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Hotel Mgmt Agrmnt #9 HOTEL MANAGEMENT AGREEMENT between MB REDEVELOPMENT, INC. and LOEWS MIAMI BEACH HOTEL OPERATING COMPANY, INC. Dated as of September J...o , 1996 MI962600.003/09/2096 R E C I TAL S ..............................................................................................................................1 ARTICLE 1 DEFINITIONS......... ................... ...... ............. .......... ........... ........... .........................2 ARTICLE 2 CONSTRUCTION OF HOTEL BY HOTEL OWNER .....................................7 ARTICLE 3 TECHNICAL SERVICES IN PRE-OPENING STAGE....................................8 ARTICLE 4 PRE-OPENING SERVICES BY OPERATOR ...................................................9 ARTICLE 5 OPENING DATE; TERM ...................................................................................1 0 ARTICLE 6 OPERATION OF THE HOTEL......................................................................... 12 ARTICLE 7 OPERATOR TO ACT SOLELY AS REPRESENTATIVE OF HOTEL OWNER................................................................................................................14 ARTICLE 8 HOTEL OWNER TO BEAR ALL OPERATING EXPENSES ......................15 ARTICLE 9 ADVERTISING..................................................................... ............................ ...15 ARTICLE 10 WORKING CAPITAL AND BANK ACCOUNTS .........................................16 ARTICLE 11 BOOKS, RECORDS AND STATEMENTS ....................................................17 ARTICLE 12 ANNUAL PLAN; BUDGET; AND POLICY MEETINGS............................18 ARTICLE 13 OPERATOR'S MANAGEMENT FEE AND PAYMENT TO OPERATOR AND HOTEL OWNER .......................................................................................19 ARTICLE 14 HOTEL REVENUE AND OPERATING EXPENSES; PAYMENT OF DEBT SERVICE................................................................................................ ..20 ARTICLE 15 FF &E RESERVE ACCOUNT ..........................................................................22 ARTICLE 16 REPAIRS AND MAINTENANCE AND CAPITAL IMPROVEMENTS ....24 ARTICLE 17 INSURANCE. ..................................................................................................... .24 MI962600.003/09120/96 -i- ARTICLE 18 REAL AND PERSONAL PROPERTY TAXES, LEVIES AND OTHER ASSESSMENTS ...................................................................................................26 ARTICLE 19 USE OF NAME "LOEWS".... ........ ..... ......................... ............................... ......27 ARTICLE 20 HOTEL OWNER NOT TO USE NAME "LOEWS" IN OBTAINING FINANCING ....................................................................................................... .28 ARTICLE 21 DAMAGE OR DESTRUCTION; CONDEMNATION ..................................29 ARTICLE 22 TITLE TO HOTEL................................... ........................................................ .30 ARTICLE 23 EVENTS OF DEF AUL T....................................................................................31 ARTICLE 24 SALE OF HOTEL..............................................................................................3 2 ARTICLE 25 TRANSFER BY OPERATOR ..........................................................................34 ARTICLE 26 INDEMNIFICATION........................................................................................3 5 ARTICLE 27 MISCELLANEOUS............................................ ...............................................36 ARTICLE 28 NOTICES, CONSENTS AND APPROV ALS..................................................39 ARTICLE 29 BINDING EFFECT ON SUBSEQUENT HOTEL OWNERS AND MORTGAGEES....................................... ......... ................................................. .41 EXHIBIT A PREMISES.......................................................................................................... ..45 EXHIBIT B TERRITORy............................................. ............ .............................................. .46 -ii- MI962600.003/09120196 HOTEL MANAGEMENT AGREEMENT made as of the ~O~ day of September, 1996, between MB REDEVELOPMENT, INC., a Florida corporation, ("Hotel Owner"), and LOEWS MIAMI BEACH HOTEL OPERATING COMPANY, INC. a Delaware corporation ("Operator"). RECITALS: -------- A. The Miami Beach Redevelopment Agency (the "Agency") and Hotel Owner have entered into a Ground Lease dated as of September _, 1996 (the "Ground Lease") providing for, among other things, the lease by the Agency to Hotel Owner of the land known as Site I-A (as more fully described on Exhibit A hereto, the "Land") and a Hotel Development Agreement (the "Hotel Development Agreement") dated as of September _, 1996 providing for the development and construction by Hotel Owner on the Land of a first class convention center hotel. B. The Agency and Hotel Owner have entered into a Garage Easement Agreement dated as of September _, 1996 (the "Garage Easement Agreement") providing for, among other things, the grant of an easement for the benefit of the Hotel for parking at a municipal parking garage to be constructed and owned by the Agency on the land described therein. C. Operator and its Affiliates are experienced in the planning, decorating, furnishing, equipping and promoting of hotels in the United States and in foreign countries; and also experienced in advising third parties in connection with the installation, management and operation of hotels. D. Operator and its Affiliates manage and operate hotels which cater to the tourist, convention and business trade and are known as the "LOEWS Hotels Chain" . E. Hotel Owner desires that Operator furnish to Hotel Owner and Operator desires to furnish to Hotel Owner the necessary technical assistance and management services in order that the hotel to be developed and constructed by Hotel Owner may obtain the benefits deriving from the reputation of the name LOEWS and from the experience and know-how of Operator and its Affiliates in the said activities. NOW, THEREFORE, Hotel Owner and Operator covenant and agree as follows: MI962600,003/09/16/96 ARTICLE 1 DEFINITIONS For all purposes of this Agreement, the terms defined in this Article I shall have the following meanings and the other provisions of this Article I shall apply: "Accounting Principles" means the Uniform System of Accounts for Hotels Eighth Revised Edition 1986 (as in effect on the date hereof), except as otherwise provided by this Agreement, with such changes as Hotel Owner and Operator shall mutually agree are consistent with this Agreement in order to reflect technologies and methodologies not addressed in the Accounting Principles. "Additional Reserve Deposit" has the meaning provided in Section 6.4(j) of the Ground Lease. "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 Agreement shall be deemed to refer to an Affiliate of Operator. "Agency" means the Miami Beach Redevelopment Agency. "Alterations" has the meaning provided in Section 16.2. "Base Rent" has the meaning provided in the Ground Lease. "Basic Fee" has the meaning provided in Section 13.1. "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, however, any personal property which is owned by Subtenants, licensees, concessionaires or contractors (except to the extent any of the foregoing are Affiliates), FF&E and Operating Equipment. - 2- MI962600.003/09/20/96 "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. "City" means City of Miami Beach, a municipal corporation of the State of Florida. "Condominium Unit Lease" has the meaning provided in the Ground Lease. "Controlling Interest" means the ownership of greater than 50% of the Equity Interests (as such term is defined in the Ground Lease) in a Person or the ownership of greater than fifty (50%) percent of the votes necessary to elect a majority of the Board of Directors or other governing body of such Person. "Convention Center Agreement" has the meaning provided in Section 6.6 of the Ground Lease. "Convention Hotel" has the meaning provided in the Ground Lease. "Debt Service" means all payments in respect of principal and interest on "Permitted Debt" (as such term is defmed in the Ground Lease) including, without limitation, the net cost to Hotel Owner 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. "Declaration of Condominium" has the meaning provided in the Ground Lease. "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 Agreement) constitute, an Event of Default. "Default Notice" has the meaning provided in Section 23.1. "Event of Default" has the meaning provided in Section 23.1. "Facility" has the meaning provided in the Garage Easement Agreement. "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), 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 - 3 - MI962600.003/09120/96 specialized hotel equipment used in the operation of kitchens, laundries, dry cleaning facilities, bars and restaurants; (e) telephone and call accounting systems; (t) 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) recreational equipment; (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 foregoing are Affiliates of Hotel Owner). "FF&E Reserve Account" has the meaning provided in Section 15.1. "Fiscal Year" has the meaning provided in Section 5.4 "Garage" means the "Garage" described in the Garage Easement Agreement. "Garage Easement Agreement" has the meaning provided in Recital B. "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 = 1(0), or any successor index thereto, appropriately adjusted. "Governmental Authority or Authorities" means the United States of America, the State of Florida, the City of Miami Beach 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 Hotel Owner 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. "Ground Lease" has the meaning provided in Recital A. "Hotel" means the hotel to be constructed, furnished and equipped by Hotel Owner in accordance with this Agreement and includes, without limitation, Hotel Owner's interest in the Premises, all Building Equipment, FF&E, Operating Equipment and other property thereon and all rights of Hotel Owner appurtenant thereto, including without limitation, Hotel Owner's rights and responsibilities under the Garage Easement Agreement and Convention Center Agreement, but expressly including any such rights or responsibilities under the Hotel Development Agreement. "Hotel Development Agreement" has the meaning provided in Recital A. -4- MI962600,OO3/09/20/96 "Hotel Owner" means MB Redevelopment, Inc. or any permitted assignee, transferee or successor thereof. "Hotel Revenue" has the meaning provided in Section 14.1. "Impositions" has the meaning provided in the Ground Lease. "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. "Land" means the real property described in Exhibit A attached hereto. "Loan Documents" means, collectively, any loan agreement, promissory note, mortgage, guaranty or other document evidencing or securing a loan secured in whole or in part by, among other things Hotel Owner's interest in the Hotel or the Ground Lease. "Opening Date" has the meaning provided in Section 5.1. "Operating Accounts" has the meaning provided in Section 10.2. "Operating Equipment" means all chinaware, glassware, linens, silverware, uniforms, and menus. "Operating Expense" has the meaning provided in Section 14.2 "Operating Supplies" means all paper supplies, cleaning materials and other consumable and expendable items such as, without limitation, food and beverages and light bulbs. "Operator" means Loews Miami Beach Hotel Operating Company, Inc. or any permitted assignee, transferee or successor thereof. "Out-of-Pocket Expenditures" means all out-of-pocket expenses and disbursements reasonably and properly incurred by Operator or any of its Affiliates in the course of the management and operation of the Hotel under this Agreement, including the performance of Technical Services and Pre-Opening Services. Without limiting the generality of the foregoing, such charges shall include all reasonable travel, telephone, telegram, air express and other incidental expenses. Except as herein otherwise expressly provided, Out-Of-Pocket - 5 - MI962600.003/09/20196 Expenditures shall not include any of the regular expenses of the offices maintained by Operator or any of its Affiliates other than offices maintained at the Hotel for the management or operation of the Hotel or the salaries and wages of employees or executives of Operator or any of its Affiliates casually performing services or work in connection with the operation of the Hotel. Reasonable travel and entertainment expenses of such employees and executives in connection with the Hotel, shall, however, be considered Out-Of-Pocket Expenditures. Notwithstanding the foregoing, if it becomes necessary for an employee or executive of Operator or an Affiliate to temporarily perform services in the Hotel of a nature normally performed by Hotel personnel, such individual's salary (including living expenses, as aforesaid) shall be considered an Out-Of-Pocket Expenditure. "Owner" means the Agency (or the City, if the City shall succeed to the interest of the Agency under the Ground Lease), acting in its proprietary capacity; provided, however, that if the Agency, the City, or any successor to its interest under the Ground Lease transfers or assigns its interest in the Premises, then from and after the date of such assignment or transfer, the term "Owner" shall mean the assignee or transferee. "Percentage Rent" has the meaning provided in the Ground Lease. "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. "Pre-Opening Services has the meaning provided in Section 4.1. "Premises" means, collectively, the Land and the Improvements (including, without limitation the "Public Areas Unit" and the "Hotel Unit" for so long as the "Condominium" is in existence (as such terms are defmed in the Ground Lease)). "Recognized Accounting Firm" means Ernst & Young/Kenneth Leventhal, Coopers & Lybrand, Arthur Andersen, Price Waterhouse, Deloitte & Touche, KPMG Peat Marwick, Pannell, Kerr & Forster, or any successor entity of any of the foregoing or any other national certified public accountants mutually acceptable to Hotel Owner and Operator. "Requirements" has the meaning provided in Section IS.I(b) of the Ground Lease. "Technical Services" has the meaning provided in Section 3.1. "Term" has the meaning provided in Section 5.2. - 6- MI962600.00J/09120/96 "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, 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 Agreement. In no event shall (i) any party's financial condition or inability to fund or obtain funding or financing constitute an "Unavoidable Delay" with respect to such party and (ii) any delay arising from a party's (or its Affiliate's) default under any Project Document (as such term is defmed in the Ground Lease) constitute an "Unavoidable Delay" with respect to such party's obligations hereunder. The times for performance set forth in this Agreement (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 Agreement. ARTICLE 2 CONSTRUCTION OF HOTEL BY HOTEL OWNER Section 2.1 Hotel Owner to Construct Hotel. Hotel Owner shall, substantially in accordance with the plans and specifications and within the time periods provided under the Hotel Development Agreement and in conformity with the Hotel Development Agreement and all applicable Requirements, construct, furnish and equip the Hotel on the Premises. Section 2.2 Architects, Enstineers, Etc. (a) For the foregoing purposes, Hotel Owner shall engage at its own expense architects, contractors, engineers, decorators and other specialists and consultants (including kitchen, food and beverage, lighting and signing and graphics) as may be necessary or desirable in the opinion of Operator, all of whom shall be subject to the prior approval of Operator. The plans and specifications for the building and facilities shall be prepared at Hotel Owner's sole expense by a licensed architect, who shall also be responsible for the supervision of the construction. - 7 - MI962600,003/09/20/96 (b) Hotel Owner shall furnish Operator with a time schedule of the design and construction stages of the Hotel, and shall revise and update such schedule as appropriate. Following commencement of construction, Hotel Owner shall, at least once each calendar month, furnish to Operator construction progress reports in reasonable detail showing the progress of each trade. Hotel Owner acknowledges that Operator, in performing its obligations under this Agreement, will be relying on all such time schedules and construction progress reports. Section 2.3 Desip Approved By Operator. The design, decor, planning, decorating and other matters affecting the operating efficiency of Hotel and the selection of all FF&E and all Operating Equipment shall be subject to the prior approval of Operator, subject, however, to the applicable provisions of the Hotel Development Agreement. Operator shall furnish Hotel Owner with assistance in connection therewith in the manner and on the terms specified in Article 3 of this Agreement. Plans, specifications, renderings and working drawings relating to the interior design and decoration of the Hotel and related matters shall be submitted to Operator for approval at various stages as requested by Operator. Section 2.4 Operator's Standards. Whenever Hotel Owner's or Operator's approval is required under this Article, such approval shall not be unreasonably withheld. Notwithstanding the provisions of Section 28.2 hereof, the reasonableness of either Hotel Owner or Operator in withholding such approval shall otherwise be determined in recognition of the additional fact that Hotel Owner is obligated to construct, furnish and equip a first class convention center hotel containing all facilities and appurtenances necessary or desirable for a hotel complying with Operator's standards for newly constructed hotels which are to be operated under the name LOEWS and complying with the applicable requirements of the Ground Lease, Hotel Development Agreement and Loan Documents. ARTICLE 3 TECHNICAL SERVICES IN PRE-OPENING STAGE Section 3.1 Technical Services. During the construction and equipping phase referred to in Article 2 of this Agreement, Operator, upon the request of Hotel Owner, shall supply to Hotel Owner the following technical services ("Technical Services"): (a) Review of architectural and engineering plans and specifications relating to the construction of the Hotel. (b) Review of plans, specifications and designs relating to the interior design and decor of the Hotel, including special effects. - 8 - MI962600.003/09120196 (c) Review and suggest specifications for FF&E for the Hotel. (d) Review any other plans, specifications, design criteria and/or invitations to bid relating to the construction, furnishing or equipping of the Hotel. (e) Advise and consult with Hotel Owner's architect, engineers, decorator and other professionals in the construction, furnishing and equipping of the Hotel. (t) Furnish purchasing criteria with regard to FF&E and Operating Equipment for the Hotel, as well as potential sources of supply for such items. Section 3.2 Expenses Relatin2 To Technical Services. All Out-Of-Pocket Expenditures reasonably and properly incurred by Operator or any of its Affiliates in connection with providing Technical Services shall be reimbursed by Hotel Owner within 60 days of presentation of statements by Operator therefor, supported by vouchers. ARTICLE 4 PRE-OPENING SERVICES BY OPERATOR Section 4.1 Pre-Openin2 Services. At such time prior to the Opening Date as Operator deems appropriate, Operator, as representative and for the account of Hotel Owner, shall undertake the following activities ("Pre-Opening Services") in connection with the preparation of the Hotel to conduct business on and after the Opening Date: (a) Recruit, train, direct and employ for and on behalf of Hotel Owner an initial staff for the Hotel. (b) Initiate and prosecute promotion, publicity and other like programs designed to attract guests to the Hotel on and after the Opening Date. (c) Negotiate leases (subject to Hotel Owner's approval) for stores, office space and lobby space of the Hotel, as well as licenses and concession agreements. All employment and supply contracts, leases, licenses or concessions shall be in the name and for the account of Hotel Owner. (d) Assist Hotel Owner in its application for, in the name and for the account of Hotel Owner, as may be required by the issuing authority, licenses and permits required in connection with the operation of the Hotel and its related facilities including, but not limited to, liquor and restaurant licenses. - 9- MI962600.003/09/20/96 (e) Advise Hotel Owner in the purchase by it, in the name and for the account of Hotel Owner, of all Operating Supplies. (t) Arrange for suitable inaugural ceremonies for the opening of the Hotel. Section 4.2 Cost Of Pre-Openin2 Services. All expenses incurred by Operator in performing the Pre-Opening Services, including without limitation travel and incidental expenses and expenses of business entertainment; salary (including payroll taxes and costs of employee benefits) of executives on the staffs of Operator and its Affiliates for time actually spent in the performance of Pre-Opening Services (including travel time); and preopening payroll charges for the manager and other Hotel personnel employed in the name and for the account of Hotel Owner; all expenses incurred in conducting partial operations of the Hotel prior to the Opening Date; the cost of pre-opening advertising, promotion and publicity; the cost of suitable inaugural ceremonies; and the cost of obtaining all necessary licenses and permits, including the fees of lawyers and other consultants incident thereto, shall be borne and paid by Hotel Owner. To the extent such amounts are payable to Operator or Operator has advanced sums on behalf of Hotel Owner (which Operator may in its sole discretion do from time to time), Hotel Owner shall reimburse or pay to Operator such amounts within 60 days of presentation of invoices or vouchers therefore. Section 4.3 Accountin2 For Pre-Openin2 Services. Within one hundred eighty (180) days after the Opening Date, Operator shall account to Hotel Owner for all expenditures made under this Article 4, crediting Hotel Owner with all income resulting from partial operations, if any, prior to the Opening Date. ARTICLE 5 OPENING DATE; TERM Section 5.1 Openin2 Date. (a) The "Opening Date" is the date of the formal opening of the Hotel. It shall occur as soon as practicable following Substantial Completion of the Hotel (as such term is defmed in the Hotel Development Agreement) after (i) Operator determines that all licenses and permits required for the operation of the Hotel (including liquor and restaurant licenses) have been obtained, and (ii) the installations of the Hotel have been approved by Operator and the Hotel is ready to render service to guests. (b) Operator may decide, subject to the Requirements, without finally approving the Hotel, to conduct partial operations of the Hotel prior to the Opening Date. Notwithstanding - 10- MI962600,003/09/20/96 the formal Opening Date, Hotel Owner shall proceed diligently thereafter to fulfill all of its obligations hereunder regarding the construction and maintenance in proper condition of the Hotel, its furnishings, equipment and facilities and to cure all defects or deficiencies as to which Operator notifies it. Section 5.2 Term. The initial "Term" of this Agreement shall commence on the date hereof and terminate at midnight on the 30th anniversary of such date. The word "Term" when used herein shall mean the initial Term as set forth in Section 5.2 and any extension thereof. Section 5.3 Renewals. (a) Operator shall have the right to extend the Term of this Agreement for four (4) successive periods of fifteen (15) years each and, thereafter, one final successive period of ten (10) years provided that: (i) Hotel Owner at such time is not entitled to terminate this Agreement pursuant to Article 23 by reason of Operator's default; (ii) The Term shall have been extended for all prior periods; and (iii) Operator shall have given notice to Hotel Owner of its election to extend this Agreement not less than six (6) months prior to the expiration of the then current Term. (b) Notwithstanding the foregoing, Operator may not exercise any such right of renewal during the term of the Ground Lease without the prior written consent of Owner and Hotel Owner, unless Owner has received by the time of such renewal an eight (8 %) per annum cumulative (not compounded) return, including payments of "Base Rent," "Percentage Rent" and the amount of "Net Proceeds" distributed to Owner pursuant to Section 3.5 of the Ground Lease, on the Land at a fixed value of $24,000,000 from and after the Opening Date through the date such renewal option is exercised; provided, however, that the foregoing requirement will cease to be applicable once Owner has received an eight (8%) percent "IRR" (including "Base Rent," "Percentage Rent" and the amount of "Net Proceeds" distributed to Owner pursuant to Section 3.5 of the Ground Lease) on the value of the Land (fixed at $24,000,(00) from and after the Opening Date. Operator will have the right to cure any shortfall with respect to the required eight (8 %) cumulative (not compounded) return by direct payment to Owner. All terms in quotation marks shall have the respective meaning provided in the Ground Lease. Section 5.4 Fiscal Year. The words "Fiscal Year" as used herein shall mean the twelve (12) month period commencing January 1 and ending December 31, except that the - 11 - MI962600.003/09/20/96 first Fiscal Year shall be that period commencing on the Opening Date and ending on the next December 31 which is at least one year thereafter. ARTICLE 6 OPERATION OF THE HOTEL Section 6.1 Operator As Exclusive Operator of Hotel. Considering that the use by Hotel Owner of the name "LOEWS" for its Hotel is expressly conditioned upon operation of the Hotel in accordance with the techniques and systems of the LOEWS chain, Hotel Owner hereby engages Operator to furnish technical assistance and to manage, in the name and for the account of Hotel Owner, the operation of the Hotel on an exclusive basis and with the widest powers of administration. In its capacity as technical advisor and exclusive director of the operation of the Hotel, in the name and for the account of Hotel Owner, Operator shall have absolute control and free decision-taking authority in the operation, direction, management and supervision of the Hotel, without detriment to its obligation of accounting to Hotel Owner in the manner and on the terms as herein specified, subject only to the express provisions of this Agreement. Within the scope of these wide powers of technical assistance and direction, there shall be deemed to be included, without limitation, (a) establishment of labor policies in the Hotel, including the hiring and discharging in the name and for the account of Hotel Owner of all employees and entering into employment contracts, always in the name and for the account of Hotel Owner, and negotiating where necessary, as Hotel Owner's representative, with applicable unions; (b) establishing credit policies (including entering into agreements with credit card organizations), terms of admittance, charges for rooms, entertainment and amusement policies, and food and beverage policies; (c) always in the name of and for the account of Hotel Owner, leasing commercial space at the Hotel and licensing and granting of concessions; (d) maintenance of and making additions to and improvements of the Hotel (subject to the limitations contained in Article 16); (e) the institution, prosecution, settlement and compromise of such legal proceedings in the name of Hotel Owner as Operator shall deem appropriate in connection with the operation of the Hotel; (t) all phases of promotion and publicity relating to the Hotel; and (g) all other matters and things which Operator may at any time deem necessary or desirable to effectuate the operation of the Hotel. In exercising these powers, Operator may enter into, in the name and for the account of Hotel Owner, such licenses and concession agreements and other contracts, agreements and undertakings on behalf of Hotel Owner as it shall from time to time consider appropriate, and Hotel Owner and officers of Hotel Owner will, if necessary, execute any or all of the same at Operator's request. Section 6.2 Purchase Of Goods And Services From Affiliates. In its counseling, direction and management of the Hotel hereunder, Operator may purchase, in the name and for the account of the Hotel Owner goods, supplies and services from or through Operator or - 12- MI962600,003/09120/96 any of its Affiliates so long as the prices and tenns thereof are competitive with, and no less favorable to Hotel Owner than, prices and tenns of goods and services of equal quality available from third parties. Section 6.3 Facility Use By Hotel Employees. Operator, in its reasonable discretion, may decide as to the provision of food and lodging for Hotel employees and allow them the use of Hotel facilities and may allow the General Manager of the Hotel suitable living quarters within the Hotel and the use of all Hotel facilities, including food, without charge to the said Hotel employees and General Manager or to Operator. Section 6.4 Reservations. Operator shall sell, represent and promote the Hotel through the LOEWS Hotels sales and reservation organization and will encourage the use of the Hotel by recognized sources of hotel business on the same basis as it does other hotels in the Loews chain. Hotel Owner agrees to honor all reservations made by Operator in the ordinary course of business even though such reservations extend or are for a period of time subsequent to the tennination of this Agreement. In connection with such reservation services, Operator shall act in accordance with the applicable provisions of the Convention Center Agreement. In addition, Operator shall cooperate with Hotel Owner in compliance with Section 6.5 of the Ground Lease relating to availability of Hotel meeting rooms for meetings of certain governmental bodies. Section 6.5 Concessions. Operator shall direct in Hotel Owner's name the operation of the Hotel and all of its facilities and activities in the same manner as is customary and usual in the operation of other similar LOEWS hotels consistent with the Hotel's facilities. Operator may grant concessions, always acting in the name and for the account of Hotel Owner, for services customarily subject to concession in LOEWS hotels. Section 6.6 Group Services. Operator shall cause to be made available to the Hotel all operational, departmental, supervisory and other group benefits and services from time to time generally furnished to other hotels in the LOEWS chain. Section 6.7 Requirements. Operator shall make all reasonable efforts in its management of the Hotel to comply in all material respects with all applicable Requirements. Section 6.8 Quality Standard. In its management of the Hotel, Operator shall make all reasonable efforts to operate the Hotel in accordance with the Quality Standard from time to time established under the Ground Lease, other applicable provisions of the Ground Lease and applicable provisions of any Loan Documents, subject, however, to the provisions and limitations of this Agreement, the Hotel's budget and the availability of working capital. - 13 - MI962600.003/09/20/96 Section 6.9 Good Neiehbor Policy. Operator shall endeavor to maintain at the Hotel a "Good Neighbor Policy" consistent with the policies of the LOEWS Hotels Chain, as the same may be from time to time in effect. Section 6.10 Beach Concession. In its management of the Hotel in the name and on behalf of Hotel Owner, Operator shall exercise Hotel Owner's rights and perform Hotel Owner's obligations under the beach concession agreement referred to in Section 14.5 of the Ground Lease. The obligations of Operator pursuant to this Section 6.10 are subject to the provisions and limitations of this Agreement, the Hotel's budget, and the availability of working capital. ARTICLE 7 OPERATOR TO ACT SOLELY AS REPRESENTATIVE OF HOTEL OWNER Section 7.1 Operator As Representative or Hotel Owner; No Partnership. In the performance of its duties as advisor and director of the Hotel, Operator shall act solely as representative of Hotel Owner. Nothing herein shall constitute or be construed to be or create a partnership or joint venture between Hotel Owner and Operator, or be construed to create a lease by Operator of the Hotel or its facilities, since, as has been expressly covenanted, this is an agreement for the rendering of technical assistance in the operation and management of the Hotel, in the name and for the account of Hotel Owner, which, at the request of Hotel Owner and by agreement between the parties, will be operated by the Operator's systems and techniques and under the name LOEWS, provided these conditions are fulfilled. All debts and liabilities to third persons incurred by Operator in the course of its operation and management of the Hotel pursuant to the terms of this Agreement shall be the debts and liabilities of Hotel Owner only and Operator shall not be liable for any such obligations by reason of its management, supervision and direction of the operation of the Hotel. Operator may so inform third parties with whom it deals on behalf of Hotel Owner and may take any other reasonable steps to carry out the intent of this Section 7.1. Section 7.2 Hotel Employees. Each Hotel employee shall be the employee of Hotel Owner and not of Operator, and every person performing services in connection with this Agreement shall be acting as the employee of Hotel Owner. Nonetheless, in view of the necessity for the Hotel to be directed and operated in accordance with the LOEWS techniques and systems, the Hotel manager and other executive personnel may be on the payroll of Operator or any of its Affiliates and their salaries and other related expenses (including, but not limited to, payroll taxes and the cost of employee benefits) shall be Operating Expenses. To the extent that Operator deems advisable, Operator may delegate to one or more persons in its general employ or to the manager of the Hotel, the responsibility of employing, paying, supervising and discharging Hotel employees, in the name and for the account of Hotel - 14- MI962600,003/09/20/96 Owner. Each person to whom any such duty is delegated shall be the representative of Hotel Owner and not of Operator for such purposes. In connection with the foregoing, Operator shall act in accordance with Hotel Owner's policy of being an "Equal Opportunity Employer" in accordance with all applicable Requirements. ARTICLE 8 HOTEL OWNER TO BEAR ALL OPERATING EXPENSES Section 8.1 All Expenses Borne By Hotel Owner. In performing its duties hereunder, Operator shall act solely in the name and for the account of Hotel Owner. All reasonable expenses incurred by Operator in performing its duties (including without limitation Out-Of-Pocket Expenditures) shall be borne exclusively by Hotel Owner. To the extent the funds necessary therefor are not generated by the operation of the Hotel, they shall be supplied by Hotel Owner to Operator in the manner provided in Article 10. Section 8.2 Operator Not Required To Advance Funds. Operator shall in no event be required to advance any of its own funds for the operation of the Hotel, nor to incur any liability in connection therewith, unless Hotel Owner shall have furnished Operator with funds necessary for the discharge thereof. ARTICLE 9 ADVERTISING Section 9.1 Advertisin2. Operator shall arrange and contract in the name and for the account of Hotel Owner, for all advertising which Operator may deem necessary and appropriate for the operation of the Hotel. Expenses for advertising the Hotel may include, without limitation, the expenses of media, displays and other advertising activities. Section 9.2 "Due Bills". Operator may, without the consent of Hotel Owner, enter into "due bill" agreements which provide for trading rooms, food and beverage in the Hotel for advertising and other services for the benefit of the Hotel, upon such terms and conditions as Operator shall reasonably deem appropriate.r - 15 - MI962600,003/09120/96 ARTICLE 10 WORKING CAPITAL AND BANK ACCOUNTS Section 10.1 Workin2 Capital. Not later than 30 days before the anticipated Opening Date, as reasonably estimated by Operator, Hotel Owner will provide Operator with initial working capital by payment thereof into the Hotel's Operating Account. Thereafter, Hotel Owner shall provide to Operator from time to time throughout the Term, if and as reasonably requested by Operator, sufficient working capital for the uninterrupted operation of the Hotel. Any dispute as to the amount of working capital required for the operation of the Hotel including, without limitation, working capital retained by Operator as provided for in Section 13.3 hereof, shall be resolved by the Recognized Accounting Firm selected to audit the Hotel's financial statements pursuant to Section 11.2(a), who shall take into account in each instance all reasonable, foreseeable financial needs of the Hotel. The determination of such Recognized Accounting Firm shall be fInal and conclusive on Operator and Hotel Owner. In the event any such dispute shall not be resolved by such Recognized Accounting Firm within thirty (30) days following submission to it of such dispute by Hotel Owner or Operator, then Hotel Owner upon expiration of such thirty (30) days shall provide to Operator (or Operator will retain, if the dispute relates to Operator's retention of working capital) such funds as Operator reasonably deems necessary and as shall be necessary for the uninterrupted operation of the Hotel for a period of thirty (30) days. If such dispute is not resolved within such further period of thirty (30) days, Hotel Owner shall provide the funds required for another thirty (30) days of operation, and the foregoing procedure shall continue to be following until the resolution of such dispute. Section 10.2 Operatin2 Accounts. (a) All funds, including working capital, made available to Operator by Hotel Owner for, or generated by, the operation of the Hotel shall be deposited in the Hotel's operating accounts (the "Operating Accounts") in a bank selected by Hotel Owner and reasonably approved by Operator in Miami Beach, Florida. On opening such accounts Hotel Owner shall grant to Operator the widest authorization in order that the withdrawal of funds and handling of the accounts shall be effected exclusively by the individual persons designated at all times for such purposes by Operator, whose signatures shall be formally and expressly recognized to this end by the bank in question. Such funds shall not be mingled with Operator's or Hotel Owner's other funds. Out of the Operating Accounts, Operator may pay all Operating Expenses of the Hotel as well as all amounts payable to Operator by Hotel Owner under this Agreement, including without limitation, Operator's fees and reimbursements. (b) The Operating Accounts shall at all times be under the absolute control of Operator as agent for Hotel Owner, without prejudice to Operator's obligation of accounting to Hotel - 16- MI962600.003/09120/96 Owner as and when provided for herein. Checks or other documents of withdrawal shall be signed only by individual representatives of Operator, duly recognized for such purpose by the bank in question. Operator shall supply Hotel Owner with bonds or other insurance unless said bonds or other insurance shall have been placed by Hotel Owner and delivered directly by the bonding or insurance company to Hotel Owner. In view of the fact that the funds in the aforesaid accounts are Hotel Owner's funds intended for the specific purpose contemplated herein, it is expressly covenanted that Hotel Owner shall have no other right to use of such funds than to receive the amounts to which it is entitled under this Agreement, all of which shall be without prejudice to Operator's obligation of accounting to Hotel Owner as and when provided for herein. Notwithstanding the foregoing, Hotel Owner will bear all losses occasioned by the failure for insolvency of the bank in which the Hotel operating accounts are maintained. Upon expiration or termination of this Agreement and the payment to Operator of all amounts due Operator hereunder upon such expiration or termination, all remaining amounts in the foregoing accounts shall be transferred forthwith to Hotel Owner, or made freely available to it. ARTICLE 11 BOOKS, RECORDS AND STATEMENTS Section 11.1 Accountine Principles. Operator shall, in the name and for the account of Hotel Owner, keep full and adequate books of account and other records reflecting the results of operation of the Hotel on an accrual basis, all in accordance with the Accounting Principles. Books of account and other records or appropriate copies thereof relating to or reflecting the operation of the Hotel shall be kept at the Hotel and shall be available to Hotel Owner and its representatives at all reasonable times for examination, audit, inspection and transcription. All such books and records pertaining to the Hotel, including without limitation, books of account, guest records and front office records, at all times shall be the property of Hotel Owner and except to the extent necessary in connection with centralized billing or other services, originals thereof shall not be removed from the Hotel by Operator without Hotel Owner's prior approval and consent. Upon termination of this Agreement, all of such books and records forthwith shall be turned over to Hotel Owner so as to ensure the orderly continuance of the operation of the Hotel, but such books and records shall thereafter be available to Operator at all reasonable times for inspection, audit, examination and transcription of particulars relating to the periods in which Operator assisted Hotel Owner in the installation, operation and management of the Hotel. Section 11.2 Financial Statements. (a) Operator shall timely deliver to Hotel Owner the "Annual Financial Statement," including the requisite report of the Recognized Accounting Firm, the monthly financial statement and such other financial and operating information as shall be necessary for Hotel - 17 - MI962600.003/09/20/96 Owner to comply with Article 28 of the Ground Lease and the appropriate requirements of any Loan Document. (b) In the event the Ground Lease shall cease to be in effect, then in lieu of the [mancial statements referred to in the preceding paragraphs, Operator shall deliver to Hotel Owner at or prior to the end of each month following the Opening Date a customary profit and loss statement showing the operations of the Hotel for the immediately preceding month and for the Fiscal Year to date and a profit and loss statement, and related statements, certified by a Recognized Accounting Firm selected by Hotel Owner with the consent of Operator, showing the results of the operation of the Hotel during such Fiscal Year. The foregoing monthly and annual financial statements shall be in customary form, including schedules, in the same detail as generally prepared by Operator or its Affiliates for other hotels in the LOEWS Hotel Chain and shall follow the general form required by the Accounting Principles. (c) In addition, Operator, as requested by Hotel Owner, will cooperate with any audit or examination of the Hotel's books and records by or on behalf of the Owner under the Ground Lease or pursuant to any Loan Document. (d) Hotel Owner shall be deemed to have waived any objections to an annual financial statement provided pursuant to subsections (a) or (b), above, not specified to Operator in writing within three years after the end of the Fiscal Year to which such annual financial statement relates. ARTICLE 12 ANNUAL PLAN; BUDGET; AND POLICY MEETINGS Section 12.1 Bud2ets. At least sixty (60) days prior to the beginning of each Fiscal Year and at least sixty (60) days before the anticipated Opening Date, qualified representatives of Operator shall schedule a budget and policy meeting with Hotel Owner's representatives at which Operator will submit to Hotel Owner an annual plan and budget of all projected (i) operating expenses; (ii) capital expenditures; and (iii) expenditures for replacements, substitutions and additions to FF&E, of the Hotel for the forthcoming Fiscal Year, together with an estimated income projection for such year. Section 12.2 Bud2et Meetin2s. At each of said budget meetings and at any additional meetings during a Fiscal Year reasonably called by Hotel Owner, Operator shall consult with Hotel Owner on matters of policy concerning management, sales, room rates, wage scales, personnel, general overall operating procedures, economics of operation and other matters substantially affecting the operation of the Hotel. - 18 - MI962600.003/09/20/96 ARTICLE 13 OPERATOR'S MANAGEMENT FEE AND PAYMENT TO OPERATOR AND HOTEL OWNER Section 13.1 Operator's Fees. During each Fiscal Year (and proportionately, for a fraction of a Fiscal Year) Hotel Owner shall pay to Operator for services rendered under this Agreement, the following amounts: (a) Fiscal Year. A "Basic Fee" at the rate of three (3 %) percent of Hotel Revenue, for each (b) A "Group Marketing Fee" at the rate of one and a quarter (1.25%) percent of Hotel Revenue for each Fiscal Year, which fee shall represent payment for chain wide advertising and marketing services provided by Operator's home office, including overhead expenses of regional sales offices. These services will include a central sales and marketing operation supported by regional sales offices and nationwide corporate advertising, marketing and promotion programs. Operator will cause these services to be provided to the Hotel on the same basis as similar services are provided to other hotels in the LOEWS Hotels Chain. (c) A "Reservations Fee" equal to the cost of centralized reservation services provided by Operator or its Affiliates (or through a third party service provider), which costs shall be allocated to the Hotel on a pass-through basis with no mark-up, but in no event shall the cost per booking increase by more than the system-wide increase charged to other hotels in the LOEWS Hotels Chain. In addition, Owner shall reimburse Operator for all Out-of-Pocket Expenditures. The foregoing amounts shall be payable as provided in this Article 13. Section 13.2 Payment Of Fees. On or before the fifth day of each month during the Term subsequent to the Opening Date, Operator shall be paid out of the Operating Accounts its Basic Fee, Group Advertising Fee and Reservations Fee for the preceding month based on the Hotel Revenue for such month and shall be reimbursed for its Out-of-Pocket Expenditures. To the extent that there may be insufficient funds in such account for such payments and reimbursement, Hotel Owner shall pay such amounts to Operator forthwith on demand. Section 13.3 Distribution of Funds. On or before the last day of each month during the Term subsequent to the Opening Date, Operator shall, after payment of Operator's Basic Fee, Group Marketing Fee, Reservations Fee, reimbursement of Out-of-Pocket Expenditures, payment of other Operating Expenses due or to become due and retention of working capital sufficient to assure the uninterrupted and efficient operation of the Hotel for the foreseeable - 19- MI962600.003/09/20/96 future (including payment to the FF&E Reserve Account) and payment of Debt Service as provided in Section 14.3, remit to Hotel Owner all remaining funds in said account. Section 13.4 Annual Adjustment. At the end of each Fiscal Year and following receipt by Hotel Owner of the annual audit, an adjustment will be made based on said audit, if necessary, so that Operator shall have received its Basic Fee, Group Marketing Fee and Reservations Fee, and other sums as hereinabove specified for the said Fiscal Year and Hotel Owner shall have received the balance of the funds available in the Operating Accounts, after retention of working capital as aforesaid, and all sums due either Operator or Hotel Owner as a result of said adjustment shall be paid within thirty (30) days of receipt by Hotel Owner of the annual financial statement for said Fiscal Year. In the event there is an operating loss in any Fiscal Year, it will be borne exclusively by Hotel Owner. Section 13.5 No Setoff. All payments required to be made by Hotel Owner to Operator under this Article 13 or under any other provision of this Agreement shall be made free and clear and without setoff or deduction on account of any taxes, levies, impositions or claims of any kind whatsoever imposed by any jurisdiction and without deduction on account of any setoffs, counterclaims or other claims of any kind by Hotel Owner or any other person. ARTICLE 14 HOTEL REVENUE AND OPERATING EXPENSES; PAYMENT OF DEBT SERVICE Section 14.1 Hotel Revenue. "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 proceeds of sales of any kind (whether in cash or on credit or otherwise) resulting from the 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 Operator on behalf of Hotel Owner 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 or other patrons of the Hotel, leasing, brokerage and management fees and commissions or other compensation derived by Hotel Owner or any Affiliate of Hotel Owner under any leasing, management or other agreement entered into by Hotel Owner or any Affiliate of Hotel Owner regarding the leasing or management of any retail space at the Facility, all revenues derived by Hotel Owner or any Affiliate of Hotel Owner from the operation of any concession agreements (including, without limitation, the concession agreement described in Section 14.5 of the Ground Lease), any gross vending income and commissions, all income and proceeds received from tenants, - 20- MI962600,003/09/20/96 lessees, licensees, concessionaires and other persons occupying space at the Hotel and or rendering services to Hotel guests and other patrons of the Hotel (but not including the gross receipts of such 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 thereat) of business interruption insurance actually received by Hotel Owner or by Operator on behalf of Hotel Owner 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: (a) 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 without limitation, gross receipts, room, bed, admission, cabaret, or similar taxes; (b) Any gratuities collected; (c) Allowances, rebates and refunds not included in Hotel Revenue in accordance with the Accounting Principles; (d) The proceeds of any financing or refinancing; (e) Interest on funds in the FF&E Reserve Account; (t) Proceeds from the sale of any Building Equipment or FF&E; and (g) Proceeds from the sale of the Hotel. Notwithstanding anything to the contrary contained herein, the funds described in clauses (e) and (t) 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 15.1. Section 14.2 Operatin2 Expenses. "Operating Expenses" means, without duplication, all costs and expenses incurred in owing, maintaining, conducting and operating the Hotel and 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 thereat), Percentage Rent, depreciation, amortization and the original cost 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 costs incurred by - 21 - MI962600.003/09/20/96 Hotel Owner or by Operator on behalf of Hotel Owner relating to parking facilities and services (including but not limited to payments under the Garage Easement Agreement), all costs incurred by Hotel Owner under any leasing agreement, management agreement, master lease or other similar agreement regarding the leasing or management of retail space at the Facility entered into by Hotel Owner or any Affiliate of Hotel Owner; all costs incurred by Hotel Owner or any Affiliate of Hotel Owner in connection with the operation of any concession agreements (including, without limitation, the concession agreement described in Section 14.5 of the Ground Lease; Base Rent, all Operator fees and payments; 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 the Ground 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; and all payments into the FF&E Reserve Account (including without limitation, any Additional Reserve Deposit). Any Operating Expenses payable to an Affiliate of Tenant or Hotel Owner 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 this Agreement. Section 14.3 Payment of Debt Service. Subject to Hotel Owner's providing the necessary working capital therefor as provided in Article 10 hereof, Operator shall pay, from funds available in the Operating Account after retention of working capital sufficient to assure the uninterrupted and efficient operation of the Hotel for the foreseeable future (including payment to the FF&E Reserve Account,) Debt Service under Loan Documents which comply with Article 30. ARTICLE 15 FF&E RESERVE ACCOUNT Section 15.1 FF&E Reserve Account. Operator shall establish, in Hotel Owner's name and for the benefit of Hotel Owner, a separate interest-bearing account (the "FF&E Reserve Account") solely for the purpose of funding the renewal, replacement and additions of Building Equipment and FF&E required for the operation of the Hotel in accordance with the terms of this Agreement. To fund the FF&E Reserve Account, Operator shall deposit from Hotel Revenue, within thirty (30) days after the end of each month from and after the Opening Date for such month an amount equal to the percentage of Hotel Revenue as set forth in the following schedule: - 22- MI962600.003/09/20/96 Fiscal Year Percentage of Hotel Revenues 1 2 3 4 and thereafter 1% 2% 3% 4% To the extent "Net Cash Flow After Debt Service" as such term is defined in the Ground Lease (without regard to the required FF&E Reserve Account payment) for any month is insufficient to allow for the FF&E Reserve Account deposit required above, Hotel Owner shall, within thirty (30) days after the end of the each Fiscal 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. Section 15.2 FF &E Expenditures. (a) Operator shall, subject to the proVIsIon of the Agreement, make such expenditures from the FF&E Reserve Account for the purposes permitted hereunder as is necessary to maintain the Hotel in accordance with this Agreement and the Ground Lease. (b) Any expenditure for replacement, substitution or additions to Building Equipment and FF&E during each Fiscal Year may be made by Operator without Hotel Owner's prior consent (but with notice to Hotel Owner) up to the amount of the FF&E Reserve Account (including the unused accumulations thereof from earlier Fiscal Years). All amounts remaining in the FF&E Reserve Account at the close of each Fiscal Year shall be carried forward until fully used as herein provided. Expenditures for Building Equipment and FF&E in excess of the amounts available in the FF&E Reserve Account may only be made with the prior written consent of Hotel Owner and shall be accounted for as an Operating Expense. Section 15.3 FF &E Reserve Account. The FF&E Reserve Account will be held by Operator in a interest-bearing bank account or accounts, bearing the name of the Hotel Owner, subject to the requirements of applicable Loan Documents. The provisions of Sections 10.2 hereof shall be applicable to the account in which the FF&E Reserve Account is held. All interest earned on such fund and the net proceeds from the sale of FF&E and Building Equipment no longer needed for the operation of the Hotel shall be credited to the FF&E Reserve Account. - 23 - MI962600.003/09/20/96 ARTICLE 16 REPAIRS AND MAINTENANCE AND CAPITAL IMPROVEMENTS Section 16.1 Repairs and Maintenance. (a) Subject to Hotel Owner's providing the necessary working capital therefor, as required under Article 10 hereof, Operator shall from time to time make such expenditures for repairs and maintenance as may be necessary to keep the Premises in good and safe order and condition and as a fIrst class convention center hotel in accordance with the requirements of the Ground Lease, however the necessity or desirability therefor may arise. Operator shall use all reasonable efforts to prevent waste, damage or injury to the Premises and shall keep all areas of the Hotel clean and free from dirt, snow, ice, mud, standing water, rubbish, obstructions and physical encumbrances. (b) All repairs made by Operator shall be substantially equal in quality to the original work or standards in effect at the time of repair and shall be made in compliance with the Requirements, the Ground Lease and any Loan Documents. As used in this Section 16.1, the term "repairs" shall include all necessary replacements and removals. (c) If any such repairs or maintenance shall be made necessary by any condition against the occurrence of which Hotel Owner has received the guaranty or warranty of any supplier of labor or materials for the construction, reconstruction or renovation of the Hotel, then Operator may invoke said guarantees or warranties in Hotel Owner's name and Hotel Owner will cooperate fully with Operator in the enforcement thereof. Section 16.2 Alterations. From time to time with the consent of Operator, Hotel Owner may, at its sole cost and expense, make alterations, additional installations, substitutions, improvements, renovations or betterments (collectively, "Alterations"; but Alterations shall not encompass the renewal and replacement of FF&E) in and to the Premises or any portion thereof. Any such Alteration shall be subject to the following: (i) such Alteration shall be made in compliance with all Requirements as well as the applicable provision of the Ground Lease and Loan Documents; and (ii) such Alteration shall be conducted with as little hinderance to the operation of the Hotel as practicable. ARTICLE 17 INSURANCE Section 17.1 Property Insurance. Hotel Owner shall provide and maintain at Hotel Owner's cost and expense, at all times during the period of construction, furnishing and - 24- MI962600.003/09/20/96 equipping of the Hotel, adequate public liability and indemnity insurance, including builder's risk, fully protecting Hotel Owner, Operator and its Affiliates against loss or damage arising in connection with the preparation, construction, furnishing and equipping of the Hotel and such other or additional insurance as may be required by the terms of the Ground Lease and applicable Loan Documents. Thereafter, during the Term, Hotel Owner shall so provide and maintain all risk property damage insurance on the Hotel in an aggregate amount which shall be not less than the full replacement value thereof and such other or additional insurance as may be required by the terms of the Ground Lease and applicable Loan Documents. Section 17.2 Liability and Other Insurance. Hotel Owner shall also during the Term provide and maintain: (a) general public liability insurance against claims brought anywhere in the world for personal injury, death and damage to and theft of property of third persons in the same amounts as generally carried on hotels owned or operated by Operator or its Affiliates or in such other amounts as Operator shall reasonably require, which insurance shall include coverage against liability arising out of (1) the ownership or operation of motor vehicles, (2) assault or battery, (3) false arrest, detention or imprisonment or malicious prosecution, (4) libel, slander, defamation or violation of the right of privacy, and (5) wrongful entry or eviction; (b) worker's compensation insurance or insurance required by similar employee benefits acts; and (c) such other or additional insurance in such amounts and against such risks as may be required by the Ground Lease or applicable Loan Documents and as Operator shall reasonably require with respect to the operation of the Hotel (to the extent such insurance is generally carried on hotels owned or operated by Operator or its Affiliates). Section 17.3 Form and Amounts. All insurance shall be in such form and amounts and with such companies as shall be reasonably satisfactory to Operator and Hotel Owner. All property damage policies shall provide that the loss, if any, payable thereunder shall be adjusted with and payable to or as directed by Hotel Owner. General liability insurance shall be in the name of Hotel Owner, Operator and such of Operator's Affiliates as it shall reasonably request as the insured and shall contain riders and endorsements adequately protecting the interests of Operator and such of Operator's Affiliates as it shall reasonably request. Section 17.4 Certificates of Insurance. Certificates of all policies shall be delivered to Operator (a) as soon as practicable after the execution of the Agreement in the case of insurance relating to the period of construction, furnishing and equipping of the Hotel, (b) not less than thirty (30) days prior to the Opening Date in the case of all insurance required to be - 25 - MI962600,003/09120/96 maintained during the Term, and (c) not less than thirty (30) days prior to the expiration date of all policies of insurance that must be maintained subsequent to such expiration dates under the terms of this Agreement. Should Hotel Owner fail to supply Operator with such certificates within the foregoing time limits, Operator may, in Hotel Owner's name and on Hotel Owner's behalf, provide any such insurance as to which such certificates are not supplied and Operator shall be reimbursed forthwith by Hotel Owner for all sums so expended, and may withdraw same from the Operating Accounts at any time. Operator in such case shall notify Hotel Owner in writing ten (10) days prior to providing such insurance. Section 17.5 Waiver of Subr02ation. Hotel Owner shall have all policies of insurance provide that the insurance company will have no right to subrogation against Hotel Owner, Operator or any of its Affiliates or the agents or employees thereof. Hotel Owner assumes all risks in connection with the adequacy of any insurance, and waives any claim against Operator or its Affiliates for any liability cost or expense arising out of any uninsured claim, in part or in full, or any nature whatsoever. Section 17.6 Payment. Subject to Hotel Owner providing the necessary working capital therefor, as provided in Article 10 hereof, Operator shall payout of the Operating Accounts, all cost of insurance provided pursuant to this Article 17 for all periods from and after the Opening Date. ARTICLE 18 REAL AND PERSONAL PROPERTY TAXES, LEVIES AND OTHER ASSESSMENTS Section 18.1 Operator to Pay Taxes. Subject to Hotel Owner's providing the necessary working capital therefor, as provided in Article 10 hereof, Operator shall pay from funds available in the Operating Accounts, after retention of working capital sufficient to assure the uninterrupted and effective operation of the Hotel for the foreseeable future, not less than ten (10) days prior to the dates the same become due and payable, with the right to pay the same in installments to the extent permitted by law, the Ground Lease and applicable Loan Documents, all real estate taxes, all personal property taxes and all betterment assessments levied against the Hotel or any of its component parts. Operator shall furnish Hotel Owner proof of payment thereof in form satisfactory to Hotel Owner. Section 18.2 Contests. Notwithstanding the foregoing, Hotel Owner may contest the validity or the amount of any such tax or assessment, provided that such contest in no way jeopardizes Operator's rights under this Agreement. Operator agrees to cooperate with Hotel Owner and execute any documents or pleadings required for such purpose, provided that Operator is satisfied that the facts set forth in such documents or pleadings are accurate and that such execution or cooperation does not impose any obligations or expenses on Operator - 26- MI962600.003/09/20/96 and Hotel Owner agrees to reimburse Operator for all increased expenses occasioned to Operator by any such contest. The cost of any such contest shall be an Operating Expense. ARTICLE 19 USE OF NAME "LOEWS" Section 19.1 Hotel Name. During the Term of this Agreement, the Hotel shall at all times be known as the Loews Miami Beach Hotel or such other name as from time to time may be selected by Operator, subject to the approval of Hotel Owner. During the Term, Hotel Owner shall not use or refer to the word "LOEWS" other than in connection with the Hotel. Upon the tennination of this Agreement, the name "LOEWS" and the right to the use thereof shall continue to be the exclusive property of Operator and its Affiliates. Use of the name "LOEWS" under this Agreement shall inure to the benefit of Operator and its Affiliates, which own and shall continue to own such name and any variance thereof. Section 19.2 Use of Name LOEWS Followin2 Termination. Following the termination of this Agreement, neither Hotel Owner nor any other hotel owner or operator of the Hotel shall have the right to use the word "LOEWS" or any "LOEWS" trademarks, emblems, insignia, slogans, or distinguishing characteristics in connection with the operation of the Hotel, except that Hotel Owner shall have the right to use all of the then existing Operating Equipment and Operating Supplies even though marked with the name "LOEWS", or with other LOEWS characteristics, until fully consumed. Notwithstanding the foregoing, if within thirty (30) days after termination Operator offers to buy (and actually buys) any or all of said Operating Equipment and Operating Supplies bearing the name "LOEWS" or "LOEWS" trademarks, emblems, insignia or distinguishable characteristics, at the fair market value thereof, Hotel Owner shall cease to use same and shall sell same to Operator. Section 19.3 Remedy; Iniunctive Relief. No right or remedy of Hotel Owner for any default, and neither the tennination or cancellation of this Agreement, nor any provision of this Agreement shall confer upon Hotel Owner or any transferee, assignee or successor, or any person, firm or corporation claiming by or through Hotel Owner, any right to use the name "LOEWS", or any variance thereof, either alone or in conjunction with any other word or words, in the use or operation of the Hotel or otherwise. Operator shall have the right to seek relief in a court of competent jurisdiction to enforce the provisions of this Article 19 by injunction and all other remedies at law and in equity, and Hotel Owner shall bear all costs in connection with such proceedings, if the Court rules against Hotel Owner. The provisions of this Article 19 shall survive any tennination of this Agreement. - 27- MI962600.003/09120/96 ARTICLE 20 HOTEL OWNER NOT TO USE NAME "LOEWS" IN OBTAINING FINANCING Section 20.1 Use of Name in Financin2. Without the prior specific written consent of Operator, Hotel Owner shall not represent in any proposed financing arrangement or to any proposed lender or participant in a private or public investment offering that Operator or any of its Affiliates is or shall be in any way responsible for Hotel Owner's obligations under said financing arrangement, nor is or shall be participating in said private or public investment offering, nor shall Hotel Owner in any way make use of the name "LOEWS" or the name of Operator or any of its Affiliates in connection with any such proposed financing arrangement or to any such lender or participant in a private or public investment offering, other than to state that, subject to the terms and provisions of this Agreement, the Hotel will bear the name II LOEWSII , will be counseled as regards its management and operation by Operator and will be a part of the "LOEWS" chain of hotels. Section 20.2 Prior Approval of Financin2 Documents. In order to ensure Hotel Owner's full and faithful compliance with the foregoing paragraph and to prevent any misunderstanding on the part of any proposed lender or participant in any such private or public investment offering, Operator and Hotel Owner agree as follows: (a) Prior to the closing of any such financing arrangement, Hotel Owner shall inform and furnish Operator with the identity of the proposed lender and copies of the proposed closing documents, and Operator shall have the right to notify such proposed lender of the legal relationship between Operator and its Affiliates and Hotel Owner and to inform it that neither Operator nor any of its Affiliates makes any warranties or representations in connection with any information provided to it by Hotel Owner. (b) Prior to the printing of any prospectus concerning said private or public investment offering, Hotel Owner shall furnish Operator with a copy of said prospectus, and said prospectus shall not be published and/or distributed without the prior written consent of Operator. Operator's right to withhold such consent shall only be on account of statements in said prospectus which might reasonably be misleading as to the legal relationship between Operator, its Affiliates and Hotel Owner, or on account of the use of the name "LOEWS" or the name of Operator or any of its Affiliates other than in the manner permitted by this Article 20. Operator shall promptly specify to Hotel Owner the statements which it deems to be misleading and what changes are required to make such statements not misleading. In addition, Operator will have the right to require Hotel Owner to insert in any such prospectus a statement that neither Operator nor any of its Affiliates may make any warranties or representations in connection with any information contained in such prospectus and will have the further right to inform upon request any participant in any such private or public investment offering of the legal relationship between Operator, its Affiliates and Hotel Owner - 28- MI962600,003/09/20/96 and to further inform it that neither Operator nor any of its Affiliates make any warranties or representations in connection with any information contained in any such prospectus or any other information provided to it by Hotel Owner. ARTICLE 21 DAMAGE OR DESTRUCTION; CONDEMNATION Section 21.1 Casualty. If the Hotel or any portion thereof shall be damaged or destroyed at any time or times during the Term of this Agreement by fire, casualty or any other cause, Hotel Owner will, at its own cost or expense and with due diligence, repair, rebuild or replace the same so that after such repairing, rebuilding or replacing the Hotel shall be substantially the same as prior to such damage or destruction. If Hotel Owner fails to undertake such work within ninety (90) days after the fIre or other casualty, or shall fail to complete the same diligently, Operator may, at its option terminate this Agreement by written notice to Hotel Owner, effective as of the date sent. Operator shall further have the right to require that any proceeds from insurance be applied to such repairing, rebuilding or replacing. Notwithstanding the foregoing, if the Hotel is damaged or destroyed to such an extent that the cost of repairs or restoration as reasonably estimated by Operator exceeds one-third of the original cost of the Hotel, then Operator may terminate this Agreement by written notice to Hotel Owner, or Hotel Owner may, if it determines not to repair, rebuild or replace the Hotel, as aforesaid, terminate this Agreement by such notice to Operator. If, within five (5) years after any such termination and during the initial Term, Hotel Owner commences the repair, rebuilding or replacement of the Hotel, Operator may within the later of sixty (60) days following the commencement of such repairing, rebuilding or replacement or of written notice from Hotel Owner of its intention to repair, rebuild or replace the Hotel, reinstate this Agreement by written notice to Hotel Owner. Hotel Owner shall give to Operator at least fifteen (15) days prior written notice of commencement of any such repair, rebuilding or replacement of the Hotel. Section 21.2 Total Condemnation. If the whole of the Hotel shall be taken or condemned in any eminent domain, condemnation, compulsory acquisition or like proceeding or agreement in lieu thereof by any competent authority or if such a portion thereof shall be so taken or condemned as to make it imprudent or unreasonable, in the reasonable opinion of Operator, to use the remaining portion as a hotel of the type and class immediately preceding such taking or condemnation, then, except as otherwise provided herein, this Agreement shall terminate as of the date of such taking or condemnation but any award in favor of Hotel owner for such or condemnation shall be fairly and equitably apportioned between Hotel Owner and Operator with priority to recoupment by Hotel Owner of its investment in the Hotel, the amount to be received by Operator being calculated on the basis of the loss suffered by it as a result of the termination of this Agreement. It is understood that until Hotel Owner - 29- MI962600.003/09120/96 recuperates the balance of its investment, the entire award will belong to Hotel Owner. If, within five (5) years after any such termination and during the initial Term, Hotel Owner operates or contracts for the operation of a hotel on the Premises, Operator may, within the later of sixty (60) days following commencement of such contract or operation or of written notice, in reasonable detail, from Hotel Owner of its intention to so operate or contract therefor, reinstate this Agreement by written notice to Hotel Owner. Hotel Owner shall give to Operator at least fifteen (15) days' prior written notice of any such contract or commencement of operation. Section 21.3 Partial Condemnation. If only a part of the Hotel shall be taken or condemned as aforesaid and the taking or condemnation of such part does not make it unreasonable or imprudent, in the reasonable opinion of Operator, to operate the remainder as a hotel of the type and class immediately preceding such taking or condemnation, this Agreement shall not terminate, and so much of any award to Hotel Owner shall be made available as shall be reasonably necessary for making alterations or modifications of the Hotel, or any part thereof, so as to make it a satisfactory architectural unit as a hotel of similar type and class as prior to the taking or condemnation. The balance of the award, after deduction of the sum necessary for such alterations or modifications, shall be fairly and equitably apportioned between Hotel Owner and Operator so as to compensate Operator for any loss of income resulting from the taking or condemnation. It is understood that until Hotel Owner recuperates the balance of its investment, the entire award will belong to Hotel Owner. Section 21.4 Provisions Subordinate. The provisions of this Article 21 shall, however, be at all times subject and subordinate to provisions of the Ground Lease and the Loan Documents, provided that no such provision shall be deemed, directly or indirectly, to impose any financial obligation upon Operator. ARTICLE 22 TITLE TO HOTEL Section 22.1 Title. Hotel Owner covenants and agrees that it has and throughout the Term will maintain full ownership of the Hotel, including the Premises, Building Equipment, FF&E, Operating Equipment and Operating Supplies, free and clear of all liens, covenants, charges and encumbrances except (a) the Ground Lease, (b) the Loan Documents (including equipment leases permitted by the Loan Documents), (c) the condominium regime created by the Declaration of Condominium and the Condominium Unit Lease and (d) those which do not materially affect the operation of the Hotel. Section 22.2 Quiet Enjoyment. Hotel Owner covenants that Operator, upon fulfilling its obligations hereunder, shall and may peaceably and quietly furnish its technical assistance - 30- MI962600.003/09/20/96 for the management and operation of the Hotel in the name and for the account of Hotel Owner without disturbance during the Term of this Agreement and Hotel Owner will at its own expense undertake and prosecute any appropriate action, judicial or otherwise, to assure such situation to Operator. Hotel Owner further agrees that throughout the Term it will pay, keep, observe and perform all payments, terms, covenants, conditions and obligations to be made, kept, observed or performed by Hotel Owner under every lease, mortgage and other agreement and security instrument in respect of the Hotel. Should Hotel Owner default in the performance of any of the foregoing obligations, Operator may fulfill said obligations in the name and for the account of Hotel Owner and shall be reimbursed forthwith by Hotel Owner for all sums so expended with interest at a rate equal to the Prime Rate, and may withdraw same from the Operating Accounts in whole or in part at any time. ARTICLE 23 EVENTS OF DEFAULT Section 23.1 Definition. The following shall constitute an "Event of Default" hereunder: (a) The failure of Operator to pay any monies to Hotel Owner provided for herein, or the failure of Hotel Owner to pay any monies to Operator provided for herein (including, without limitation, the failure of Hotel Owner to provide working capital pursuant to Article 10 hereof) or to pay any monies owed to any of its Affiliates, and such failure continues for a period of thirty (30) days after Notice is given by the non-defaulting party that the same is past due; (b) To the extent permitted by law, the filing of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law by either Hotel Owner or Operator; (c) To the extent permitted by law, the consent to an involuntary petition in bankruptcy or the failure to vacate within one hundred eighty (180) days from the date of entry thereof any order approving an involuntary petition by either Hotel Owner or Operator; (d) To the extent permitted by law, the entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating either Hotel Owner or Operator a bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee or liquidator of all or a substantial part of such party's assets, and such order, judgment or decree shall continue unstayed and in effect for a period of one hundred eighty (180) consecutive days; - 31 - MI962600.003/09120/96 (e) If either party shall default in the observance or performance of any term, covenant or condition of this Agreement on such party I s part to be observed or performed (other than the covenants for the payment of money or as expressly set forth above) and such party shall fail to remedy such default within thirty (30) days after Notice by the other party 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, such party shall not (i) within thirty (30) days after the giving of a Default Notice, advise the other party of its intention to institute all steps necessary to remedy such default, and (ii) thereafter diligently prosecute to completion all steps necessary to remedy the same. Section 23.2 Effect of Default. If an Event of Default is alleged, the non-defaulting party may give to the defaulting party Notice of its intention to either (i) terminate this Agreement, setting forth the date, not earlier than 30 days from the date of such Notice, on which such termination shall be effected, or (ii) seek damages, in an amount specified, arising from such Event of Default. If the defaulting party disputes the existence of such alleged Event of Default, it shall give Notice to the non-defaulting party within 30 days of the Notice alleging such Event of Default, in which case the defaulting party shall not be deemed in default hereunder, and this Agreement shall remain in full force and effect pending the final resolution of appropriate legal proceedings resolving such dispute. If as a result of such proceedings an Event of Default has been found to have occurred, then this Agreement shall terminate, or damages shall be payable as determined by such proceedings. Section 23.3 Late Payments. All payments required to be made by Operator to Hotel Owner or by Hotel Owner to Operator shall bear interest at the Prime Rate plus three (3 % ) percent from the date such payment is due until paid in full, except to the extent another rate of interest is expressly provided for in this Agreement. ARTICLE 24 SALE OF HOTEL Section 24.1 Sale of Hotel. The following provisions shall govern any "Sale of the Hotel" (as such term is defmed in the Ground Lease): (a) Hotel Owner shall not effect, suffer or permit a Sale of the Hotel which requires the consent of Owner under the Ground Lease without obtaining the prior written consent of Operator. In connection with any such proposed Sale of the Hotel, Hotel Owner shall furnish Operator a copy of the information required to be provided by Hotel Owner to Owner under Section 1O.1(d) of the Ground Lease not later than the date such information is furnished to Owner (the "Sale Information"), and shall furnish such additional information to Operator as Operator may reasonably request in connection with Operator's evaluation of a proposed Sale - 32- MI962600.003/09/20/96 of the Hotel, provided Operator shall make such request within ten (10) business days after receipt of the Sale Information. Operator shall approve or disapprove the proposed transaction within ten (10) business days after receipt of the Sale Information or Operator's receipt of such additional information, as the case may be. Notwithstanding the foregoing, if any change in circumstances prior to the close of such Sale of the Hotel renders the information provided pursuant to this subsection (a) materially incomplete or materially incorrect, any consent previously given by Operator shall be deemed null and void, and Hotel Owner shall notify Operator of the change. Operator shall thereupon have ten (10) business days to notify Hotel Owner whether Operator's consent to such changed a Sale of the Hotel is given or denied. (b) In the event of a "Permitted Sale" (as such term is defmed in the Ground Lease), Hotel Owner shall furnish to Operator a duplicate copy of the information required to be furnished to Owner under Section 10. 1 (c) of the Ground Lease. (c) In the event of a Sale of the Hotel, Hotel Owner shall deliver to Operator within ten (10) business days after the execution thereof, the instruments of assignment and transfer referred to in Section 10. 1 (h) of the Ground Lease. (d) If Hotel Owner does not survive a Sale of the Hotel as Hotel Owner, then the successor Hotel Owner shall assume and be deemed to assume this Agreement and shall be liable for the performance of and compliance with all the terms, conditions and agreements contained in this Agreement on Hotel Owner's part to be performed which accrue from and after the date of such Sale of the Hotel. No such Sale of the Hotel shall be binding on Operator unless and until such successor shall enter into a written agreement containing a covenant of assumption as aforesaid. Upon Operator's receipt of such assumption instrument, the predecessor Hotel Owner shall be released from all liability accruing after the date of such Sale of the Hotel. (e) Any Sale of the Hotel (i) entered into without Operator's consent as and if required in this Article 24, (ii) sought to be entered into without the execution and delivery to Operator within ten (10) business days thereafter, of the instrument provided in Section 24.1 (unless such Sale of the Hotel is effected by operation of law, in which case no such instrument shall be required), or (Hi) which in any other respect fails to comply with the provisions of this Article 24, shall have no validity and shall be null and void and without effect. Section 24.2 Provision Continues. The provisions of this Article 24 shall survive any termination of the Ground Lease and therefore shall be applicable to any Sale of the Hotel subsequent to such termination. - 33 - MI962600,003/09120/96 ARTICLE 25 TRANSFER BY OPERA TOR Section 25.1 Transfer by Operator. The foregoing provisions shall govern any "Management Transfer" (as such term is defined in the Ground Lease); (a) Operator shall not effect, suffer or permit a Management Transfer which requires the consent of the Owner under the Ground Lease without obtaining the prior written consent of Owner under the Ground Lease (for so long as the Ground Lease is in effect), as well as the prior written consent of Hotel Owner hereunder. In connection with any such proposed Management Transfer, Operator shall furnish to Hotel Owner and to Owner the information required to be provided pursuant to Section 16.3(e) and (t) of the Ground Lease and shall furnish such additional information to Hotel Owner as Hotel Owner may reasonably request in connection with Hotel Owner's evaluation of such proposed transaction. Hotel Owner shall approve or disapprove the proposed transaction within ten (10) business days after receipt of Operator's request for consent or Owner or Hotel Owner's receipt of such additional information, as the case may be. (b) Operator shall deliver to Hotel Owner, or shall cause to be delivered to Hotel Owner, within ten (10) business days after the execution thereof, a true and correct copy of an executed instrument of transfer, engagement, and a true and correct copy of an executed instrument of assumption by the transferee of Operator's obligations under this Agreement accruing from and after the date of such Agreement. (c) If Operator does not survive a Management Transfer as Operator, then the successor Operator shall assume and be deemed to assume this Agreement. No Management Transfer shall be binding on Owner unless and until such Management Transferee shall enter into a written agreement containing a covenant of assumption as aforesaid. (d) Any transaction (i) entered into without Hotel Owner's consent as and if required in this Article 25, (ii) sought to be entered into without the execution, and delivery to Hotel Owner within ten (10) business days thereafter, of the instrument of transfer (unless such Management Transfer is effected by operation of law, in which case no instrument shall be required), if applicable (iii) which in any other respect fails to comply with the provisions of this Article 25, shall have no validity and shall be null and void and without effect. Section 25.2 Provision Continues. The provisions of this Article 25 shall survive any termination of the Ground Lease and therefore shall be applicable shall be applicable to any Management Transfer subsequent to such termination. - 34- MI962600,OO3/09/20/96 ARTICLE 26 INDEMNIFICATION Section 26.1 Operator Liability. Operator shall not, in the performance of this Agreement, be liable to Hotel Owner or to any other person or entity for any act or omission, negligent, tortious, or otherwise, of (i) any agent or employee of Hotel Owner, or (ii) of Operator or any of its Affiliates, unless such act or omission on the part of Operator or its Affiliates constitutes gross negligence or willful misconduct, and then only to the extent that the damages resulting therefrom are not covered by the insurance required to be carried by Hotel Owner pursuant to the terms hereof whether or not such insurance is actually in place. Operator shall be considered responsible only for the acts of omissions of such of its employees as are not Hotel employees. Section 26.2 Indemnification by Hotel Owner. Hotel Owner shall indemnify and save Operator and its Affiliates harmless from all liability, loss, damage, cost, claim or expense, including reasonable attorney's fees, incurred by Operator and its Affiliates by reason of (i) any act or omission, negligent, tortious or otherwise, of Hotel Owner or any agent or employee of Hotel Owner (including, but not limited to, Hotel employees), (ii) any such act or omission of Operator or any of its Affiliates or any of their respective agents or employees (including, but not limited to, Hotel employees) in connection with the performance of this Agreement, unless such act or omission constitutes gross negligence or willful misconduct and the damages resulting therefrom are not covered by insurance which Hotel Owner is required to maintain hereunder, whether or not such insurance is actually in place, (Hi) any person claiming to have acted for Hotel Owner or at its request as a broker or fmder or prior operator in connection with this Agreement, or (iv) any person claiming interference with his rights under any contract or otherwise, which in any way relate to the Premises or the ownership or operation of a hotel thereon. Hotel Owner shall, at Operator's request, assume the defense of any legal proceeding arising out of any allegation with respect to any of the foregoing. Section 26.3 Operator Not Responsible for Errors in Jud2l11ent. Notwithstanding any other provisions of this Agreement, in no event shall Hotel Owner make any claim against Operator or its Affiliates on account of any alleged errors of judgment made in good faith in connection with its counseling in the management and operation of the Hotel hereunder by Operator. Hotel Owner shall not object to any expenditure made by Operator in good faith in the course of its activities of management of the Hotel, provided it is incurred in accordance with the provisions hereof, or in settlement of any claims arising out of the operation of the Hotel made in accordance with this Agreement. The provisions of this Article 26 shall survive any termination of this Agreement. - 35 - MI962600.003/09/20/96 ARTICLE 27 MISCELLANEOUS Section 27.1 Further Assurances. Hotel Owner and Operator shall execute and deliver all other appropriate supplemental agreements and other instruments, and take any other action necessary to make this Agreement, fully and legally effective, binding and enforceable as between them and as against third parties. Any fees or expenses incurred in connection therewith shall be borne by Hotel Owner except attorneys' fees of Operator. Section 27.2 Headin2s. The headings of the titles and sections of the several articles of this Agreement are inserted for convenience only and are not intended to affect the meaning of any of the provisions hereof. Section 27.3 "Prime Rate". The term "Prime Rate" as used herein shall mean the prime commercial lending rate of Citibank, N .A. All interest shall be computed on the basis of a 365-day year at the Prime Rate from time to time in effect during the applicable period. Section 27.4 Inspection. Hotel Owner shall have the right to inspect the Hotel during reasonable business hours provided that such inspection shall not interfere with the efficient operation of the Hotel. In addition, Operator shall permit Owner, under the Ground Lease, to exercise its right to inspect the Hotel pursuant to and subject to the provisions of Section 25.10 thereof. Section 27.5 Partial Invalidity. In the event that anyone or more of the phrases, sentences, clauses or paragraphs contained in this Agreement shall be declared invalid by the final and unappealable order, decree or judgment of any court, this Agreement shall be construed as if such phrases, sentences, clauses or paragraphs had not been inserted; provided that if such invalidity shall destroy the basis of this Agreement between the parties and the intent thereof, then Operator or Hotel Owner shall have the option to terminate this Agreement within thirty (30) days thereafter on written notice to the other. Section 27.6 "Herein, etc. ". The words, "herein", "hereof", "hereunder" and words of similar import, wherever used in this Agreement, refer to the Agreement as a whole and not to any particular article, section or paragraph thereof. Section 27.7 Entire Aueement. This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, superseding all prior agreements or understandings, oral or written. This Agreement may not be amended, modified or discharged, or any of the terms hereof waived, except by an instrument in writing signed by the party against which such amendment, modification, discharge or waiver is sought to be enforced. - 36- MI962600,OO3/09/20/96 Section 27.8 No Representations. Hotel Owner hereby represents that, in entering into this Agreement, Hotel Owner has not relied on any projections of earnings, statements as to possibility of future success or other similar matters which may have been prepared by Operator or any of its respective Affiliates or subsidiary companies as to the cost or the future financial success of the Hotel. Operator hereby represents that, in entering into this Agreement, Operator has not relied on any projections or earnings, statements as to possibility of future success, or other similar matters which may have been prepared by Hotel Owner or any of its respective Affiliates as to the cost or the future fmancial success of the Hotel. Section 27.9 Governin2 Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida, U.S.A. Section 27.10 Maximum Interest Rate. Regardless of any provisions contained in this Agreement, Operator shall never be entitled to receive, collect, or apply as interest on any indebtedness any amount in excess of the maximum rate of interest permitted to be charged by applicable law, and, in the event Operator ever received, collects, or applies as interest any such excess, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of such indebtedness, and if the principal balance of such indebtedness is paid in full, any remaining excess shall forthwith be paid to Hotel Owner. In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Hotel Owner and Operator shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) "spread" the total amount of interest throughout the entire contemplated term of the indebtedness. As used herein, the term "indebtedness" shall mean all present and future indebtedness, obligations, and liabilities, and all renewals, extensions, and refundings thereof, or any part thereof, of Hotel Owner arising pursuant to this Agreement, regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, joint, several, or joint and several. Section 27.11 Effect of Unavoidable Delay. Except as and to the extent otherwise expressly provided herein, no failure of any party to comply with or meet any requirement of any provision of this Agreement or perform any of its obligations hereunder, other than an obligation to payor provide money or financing, by reason of Unavoidable Delay shall constitute a breach of any of the provisions hereof, and, if applicable, any time for performance or compliance with any such provision or requirement shall be deemed extended during the period of the pendency of Unavoidable Delay. Section 27.12 No Waiver. No failure by Operator or Hotel Owner to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy consequent upon a breech thereof, shall constitute a waiver of - 37- MI962600.003/09/20/96 any such breach or any subsequent breach of such covenant, agreement, term or condition. No covenant, agreement, term or condition of this Agreement and no breach thereof shall be waived, altered or modified except by written instrument. No waiver of any breach shall affect or alter this Agreement, but each and every covenant, agreement, term and condition of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. Section 27.13 Corporate Obli2ations. It being expressly understood that this Agreement and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of Hotel Owner or Operator, or of any successor corporation, or any of them, under or by reason of the obligations, covenants or agreements contained in this Agreement or implied therefrom; and 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 or director, as such, or under or by reason of the obligations, covenants or agreements contained in this Agreement or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Agreement. Section 27.14 No Third party Beneficiary. Hotel Owner and Operator hereby acknowledge and confirm that this Agreement has been entered into solely for the benefit of Hotel Owner and Operator and no third party, whether referred to herein or otherwise, shall be deemed to be an intended beneficiary or have any rights hereunder. Section 27.15 Inflation Adjustment. Unless otherwise expressly provided hereunder, any dollar amount described in this Agreement 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 GDP Implicit Price Deflator Index for the calendar year immediately preceding the date of such adjustment, and the denominator of which shall be the GDP Implicit Price Deflator Index for the calendar year during which this Agreement is executed. If the GDP Implicit Price Deflator Index ceases to be published, and there is no successor thereto, such other reasonably similar index as Hotel Owner and Operator mutually designate shall be substituted for the GDP Implicit Price Deflator Index. Section 27.16 Estoppel Certificates. Operator shall, within fifteen (15) days after notice by Hotel Owner, execute, acknowledge and deliver to Hotel Owner, or any other person specified by Hotel Owner, a written statement (which may be relied upon by such person) (a) certifying that this Agreement is unmodified and in full force and effect (or if there are modification, that this Agreement, as modified, is in full force and effect and stating such modifications), and (b) stating (i) whether Operator has given Hotel Owner written notice of any default, by Hotel Owner of Hotel Owner's obligations under this Agreement, which default has not been cured. - 38- MI962600.003/09/20/96 Section 27.17 Prohibition of Competin2 Projects. (a) Operator hereby covenants for itself and its Affiliates, not to operate, without the prior consent of Hotel Owner, a Convention Hotel within the area described on Exhibit B hereto (the "Territory"). (b) Notwithstanding anything to the contrary contained in subsection (a) above, if Operator, or an Affiliate, purchases two (2) or more hotels as part of a chain (a "Hotel Chain"), then the provisions of subsection (a), above shall not be applicable to any hotels comprising a portion of the Hotel Chain at the time the Hotel Chain is acquired. (c) Operator acknowledges that Hotel Owner will be irreparably harmed in the event Operator violates the provisions of this Section 27.17 and that money damages would be inadequate to compensate Owner for such harm. Consequently, Operator agrees that Hotel 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. ARTICLE 28 NOTICES, CONSENTS AND APPROVALS Section 28.1 Service of Notices and Other Communications. (a) 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 whenever either or 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 28.1 as a "Notice") shall be in writing and shall be effective for any purpose only if given or served by (i) certified U.S. Mail, postage prepaid, return receipt requested, (ii) personal delivery with a signed receipt, or (Hi) a recognized national courier service, addressed as follows: if to Hotel Owner: MB Redevelopment, Inc. c/o Loews Hotels, Inc. 667 Madison Avenue New York, New York 10022 Attn: Corporate Secretary - 39- MI962600.003/09/20/96 with a copy to: Loews Hotels, Inc. 667 Madison Avenue New York, New York 10022 Attn: Corporate Secretary and to: Hughes Hubbard & Reed 201 S. Biscayne Boulevard, Suite 2500 Miami, Florida 33131 Attn: William A. Weber, Esq. if to Operator: Loews Miami Beach Hotel Operating Company, Inc. 667 Madison Avenue New York, New York 10022 Attn: Corporate Secretary with a copy to: Hughes Hubbard & Reed 201 S. Biscayne Boulevard, Suite 2500 Miami, Florida 33131 Attn: William A. Weber, Esq. or to such other address as a party shall designate by Notice to the other in the manner herein provided. (b) Every Notice hereunder shall be effective on the date actually received, as indicated on the receipt therefor or on the date delivery thereof, if delivery is refused by the recipient thereof. (c) All references in this Agreement to the "date" of a Notice shall mean the effective date, as provided in the preceding subsection (b). Section 28.2 Consents and Approvals. (a) All consents and approvals which may be given under this Agreement 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 Agreement, or the - 40- MI962600.003/09120/96 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. Any provision of this Agreement providing for any consents or approvals or purportedly setting forth standards therefor, shall in all cases be governed by this Section 28.2. (b) All consents and approvals which may be given by a party under this Agreement shall not 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. (c) In the event there shall be a final determination that a consent or approval has been unreasonably withheld, conditioned or delayed so that the consent or approval should have been granted, the consent or approval shall be deemed granted. In addition, the requesting party shall be entitled to any and all damages resulting from such wrongful condition, delay, or withholding. (d) 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 Agreement. Section 28.3 Consents under the Ground Lease. Notwithstanding anything herein to the contrary, any consent of Owner under the Ground Lease shall be governed by the terms of the Ground Lease, and Hotel Owner shall have no liability to Operator based upon any consent given or withheld by Owner under the Ground Lease in accordance with the terms thereof. ARTICLE 29 BINDING EFFECT ON SUBSEQUENT HOTEL OWNERS AND MORTGAGEES Section 29.1 Successors and Assi2DS. This Agreement shall be binding upon and inure to the benefit of Hotel Owner, its successors and permitted assigns, including without limitation, all subsequent Hotel Owners of any interest in the Premises and shall be binding upon and inure to the benefit of Operator, its successors and permitted assigns. Section 29.2 Covenant Runnin2 with the Land. Hotel Owner acknowledges that the Premises, including the Hotel will be substantially increased in value and made more useful and valuable to Hotel Owner and all future holders of any interest in the Premises by the existence of and performance by Operator under this Agreement. Hotel Owner acknowledges - 41 - MI962600.003/09/20/96 that the provisions of this Agreement, including without limitation Articles 21, 22, 24 and this Article 29 are specifically intended to be covenants running with the land, create real property interests in the Premises and the Hotel and equitable servitudes upon the Premises and the Hotel for the benefit of Operator and to be binding upon Hotel Owner and its successors and assigns and all subsequent holders of any interest in the Premises, including the Hotel, but shall nevertheless be subject and subordinate to the Ground Lease and the rights of Owner thereunder. Section 29.3 Loan Documents. The parties acknowledge that Hotel Owner may be required to obtain financing (interim, construction and/or permanent) to obtain a portion of the funds needed to construct and equip the Hotel and otherwise perform Hotel Owner's obligations under Article 2 hereof, which financing may be secured by mortgages and other liens and security interests (the "Loan Documents") on the Hotel. Each Loan Document shall provide as follows (and each holder thereof shall enter into an agreement with Operator to the effect that): (a) This Agreement shall not be subject to termination or forfeiture except pursuant to the terms hereof, notwithstanding a default under the Loan Documents; (b) So long as no Event of Default by Operator has occurred and is continuing, no creditor under the Loan Documents shall take any action or commence any proceeding, including without limitation, joining Operator as a party in any action or proceeding brought as a result of a default under a Loan Document, for the purpose of terminating or otherwise interfering with, subordinating or restricting Operator's interest under this Agreement; (c) Nothing in the Loan Documents shall be deemed to limit or restrict Operator's rights under Section 10.2 hereof, including without limitation Operator's right to pay all Operating Expenses of the Hotel as well as all amounts payable to Operator by Hotel Owner under this Agreement, out of the Operating Accounts; (d) Any sale of the Premises, under any power of sale, foreclosure or any other remedy under the Loan Documents or by acceptance of a deed in lieu of such sale or foreclosure, or otherwise, shall be deemed a "Sale of the Hotel" subject to all of the provisions of Article 24 hereof; and (e) In the event this Agreement is terminated or discharged for any reason (other than the default of Operator) by virtue of a proceeding relating to the Loan Documents or under any law relating to bankruptcy or creditor's rights from time to time in effect and the creditors under the Loan Documents or their designee obtains possession or title to the Hotel, such entity shall enter into a new management agreement with Operator on the same terms and conditions as this Agreement. - 42- MI962600.003/09/20/96 Section 29.4 Operator Consent to Assignment of this Agreement. In addition to the foregoing, Operator agrees that upon the request of any holder of the Loan Documents it will consent to the assignment of this Agreement as collateral security for the Loan Documents and will agree to permit such holder to cure any default by Hotel Owner hereunder to the same extent as may Hotel Owner, and that in the event such holder takes possession of the Premises as a result of foreclosure, deed in lieu of foreclosure, or otherwise, Operator shall continue to perform its obligations under this Agreement on behalf of such holder without any cost increases over the sums set forth herein; provided that (i) such holder is an "institutional investor"; (ii) such holder has agreed by an instrument in form and substance reasonably satisfactory to Operator to assume, be bound by and perform all obligations of Hotel Owner under this Agreement which become payable or accrue (without giving effect to any acceleration of any such obligations by Operator prior to such taking on possession) on or after the date such holder takes possession, with the same force and effect as if such holder were the "Hotel Owner" under this Agreement; provided, further, that nothing herein shall limit the right of such holder, after taking possession of the Premises and assuming the obligations of Hotel Owner as provided above, at any time, from terminating this Agreement for cause upon the occurrence and countenance of an Event of Default hereunder. Section 29.5 Breach by Hotel Owner. The provisions of this Article 29 shall not be deemed to limit, waive, or otherwise affect any right of Operator arising out of any breach or default of any of the provisions hereof by Hotel Owner or its successors. Section 29.6 Further Assurances. Hotel Owner agrees to execute and deliver all such documents, agreements and other instruments and take all such action as Operator may request to make effective the foregoing provisions of this Article 29. Hotel Owner acknowledges that in addition to all other rights Operator may have, at law and in equity, to enforce its rights under this Agreement and/or to recover damages for the breach thereof, Operator shall have the right to seek and obtain specific performance of this Agreement and to seek and obtain injunctions and other equitable relief as may be necessary to protect, preserve and enforce its rights under this Agreement. Section 29.7 Effect of Attornment Agreement. The provisions of Sections 29.1, 29.2 and 29.3 above shall be subject to any agreement of attornment or non-disturbance which may be entered into between Operator and the creditors under any Loan Documents. - 43 - MI962600,003/09/20/96 IN WITNESS WHEREOF, Operator and Hotel Owner have executed this Agreement as of the day and year first above written. MB REDEVELOPMENT, INC. eVl r LOEWS MIAMI BEACH HOTEL OPERATING COMPANY, INC. ~;Q{~ - 44- MI962600.003/09/20/96 EXHIBIT A PREMISES - 45- MI962600.003/09120/96 EXHIBIT B 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. - 46- MI962600.003/09/20/96 HOTEL LEGAL DESCRIPTION PARCEL I: LOTS " 2, 17 AND lB, BLOCK 55. F'ISHER'S F'IRST SUBDIVISION OF' AI.. TON BEACH, ACCORDING TO PLAT THEREOF', RECORDED IN PLAT BOOK 2, AT PAGE 77. OF' THE PUBLIC RECORDS OF' D~E COUNTY. FLORIDA. LESS THAT PART OF' LOTS 2 AND 17 LYING NORTH OF' A LINE. WHICH SAID LINE IS LOCATED AND DESCRIBED AS FOLLOWS: BEGIN AT THE NORTHWEST CORNER OF' LOT 16. BLOCK 55, F'ISHER'S F'IRST SUBDIVISION OF' Al TON BEACH, THENCE RUN SOUTHWESTERL Y ALONG THE WESTERL Y LINE OF' SAlD LOTS 16 AND 17 F'OR A DISTANCE OF' 72 F'EET TO A POINT. SAID POINT BEING THE POINT OF' BEGINNING OF' THE LINE BEING DESCRIBED; THENCE EASTERLY PARALLEL TO THE NORTHERLY LINE OF' LOT 16 AND LOT J, BLOCK 55 OF' F'ISHER'S F'IRST SUBDIVISION OF' ~ TON BEACH F"OR A DIST ANCE OF' 400 F'EET TO A POINT IN THE EASTERLY LINE OF' LOT 2, OF' SAID BLOCK 55. f:"ISHER'S FIRST SUBDIVISION OF" AlTON BEACH. A.S TO LOTS 2 AND 17, SAlD PROPERTY MAY AlSO BE DESCRIBED AS lOTS 2 AND 17. LESS THE NORTH 21.3 FEET THEREOF, IN BLOCI< 55. ALTON BEACH FISHER'S FIRST SUBDIVISION, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 2. AT PAGE 77, OF' THE PUBLIC RECORDS OF' DADE COUNTY, FLORIDA. PARCEL II: PARCEL OF' LAND LYING BETWEEN BLOCK 55, OF' F'ISHER'S F'IRST SUBDIVISION OF' A.L TON BEACH, ACCORDING TO PLAT THEREOF', RECORDED IN PLAT BOOI< 2, AT PAGE 7i. OF' THE PUBLIC RECORDS OF' D~E COUNTY, FLORIDA, AND THE HIGH WATER ~ARK OF THE ATLANTIC OCEAN. WHICH SAID PARCEL OF' LAND IS P ~T1CUL ~L Y DESCRIBED AS FOLLOWS: 8EGI~ AT THE SOUTHEAST CORNER OF' SAID LOT " BLOCK 55. FISHER'S F'IRST SUBDIVISION OF' AI.. TON BEACH. THENCE RUN NORTHERLY AlONG THE EASTERL Y LINE OF'. LOT 1 AND LOT 2 OF SAJD BLOCK 55, F'ISHER'S FIRST SUBDIVISION OF' Al TON BEACH A DISTANCE OF' 102.2 F'EET MORE OR LESS TO A POINT IN THE EASTERLY LINE OF' SAID LOT 2, WHICH SAID POINT IS 72 F'EET SOUTH OF THE NORTHEAST CORNER OF LOT J OF' SAID BLOCK 55 OF' FISHER'S nRST SUBDIVISION OF AlTON BEACH; THENCE RUN IN AN EASTERLY DIRECTION ~O~G A LINE PARAlLEL TO THE EASTERLY EXTENSION OF' THE NORTH LINE OF' SAJO LOT .3. TO THE HIGH WATER MARK OF' THE ATLANTIC OCEAN; THENCE RUN IN A SOUTHERL Y DIRECTION AlONG THE HIGH WATER MARK OF THE ATLANTIC OCE AN A DISTANCE OF' 102.2 FEET MORE OR LESS TO A. POINT ON SAID HIGH WATER ~ARI( Of" THE ATLANTIC OCEAN WHICH IS THE INTERSECTION WITH THE E A.STERL Y EXTENSION OF THE SOUTHERLY LINE OF SAID LOT 1; THENCE IN A WESTERL Y DIRECTION AlONG THE EASTERLY EXTENSION OF SAID SOUTH LINE or LOT , TO THE POINT OF' BEGINNING. 1 of ;. '3 HOTEL LEGAL DESCRIPTION PARCEL III: LOTS 3 AND 16 AND THE NORTH 21.3 FEET CAS MEASURED ALONG LOT LINES> OF LOTS 2 AND 17. BLOCK 55. FISHER'S FIRST SUBDIVISION OF ALTON BEACH. ACCORDING TO THE PLAT THEREOF AS FILED FOR RECORD IN PLAT BOOK 2. PAGE 77. OF THE PUBLIC RECORDS OF D~E COUNTY. FLORIDA: TOGETHER WITH: THAT CERTAIN PARCEL OF LAND LYING EAST OF ~D ADJACENT TO THE LAND DESCRIBED ASOVEiSAlD LAND 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 EASTERL Y BOUNDED ON THE EAST BY THE MEAN HIGH WATER LINE OF THE ATLANTIC OCEAN AND BOUNDED ON THE WEST BY THE EAST LINE OF SAlD LOTS 2 AND 3 AFOREMENTIONED. PARCEL IV: LOTS 9. 10, 11, 12 AND NORTH '12 OF LOT 8 AND THE NORTH 'Iz OF LOT 13, BLOCK 56 OF FISHER'S FIRST SUBDIVISION OF ALTON BEACH FLORIDA. A SUBDIVISION IN FRACTIONAL SECTION 34, TOWNSHIP 53 SOUTH, RANGE 42 EAST, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 2. AT PAGE 77, OF THE PUBLIC RECORDS OF DADE COUNTY, FLORIDA. PARCEL V: BEGINNING AT THE NORTHEAST CORNER OF LOT 9, IN BLOCK 56 OF FISHER'S FIRST SUBDIVISION OF ALTON BEACH, AS THE SAME IS SHOWN MARKED AND DESIGNATED ON A PLAT OF SAID SUBDIVISION, RECORDED IN PLAT BOOK 2. AT PAGE 77, IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT IN .AND FOR DADE COUNTY. FLORIDAi THENCE RUN IN AN EASTERLY DIRECTION .6LONG THE NORTH LINE OF LOT 9 OF BLOCK 56. PRODUCED TO THE HIGH WATER LINE Of THE ATL~TlC OCEN>4i THENCE RUN IN A SOUTHERLY DIRECTION MEANDERING SAlD HIGH WATER LINE A DISTANCE OF 76.05 FEET PLUS OR MINUS TO A POINT. SAID POINT BEING AT THE INTERSECTION OF THE LAST MENTIONED COURSE WITH THE CENTER LINE OF LOT 8 OF BLOCK 56 PRODUCED TO THE HIGH WATER LINE OF THE ATLANTIC OCEAN; THENCE RUN IN A WESTERLY DIRECTION AlONG SAID CENTER LINE OF LOT 8. BLOCK 56 PRODUCED TO THE HIGH WATER LINE Of THE ATLANTIC OCEN>4: THENCE RUN IN A WESTERLY DIRECTION ALONG SAID CENTER LINE OF LOT 8. BLOCK 56 PRODUCED TO THE EAST LINE OF BLOCK 56, AT ITS INTERSECTION WITH THE CENTER LINE OF LOT 8, IN BLOCK 56: THENCE RUN IN A NORTHERLY DIRECTION ALONG SAID EAST LINE OF BLOCK 56, A DISTANCE OF 76.05 FEET PLUS OR MINUS TO A POINT OF BE,GINNING. 2 of f '3 PARCEL VI; BEGINNING AT THE SOUTHEAST CORNER OF LOT 10, IN BLOCK 56 AS SHOWN By THE PLAT ENTITLED "FISHER'S FIRST SUBDIVISION OF' AL TON BEACH", S~D PLAT BEING RECORDED IN PLAT BOOK 2, AT PAGE 77, OF' THE PUBLIC RECORDS OF'" D.ADE COUNTY, FLORIDA; RUN IN A NOR THERL Y DIRECTION AlONG THE EAST LINE OF'" SAID LOT la, A DISTANCE 01="' 50.7 F'"EET TO THE NORTHEAST CORNER or LOT 10; THENCE RUN IN AN EASTERL'( DIRECTION ALONG THE NORTH LINE OF SAID LOT 10. PRODUCED EASTERL Y TO THE HIGH WATER LINE OF'" THE ATLAN,I: OCE~; THENCE RUN IN A SOUTHERLY DIRECTION, MEANDERING SAID HIGH WATER LINE A DISTANCE OF '50.7 FEET, PLUS OR MINUS, TO A POINT; THENCE RUN IN A WESTERLY DIRECTION ALONG THE SOUTH LINE OF LOT 10, IN BLOCK 56, PRODUCED EASTERLY, TO THE POINT OF BEGINNING. PARCEL VII: THE SOUTH 'h OF LOTS 8 AND 1.3 AND ALL OF LOTS 7 AND 1., LESS THE SOUTH 12.65 FEET OF SAID LOTS 7 AND 14, TOGETHER WITH THAT PIECE OF PARCEL OF'" L~O LYING BETWEEN THE NORTH AND SOUTH BOUNDARIES OF SAID PROPERTY EXTENDING EASTWARD TO THE ATLANTIC OCEAN, ALL LYING AND BEING 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. PARCEL VIII: THAT PORTION OF AVENUE C (WK/A 16TH STREET> AS SHOWN IN F"lSHER'S FIRST SUBDIVISION OF ALTON BEACH, RECORDED AT PLAT BOOK 2, AT PACE 77, OF THE PUBLIC RECORDS OF' DADE COUNTY, FLORIDA. AND ITS EASTERLY EXTENSION BOUNDED ON THE WEST BY THE EASTERLY RIGH:r-OF-WAY LINE OF' COLLINS AVENUE AND BOUNDED ON THE EAST BY THE EROSION CONTROL LINE, ALL OF WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCE, AT THE NORTHWEST CORNER OF LOT 11, BLOCK 56, FISHER'S FIRST SUBDIVISION OF AI. TON BEACH, PLAT BOOK 2, AT PAGE 77, OF THE cUBllC RECORDS OF DADE COUNTY, FLORIDA. SAID POINT BEING THE POINT OF BEGINNING; THENCE NORTI-l 88 DEGREES 00 MINUTES .9 SECONDS EAST ALONG THE NORTH LINE OF SAID BLOCK 56 AND ITS EASTERLY EXTENSION FOR A DIST ANCE OF 576.20 FEET TO THE POINT OF INTERSECTION WITH THE EROSION CONTROL LINE OF' THE ATLANTIC OCEAN; THENCE NORTH 8 DEGREES 54 MINUTES 53 SECONDS EAST, ALONG THE EROSION CONTROL LINE FOR A DIST ANCE OF 71.28 FEET TO THE POINT OF INTERSECTION WITH THE EASTERL Y EXTENSION OF THE SOUTH LINE OF BLOCK 55 OF THE ABOVE MENTIONED FISHER'S FIRST SUBDIVISION OF ALTON BEACH; THENCE SOUTH 88 DEGREES 00 MINUTES 49 SECONDS WEST, ALONG THE SOUTH LINE OF SAID BLOCK 55 AND ITS EASTERL Y EXTENSION FOR A DISTANCE or 577.88 FEET TO THE POINT OF INTERSECTION WITH THE EASTERLY RIGHT-OF-WAY or COLLINS AVENUE; THENCE SOUTH 07 DEGREES 35 MINUTES 04 SECONDS WEST, ALONG THE EASTERLY RIGHT-OF-WAY LINE OF COLLINS AVENUE FOR A DISTANCE OF 70.98 FEET TO THE POINT OF BEGINNING. 3 of ;.3