changes and a notification to Owner that the amended or modified Tenant
Document is on file at the office of Tenant located in Dade County, Florida, and that it is available
for inspection by Owner, (2) the Substantial Controlling Interest in Tenant is owned by African-
American Persons, or if changes have been made in the ownership of Tenant, an explanation of the
changes, which shall include a description of the general and limited partners or shareholders, their
respective equity ownership percentages and whether or not they are African-American Persons
(such listing shall also include any assignee of any partner's partnership interest under the Tenant
Document even if such assignee has not been admitted as a substitute general or limited partner as
of the date of such certificate), and (3) the obligation of the partners of Tenant to fund operating
deficits (pursuant to Section 16.7(d) hereof), and the obligation of Tenant's partners to each other
related thereto under the Partnership Agreement have not been amended or modified in any way that
is materially adverse to Owner, and (4) as long as the general partner of Tenant is a corporation,
it remains a Florida corporation in good standing and the annual report of said corporation, required
to be filed with the Department of State of the State of Florida pursuant to Chapter 607 , Florida
Statutes, as amended (the "Annual Report"), and any fees required for the filing thereof, are not
delinquent; or, if not a Florida corporation, it is a corporation properly authorized to do business in
the State of Florida, and a statement to the effect that the Substantial Controlling Interest in said
general partner or any successor thereto is owned by African-American Persons. A copy of the latest
such Annual Report of the general partner of Tenant shall be attached to the aforesaid certificate.
Section 27.2. Certificate of Owner.
Owner shall, within fifteen (15) days after request by Tenant for reasonable purposes,
execute, acknowledge and deliver to Tenant, or such other Person specified by Tenant, a written
statement (which may be relied upon by such Person) (a) certifying (i) that this Lease is
unmodified and in full force and effect (or if there are modifications, that this Lease, as modified,
is in full force and effect and stating such modifications) (and, if so requested, that the annexed
copy of this Lease is a true, correct and complete copy of this Lease), and (ii) the date to which
each item of Rental payable by Tenant hereunder has been paid, and (b) stating (i) whether an
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1 ;.,;. f;
Event of Default has occurred or whether Owner has given Tenant notice of any event that, with
the giving of notice or the passage of time, or both, would constitute an Event of Default, which
Default or Event of Default has not been cured, and (ii) whether, to the actual knowledge of
Owner (but without independent inquiry), Tenant is in default in the performance of any covenant,
agreement, obligation or condition contained in this Lease, and, if so, specifying, in detail, each
such Default or Event of Default.
ARTICLE 28.
FINANCIAL REPORTS AND RECORDS
Section 28.1. Books and Records: Audit Rights.
(a) Tenant shall at all times during the Term of this Lease keep and maintain (separate
from any of Tenant's other books, records and accounts), and shall cause the Hotel Manager to
keep and maintain, accurate and complete records pertaining to the Hotel and the Construction
Work related thereto, including, without limitation, books of account reflecting the operations of
the Hotel and such other matters referenced in this Lease, in accordance with the Accounting
Principles with such exceptions as may be provided for in this Lease, and provided that Tenant
(and Hotel Manager) may make such reasonable modifications in such books of account as are
consistent with Hotel Manager I s standard practice in accounting for its operations under
management contracts generally. Owner and its representatives shall have, during normal
business hours and upon reasonable advance notice, access to inspect (but not photocopy) the
books and records of Tenant and the Hotel Manager pertaining to the Hotel, including, without
limitation, books of account properly reflecting the operations of the Hotel, which books and
records shall be kept at the Hotel. Notwithstanding anything to the contrary in the foregoing, such
books and records may be maintained at the Hotel Manager's principal office in the continental
United States of America and in such case, provided such books and records are not readily available
in Dade County, Florida, Tenant shall pay the reasonable travel expenses of not more than two (2)
employees or agents of Owner to travel to and stay in the city in which such books and records are
maintained for the purpose of inspecting such books and records not more than (i) once in each
calendar year jf Tenant is not in default under this Lease or (ii) once each month if Tenant is in
default under this Lease. Owner shall have the right to cause an audit by any Recognized
Accounting Firm (in accordance with the Accounting Principles) of such books and records to be
made at any time (but not more frequently than one (1) time in any twelve (12) month period),
at Owner's expense (a copy of which shall be delivered to Tenant). Such right of inspection and
audit may be exercised at any time within three (3) years after the end of the Lease Year to which
such books and records relate, and Tenant and Hotel Manager shall maintain all such books and
records for at least such period of time and, if any Dispute between the parties has arisen and
remains unresolved at the expiration of such period of time, for such further period of time until
the resolution of such Dispute.
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1;';;7
(b) If, upon any audit by Owner as described above of the books or records of Tenant
or Hotel Manager, (i) an error (which shall mean a mistake in calculation, allocation of overhead
costs properly chargeable to Hotel Manager's home office (including the home offices of Affiliates
of Hotel Manager), an accounting error, or a cost fraudulently incurred, but shall exclude any
error based on assertions that Tenant acted imprudently or unwisely in connection with the
operation and management of the Hotel) shall be revealed which results in there being due to
Owner Incentive Rent for any Lease Year for which Annual Financial Statements are being
audited pursuant to Section 28.1(a) the amounts of any such underpayments of Incentive Rent
which may be disclosed by such audit, together with interest accrued thereon at the Late Charge
Rate from the date on which such underpayment was made until the date of payment of the correct
amount, shall be paid to Owner upon thirty (30) days demand or (ii) an error (as defmed in clause
(i) above) shall be revealed which resulted in an overpayment by Tenant to Owner of Incentive
Rent, Owner shall remit the amount of such overpayment (less the cost of such audit) to Tenant
within thirty (30) days after the completion of such audit. If such error results in there being due
to Owner Incentive Rent for any Lease Year being audited pursuant to Section 28.1(a) in an
amount equal to or exceeding three percent (3 %) of the Incentive Rent theretofore paid by Tenant
in respect of such Lease Year, then the cost of such audit shall be paid by Tenant to Owner upon
thirty (30) days demand. If Owner does not notify Tenant of any error in the calculation of
Incentive Rent within three (3) years after the end of any Lease Year, then Owner shall be deemed
to have conclusively waived any and all obligations with respect to any Incentive Rent payments
with respect to such Lease Year.
(c) The following financial statements for the applicable year shall be delivered to Owner
by Tenant if, and only if, Tenant fails to (I) fully pay the Base Rent, (2) fully pay the Additional
Rent, (3) fully pay the Incentive Rent, if any is due, or (4) keep the Lease otherwise in good standing
and not in Default:
(i) As soon as available, but in no event later than the date which is one
hundred fifty (l50) days after the end of each Lease Year, Tenant shall deliver to Owner or its
representatives, which representatives shall have executed a confidentiality agreement as described
below, annual financial statements which shall include (l) an information copy of a projected
income statement reflecting the budget for the upcoming year, (2) a statement of Hotel Revenue
(which shall include, without limitation, occupancy and average daily rate information) and (3)
a statement of expenditures for FF&E, capital expenditures, Operating Expenses (including,
separately, rooms expense, administrative and general expense, utility expense and repair and
maintenance expense), Debt Service, and Hotel Operating Profit (the "Annual Financial
Statements") for such Lease Year (which statements shall be audited by any Recognized
Accounting Firm) accurately reflecting the financial condition of Tenant and the Hotel and the
results of the Hotel's operations, including, without limitation, balance sheets, profit and loss
statements and statements of changes in financial condition, all prepared and certified by Tenant
and such independent certified public accountant in accordance with the Accounting Principles;
all such financial statements shall set forth separately the property included in, the liabilities
relating to and the results of the operations of, the Hotel.
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1~'8
(ii) As soon as available, but in no event later than thirty (30) days after the end
of each month, Tenant shall deliver to Owner or its representatives, which representatives shall
have executed a confidentiality agreement as described below, an unaudited financial statement,
the contents of which shall be the same as the Annual Financial Statements and an unaudited profit
and loss statement comparing actual results to both the then current budget and the previous year's
actual results, for both the current month and Lease Year to date.
(d) As soon as. available, but in no event later than thirty (30) days prior to the
commencement of each Lease Year, Tenant shall make available at the Hotel for inspection and
examination (but not photocopying) by Owner or its representatives, which representatives shall
have executed a confidentiality agreement as described below, an information copy of a projected
summary income and expense statement reflecting the budget of the estimated Hotel Revenue
(including, separately, gross room revenues and food and beverage revenues), expenditures for
FF&E, capital expenditures, Operating Expenses (including, separately, rooms expense,
administrative and general expense, utility expense and repair and maintenance expense), Debt
Service, and Hotel Operating Profit for such coming Lease Year.
(e) Notwithstanding any of the foregoing provisions of this Article 28, so long as the
Owner is the Agency, the City or any instrumentality of the Agency or the City, the books and
records of the Hotel, the Annual Financial Statements and any other documents (collectively, the
"Hotel Documents") required to be made available to Owner under this Article 28 shall be
maintained at the Hotel; provided, however, that certain Hotel Documents are required to be
delivered to Owner by Tenant pursuant to Sections 28.1(c).
(f) If an extract of any Hotel Document is made by Owner or any of its
representatives and delivered to Owner's offices, there shall be attached by Owner or its
representatives to the front of the fIrst page of such Hotel Document a sheet of paper bearing the
legend set forth below in capital letters and in a type size not less than that provided below:
"THE A TT ACHED DOCUMENT CONTAINS BUSINESS OR FINANCIAL
INFORMATION THAT HAS BEEN DESIGNATED AS CONFIDENTIAL BY
[INSERT NAME OF TENANT]. THE ATTACHED DOCUMENT IS TO BE KEPT
SOLELY IN THE OFFICE OF THE CITY ATTORNEY OF THE CITY OF MIAMI
BEACH, FLORIDA. THE ATTACHED DOCUMENT IS TO BE REVIEWED
ONLY IN SUCH OFFICE AND SHALL BE RELEASED SOLELY IN
ACCORDANCE WITH APPLICABLE LAW."
(g) Any third party representatives (including, without limitation, any Recognized
Accounting Firm) of Owner that review any Hotel Documents shall execute a confidentiality
agreement mutually acceptable to Owner and Tenant. If an extract of any Hotel Document is
made by any such representative for use in the offices of such representative, there shall be
attached by Owner or its representative to the front of the first page of such Hotel Document a
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1~9
sheet of paper bearing the legend set forth below in capital letters and in a type size not less than
that provided below:
"THE ATTACHED DOCUMENT CONTAINS BUSINESS OR FINANCIAL
INFORMATION THAT HAS BEEN DESIGNATED AS CONFIDENTIAL BY
[INSERT NAME OF TENANT]. THE ATTACHED DOCUMENT IS SURJECT TO
A CONFIDENTIALITY AGREEMENT AND SHALL BE KEPT SOLELY IN THE
OFFICES OF [INSERT NAME OF REPRESENTATIVE]. THE ATTACHED
DOCUMENT IS TO BE REVIEWED ONLY IN SUCH OFFICES AND SHALL BE
RELEASED SOLELY IN ACCORDANCE WITH SUCH CONFIDENTIALITY
AGREEMENT AND APPLICABLE LAW."
(h) Promptly following receipt of a request under any Requirement for the release of
a copy of any Hotel Document, Owner shall notify Tenant of such request, but neither Owner nor
any Owner Indemnified Party shall incur any liability to Tenant or any Tenant Indemnified Party
if Owner unintentionally fails to provide any such notice.
(i) Neither Owner nor any Owner Indemnified Party shall incur any liability to Tenant
or any Tenant Indemnified Party in the event any Hotel Document is stolen, misplaced or
otherwise unintentionally released in violation of the foregoing provisions of Sections 28.1(-e)-(h).
G) So long as the Owner is not the Agency, the City or the State of Florida, or any
instrumentality of the Agency, the City or the State of Florida, then the provisions of this Section
28.1(j) shall be applicable to Owner: "Owner acknowledges that it may acquire certain
information pursuant to its rights under this Article 28 that Tenant desires to keep confidential,
including, without limitation, the Hotel Documents and other financial information made available
to Owner (the "Information"). Subject to Requirements, Owner agrees (i) to keep such
Information confidential and (ii) to disclose or permit disclosure of the Information only (1) to
securities rating agencies, reinsurers, liquidity and credit providers, legal and other advisors and
insurance and other regulatory bodies, in each case, for reasons consistent with the performance
of their duties; provided, that Owner shall obtain, for the benefit of Tenant, from any such Person
a confidentiality agreement incorporating the terms of this Section 28.1(j) prior to the disclosure
of such Information, or (2) upon subpoena by any Governmental Authority having jurisdiction
thereof; provided, however, that Owner shall notify Tenant within five (5) Business Days after
service of such subpoena and Tenant shall thereafter have the right to seek a protective order
preventing disclosure of such Information. "
(k) The obligations of Tenant and Owner under this Article shall survive the Expiration
of the Term.
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130
ARTICLE 29.
SURRENDER AT END OF TERM
Section 29.1. Surrender of Premises.
Upon the Expiration of the Term (or upon a re-entry by Owner upon Tenant's Interest in
the Premises (including, without limitation, a re-entry upon the Premises) pursuant to Article 25),
Tenant, without any payment or allowance whatsoever by Owner, shall surrender Tenant's
Interest in the Premises, and shall yield up possession of the Premises, to Owner in good order,
condition and repair, reasonable wear and tear excepted and (subject to the provisions of Article
8) damage from casualty excepted, free and clear of all Subleases, liens and encumbrance other
than as set forth below and the Title Matters. Tenant hereby waives any notice now or hereafter
required by law with respect to vacating the Premises on the Expiration of the Term.
Section 29.2. Delivery of Subleases. etc.
Upon the Expiration of the Term (or upon a re-entry by Owner upon Tenant's Interest in
the Premises (including, without limitation, a re-entry upon the Premises) pursuant to Article 25),
Tenant shall deliver to Owner the following (to the extent then in Tenant's possession or control):
Tenant's original executed counterparts, if available (and if not available, true and correct copies
thereof), of all Subleases then in effect, any service and maintenance contracts then affecting the
Premises, true and complete maintenance records for the Premises, all original licenses and
permits then pertaining to the Premises, permanent or temporary certificates of occupancy then
in effect for the Premises, and all warranties and guarantees then in effect which Tenant has
received in connection with any work or services performed or Building Equipment and FF&E
installed in the Premises (such to be delivered without representation or warranty by Tenant),
together with a duly executed assignment thereof (without recourse) to Owner in form suitable for
recording, and all financial reports required by Article 28 and any and all other documents of
every kind and nature whatsoever relating to the operation of the Premises and the condition of
the Improvements.
Section 29.3. Title to Improvements.
Owner recognizes and agrees that until Expiration of the Term (i) ownership of and title
to Tenant's Interest in the Premises shall be in Tenant, (ii) Tenant shall own the Improvements
now existing or in the future located on the Land and (iii) Tenant has, and shall be entitled to, all
rights and privileges of ownership of Tenant's Interest in the Premises. Ownership of and to
Tenant's Interest in the Premises shall automatically vest in Owner upon the Expiration of the
Term, without the payment of consideration therefor, and without the necessity for the execution
and delivery by Tenant of any instrument transferring title. Notwithstanding the foregoing,
Tenant covenants and agrees that upon the Expiration of the Term, Tenant shall, upon Owner's
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131
request, execute and deliver to Owner any instrument or document reasonably requested by Owner
to confirm title to Tenant's Interest in the Premises in Owner.
.>
Section 29.4. Title to FF&E Reserve Account.
Ownership of and to the FF&E Reserve Account and all proceeds thereof shall
automatically vest in Owner (subject to the lien therein of the Recognized Mortgagee) upon the
Expiration of the Term, without the payment of consideration therefor, and without the necessity
for the execution and delivery by Tenant of any instrument transferring title thereto.
Notwithstanding the foregoing, Tenant covenants and agrees that upon the Expiration of the Term,
Tenant shall, upon Owner's request, execute and deliver to Owner any instrument or document
reasonably requested by Owner to confirm title. to said FF&E Reserve Account and proceeds
thereof in Owner.
Section 29.5. Cash and Accounts Receivable.
Tenant shall retain the right to all cash and accounts receivable on or in connection with
the Premises existing as of the Expiration of the Term and Owner shall pay Tenant for all
unopened consumable supplies located at the Premises upon the Expiration of the Term (based on
Tenant's actual cost therefor); provided, however that Tenant shall turn over to Owner all
deposits, accounts receivables and other payments with respect to all bookings for periods after
the Expiration of the Term. Owner shall assume all advanced bookings for periods after the
Expiration of the Term made in the ordinary course of the operation of the Hotel. If, after the
Expiration of the Term, Owner collects any accounts receivable to which Tenant is entitled,
Owner shall promptly remit such amounts to Tenant, subject to the rights of any Recognized
Mortgagee.
Section 29.6. Personal Property.
Any personal property of Tenant or of any Subtenant which remains on the Premises after
the termination of this Lease or after the removal of Tenant or such Subtenant from the Premises,
may, -at the option of Owner, be deemed to have been abandoned by Tenant or such Subtenant,
and either may be retained by Owner as its property or be disposed of, without accountability, in
such manner as Owner may see fit, in its absolute and sole discretion, but in compliance with
applicable Requirements. Owner shall not be responsible for any loss or damage occurring to any
such property owned by Tenant or any Subtenant.
Section 29.7. Survival Clause.
The provisions of this Article shall survive the Expiration of the Term.
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132
ARTICLE 30.
QUIET ENJOYMENT .'
Owner covenants that, as long as this Lease is in full force and effect without an Event of
Default existing hereunder, Tenant shall and may (subject to the exceptions, reservations, terms
and conditions of this Lease) peaceably and quietly have, hold and enjoy Tenant's Interest in the
Premises for the Term without molestation or disturbance by or from Owner (solely in its
proprietary capacity) or any Person claiming by, under or through Owner (solely in its proprietary
capacity).
ARTICLE 31.
[RESERVED]
ARTICLE 32.
ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS, CONTESTS, ETC.
Section 32.1. Tax Contest Proceedin~s.
Tenant shall have the right (subject to the provisions of Section 32.2), at its sole cost and
expense, to seek reductions in the valuation of the Premises assessed for real property tax
purposes and to prosecute any action or proceeding in connection therewith by appropriate
proceedings diligently conducted in good faith, in accordance with applicable Requirements.
Section 32.2. Imposition Contest Proceedin~s.
Tenant shall have the right to contest, at its sole cost and expense, the amount or validity,
.. in-whole or in.part, of any Imposition by appropriate proceedings diligently conducted in good
faith, in which event payment of such Imposition may be postponed, subject to Requirements, if,
and only as long as:
(a) Neither the Premises nor any part thereof would, by reason of such postponement
or deferment, be, in the reasonable judgment of Owner, in danger of being forfeited to a
Governmental Authority (other than Owner when the Agency or the City or an instrumentality
thereof is Owner) and Owner is not in danger of being subjected to criminal liability or penalty
or civil liability or penalty in excess of the amount for which Tenant has furnished security as
provided in Section 32.2(b) by reason of nonpayment thereof; and
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122
133
(b) Tenant has deposited with a Recognized Mortgagee, if any (or if not, with a third
party escrow agent proposed by Tenant, subject to Owner's consent, not to be unreasonably
withheld (failure to respond within fifteen (15) days after notice being conclusively deemed
approval)), cash in the amount so contested and unpaid or, alternatively, at Tenant's option, a
surety company bond or an irrevocable letter of credit issued by an Institutional Lender (in form
reasonably satisfactory to Owner) or other security (for example, a personal guaranty) reasonably
satisfactory to Owner, in the amount so contested and unpaid, together with all interest and
penalties in connection therewith and all charges relating to such contested Imposition that may
or might, in Owner's reasonable judgment, be assessed against, or become a charge on, the
Premises or any part thereof in or during the pendency of such proceedings; provided, however,
any amount deposited with any governmental entity, the making of which deposit is required by
law in order for Tenant to contest such matters, shall be considered part of the amount so required
of Tenant by Owner (the intent being that Tenant shall not be required to make duplicitous
deposits under this Section 32.2(b)). Upon the termination of such proceedings, Tenant shall pay
the amount of such Imposition or part thereof as finally determined in such proceedings, the
payment of which was deferred during the prosecution of such proceedings, together with any
costs, fees (including, without limitation, reasonable attorneys' fees and disbursements), interest,
penalties or other liabilities in connection therewith, and, upon such payment, any Recognized
Mortgagee or escrow agent holding any amount or other security deposited with it with respect
to such Imposition shall (subject to the terms of any agreement between Tenant and any
Recognized Mortgagee or escrow agent) return the same, together with the interest, if any, earned
thereon. However, if such Recognized Mortgagee or escrow agent is so requested by Tenant,
such Recognized Mortgagee or escrow agent shall disburse said moneys on deposit with it directly
to the Person to whom or to which such Imposition is payable. If at any time during the
continuance of such proceedings Owner, in its reasonable judgment, deems insufficient the amount
or nature of the security deposited, Tenant, within ten (10) days after Owner's demand, shall
make an additional deposit of such additional sums or other acceptable security as Owner may
request, and upon failure of Tenant to so do, the amount theretofore deposited, together with the
interest, if any, earned thereon, shall, upon demand by Owner, be applied by such Recognized
Mortgagee or escrow agent to the payment, removal and discharge of such Imposition and the
interest and penalties in connection therewith and any costs, fees (including, without limitation,
reasonable attorneys' fees and disbursements) or other liability accruing in any such proceedings
and the balance, if any, remaining thereafter, together with the interest, if any, earned thereon and
remaining after application by Owner as aforesaid, shall be returned to Tenant or to the Person
entitled to receive it. If there is a deficiency, Tenant shall pay the deficiency to Owner or the
Person entitled to receive it, within ten (l0) days after Owner's demand.
Section 32.3. Requirement Contest.
Tenant shall have the right to contest the validity of any Requirement or the application
thereof. During such contest, compliance with any such contested Requirement may be deferred
by Tenant provided that before instituting any such proceeding, Tenant shall furnish such
Recognized Mortgagee, if any (or if not, with a third party escrow agent proposed by Tenant,
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134
subject to Owner's consent, not to be unreasonably withheld (failure to respond within fifteen (l5)
days after notice being conclusively deemed approval)), with a surety company bond or,
alternatively at Tenant's option, a cash deposit, an irrevocable letter of credit issued by an
Institutional Lender or other security (e.g., a personal guaranty), in form and amount reasonably
satisfactory to Owner, securing compliance with the contested Requirement and payment of all
interest, penalties, fines, civil liabilities, fees and expenses in connection therewith; provided,
however, any amount deposited with any governmental entity, the making of which deposit is
required by law in order for Tenant to contest such matters, shall be considered part of the amount
so required of Tenant by Owner (the intent being that Tenant shall not be required to make
duplicitous deposits under this Section 32.3). Any such proceeding instituted by Tenant shall be
commenced as soon as possible after the issuance of any such contested Requirement and shall be
prosecuted with diligence to final adjudication, settlement, compliance or other mutually
acceptable disposition of the Requirement so contested. The furnishing of any bond, deposit,
letter of credit or other security notwithstanding, Tenant shall comply with any such Requirement
in accordance with the provisions of Section 15.1 if, in Owner's reasonable judgment, (i)
noncompliance therewith would create an emergency condition involving the health or safety of
persons, (ii) the Premises, or any part thereof, are in material danger of being forfeited to an
authority (other than Owner when the Agency or the City or an instrumentality thereof is Owner)
or (iii) Owner is in danger of being subjected to criminal liability or penalty, or civil liability in
excess of the amount for which Tenant shall have furnished security as hereinabove provided by
reason of noncompliance therewith, and any security posted by Tenant shall (subject to the terms
of any agreement between Tenant and any Recognized Mortgagee or escrow agent) be returned
to Tenant with any interest accrued thereon.
Section 32.4. Owner's Participation in Contest Proceedin~s.
Owner shall not be required to join in any action or proceeding referred to in this Article
unless the provisions of any law, rule or regulation at the time in effect require that such action
or proceeding be brought by and/or in the name of Owner. If so required, Owner shall join and
cooperate in such proceedings or permit them to be brought by Tenant in Owner's name, in which
case Tenant shall pay all reasonable costs and expenses (including, without limitation, attorneys'
fees and disbursements) incurred by Owner in connection therewith. Notwithstanding the
foregoing, Owner's joinder and cooperation shall be limited to actions necessary to enable Tenant
to satisfy technical requirements of any such action or proceeding and in no event shall Owner be
required to join in any such action or proceeding in any substantive capacity.
ARTICLE 33.
RESTAURANT
Tenant shall enter into a lease or purchase agreement (the "Restaurant Agreement") with
the Restaurant Operator who shall lease or purchase approximately twelve thousand (12,000)
square feet of retail space in the Shorecrest Hotel for the operation of a destination type restaurant
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(the "Restaurant"). The Restaurant Agreement shall include, without limitation, the following
terms and conditions:
.'
(a) Commencement. The Restaurant shall be open to the public for business within
one hundred twenty (l20) days from the Hotel Opening Date.
(b) Restaurant A~reement Execution. The Restaurant Agreement shall be executed no
later than the Commencement Date; provided, however, the date of the execution of the
Restaurant Agreement may be postponed until the Hotel Opening Date if Tenant posts, on or
before the Construction Commencement Date, an irrevocable standby letter of credit, in the form
reasonably acceptable to Owner, payable on presentation (sight credit), in favor of Owner in the
amount of Three Hundred Thousand Dollars ($300,000) and payable according to the following:
"This letter of credit may be drawn upon in full by the beneficiary hereunder upon
the presentation to the Bank of a statement signed by an officer of beneficiary that
a monetary Event of Default exists under the Agreement of Lease between the
beneficiary and RDP Royal Palm Hotel Limited Partnership [insert date]."
(c) Approval of the Restaurant. The selection of the Restaurant and the Restaurant
Operator, and any substitutes thereto, shall be subject to the approval of Owner.
(d) The Restaurant as a Condominium Unit. If Tenant elects to file a Declaration of
Condominium for the Hotel, the Restaurant shall be one (1) out of a total of two (2) condominium
units allowed under such Declaration of Condominium pursuant to Section 6.2(a)(iv). Tenant
shall cause said Declaration of Condominium to contain provisions that (i) the sale or lease of the
Restaurant unit shall be subject to Owner's approval and (ii) the Restaurant unit shall be operated
in accordance with the quality standards referred to in this Article 33.
(e) Quality Standards. The Restaurant Agreement shall contain quality standards
pertaining to the operation and physical condition of the Restaurant. All of the quality standards
shall be subject to the approval of Owner. Tenant shall cause the Restaurant Operator to comply
with all Of the. quality standards.
(f) Restaurant A~reement a Sublease. The Restaurant Agreement, if it is in the nature
of a lease, shall be deemed to be a Sublease under this Lease requiring Owner's approval under
Section 10.2 subject to Section 10.I(a)(vi)(C).
(g) Non-Disturbance A~reement. Upon request of Tenant, Owner shall execute a non-
disturbance agreement in favor of the Restaurant Operator containing terms generally found in
such agreements in form and content reasonably acceptable to the Restaurant Operator and Owner,
but the term of which shall be no longer than the earlier to occur of (i) the expiration of the
Restaurant Agreement or (ii) twenty (20) years.
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ARTICLE 34.
INVESTIGATIONS, ETC..
To the extent required by Requirements, Tenant shall cooperate fully and faithfully with
any investigation, audit or inquiry conducted by any Governmental Authority that is empowered
directly or by designation to compel the attendance of witnesses and to examine witnesses under
oath, or conducted by a Governmental Authority that is a party in interest to the transaction,
submitted bid, submitted proposal, contract, lease, permit, or license that is the subject of the
investigation, audit or inquiry. In addition, Tenant shall promptly report in writing to the City
Attorney of the City of Miami Beach, Florida any solicitation, of which Tenant's officers or
directors have knowledge, of money, goods, requests for future employment or other benefit or
thing of value, by or on behalf of any employee of the Agency, City or other Person relating to
the procurement or obtaining of this Lease by the Tenant or affecting the performance of this
Lease.
ARTICLE 35.
HAZARDOUS MATERIALS
Section 35.1. Definitions. For the purposes of this Lease, the following terms shall have
the following definitions:
(a) "Hazardous Materials" shall mean (i) petroleum and its constituents; (ii) radon gas,
asbestos in any form which is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contain dielectric fluid containing levels of polychlorinated
biphenyls in excess of federal, state or local safety guidelines, whichever are more stringent; (Hi)
any substance, gas, material or chemical which is or may hereafter be defined as or included in
the definition of "hazardous substances," "hazardous materials," "hazardous wastes,"
"pollutants or contaminants," "solid wastes" or words of similar import under any Requirement
including the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ~ 9061 ~~; the Hazardous Materials Transportation Act, as amended,
49 U.S.c. ~ 1801, ~~; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
~ 6901, ~~; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ~ 1251, et~;
and Florida Statutes, Chapters 376 and 403; and (iv) any other chemical, material, gas or
substance, the exposure to or release of which is regulated by any governmental or quasi-
governmental entity having jurisdiction over the Premises or the operations thereon;
(b) "Environmental Laws" shall mean all Requirements relating to the protection of
human health or the Environment, including:
(i) all Requirements relating to reporting, licensing, permitting, investigation
and remediation of Releases or Threat of Release into the Environment, or relating to the
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manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials; and
(ii) all Requirements pertaining to the protection of the health and safety of
employees or the public;
(c) "Environment" shall mean soil, surface waters, groundwaters, land, stream
sediments, surface or subsurface strata and ambient air;
(d) "Environmental Condition" shall mean any condition with respect to the Premises,
whether or not yet discovered, which could or does result in any Environmental Damages,
including any condition resulting from the operation of Tenant's business or the operation of the
business of any subtenant or occupant of the Premises or that of any other property owner or
operator in the vicinity of the Premises or any activity or operation formerly conducted by any
Person on or off the Premises;
(e) "Environmental Damages" shall mean all claims, judgments, damages (including
punitive damages), losses, penalties, fines, liabilities (including strict liability), encumbrances,
liens, costs and expenses of investigation and defense of any claim, whether or not such is
ultimately defeated, and of any settlement or judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, any of which are incurred at any
time as a result of the assessment, monitoring, remediation or mitigation of an Environmental
Condition (and shall include any damages for the failure to do so), including, without limitation,
fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all
other costs incurred in connection with investigation and remediation, including the preparation
of any feasibility studies or reports and the performance of any remedial, abatement, containment,
closure, restoration or monitoring work;
(f) "Permit" shall mean any environmental permit, license, approval, consent or
authorization issued by a federal, state or local governmental or quasi-governmental entity;
- (g) "Release" shall mean any releasing, seeping, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of a
Hazardous Material into the Environment; and
(h) "Threat of Release" shall mean a substantial likelihood of a Release which requires
action to prevent or mitigate damage to the Environment which may result from such Release.
Section 35.2. Use of Hazardous Materials.
Tenant shall not cause or permit any Hazardous Material to be brought on, kept or used
in or about the Premises except as necessary or useful to Tenant's business and in compliance with
all Environmental Laws.
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Section 35.3. Indemnification.
(a) Tenant hereby indemnifies and holds harmless the Owner Indemnified Parties from
and against any and all Environmental Damages to the Premises during the term of this Lease,
except to the extent any such Environmental Damage is caused, permitted, allowed, suffered or
contributed to, directly or indirectly, by any of the Owner Indemnified Parties prior to the
Commencement Date. Such obligation of Tenant shall include the burden and expense of
defending all claims, suits and administrative proceedings (with counsel reasonably satisfactory
to Owner), even if such claims, suits or proceedings are groundless, false or fraudulent, and
conducting all negotiations of any description, and paying and discharging, when and as the same
become due, any and all judgments, penalties or other sums due against any of the Owner
Indemnified Parties. Tenant's obligations shall not apply with respect to Environmental Damages
resulting from Environmental Conditions existing in the Land prior to the execution hereof
(regardless of whether the same were caused by any of the Owner Indemnified Parties). Without
limiting the foregoing, if the presence or Release on or from the Premises caused or permitted by
Tenant results in contamination of the Premises, Tenant shall promptly take all actions at its sole
cost and expense as are necessary to remediate the Premises in compliance with Environmental
Laws in effect from time to time and to comply with any requirements imposed by any
Governmental Authorities; provided that Owner's approval of such actions shall first be obtained,
which approval shall not be unreasonably withheld.
(b) Owner hereby indemnifies and holds harmless the Tenant Indemnified Parties from
and against any and all Environmental Damages resulting from Environmental Conditions existing
prior to the Commencement Date, but only in the Land and specifically excluding the
Improvements. Such obligation of Owner shall include the burden and expense of defending all
claims, suits and administrative proceedings (with counsel reasonably satisfactory to Tenant), even
if such claims, suits or proceedings are groundless, false or fraudulent, and conducting all
negotiations of any description, and paying and discharging, when and as the same become due,
any and all judgments, penalties or other sums due against any of the Tenant Indemnified Parties.
(c) Notwithstanding anything to the contrary contained herein, Owner agrees to take
such action as-necessary to immediately remove the underground storage tank(s), if any, located
on the Premises; to expeditiously undertake such further assessment, remediation, and monitoring
of the soil and ground water impacted by the Release from such tank(s), if any, as required under
applicable Environmental Laws; and to take such action as necessary to obtain a No Further
Action determination from DERM or DEP, if required under Environmental Laws.
Owner shall use reasonable efforts to undertake the work described in this Section 35.3(c)
in such a manner as to minimize disruption to and to avoid delaying Tenant's plans to renovate
and develop the Premises.
Owner agrees that in connection with the work described in this Section 35.3(c) it will
provide to Tenant all correspondence, reports, studies and other documents exchanged between
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Owner, its consultants, and DERM or DEP promptly after those documents are provided to or
received from DERM or DEP.
"
Section 35.4. Compliance.
Tenant, at its sole cost and expense (except as otherwise provided in this Lease), shall
comply and cause the Hotel Manager and all Subtenants to comply with all Environmental Laws
with respect to the use and operation of the Premises.
Section 35.5. Notices.
If Tenant or Owner receives any notice of a Release, Threat of Release or Environmental
Condition or a notice with regard to air emissions, water discharges, noise emissions, recycling,
violation of any Environmental Law or any other environmental, health or safety matter affecting
Tenant or the Premises (an "Environmental Complaint") independently or by notice from any
Governmental Authority having jurisdiction over the Premises, including the EP A, or with respect
to any litigation regarding Environmental Conditions at or about the Premises, then such party
shall give prompt oral and written notice of same to the other party detailing all relevant facts and
circumstances.
Section 35.6. Owner's Remedies.
Provided Tenant does not diligently commence to remediate the applicable Environmental
Conditions promptly after becoming aware of the same and thereafter diligently pursue the
completion thereof in a reasonable time (and in any event in accordance with Requirements),
Owner shall have the right, but not the obligation, to enter onto the Premises or remediate the
Premises in compliance with Environmental Laws in effect from time to time and to comply with
any requirements imposed by any Governmental Authorities upon its obtaining knowledge of such
matters independently or by receipt of any notice from any Person, including the EP A.
Section 35.7. Defaults.
Except to the extent the same is a matter for which Owner is responsible pursuant to
Section 35.3(b) above or relates to an Environmental Condition caused, let, permitted, suffered,
contributed to or allowed by an Owner Indemnified Party prior to the Commencement Date, the
occurrence of any of the following events shall constitute an Event of Default under this Lease:
(a) if the EPA or any other federal, state or local body or agency creates a lien upon the
Premises which is not discharged by payment or bonding within ninety (90) days; or
(b) if the EPA or any other federal, state or local body or agency makes a claim (which
shall mean, for the purposes of this Section 35.7, issuance of a warning notice, citation, notice
of violation or administrative complaint) against Tenant (or any subtenant, licensee or other
A:VNM\CMB\GLEASE.15(EXECUTION.I )\1 0-16-97 129
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occupant of the Premises), the Premises or Owner, for damages or cleanup costs related to a
Release or an Environmental Complaint on or pertaining to the Premises; provided however, such
claim shall not constitute an Event of Default if, within thirty (30) days of the lien or claim:
(i) Tenant has commenced and is diligently pursuing either: (x) cure or
correction of the event which constitutes the basis for the lien or claim and continues diligently
to pursue the cure or correction to the satisfaction of the Governmental Authority that asserted the
lien or claim and obtains the discharge of any lien, or (y) proceedings for an injunction,
restraining order, administrative or other appropriate emergency relief contesting the validity of
the claim and, if such relief is granted, the emergency relief is not thereafter dissolved or reversed
on appeal; and
(ii) Tenant has posted a bond, letter of credit or other security satisfactory in
form and substance to Owner to secure the proper and complete cure or correction of the event
which constitutes the basis of the claim. The amount of the bond, letter of credit or other security
shall be determined in the following manner: (A) Owner, Tenant and their respective consultants
shall use their best efforts to agree upon the most probable cost to cure or correct the event which
constitutes the basis of the claim; (B) in the event Owner and Tenant are unable to agree despite
their best efforts, Owner's consultant and Tenant's consultant shall select a third consultant who
shall provide an estimate of the most probable cost of curing or correcting the event, which
constitutes the basis of the claim. Owner and Tenant shall each pay the cost of their own
consultant under this Section 35.7(b)(ii) and shall share evenly the cost of the third consultant
should use of a third consultant become necessary.
Section 35.8. Owner Responsibility.
In addition to Section 35.3(b), Owner (in its proprietary capacity) is responsible for all
Environmental Damages resulting from an Environmental Condition caused by any of the Owner
Indemnified Parties.
Section 35.9. Survival.
The provisions of this Article 35 shall survive the Expiration of the Term.
ARTICLE 36.
PURCHASE; RIGHT OF FIRST OFFER
Section 36.1. Purchase of Owner's Interest in the Premises by Tenant.
(a) Purchase by Tenant When Required by Owner. Tenant shall be required to pay
the Purchase Price or make Installment Payments toward the Purchase Price of Owner's Interest
in the Premises at (i) each of the Refinancing Times to the extent of any Net Refinancing Proceeds
A:VNM\CMB\GLEASE.15(EXECUTION.I )\ 1 0-16-97 130
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or (ii) any time Tenant voluntarily refinances Tenant's Interest in the Premises to the extent of any
Net Refinancing Proceeds.
"
(b) Voluntat:Y Purchase by Tenant. Tenant may voluntarily purchase at the Purchase
Price or make Installment Payments toward the Purchase Price of Owner's Interest in the Premises
at any time subject to the provisions of Section 36.1(c)(ii).
(c) Mandatory Purchase by Tenant. Tenant shall purchase all of Owner's Interest in
the Premises at the full Purchase Price upon the earlier happening of either of the following
events:
(i) any Sale of the Hotel except a Sale of the Hotel pursuant to Section lO.l(c),
or
(ii) the expiration of twenty-five (25) years from the Hotel Opening Date;
provided, however, that this time period may be extended if Owner, in its sole and absolute
discretion, gives Notice to Tenant that Owner is rescheduling this mandatory purchase of Owner's
Interest in the Premises to a later date to be decided by Owner, in its sole and absolute discretion;
provided further, however, that if such rescheduling of this mandatory purchase occurs, then, in
that event, there shall be no subordination of Owner's interest in the Rentals from the date of such
expiration of twenty-five (25) years until the end of the Term.
(d) Purchase Price if Paid Within Ten (10) Years from the Hotel Openinl:" Date. For
the period commencing on the Commencement Date and ending ten (10) years from the Hotel
Opening Date, the purchase price of Owner's Interest in the Premises (the "Purchase Price")
shall be calculated as the sum of all of the following:
(i) the amount required for Owner to achieve a return of eight percent (8 % )
per year on the Royal Palm Portion of the Purchase Price (as hereinafter defmed) (or on such
lesser amount after deducting any Installment Payments made so that the return is calculated on
the basis of the amount outstanding on the Royal Palm Portion of the Purchase Price from time
to time over the period commencing on the Hotel Opening Date and continuing until payment of
all of the Royal Palm Portion of the Purchase Price) after giving Tenant a credit for all Base Rent
paid and fifty-five percent (55 %) of all Incentive Rent paid;
(ii) the sum of Five Million Five Hundred Thousand Dollars ($5,500,000) (the
"Royal Palm Portion of the Purchase Price" for purposes of this Lease only);
(iii) the amount required for Owner to achieve a return of eight percent (8 %)
per year on the Shorecrest Portion of the Purchase Price (as hereinafter defmed) (or on such lesser
amount after deducting any Installment Payments made so that the return is calculated on the basis
of the amount outstanding on the Shorecrest Portion of the Purchase Price from time to time over
the period commencing on the Hotel Opening Date and continuing until payment of all of the
A:VNM\CMB\GLEASE.1 5(EXECUTION.1 )\ 1 0-16-97 131
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Shorecrest Portion of the Purchase Price) after giving Tenant a credit for Additional Rent paid and
forty-five percent (45%) of all Incentive Rent paid; provided, further, however, that any Incentive
Rent paid after amounts specified in Section 36.1(d)(i) have been paid shall be credited at one
hundred percent (100 % ); and
(iv) the sum of Four Million Five Hundred Thousand Dollars ($4,500,000) (the
"Shorecrest Portion of the Purchase Price" for purposes of this Lease only).
Attached hereto and incorporated by reference herein as Exhibit 36.1(d) are examples of the
aforementioned Purchase Price calculation. Such examples are attached for illustrative purposes
only and in no way modify the provisions of this Section 36.1(d) or any other provision of this
Lease.
(e) Purchase Price if Paid After Ten (10) Years from the Hotel OpeniI\!:" Date. For the
period after ten (10) years have elapsed from the Hotel Opening Date, the Purchase Price shall
be calculated as the sum of all of the following:
(i) the sum of the amounts stated in Sections 36.1(d)(i), (ii), and (iv); and
(ii) the amount required for Owner to achieve a return of eight percent (8 %)
per year on the Shorecrest Portion of the Purchase Price (as hereinafter defmed) (or on such lesser
amount after deducting any Installment Payments made so that the return is calculated on the basis
of the amount outstanding on the Shorecrest Portion of the Purchase Price from time to time over
the period commencing on the Hotel Opening Date and continuing until payment of all of the
Shorecrest Portion of the Purchase Price) after giving Tenant a credit for Additional Rent paid and
forty-five percent (45%) of all Incentive Rent paid; provided, further, however, that any Incentive
Rent paid after amounts specified in Section 36.1(d)(i) have been paid shall be credited at one
hundred percent (100 % ).
Examples of the aforementioned Purchase Price calculation are contained in Exhibit 36.1(d)
attached hereto and incorporated by reference herein. Such examples are attached for illustrative
purposes-only.and in no way modify the provisions of this Section 36.1(e) or any other provision
of this Lease.
(f) Installment Payments. Tenant shall be allowed to make partial payments towards
the Purchase Price (each an "Installment Payment") of Owner's Interest in the Premises. Each
Installment Payment shall be made only in the following manner and subject to the following
conditions:
(i) each Installment Payment is non-refundable;
(ii) all Rental shall continue to be due and payable by Tenant notwithstanding
the fact that one or more Installment Payments have been made until such time as the Purchase
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Price has been paid in full. At the time of fmal payment of the full Purchase Price, Tenant shall
receive a credit against the Purchase Price for all Installment Payments made along with the
appropriate credit for all Rental paid, as applicable, as provided in Sections 36.1(d) and (e);
(iii) the proceeds of each Installment Payment shall be applied to the Purchase
Price in the same order and in the same manner as listed for the amounts stated in (1) Sections
36.1(d)(i) - (iv) for Installment Payments made within ten (10) years from the Hotel Opening Date
and (2) Sections 36.1(e)(i) - (ii) for Installment Payments made after ten (10) years from the Hotel
Opening Date; and
(iv) a document executed by Owner evidencing receipt by Owner of each
Installment Payment made by Tenant shall be recorded in the Public Records of Dade County,
Florida, and such document shall be subject to the review and approval of Owner prior to
recordation.
(g) Transfer of Premises upon Full Payment of Purchase Price. Upon payment in full
of the Purchase Price, Owner shall simultaneously convey to Tenant (i) by Special Warranty
Deed, all of Owner's right, title and interest in and to the Premises and (ii) by Assignment of the
Lease, all of Owner's right, title and interest in and to the Lease. The conveyances shall be as
provided in Items 3, 4 and 5 of Exhibit 36.2(a) attached hereto and incorporated by reference
herein.
Section 36.2. Tenant's Ril:"ht of First Offer.
(a) If, during the Term, Owner shall desire to sell, conveyor otherwise transfer,
directly or indirectly, all of such Owner's estate in and to the Premises (a "Right of First Offer
Transaction"), such Owner shall first deliver to Tenant a Notice (an "Offer Notice") thereof
setting forth the material terms of such proposed Right of First Offer Transaction. For a period
of forty-five (45) days after Tenant's receipt of the Offer Notice, Tenant shall have the right to
elect in writing to consummate the Right of First Offer Transaction described therein at the price
and upon such other material terms set forth in the Offer Notice. As used in this Section 36.2,
the material terms of a Right of First Offer Transaction shall be the terms set forth in Exhibit
36.2(a) attached hereto and incorporated by reference herein.
(b) If Tenant does not consummate a Right of First Offer Transaction pursuant to this
Section 36.2, the Owner shall have the right to consummate the proposed transaction with any
other Person upon such terms and conditions as shall be no less favorable to the Owner than those
which are set forth in the Offer Notice, within one hundred eighty (180) days following the earlier
of (i) the expiration of such forty-five (45) day period and (ii) the receipt by Owner of a notice
from Tenant stating that Tenant does not elect to consummate such Right of First Offer
Transaction. If the Owner shall fail to consummate the Right of First Offer Transaction set forth
in such Offer Notice within such one hundred eighty (180) day period (subject to extensions not
A:VNM\CMB\GLEASE.1 5(EXECUTION. 1)\10-16-97 133
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to exceed, in the aggregate, sixty (60) days), the provisions of this Section 36.2 shall be
applicable to any future Right of First Offer Transaction. Notwithstanding anything to the
contrary contained herein, Owner may in good faith negotiate with any other Person the terms and
conditions of a Right of First Offer Transaction that Tenant has elected not to consummate;
provided, however, that if the material terms of such Right of First Offer Transaction are
modified so that such terms when so modified are more favorable to the Owner, then such
transaction shall be deemed a new Right of First Offer Transaction and the provisions of this
Section 36.2 (including, without limitation, subsection 36.2(a)), shall be applicable with respect
to such Right of First Offer Transaction; provided, further, however, that such Owner may
modify the material terms of any such Right of First Offer Transaction, and provide notice thereof
to Tenant as provided herein, only once. The Owner shall give twenty (20) days notice to Tenant
of the terms of any Right of First Offer Transaction as so modified prior to consummating the
same, so that Tenant may determine whether such modifications are sufficiently material that
Tenant wishes to consummate such Right of First Offer Transaction. If Tenant does not elect to
consummate a Right of First Offer Transaction pursuant to Section 36.2, the Owner shall provide
Tenant with a true, complete and correct copy of the executed purchase agreement for such Right
of First Offer Transaction not less than ten (10) days prior to the closing of such Right of First
Offer Transaction.
(c) The Owner and Tenant shall diligently undertake to consummate any Right ef First
Offer Transaction involving Tenant under this Section 36.2 as soon as practicable after Tenant's
election as hereinabove described. If Tenant defaults in its obligation to close the Right of First
Offer Transaction in accordance with the terms thereof (subject to reasonable extensions not to
exceed, in the aggregate, sixty (60) days), the foregoing right of first offer shall be null and void
with respect to any future Right of First Offer Transaction.
(d) In addition, Owner may not sell such interest in the Premises together with any
other interests or other assets. Any sale of the Premises together with any other interests or other
assets, shall be null and void and of no effect.
(e) If Tenant does not exercise its right of first offer and the Owner consummates its
Right of First Offer Transaction, the purchaser shall be deemed to have acquired the Premises
subject to the provisions of this Lease and the purchaser shall be deemed to have assumed the
obligations of Owner hereunder accruing from and after the effective date of such consummation,
and the Owner shall deliver to Tenant, or shall cause to be delivered to Tenant, within ten (10)
business days after the execution thereof, a true, complete and correct copy of an executed
instrument of transfer and a true, complete and correct copy of an instrument of assumption by
the transferee of the Owner's obligations under this Lease accruing from and after the date of such
transfer.
(f) If an Owner does not comply with the terms of this Section 36.2, any Right of First
Offer Transaction entered into by such Owner shall have no validity and shall be null and void
and without effect.
A:VNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\ I 0-16-97 134
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(g) Notwithstanding the foregoing provisions of this Section 36.2, Owner may not
institute the procedures set forth herein for a Right of First Offer. Transaction more than once in
any fiscal year, except with respect to any modifications of the Right of First Offer Transaction
as provided in Section 36.2(b).
Section 36.3. Assi~nment.
The rights of Tenant pursuant to Sections 36.1 and 36.2 above shall not be severed from
Tenant's Interest in the Premises, and shall be assigned, transferred or otherwise conveyed to the
transferee only upon a Sale of the Hotel or a Foreclosure Transfer.
Section 36.4. No Merl:"er.
Notwithstanding anything set forth to the contrary in Sections 36.1 through 36.3, under no
circumstances shall the fee estate of Owner and the leasehold estate created hereby merge, even
though owned by the same party, without the prior written consent of the holder of a Recognized
Mortgage.
ARTICLE 37.
MISCELLANEOUS
Section 37.1. Governing Law and Exclusive Venue.
This Lease shall be governed by, and construed in accordance with, the laws of the State
of Florida, both substantive and remedial, without regard to principles of conflict of laws. The
exclusive venue for any litigation arising out of this Lease shall be Dade County, Florida, if in state
court, and the U. S. District Court, Southern District of Florida, if in federal court.
Section 37.2. References.
(a) Captions. The captions of this Lease are for the purpose of convenience of
reference only, and in no way defme, limit or describe the scope or intent of this Lease or in any
way affect this Lease.
(b) Table of Contents. The Table of Contents is for the purpose of convenience of
reference only, and is not to be deemed or construed in any way as part of this Lease.
(c) Reference to Owner and Tenant. The use herein of the neuter pronoun in any
reference to Owner or Tenant shall be deemed to include any individual Owner or Tenant, and
the use herein of the words "successors and assigns" or "successors or assigns" of Owner or
A:VNM\CMB\GLEASE.15(EXECUTION.1 )\ 10-16-97 135
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Tenant shall be deemed to include the heirs, legal representatives and assigns of any individual
Owner or Tenant.
(d) A2ency's and City's Governmental Capacity. Nothing in this Lease or in the
parties' acts or omissions in connection herewith shall be deemed in any manner to waive, impair,
limit or otherwise affect the authority of the Agency or City in the discharge of its police or
governmental power.
(e) Reference to "herein". "hereunder". etc. All references in this Lease to the terms
"herein", "hereunder" and words of similar import shall refer to this Lease, as distinguished
from the paragraph, Section or Article within which such term is located.
(f) Reference to "Approval" or "Consent", etc. All references in this Lease to the terms
"approval", "consent" and words of similar import shall mean "reasonable written approval" or
"reasonable written consent" except where specifically provided otherwise.
Section 37.3. Entire Al:"reement. etc.
(a) Entire Al:"reement. This Lease, together with the attachments hereto, contains all
of the promises, agreements, conditions, inducements and understandings between Owner and
Tenant concerning the Premises and there are no promises, agreements, conditions,
understandings, inducements, warranties or representations, oral or written, express or implied,
between them other than as expressly set forth herein and in such attachments hereto or as may
be expressly contained in any enforceable written agreements or instruments executed
simultaneously herewith by the parties hereto. Notwithstanding anything to the contrary set forth
in this Lease, the terms of this Lease shall supersede the terms of the Letter of Intent and the RFP
and RDP's response thereto. This Lease may be executed in counterparts, each of which shall be
deemed an original but all of which together shall represent one instrument.
(b) Waiver. Modification. etc. No covenant, agreement, term or condition of this
Lease shall be changed, modified, altered, waived or terminated except by a written instrument
of change, modification, alteration, waiver or termination executed by Owner and Tenant. No
waiver of any Default or default shall affect or alter this Lease, but each and every covenant,
agreement, term and condition of this Lease shall continue in full force and effect with respect to
any other then existing or subsequent Default or default thereof.
(c) Effect of Other Transactions. No Sublease, Mortgage or Capital Transaction,
whether executed simultaneously with this Lease or otherwise, and whether or not consented to
by Owner, shall be deemed to modify this Lease in any respect, and in the event of an
inconsistency or conflict between this Lease and any such instrument, this Lease shall control.
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Section 37.4. Invalidity of Certain Provisions.
If any provision of this Lease or the application thereof to.any Person or circumstances is,
to any extent, finally determined by a court of competent jurisdiction to be invalid and
unenforceable, the remainder of this Lease, and the application of such provision to Persons or
circumstances other than those as to which it is held invalid and unenforceable, shall not be
affected thereby and each term and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
Section 37.5. Merl:"er.
Unless Owner, Tenant and all Mortgagees execute and record an agreement to the
contrary, there shall be no merger of this Lease or the leasehold estate created hereby with the fee
estate in the Premises or any part thereof by reason of the same Person acquiring or holding,
directly or indirectly, this Lease and the leasehold estate created hereby or any interest in this
Lease or in such leasehold estate as well as the fee estate in the Premises.
Section 37.6. Remedies Cumulative.
Each right and remedy of either party provided for in this Lease shall be cumulative and
shall be in addition to every other right or remedy provided for in this Lease, or now or hereafter
existing at law or in equity or by statute or otherwise (except as otherwise expressly limited by
the terms of this Lease), and the exercise or beginning of the exercise by a party of anyone or
more of the rights or remedies provided for in this Lease, or now or hereafter existing at law or
in equity or by statute or otherwise, except as otherwise expressly limited by the terms of this
Lease, shall not preclude the simultaneous or later exercise by such party of any or all other rights
or remedies provided for in this Lease or now or hereafter existing at law or in equity or by
statute or otherwise except as otherwise expressly limited by the terms of this Lease.
Section 37.7. Performance at Each Party's Sole Cost and Expense.
Unless .otherwise expressly provided in this Lease, when either party exercises any of its
rights, or renders or performs any of its obligations hereunder, such party shall do so at its sole
cost and expense.
Section 37.8. Recol:"nized Mortl:"al:"ee Charl:"es and Fees.
Tenant shall pay any and all fees, charges and expenses owing to a Recognized Mortgagee
in connection with any services rendered by it as a depositary pursuant to the provisions of this
Lease.
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Section 37.9. Successors and Assil:"ns.
The agreements, terms, covenants and conditions herein shall be binding upon, and inure
to the benefit of, Owner and Tenant and, except as otherwise provided herein, their respective
permitted successors and permitted assigns and shall be construed as covenants running with the
Land. If, while the Agency is Owner hereunder, the Agency shall cease to exist, the City, by its
signature hereto, hereby agrees, from and after the date the Agency shall cease to exist, to be
bound by the terms, covenants and conditions of Owner hereunder and Tenant agrees to recognize
the City as Owner hereunder.
Section 37.10. Recordin~ of Lease.
Tenant shall cause this Lease and any amendments hereto to be recorded in the Public
Records of Dade County, Florida promptly after the execution and delivery of this Lease or any
such amendments and shall pay and discharge all costs, fees and taxes in connection therewith;
provided, however, a memorandum of this Lease may be recorded in such public records in place
of the recording of this Lease if, and only if, the parties to this Lease mutually agree upon the
contents of same. In the event the parties to this Lease do not mutually agree as aforesaid, this
Lease in its entirety shall be recorded in such public records and no such memorandum shall be
recorded.
Section 37.11. Notice of Defaults.
Notwithstanding anything to the contrary set forth in this Lease, under no circumstances
shall any party to this Lease lose any right or benefit granted under this Lease or suffer any harm
as a result of the occurrence of any Default or default of such party as to which Default or default
such party has not received notice thereof from the other party.
Section 37.12. COl::porate Obligations.
It is expressly understood that this Lease and obligations issued hereunder are solely
corporate obligations, and, except as otherwise provided in Article 19 and as provided in a
separate personal guarantee of even date herewith from the Guarantor, that no personal liability
will attach to, or is or shall be incurred by, the incorporators, stockholders, officers, members,
partners, holders of other ownership interests, directors, elected or appointed officials (including,
without limitation, the Chairman and Members of the Owner and the Mayor and Commissioners
of the City and the members of any other governing body of Owner) or employees, as such, of
the Owner or Tenant, or of any successor corporation or other successor entity, or any of them,
under or by reason of the obligations, covenants or agreements contained in this Lease or implied
therefrom; and, except as otherwise provided in Article 19 and as provided in separate personal
guaranties of even date herewith from the Guarantor, that any and all such personal liability,
either at common law or in equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer, member, partner, holder of other
A:VNM\CMB\GLEASE. 15(EXECUTION. 1)\ 1 0-16-97 13 8
149
ownership interest, director, elected or appointed official (including, without limitation, the
Chairman and any Member of the Owner and the Mayor and Commissioners of the City and the
members of any other governing body of Owner) or employee, as. such, or under or by reason of
the obligations, covenants or agreements contained in this Lease or implied therefrom are
expressly waived and released as a condition of, and as a consideration for, the execution of this
Lease.
Section 37.13. Nonliability of Officials and Employees.
Except as otherwise provided in Article 19, no member, officer, director, stockholder,
partner, holder of other ownership interest, official or employee of Owner or the City shall be
personally liable to Tenant, or any successor in interest, in the event of any default or breach by
Owner or for any amount or obligation which may become due to Tenant or successor under the
terms of this Lease; and, except as otherwise provided in Article 19, any and all such personal
liability, either at common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such Person, under or by reason of the obligations, covenants or
agreements contained in this Lease or implied therefrom are expressly waived and released as a
condition of, and as a consideration for, the execution of this Lease.
Section 37.14 . No Conflict of Interest.
Tenant represents and warrants that, to the best of its actual knowledge, no member,
official or employee of Owner or the City has any direct or indirect fmancial interest in this
Lease, nor has participated in any decision relating to this Lease that is prohibited by law. Tenant
represents and warrants that, to the best of its knowledge, no officer, agent, employee or
representative of the City or Owner has received any payment or other consideration for the
making of this Lease, directly or indirectly, from Tenant. Tenant represents and warrants that it
has not been paid or given, and will not payor give, any third person any money or other
consideration for obtaining this Lease, other than normal costs of conducting business and costs
of professional services such as architects, engineers, and attorneys. Tenant acknowledges that
Owner is relying upon the foregoing representations and warranties in entering into this Lease and
. . would not enter into this Lease absent the same.
Section 37.15. No Partnership.
The parties hereby acknowledge that it is not their intention under this Lease to create
between themselves a partnership, joint venture, tenancy-in-common, joint tenancy, co-ownership
or agency relationship for the purpose of developing the Hotel, or for any other purpose
whatsoever. Accordingly, notwithstanding any expressions or provisions contained herein, except
for the limited purpose of being co-declarants under the Declaration of Condominium, if any,
nothing in this Lease or the other documents executed by the parties with respect to the Hotel,
whether based on the calculation of Rental or otherwise, shall be construed or deemed to create,
or to express an intent to create, a partnership, joint venture, tenancy-in-common, joint tenancy,
A:VNM\CMB\GLEASE. 15(EXECUTION. 1)\10-16-97 139
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co-ownership or agency relationship of any kind or nature whatsoever between the parties hereto.
The provisions of this Section shall survive Expiration of the Term.
Section 37.16. Time Periods.
Any time periods in this Lease of less than thirty (30) days shall be deemed to be computed
based on business days (regardless of whether any such time period is already designated as being
computed based on business days). In addition, any time period which shall end on a day other
than a Business Day shall be deemed to extend to the next Business Day.
Section 37.17. Radon Notice.
NOTICE REQUIRED BY CHAPTER 88-285, LAWS
OF FLORIDA
Chapter 88-285, Laws of Florida, requires the following notice to be provided with respect
to the contract for sale and purchase of any building, or a rental agreement for any building:
"RADON GAS: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state guidelines have been found
in buildings in Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit. "
Section 37.18.
No Third Party Beneficiaries.
Nothing in this Lease shall confer upon any Person, other than the parties hereto and their
respective successors and permitted assigns, any rights or remedies under or by reason of this
Lease; provided, however, that a Recognized Mortgagee or its Designee shall be a third party
beneficiary hereunder to the extent such Recognized Mortgagee or such Designee is granted rights
hereunder.
Section 37.19.
Relationship of this Lease to Tenant Document.
Tenant acknowledges and agrees that in the event, and to the extent, of any conflict between
the terms of this Lease and the terms of the Tenant Document, the terms of this Lease shall govern
the relationship between Owner and Tenant.
[EXECUTION ON FOLLOWING PAGE]
A:VNM\CMB\GLEASE.15(EXECUTION.1)\ 1 0-16-97 140
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EXECUTION
IN WITNESS WHEREOF, Owner and Tenant, intending to be legally bound, have
executed this Lease as of the day and year first above written.
MIAMI BEACH REDEVELOPMENT AGENCY
/1
(I f
/1' ) 7lA
,/' L-- /}
/Jfl ^ L~~ / / ~ / -(. ... '--^---
(1XJl~ /Q,i ,By: -"""'..-/
Print Name: A l..iC )l~.vtIZ :r . -n:rc,t+rV/~~ Seyrye1ff) elber,
Chairman
''0
ATTEST:
:- ... By: ~cr PMJ~
(' [SEALJ<'; j Robert Parcher, APPROVED AS TO
';_'~ " ,,' T' \.", n-r/ Secretary FORM & L.AN~I'''GE
--', ,>- ." '\ I .: & FOR EXecLmON
,......~..\.~~,,:.:,.~..'~. .".;.,
STATE OF FLORIDA iss: ~. Icl;'l07
COUNTY OF DADE ) G.neral COUnseftncy Date
The foregoing instrument was acknowledged before me this 021 S I day of O~) ,
1997, by Seymour Gelber, as Chairman, and Robert Parcher, as Secretary, of the MIAMI BEACH
REDEVELOPMENT AGENCY, a public body corporate and politic, on behalf of such public body.
They are personally known to me or produced valid Florida driver's licenses as identification.
ytll~
Notary Pub.. , State of Florida
. I). t:ffl
WITNESSES:
~~-2 Q. ~
/ ...~~PrF(~~~~\ 1'hJ~&;:" . EV(j--
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: ;,....;
My commission expires:
WITNESSES:
pq;~t:::t;,~~
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A:VNM\CMB\GLEASE.15(EXECUTION.1 )\1 0-16-97
LILLIAN BEAUCHAMP
NOrARY PUBLIC STATE OF FLORIDA
COMMISSION NO. CC347882
MYCOMMISSlON EXP. FEB. 13,1998
RDP ROYAL PALM HOTEL
LIMITED PARTNERSHIP,
a Florida limited partnership
By: PADC HOSPITALITY CORPORATION I,
. da co ration, as General Partner
141
J~?
STATE OF FLORIDA)
)ss:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ~ay of () ct;;-t-.L1> / ,
1997, by R. Donahue Peebles, as President of PADC Hospitality Corporation I, a Florida corporation,
on behalf of such corporation, and as General Partner of RDP ROYAL PALM HOTEL LIMITED
PARTNERSHIP, a Florida limited partnership, on behalf of such limited partnership. He is
personally known to me or produced a valid Florida driver's license as identification.
,,~
jJA.2... ~tJ~~
otary Publi , State of Florida
Print Name: C /i (',.-J 16e.tl ,) ( h;.. n-> ;0
I
My coriimission expires:
OFFICIAL NOTARY SEAL
ULLlAN GFj,UCHAMI'
NOTARY PUBLlC STATE OF FLORIDA
COMMIS810N NO. CC347882
MY COMMI561ON EXP. PEs. 13.1998
4.... ... ...-. -~-----'
THE CITY OF MIAMI BEACH IS EXECUTING THIS LEASE SOLELY FOR THE
PURPOSES OF BEING BOUND ONLY BY SECTION 14.5, SECTION 19.1(c), SECTION
21.2 AND SECTION 37.9 OF THE FOREGOING LEASE:
WITNESS:
~(j)JL---
Print Name: ALkX'A-NDfJ2 -r:. TAC~-hl-1t?~
CITY OF MIAMI BEACH
~~t\0 ;)[1 ,
By: 'v /+-\ / ..:..' L I~
J ~
Seymow; Gelber,
Mayo~/
~~. ArrES .
'r.
. ..... .
: '" ~
Robert Parcher,
City Clerk
~?A~
APPROvED AS TO
FORM & lANGUAGE
& fOR EXECunON
[SE~]
By:
';" . .:
'. .
STATE OF,;FLORIDA)
. i")S ~ rML
'G.9U~~YOF DADE ) s: f~ _ /pP/o.,
I\ll\l"'~ ~
The foregoing instrument was acknowledged before me thisc:::2/ S;-day of O~~ ,
1997, by Seymour Gelber, as Mayor, and Robert Parcher, as City Clerk, of the CITY OF MIAMI
BEACH, a municipal corporation of the State of Florida, on behalf of such municipal corporation.
They are personally known to me or produced valid Florida driver's licenses as identification.
M commission ex ires:
OFFICIAL NOTARY SEAL
L1LUAN BEAuCHAMP
NOTARY PUBLIC STATE OF FLORIDA
COMMIS8rON NO. CC3478&'2
MY COMMISSION EXP. FEB. 13,1998
~~~.
otary Pub ic, State of Florida .
Print Name:6/ !/f/r1 DpfJt.J('ju/-ftO
I
A:VNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\ 1 0-16-97
142
153
EXHffiIT A
DESCRIPTION OF THE LAND
RP LAND.
The South 12.65 feet (measured along the lot line) of Lots 7 and 14, all of Lots 6
and 15 and the North 10.7 feet (measured along the lot line) of Lots 5 and 16, all
in Block 56, of FISHER'S FIRST SUBDMSION OF ALTON BEACH, according
to the plat thereof, as recorded in Plat Book 2, at Page 77, of the Public Records
of Dade County, Florida, together with that certain parcel of land lying East and
adjacent to the above described parcel; said parcel bounded on the South by the
South line of the above described parcel extended Easterly; bounded on the North
by the North line of the above described parcel extended Easterly; bounded on the
East by the Erosion Control Line of the Atlantic Ocean and bounded on the West
by the East line of the above mentioned Block 56.
SHORECREST LAND
The South 40.00 feet (measured along the lot line) of Lots 5 and 16 and the North
one-half of Lots 4 and 17, all in Block 56, of FISHER'S FIRST SUBDIVISION
OF ALTON BEACH, according to the plat thereof, as recorded in Plat Book 2,'
at Page 77, of the Public Records of Dade County, Florida, together with that
certain parcel of land lying East and adjacent to the above described parcel; said
parcel bounded on the South by the South line of the above described parcel
extended Easterly; bounded on the North by the North line of the above described
parcel extended Easterly; bounded on the East by the Erosion Control Line of the
Atlantic Ocean and bounded on the West by the East line of the above mentioned
Block 56.
All lands described above located, lying and being in Section 34, Township 53 South, Range 42
East, in the City of Miami Beach, Dade County, Florida.
15'1
A:VNM\CMB\GLEASE.15(EXECUTION.l)\ 10-16-97 143
EXHIBIT 2.1
TITLE MATTERS
"
RP LAND AND SHORECREST LAND
1 . Taxes for 1998 and subsequent years.
2. Plat Book 105, at Page 62, Re: Erosion Control Plat/Map.
3. The rights of the United States Government and/or of the State of Florida,
arising by reason of the United States Government's control over navigable
waters in the interest of navigation and commerce, and the inalienable rights
of the State of Florida, in artificially filled-in land which was formerly
navigable waters.
4. Rights, if any, of the public, acquired by previous adverse use or by virtue of
local custom with respect to the special nature of seaside beaches, to use any
part of the land seaward of the natural line of vegetation or of the ~xtreme
high water line, as a public beach or recreation area.
MIA4-531875
144
155
EXHIBIT 6.3(a)-1
DESCRIPTION OF TERRITORY
"
1. All of Metropolitan Dade County, Florida.
2. That portion of Broward County bordered by:
a. The Metropolitan Dade County/Broward County Line to the south;
b. McNab Road to the north;
c. The Atlantic Ocean to the east; and
d. U.S. Interstate 95 to the west.
156
A:VNM\CMB\GLEASE.l5(EXECUTlON.l)\ I 0-16-97 145
EXHIBIT 6.3(a)-2
DESCRIPTION OF TEN (10) YEAR TERRITORY
That portion of Dade County, Florida bordered by:
1. The Dade County line to the north and south,
2. The western boundary of Biscayne Bay and the western boundary of the
northern extension of Biscayne Bay a/k/a the Intracoastal Waterway to the
west, and
3. The Atlantic Ocean to the east;
and excluding Key Biscayne, Florida.
l~l/
A:VNM\CMB\GLEASE.15(EXECUTlON.l)\ 1 0-16-97 146
EXHmIT 6.4 (b)
BENCHMARK HOTELS
CROWNE PLAZA HOTELS IN THE FOLLOWING LOCATIONS:
I. HILTON HEAD ISLAND, SOUTH CAROLINA
130 Shipyard Drive
Shipyard Plantation
Hilton Head Island, S.C. 29928
2. WASHINGTON, DISTRICT OF COLUMBIA
14th and K Streets
Washington, DC 20005
3. RA VINIAI A TLANT A, GA.
4355 Ashfod-Dunwoody Rd
Atlanta, Ga. 30346
4. REDONDO BEACH, CALIFORNIA
300 North Harbor Dr.
Redondo Beach, CA 90277
5. TAMPA, FLORIDA WESTSHORE
700 N. Westshore Blvd.
Tampa, F1 33609
158
147
EXHIBIT 6.4(c)
OPERATIONAL AND PHYSICAL STANDARDS
I.
OPERATIONAL STANDARDS
Category
Relative Weight
1. Reservations
2. Guest Services-Door
3. Guest Services-Bell
4. Front Desk.
5. Concierge
6. Telephone
7. Housekeeping.
8. Laundry Valet
9. Room Service
10. Restaurant
11. Bar/Lounge
12. Group Services-Sales, Catering,
Conference Management
13. Banquets
14. Complaint Handling/Maintenance
Requests
15. Business Amenities.
3%
1%
1%
4%
1%
3%
4%
1%
2%
2%
1%
3%
3%
4%
3%
II. PHYSICAL STANDARDS
Category
Relative Weight
1. Entrance/Lobby/Front Desk.
2. Public Restrooms
3. Dining and Bar Facilities
4.- .' . Lounge Facilities:
Lounges and Lobby Bar/Front Desk
5. Corridors/Elevators/Stairwells
6. Meeting/Pre-Function Facilities.
7. Recreation Facilities
8. Exterior Components
9. Guest Rooms.
10. Guest Bathrooms.
6%
6%
6%
6%
6%
6%
5%
3%
14%
6%
CATEGORIES MARKED WITH AN ASTERISK (*) ARE "DESIGNATED
COMPONENTS"; HOWEVER GUEST ROOMS AND GUEST BATHROOMS ARE A
SINGLE DESIGNATED COMPONENT.
159
A:VNM\CMB\GLEASE.l5(EXECUTION.l)\ 10-16-97 148
OPERATIONAL STANDARDS
1. RESERVATIONS
. Answers phone promptly with professional greeti!J.g
. Informs guest of rate ranges for available rooms
. Knowledgeable of rate variances, reservation and arrival policies
. Able to answer common questions about hotel services, facilities, location
· Requests and clarifies necessary reservation information
· Offers confirmation
· Extends friendly departing comment
2. GUEST SERVICES - DOOR
· Uniformed attendant scheduled at Hotel entrance
· Extends friendly greeting when assisting a guest
· Promptly unloads guest luggage and delivers to bell staff/front desk
· Valet parking services available, which include numbered receipts and secure
storage
· Able to explain parking options and procedures
· Assists guest in procuring a taxi
· Able to provide directions to popular destinations
· Able to answer common questions and provide information about hotel services
and facilities
· Staff neatly uniformed and groomed
160
A:VNM\CMB\GLEASE.I 5(EXECUTION. 1)\ 10-16-97 149
3. GUEST SERVICES - BELL
· Luggage assistance available for check in and check out
.
Luggage storage available
"
· Extends friendly greeting when assisting a guest
· Efficiently delivers luggage to guest room, placing appropriately
· Able to provide information about room features, hotel services and facilities and
to answer common questions
· Efficiently assists guests checking out by picking up luggage from guest room
· Staff neatly uniformed and groomed
· Extends friendly departing comment
4. FRONT DESK
· Provides courteous, prompt, efficient check in and check out
· ConfIrms rate, room type and departure by presenting written information at check
in
· Discreetly gives room number and provides room key
· Arranges for bell staff to help guests who wish luggage assistance
· Express or video check out service available
· .. Provides copy of bill for review
· Posts to guest's account appropriately
· Able to deliver phone messages
· Able to answer common questions and provide information about room features,
hotel services and facilities
· Staff neatly uniformed and groomed
· Extends friendly departing comment
161
A:VNM\CMB\GLEASE.15(EXECUTION.l)\10-16-97 150
5. CONCIERGE
· Staff available to handle requests professionally and efficiently
· Able to answer common questions and provide information about local area
attractions, events, restaurants, shopping, transportation, etc.
· Able to provide directions/maps to popular destinations
· Able to answer common questions and provide information about hotel services
and facilities
· Staff neatly uniformed and groomed
· Follows-up on open guest requests and questions
6. TELEPHONE
· Calls answered promptly
· Answers phone with professional greeting
· Prompt, efficient message service
· Wake up call requests executed properly
· Able to answer common questions and provide information about hotel services
and facilities
· Extends friendly departing comment
7.- .' . HOUSEKEEPING
· Rooms cleaned daily to a proper level of cleanliness
· Carts are orderly and clean
· Room is entered after knocking
· Room cleaning includes emptying trash, changing linens, providing room/bath
supplies and amenities, dusting and vacuum
· Room items commonly requested are available and delivered promptly
· Staff neatly uniformed and groomed
A:VNM\CMB\GLEASE.15(EXECUTION.1 )\1 0-16-97
151
162
8. LAUNDRY VALET
· Extend courteous and friendly service
· Drop-off procedure appropriately explained
· Dry cleaning and laundry professionally done and delivered on a reasonably timely
basis
· Garments attractively presented
· Receipts attached or provided
· Staff neatly uniformed and groomed
· Special requests retrieved and delivered promptly
9. ROOM SERVICE
· Private dining in guest room available
· Professionally printed menu available with suitable selection of food/beverage
· Answers phone promptly with professional greeting
· Able to answer common questions and provide information about
menu/food/beverage items
.
Gives time estimate for delivery
.
Delivers order professionally and efficiently
.
Sets up table/tray according to guest request
.
Extends friendly departing comment
.
Food is fresh in taste and attractively presented on table/tray with appropriate
accompaniments
.
Portions are adequate and consistent
.
Presents bill for guest approval
.
Tray removed from guest room/hall as requested
163
A:VNM\CMB\GLEASE.l 5(EXECUTION, 1)\ 1 0-16-97 152
10. REST AURANT
· Extends friendly greeting when seating a guest
· Seats guests promptly
· Professionally printed menu presented with suitable selection of food/beverage
· Able to answer common questions and provide information about menu
food/beverage items
· Delivers order professionally and efficiently
· Food is fresh in taste and attractively presented with appropriate accompaniments
· Portions are adequate and consistent
· Presents bill for guest approval and processes payment promptly
· Extends friendly departing comment
· Tables promptly set and reset
· Reservations made and honored in a professional manner
11. BAR/LOUNGE
· Able to answer common questions and provide information about beverage items
· Delivers order professionally and efficiently
· Presents bill for guest approval and processes payment promptly
· Extends friendly departing comment
· Tables promptly cleared
12. GROUP SERVICES - SALES. CATERING. CONFERENCE MANAGEMENT
.
Greets clients professionally
.
Obtains relevant information about group
.
Uses selling materials including distinctive hotel brochures and banquet menus
A:VNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\1 0-16-97
153
164
· Professionally describes hotel facility and services
· Able to quote menu prices, room rates, rental charges
· Knowledgeable of credit policies, booking process and other group related hotel
policies
· Asks specific questions about group's meeting plans, making arrangements
accordingly
· Competently addresses group requests
· Follows-up on initial meeting, when appropriate
13. BANQUETS
· Meeting rooms set as requested
· Meeting rooms refreshed as scheduled
· Extends friendly greeting when assisting a guest
· Delivers order professionally and efficiently
· Food is fresh in taste and attractively presented with appropriate accompaniments
· Portions are adequate and consistent
· Staff neatly uniformed and groomed
· Audio/visual equipment, available, properly set-up and in working order
14. COMPLAINT HANDLING/MAINTENANCE REQUESTS
· Staff trained in customer care technique
· Guests know where to make special requests/complaints, if appropriate
· Complaint and special requests handled efficiently and promptly, taking into
account nature and severity of item
· Staff uniformed and neatly groomed
· Staff helpful and courteous
165
A:VNM\CMB\GLEASE.l5(EXECUTION.l)\10-16-97 154
15. BUSINESS AMENITIES
· Staff available to handle requests professionally and efficiently
.
Staff adequately trained
"
· Staff able to answer common questions and provide information about services and
facilities provided
· Staff neatly uniformed and groomed
· Adequate facsimile, mail/package, duplicating, conference call, computer and
print-out services available to handle guest requests promptly
· Secretarial/word processing services available to guests
· In-coming facsimiles and mail/packages delivered promptly to guests
· Directory of local business services/resources available
166
A:VNM\CMB\GLEASE.I5(EXECUTION.I)\10-16-97 155
PHYSICAL STANDARDS
1. ENTRANCE/LOBBY/FRONT DESK
"
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, ceilings, doors, vents, windows, etc.; well
maintained.
.
Condition/FF&E
Carpet, wall treatment, furnishings, window treatment,
telephone areas, lighting, etc.; well maintained.
Well organized and free of clutter; well maintained.
.
Front Desk
.
Signage
Professionally prepared; well maintained.
.
HVAC
Performs in accordance with specifications; well maintained.
.
Safety/Security
Areas safe and secure. Emergency exits properly identified.
Key access and control areas properly secured. Emergency
lighting present and operable.
2. PUBLIC RESTROOMS
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, ceilings, vents, doors, etc.; well maintained.
.
Condition/FF&E
Vanities, toilets and seats, urinals, chrome, wall treatment,
lighting, mirrors, etc.; well maintained.
.
Partitions/Privacy
Sufficient for privacy; locks operable; well maintained.
-'.. -
Signage
Professionally prepared; well maintained.
.
HVAC
Performs in accordance with specifications; well maintained.
.
Amenities
Soap, towels, toilet tissue, waste receptacles, etc., provided.
3. DINING AND BAR FACILITIES
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, ceilings, vents, doors, etc.; well maintained.
.
Condition/FF&E
Carpet, buffets, wall treatment, light fixtures, high chairs,
window treatment, cashier's counter, etc.; well maintained.
A:VNM\CMB\GLEASE.15(EXECUTION.I)\ 1 0-16-97
156
167
.
Condition/
FF&E Seating
Tables, chairs, bar stools, booths, etc; well
maintained.
Shielded, organized.-
China, glassware, flatware, linens, condiment containers,
etc., clean. Menus in good condition. Professionally
prepared. Variety provided.
Performs in accordance with specifications; well maintained.
Areas safe and secure. Emergency exits properly identified.
Key access and control areas properly secured. Emergency
lighting present and operable.
4. LOUNGE FACILITIES; LOUNGES AND LOBBY AREA
.
Service Areas
Overall clean.
Floors, walls, doors, ceilings, windows, etc.; well
maintained.
Carpet, wall decor, wall treatment, light fIxtures, window
treatment, etc.; well maintained.
Clean; well maintained.
Organized; well maintained.
Performs in accordance with specifications; well maintained.
Areas safe and secure. Emergency exits properly identified.
Key access and control areas properly secured. Emergency
lighting present and operable.
5. CORRIDORS/ELEV A TORS/STAIRWELLS
.
Table Top/Menus
.
HVAC
.
Safety /Security
.
Cleanliness
.
Condition/Structure -
.
Condition/FF&E
.
Glassware
.
Bar/Service Areas
.
HVAC
.
Safety/Security
.
Cleanliness
.
Condition/Structure -
.
Condition/FF&E
.
Elevators/Stairwells -
A:VNM\CMB\GLEASE.15(EXECUTION.I)\! 0-16-97
Overall clean.
Floors, walls, railings, doors, frames, room numbers,
ceilings, windows, etc.; well maintained.
Carpet, wall treatment, window treatment, furnishings,
telephone areas, lighting, etc.; well maintained.
Well maintained; operating properly.
157
168
.
Ice Machines
Well maintained; operating properly.
Performs in accordance with specifications; well maintained.
Proper storage. Required emergency lighting and
equipment present; operable.
Adequate; well maintained.
6. MEETING/PRE-FUNCTION FACILITIES
.
HVAC
.
Safety /Security
.
Signage
.
Cleanliness
.
Condition/Structure -
.
Condition/FF&E
.
Movable Walls
.
HVAC
.
Equipment
.
Signage
.
Safety/Security
7. RECREATION FACILITIES
'.' -
Cleanliness
.
Condition/Structure -
.
Condition/FF&E
.
Exterior Pool
.
Interior pool/Sauna
A:VNM\CMB\GLEASE. 15(EXECUTION. 1)\ 1 0-16-97
Overall clean.
Floors, walls, doors, ceilings, windows, etc.; well
maintained.
Carpet, wall decor, wall treatment, furnishings, window
treatment, telephone areas, lighting, etc.; well maintained.
Operable; well maintained.
Performs in accordance with specifications; well maintained.
Operable; well maintained.
Adequate; well maintained.
Areas safe and secure. Emergency exits properly identified.
Key access and control areas properly secured. Emergency
lighting present and operable.
Overall clean.
Floors, walls, doors, ceiling, vents, windows, etc.; well
maintained.
Carpet, wall treatment, furnishings, lighting, pool cover,
etc.; well maintained.
Operable in accordance with specifications; well maintained;
paint, caulking, grouting and tiling in good condition; odor-
free; water clear; properly treated.
Operable in accordance with specification; well maintained;
odor-free; water clear; properly treated.
158
169
.
Equipment
Exercise machines clean; operable; well maintained.
.
Safety /Security /
Signage/Phone
Required safety equipment present; signage adequate;
professional; well maintained; emergency lighting present
and operable.
.
HVAC
Performs in accordance with specifications; well maintained.
8. EXTERIOR COMPONENTS
.
Cleanliness
Overall clean.
.
Condition/Structure -
Stairs, railings, windows, doors, frames, walkways, walls,
roof, storage areas, etc.; well maintained.
.
Canopy
Well maintained; clearance height posted.
.
On- Site Garage
Adequately striped, lighted; well maintained.
.
Driveway/Curbs/
Sidewalks
Well marked; clean; curbs, curb stops, sidewalks; etc.; well
maintained.
.
Signage
Adequate; professionally prepared; in good condition and
well maintained.
. Safety /Security Areas safe and secure. Emergency lighting present and
operable.
. Building Facade/
Exterior Clean; windows clean.
,. Entry Doors Clean; well lighted; well maintained.
. Landscape Free of weeds, litter, debris; healthy; well-kept.
9. GUEST ROOMS
.
Cleanliness
Overall clean; artwork, windows, and mirrors cleaned.
.
Bedding
Mattresses and box springs in proper condition and well
maintained.
.
Condition/Structure -
Floors, walls, ceilings, closets, doors, windows, vents, etc.;
in appropriate condition and well maintained.
A:VNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\10-16-97
159
170
.
Cosmetic Package
.
Case Goods
.
Condition/Other
FF&E
.
Bed Linens
.
HVAC
.
Television/Radio/
Telephone/Clock
.
Safety /Security
10. GUEST BATHROOMS
- '. -
.
Cleanliness
.
Expendable Supplies -
.
Condition/Structure -
Vanity /Fixtures
.
Bath/Fixtures
.
Lighting/Mirrors
.
Tub Wall/Grouting
.
Linens
A:VNM\CMB\GLEASE.15(EXECUTION.1 )\1 0-16-97
Carpet, window treatments, wall treatment, decor, etc.; well
maintained.
Mirrors, credenzas, clothes, racks, nightstand(s), desks,
desk chairs, headboards, etc.; well maintained.
Chairs, sofas, tables, lighting, etc.; in appropriate condition
and well maintained.
Mattress pads, pillows, bedspreads, linens, blankets, etc.;
well maintained.
Performs in accordance with specifications; m good
condition and well maintained.
Well maintained; working properly; good quality picture
and sound. Television programs listings of current date.
Remote control operative.
Deadbolts, chain latches, door viewers, connecting door
hardware, etc.; present, operable and well maintained.
Overall clean.
Required expendable supplies present; proper quantities.
Floors, walls, doors, ceilings, etc.; in appropriate condition
and well maintained; clean and free of hair.
Vanities, chrome, basin(s), soap dishes, towel bars, shelves,
etc.; well maintained.
Toilets, tubs, showers, shower curtains and rods,
showerheads, towel bars and shelves, soap dishes, chrome,
etc.; well maintained.
Well maintained; clean and operable.
Well maintained; clean.
Bath towels, hand towels, washcloths, bathmats;
proper quantity and size and weight.
160
171
.
Exhaust/Vents
.
Safety/Security
A:VNM\CMB\GLEASE. 1 5(EXECUTION. 1 )\1 0-16-97
Performs in accordance with specifications.
Tub non-slip provisions present; in appropriate condition
and well maintained; grab bars present and secure.
161
1~,2
EXHIBIT 8.2
ARTICLE 2 OF HOTEL DEVELOPMENT AGREEMENT
ARTICLE 2.
CONSTRUCTION
Section 2.1 Conditions Precedent to Developer's Commencement
of Construction ofthe Project.
(a) Developer shall (subject to Unavoidable Delays) obtain all Permits and Approvals
by not more than one (1) year from the Commencement Date. Subject to Section 2.1(c), Developer shall
not Commence Construction of the Project unless and until (i) Developer shall have obtained and delivered
to the Owner's Consultant copies of all Permits and Approvals required to Commence Construction and (ii)
Developer shall have delivered to the Owner original certificates of the policies of insurance required to be
carried pursuant to the provisions of Article 7 of this Agreement.
(b) The Owner (solely in its capacity as the owner of the Project Site and not in its
governmental capacity) shall reasonably cooperate with Developer in obtaining the Permits and Approvals
required by Section 2.1(a) and any necessary utility access agreements, shall sign any application reasonably
made by Developer which is required in order to obtain such Permits and Approvals and utility access
agreements and shall provide Developer with any information and/or documentation not otherwise
reasonably available to Developer (if available to the Owner) which is necessary to procure such Permits
and Approvals and utility access agreements. Any such accommodation by Owner shall be without
prejudice to, and shall not constitute a waiver of, Owner's rights to exercise its discretion in connection with
its governmental functions. Developer shall reimburse the Owner, within ten (10) days after the Owner's
demand, for any reasonable out-of-pocket cost or expense payable to the Owner's technical consultants
(other than the Owner's Consultant and Owner's employees), such as architects and engineers, so incurred
by the Owner in connection with Owner's assistance in obtaining the Permits and Approvals and utility
. access agreements required by Section 2.1(a).
(c) Developer shall not Commence Construction of the Project, or any portion thereof,
unless and until the Owner shall have approved the Plans and Specifications (to the extent required herein).
However, if Developer chooses to perform any Construction of the Project on a "fast-track" basis,
Developer may request the necessary approval of the Owner in stages and perform that portion of the
Construction Work which has been approved (provided Developer shall comply with all other requirements
with respect to such portion of the Construction Work), even if progress plans and specifications for other
portions of the Construction Work have not yet been prepared.
(d) Prior to Commencement of Construction of the Project, Developer shall furnish to
Owner a completion guarantee (the "Completion Guarantee"), in the form attached hereto and
incorporated by reference herein as Exhibit 2.1(d), from Guarantor, pursuant to which, among other matters,
Guarantor guarantees timely completion of the Project.
( e) Payment and Performance Bond. Prior to Commencement of Construction of the
Project, Developer shall cause the General Contractor to furnish to Owner a payment and performance bond
A:VNM\CMB\GLEASE.15(EXECUTION.I)\ 1 0-16-97
162
173
(the "Payment and Performance Bond"), in a form reasonably acceptable to Owner, issued by a surety
listed in the most recent United States Department of Treasury listing of approved sureties, guaranteeing the
performance of the General Contractor under that certain guaranteed maximum price contract for the
Construction of the Project. Owner may accept, in its sole and absolute discretion, for any reason and for
no reason whatsoever, a completion guarantee from the General Contractor in substitution for such Payment
and Performance Bond. Owner shall be named as a dual obligee under the Payment and Performance Bond;
provided, however, Owner's rights under the Payment and Performance Bond shall be subordinate to the
Recognized Mortgagee's (as defined in the Lease) rights under the Payment and Performance Bond and
Owner shall agree in writing with such Recognized Mortgagee that Owner shall only seek to enforce its
rights under the Payment and Performance Bond if the Ground Lease is terminated and such Recognized
Mortgagee fails to exercise its rights under Section 11.6 of the Ground Lease for the execution of New
Tenant's Documents (as defined in the Ground Lease).
Section 2.2 Commencement and Completion of Construction of the PrQject.
Developer shall, subject to Unavoidable Delays, at its expense (a) Commence Construction on or
before sixty (60) days after all Permits and Approvals necessary for the Commencement of Construction
are issued (the "Construction Commencement Date") and (b) thereafter continue to prosecute
Construction of the Project with diligence and continuity to completion. If, after Developer has Commenced
Construction, Developer fails to diligently prosecute Construction of the Project (subject to Unavoidable
Delays), and such failure continues (subject to Unavoidable Delays) for thirty consecutive (30) days after
Developer's receipt of notice of such failure, the Owner shall, in addition to all of its other remedies under
this Agreement and the Ground Lease, have the right to seek such equitable relief (either mandatory or
injunctive in nature) as may be necessary to cause diligent and continuous prosecution of Construction of
the Project (subject to Unavoidable Delays) by Developer, it being understood that Construction of the
Project is a material inducement to the Owner to enter into the Ground Lease and monetary damages shall
be inadequate to compensate the Owner for harm resulting from such failure. Notwithstanding anything to
the contrary contained herein, if Developer fails to Substantially Complete Construction of the Project by
the Default Date, then the same shall constitute an Event of Default under this Agreement and under the
Ground Lease and the Owner shall be entitled to all of its remedies hereunder and thereunder, including,
without limitation, the termination of this Agreement and the Ground Lease. Notwithstanding anything to
the contrary contained in this Agreement, the Default Date shall not be extended by reason of Unavoidable
Delay.
Section 2.3 Completion of Construction of the Proiect.
(a) Substantial Completion of the Project shall be accomplished in a diligent manner, and
in any event by the Completion Deadline, and final completion of the Construction of the Project, including
but not limited to completion of all punch-list items, shall be accomplished in a diligent manner thereafter,
in each case in a good and workerlike manner, in substantial accordance with the Plans and Specifications,
in accordance with all applicable Requirements and, except as provided in Article 6, at Developer's sole
cost and expense.
(b) Upon Substantial Completion of Construction of the Project, Developer shall furnish
the Owner with the following:
174
A:VNM\CMB\GLEASE.15(EXECUTION.1 )\1 0-16-97 163
(i) a certification of the Architect (certified to the Owner on the standard AlA
certification form) that it has examined the Plans and Specifications and that, in its
professional judgment, after diligent inquiry, Construction of the Project has been
Substantially Completed in accordance with the Plans and Specifications applicable thereto
and, as constructed, the Improvements comply with all applicable Requirements;
(ii) if Requirements require the same, a copy or copies of the temporary
certificates of occupancy for the Hotel (or portion thereof, as applicable) issued by the City
of Miami Beach Building Department;
(iii) lien waivers in form and substance reasonably satisfactory to Owner from
each contractor, subcontractor, supplier or materialman retained by or on behalf of Developer
in connection with the Construction of the Project, evidencing that such Persons have been
paid in full for all work performed or materials supplied in connection with the Construction
of the Project;
(iv) a complete set of "as built" plans and a survey showing the Improvement(s)
(excluding personalty) for which the Construction of the Project has been completed. The
Owner shall have an unrestricted license to use such "as built" plans and survey for any
purpose related to the Project Site without paying any additional cost or compensation
therefor, subject to copyright and similar rights of the Architect to prohibit use of designs for
purposes unrelated to the Project Site, as such rights exist in law or may appear in the
Architect's contract, and subject to applicable public records laws. The foregoing
requirement with respect to "as built" plans shall be satisfied by Developer furnishing to the
Owner, at Developer's expense, a complete set of Plans and Specifications, with all addenda
thereto and change orders in respect thereof, marked to show all changes, additions, deletions
and selections made during the course of the Construction of the Project;
(v) a Contractor's Final Affidavit in form and substance reasonably satisfactory
to Owner executed by the General Contractor (i) evidencing that all contractors,
subcontractors, suppliers and materialmen retained by or on behalf of Developer in
connection with the Construction of the Project have been paid in full for all work performed
or materials supplied in connection with the Construction of the Project; and (ii) otherwise
complying with all of the requirements under the Florida Construction Lien Law, Chapter
713, Florida Statutes, as amended; and
(vi) evidence that all FF&E necessary to use and operate the Hotel in accordance
with the Ground Lease, Management Agreement, Plans and Specifications and the
Development Budget has been installed in the Hotel.
175
A:VNM\CMB\GLEASE.15(EXECUTION.I)\ 10-16-97 164
EXHIBIT lO.l(c)(i)(l)
SOURCES AND USES OF CASH
r,6
A:VNM\CMB\GLEASE.I 5(EXECUTION. I )\ 1 0-16-97
165
EXHIBIT 14.5
TERMS OF CONCESSION AGREEMENT (the "Concession Agreement")
1. Parties.
The City of Miami Beach, its successors and assigns.
Tenant, its successors and assigns, as concessionaire.
2. ThIm.
Five (5) years, renewable by Tenant every five (5) years during the Term of this Lease, but
expiring on March 31, 2023. Notwithstanding the preceding sentence, upon an Event of Default
under this Lease that results in a termination of this Lease, the Concession Agreement shall
terminate.
3. Location.
The Concession Agreement shall cover the beach concession for the area of the beach west and
east of the sand dunes immediately adjacent to the Hotel and having a width from the northerly
boundary to the southerly boundary of the Land (the "Concession Area").
4. Uses and Services.
Tenant will conduct only the following types of businesses and provide only the following
services:
4.1 Food and/or beverage services from pushcarts or other mobile vehicles and, if permitted
under concession agreements entered into by the City with other beach concessionaires, from permanent
locations as may be designated or permitted by the City.
4.2 Rental of beach equipment, including, but not limited to, chairs, umbrellas, rafts or other
flotation devices.
4.3 Sale of clothing and beach products.
4.4 Rental of special recreational equipment, including, but not limited to, surfboards,
windsailing, catamarans and jet skis. Any special water recreational activity shall be subject to the prior
approval of the Marine Authority and any other Governmental Authority whose approval is required and
shall be permitted only if Tenant obtains, at Tenant's sole cost and expense, insurance required and
approved by the City.
4.5 Special Events (as hereinafter defmed) desired by Tenant; provided, that any Special Event
shall be subject to the prior approval of the City.
A:VNM\CMB\GLEASE.15(EXECUTION.l)\ 1 0-16-97
166
177
4.6 Such other businesses and services permitted by the applicable Governmental Authorities
to be conducted by other beach concessionaires from time to time.
5. Facilities.
All facilities (which may not be permanently situated structures and which must movable on a
daily basis, except that Tenant may erect permanently situated structures that are similar to any
permanently situated structures that the City permits other beach concessionaires to erect on the
beach) used in connection with the Concession Agreement shall be constructed or provided by
Tenant, at Tenant's sole cost and expense, in accordance with Requirements and the provisions
this Lease as if such facilities were part of the Premises. Tenant shall maintain such facilities at
its sole cost and expense and in accordance with Requirements and the provisions of this Lease
as if such facilities were part of the Premises. Without limiting the foregoing, Tenant shall each
day remove or cause the removal of all litter, garbage and trash in the Concession Area. The
Concession Agreement shall have no effect on Owner's obligations pursuant to Section 14.5 of
the Lease. In addition, the City will have the right to require Tenant to post, at Tenant's sole cost
and expense, a performance bond for beach concessions similar to that required of other owners
or operators of hotels in Miami Beach of a similar size and location as the Hotel, in an amount
and on such terms, and issued by a surety company, reasonably satisfactory to Owner, in order
to secure such removal obligations.
6. Concession Fees.
Tenant shall pay to the State of Florida concession fees in the amount, if any, required from time
to time by law or regulation by the State of Florida. Such fees will be subject to sales and use
taxes. Concession fees shall be net to the State of Florida.
7. Special Events.
The Concession Agreement shall provide for exclusivity for Tenant within the Concession Area.
The City will, however, have the right to allow other concessionaires to operate upon the
Concession Area covered by the Concession Agreement during Special Events approved by the
City. The Concession Area will be for the use of the public for recreation and other public
purposes, and the public's right to such use shall not be infringed upon by any activity of Tenant.
The City shall not be precluded from using the Concession Area for public and/or civic purposes
as deemed necessary or desirable. For purposes of the Concession Agreement, the term "Special
Event" shall mean a concert or other attraction which will involve production expenses of at least
Two Hundred Fifty Thousand Dollars ($250,000.00), adjusted for inflation as provided in the
Lease, including, without limitation, expenses in connection with talent and accommodations
therefor, advertising and promotion, security, beach area clean-up, insurance, and legal and other
professional expenses.
8. Requirements.
Tenant will obtain all permits and licenses necessary for the conduct of the business and other
activities under the Concession Agreement, and Tenant will comply with all other Requirements
applicable to such business and other activities.
A:VNM\CMB\GLEASE.1 5(EXECUTION .1)\ 10-16-97
167
1~'8
9. Utilities.
Tenant will be responsible for, and shall pay for, all utilities used in connection with the business
and other activities under the Concession Agreement.
"
10. Sil:"na~e.
Subject to Requirements, Tenant shall have the right to advertising, signage and postings desired
by Tenant in the Concession Area of a type and manner allowed to owners or operators of hotels
in Miami Beach of a similar size and location as the Hotel, subject to the prior approval of the
City, if such approval is required of other owners or operators of hotels in Miami Beach of a
similar size and location as the Hotel.
11. Books and Records
The City will have the right to examine and audit Tenant's books and records regarding the
Concession Agreement in the manner provided in Article 28 of this Lease.
12. Insurance: Indemnification.
Tenant will be required to provide the City with insurance consistent with the provisions of
Article 7 of this Lease. The Concession Agreement shall contain indemnification 'provisions
consistent with the provisions of Article 20 of this Lease.
13. Employees: Mana~ers: Hours of Operation.
The Concession Agreement will contain provisions governing employees, managers and hours of
operation as then required by the City for concession agreements with owners or operators of
hotels of a similar size and location as the Hotel.
14. No Lease.
The Concession Agreement shall not constitute a lease and the Tenant shall not be a tenant
- . thereunder or of the Concession Area.
1179
A:VNM\CMB\GLEASE.15(EXECUTION.l )\1 0-16-97 168
15. Definitive Al:"reement.
The foregoing provisions of this Exhibit 14.5 only summarize certain of the terms and provisions
of the Concession Agreement. The actual rights and obligations of Tenant and the City shall be
only as set forth in the Concession Agreement, and the Concession Agreement shall contain the
terms and conditions set forth above and such other terms and provisions not inconsistent with the
foregoing provisions of this Exhibit 14.5 for concession agreements granted to the owners or
operators of hotels in Miami Beach of a similar size and location as the Hotel. Without limiting
the preceding sentence, upon each renewal of the Concession Agreement, the Concession
Agreement will be modified to include such terms and conditions then included in concession
agreements granted to the owners or operators of hotels in Miami Beach of a similar size and
location as the Hotel; provided, however, that such terms and conditions are not inconsistent with
the foregoing provisions of Exhibit 14.5.
180
A:VNM\CMB\GLEASE. 1 5(EXECUTlON. 1 )\ 10-16-97 169
EXHIBIT 25.1(c)
LIST OF PROJECT AGREEMENTS
"
Hotel Development Agreement
Garage Easement Agreement
Convention Center Agreement
181
A:VNM\CMB\GLEASE.l5(EXECUTION.l)\10-16-97 170
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EXHIBIT 36.2(a)
TERMS OF RIGHT OF FIRST OFFER TRANSACTION
"
1. Purchase Price.
The Purchase Price shall be as set forth by the Owner in the Offer Notice and shall be payable at
the closing of the purchase by wire transfer of immediately available funds to an account
designated in writing by the Owner. The Purchase Price may not include seller-financing unless
the Owner is an Institutional Lender or an Affiliate of an Institutional Lender. The purchaser shall
not be permitted to make its obligation to close contingent on obtaining third-party fmancing.
2. Closiul:" Date.
The closing of the purchase shall take place on a date designated by the Owner, but in any event
not less than thirty (30) days nor more than sixty (60) days following the date such Owner
executes a purchase agreement with the purchaser.
3. Deed: Title.
At the closing of the purchase, Owner shall convey to the purchaser (i) all of Owner's right, title
and interest in and to the Premises by a special warranty deed and (ii) all of Owner's right, title
and interest in and to this Lease by an assignment of lease. The form of such deed and assignment
of lease shall be mutually acceptable to Owner and Tenant but shall not in any event provide for
any representations by Owner other than a representation that Owner has not theretofore
transferred or assigned the items being transferred or conveyed thereby and the representations
and warranties customarily contained in a special warranty deed. Owner's Interest in the Premises
and the Lease shall be conveyed to Tenant subject to all liens, encumbrances and other matters
then affecting the title thereto and any state of facts a survey may reveal (but in all cases subject
to Owner's obligations under Section 2.2 of the Lease). Owner shall also execute all other
documents customarily used in real estate transactions in Metropolitan Dade County, Florida;
provided, however, that if Owner is a Governmental Authority, (x) such documents shall not
- include those documents from which Governmental Authorities are exempt pursuant to applicable
Requirements and (y) with respect to any title affidavit required of Owner, (i) Owner shall not be
required to make any statement or certification regarding parties-in-possession and (ii) any
statement or certification regarding mechanics' or materialmen's liens shall cover only work or
materials directly contracted for by Owner in writing.
4. Rent: Prorations.
At the closing of the purchase, all Rental shall be prorated through the date of closing and paid
to the party entitled thereto. No other prorations shall be made.
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5. Expenses.
Each party shall pay its own attorneys' fees. All transfer taxes, title charges, recording fees,
survey charges and other expenses incurred in connection with the purchase shall be paid by
Tenant; provided, however, that Owner shall pay all documentary stamp taxes and surtax, if any,
payable in connection with the purchase.
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