exv10w1






Exhibit 10.1




LEASE




BY AND BETWEEN



THE UNITED STATES OF AMERICA,



ACTING BY AND THROUGH

THE ADMINISTRATOR OF GENERAL SERVICES

AND



TARIFF BUILDING ASSOCIATES, L.P.



 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page(s)	 
	1. DEFINITIONS
	 	 	2	 
	1.1. Certain Terms Defined
	 	 	2	 
	 
	 	 	 	 
	2. PREMISES
	 	 	18	 
	2.1. Lease of Land and Improvements
	 	 	18	 
	2.2. Vault Space
	 	 	19	 
	2.3. Lease as Master Lease
	 	 	19	 
	2.4. “As Is” Condition
	 	 	19	 
	2.5. Landlord’s Access
	 	 	19	 
	2.6. Access by the Smithsonian Institution
	 	 	20	 
	2.7. Public Access
	 	 	20	 
	2.8. Signs
	 	 	21	 
	2.9. Compliance with Historic Preservation Standards
	 	 	21	 
	 
	 	 	 	 
	3. [RESERVED]
	 	 	21	 
	 
	 	 	 	 
	4. TERM
	 	 	21	 
	4.1. Commencement
	 	 	21	 
	4.2. Lease Conditional on Memorandum of Agreement
	 	 	21	 
	4.3. Holding Over
	 	 	22	 
	 
	 	 	 	 
	5. RENT AND RESERVES
	 	 	22	 
	5.1. Annual Base Rent
	 	 	22	 
	5.2. Percentage Rent
	 	 	22	 
	5.3. Participation Rent
	 	 	23	 
	5.4. Proceeds from Sale or Refinancing
	 	 	23	 
	5.5. Statements
	 	 	24	 
	5.5.1. Annual Statement
	 	 	24	 
	5.5.2. Quarterly Statement.
	 	 	24	 
	5.5.3. Statement in Connection with First Sale or Prior Refinancing
	 	 	24	 
	5.6. Audit Of Annual Statements
	 	 	24	 
	5.7. Retention Of Records
	 	 	25	 
	5.8. Contributions To Reserves
	 	 	25	 
	5.8.1. FF&E Reserve
	 	 	25	 
	5.8.2. Capital Maintenance Reserve
	 	 	25	 
	5.8.3. Tenant’s Obligation to Deliver Statements and to Make Deposits
	 	 	26	 
	5.9. Deposits and Contributions as Rent
	 	 	26	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	5.10. General Rent Provisions
	 	 	26	 
	5.11. Net Lease
	 	 	26	 
	 
	 	 	 	 
	6. STANDARD OF OPERATION AND USE 
	 	 	26	 
	6.1. Permitted Use
	 	 	26	 
	6.2. Certain Uses
	 	 	27	 
	6.3. No Use By Public Without Restriction
	 	 	27	 
	6.4. Continuous Occupancy
	 	 	28	 
	 
	 	 	 	 
	7. REPAIRS AND MAINTENANCE
	 	 	28	 
	7.1. Tenant
	 	 	28	 
	7.2. Landlord
	 	 	29	 
	7.3. Compliance with Laws
	 	 	29	 
	7.4. Contest of Obligation
	 	 	29	 
	7.5. Certain Termination Rights
	 	 	30	 
	7.5.1. Uneconomic or Infeasible Costs
	 	 	30	 
	7.5.2. Last Five Years
	 	 	30	 
	7.5.3. Distribution of Insurance Proceeds and Reserves
	 	 	31	 
	 
	 	 	 	 
	8. ALTERATIONS
	 	 	31	 
	8.1. Right to Make Alterations
	 	 	31	 
	8.2. Additional Requirements
	 	 	31	 
	 
	 	 	 	 
	9.
TENANT’S PROPERTY, ETC.
	 	 	32	 
	9.1. Ownership of Tenant’s Property
	 	 	32	 
	9.2. Leased
and Financed Property, Etc.
	 	 	32	 
	9.3. Name of Building; Intellectual Property
	 	 	33	 
	 
	 	 	 	 
	10. MECHANICS’ LIENS
	 	 	33	 
	10.1. No Liens
	 	 	33	 
	10.2. No Consent of Landlord
	 	 	34	 
	10.3. Notice of Liens
	 	 	34	 
	 
	 	 	 	 
	11. TAXES
	 	 	34	 
	11.1. Real Property Taxes
	 	 	34	 
	11.2. BID Taxes
	 	 	34	 
	11.3. Personal Property Taxes
	 	 	35	 
	11.4. Election to Pay In Installments
	 	 	35	 
	11.5. Proration
	 	 	35	 
	11.6. Contest
	 	 	35	 
	11.7. Landlord and
	 	 	35	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	12. UTILITIES AND SERVICES
	 	 	36	 
	12.1. Tenant Pays For Its Utilities
	 	 	36	 
	12.2. Steam Service
	 	 	36	 
	12.3. Landlord’s Liability
	 	 	36	 
	 
	 	 	 	 
	13. INSURANCE
	 	 	37	 
	13.1. Tenant’s Fire and Extended Coverage
	 	 	37	 
	13.2. Tenant’s Worker’s Compensation, Employer Liability,
Commercial General Liability and Commercial Automobile
Liability Coverage
	 	 	38	 
	13.3. Policies and Certificates
	 	 	38	 
	13.4. Blanket Coverage
	 	 	39	 
	13.5. Subrogation Waiver
	 	 	39	 
	13.6. Tenant Insurance Primary
	 	 	39	 
	 
	 	 	 	 
	14. INDEMNIFICATION OF LANDLORD
	 	 	39	 
	14.1. Tenant’s Obligation
	 	 	39	 
	14.2. Survival of Provision
	 	 	39	 
	14.3. Obligation Not Affected By Failure of Insurance Carriers
	 	 	40	 
	14.4. Tenant to Defend Claims Against Landlord
	 	 	40	 
	 
	 	 	 	 
	15. ASSIGNMENT AND SUBLETTING
	 	 	40	 
	15.1. Operator
	 	 	40	 
	15.2. Assignment or Major Sublease
	 	 	40	 
	15.3. Deemed Assignments
	 	 	41	 
	15.4. Costs and Expenses
	 	 	42	 
	15.5. Reasonable Consent
	 	 	42	 
	15.6. Subleases and Restaurant Leases
	 	 	43	 
	15.7. Anti-Assignment Acts Limitation
	 	 	44	 
	 
	 	 	 	 
	16. SALE OR MORTGAGE OF LANDLORD’S INTEREST;
	 	 	 	 
	TENANT’S RIGHT OF FIRST REFUSAL; TENANT’S OPTION
	 	 	44	 
	16.1. Landlord’s Right to Assign
	 	 	44	 
	16.2. Right of First Offer
	 	 	45	 
	16.2.1. Notice
	 	 	45	 
	16.2.2. Option Exercise
	 	 	45	 
	16.2.3. Option Not Exercised
	 	 	45	 
	16.2.4. Delayed Sale
	 	 	45	 
	16.2.5. Less Favorable Offer
	 	 	45	 
	16.2.6. Exclusions
	 	 	46	 
	16.2.7. Foreclosure
	 	 	46	 
	16.2.8. Default
	 	 	46	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	16.2.9. Non-Assignable
	 	 	46	 
	16.3. Sale by Landlord
	 	 	46	 
	16.4. Merger 
	 	 	47	 
	 
	 	 	 	 
	17. LEASE STATUS REPORTS; LEGAL OPINIONS
	 	 	47	 
	17.1. Lease Status Reports
	 	 	47	 
	17.2. Legal Opinions
	 	 	48	 
	17.2.1. Landlord’s Legal Opinion
	 	 	48	 
	17.2.2. Tenant’s Legal Opinion
	 	 	48	 
	 
	 	 	 	 
	18. LEASEHOLD MORTGAGES
	 	 	48	 
	18.1. Definitions
	 	 	48	 
	18.1.1. Assignment For Security
	 	 	48	 
	18.1.2. Leasehold Mortgage
	 	 	49	 
	18.1.3. Leasehold Mortgagee
	 	 	49	 
	18.1.4. Mortgaged Premises
	 	 	49	 
	18.2. Permitted Assignments For Security
	 	 	49	 
	18.3. No Merger or Termination By Reason Of Foreclosure, Sale or
Surrender
	 	 	49	 
	18.4. Leasehold Mortgagee Succeeds to Tenant’s Interest; Liability of
Leasehold Mortgagee Limited
	 	 	50	 
	18.5. Right of Leasehold Mortgagee To Cure Default
	 	 	50	 
	18.5.1. Notice
	 	 	50	 
	18.5.2. Failure to Cure
	 	 	51	 
	18.5.3. Certain Limitations on Liability of Leasehold Mortgagee
	 	 	52	 
	18.6. Assignment After Cure
	 	 	52	 
	18.6.1. Notice
	 	 	52	 
	18.6.2. Failure to Cure
	 	 	52	 
	18.7. Continuing Offer
	 	 	53	 
	18.8. New Lease and Survival
	 	 	53	 
	18.9. Additional Rights of Leasehold Mortgagee
	 	 	54	 
	18.10. Multiple Mortgagees
	 	 	54	 
	18.11. Condemnation Proceeds
	 	 	54	 
	18.12. Execution of Documents
	 	 	55	 
	18.13. Notice
	 	 	55	 
	18.14. Disputes Over Lien Priority
	 	 	55	 
	 
	 	 	 	 
	19. NOTICE; APPROVALS
	 	 	55	 
	19.1. Procedure
	 	 	55	 
	19.2. Form and Effect of Notice
	 	 	56	 
	19.3. Approvals
	 	 	57	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	20. RECORDATION, COVENANTS RUNNING WITH THE LAND
	 	 	57	 
	20.1. Recordation of Memorandum of Lease
	 	 	57	 
	20.2. Covenants Running With the Land
	 	 	57	 
	 
	 	 	 	 
	21. NO PARTNERSHIP
	 	 	58	 
	 
	 	 	 	 
	22. DAMAGE OR DESTRUCTION OF PREMISES; CONSTRUCTION
OBLIGATIONS AND STANDARDS
	 	 	58	 
	22.1. Insured Casualty
	 	 	58	 
	22.1.1. Tenant’s Obligation to Repair
	 	 	58	 
	22.1.2. Termination Right on Certain Casualties
	 	 	58	 
	22.1.3. Use of Proceeds
	 	 	59	 
	 
	 	 	 	 
	23. APPROPRIATION
	 	 	59	 
	23.1. Total Taking
	 	 	59	 
	23.2. Partial Taking: Repair and Restoration By Tenant
	 	 	59	 
	23.3. Rights Of Termination
	 	 	58	 
	23.4. Allocation Of Award
	 	 	60	 
	23.5. Temporary Appropriation
	 	 	61	 
	23.6. Representation
	 	 	61	 
	 
	 	 	 	 
	24. SURRENDER OF PREMISES
	 	 	61	 
	24.1. Required Condition
	 	 	61	 
	24.2. Termination Before Substantial Completion
	 	 	62	 
	24.3. Other Contracts and Subleases
	 	 	64	 
	 
	 	 	 	 
	25. INSOLVENCY OR BANKRUPTCY
	 	 	65	 
	 
	 	 	 	 
	26. QUIET ENJOYMENT BY TENANT
	 	 	65	 
	26.1. Quiet Enjoyment
	 	 	65	 
	26.2. Compliance With Applicable Laws
	 	 	65	 
	 
	 	 	 	 
	27. DEFAULT; RIGHTS ON CERTAIN TERMINATION EVENTS
	 	 	65	 
	27.1. Tenant’s Default
	 	 	65	 
	27.1.1. Monetary Breach
	 	 	65	 
	27. 1.2. Non-Monetary Breach
	 	 	66	 
	27.1.3. Insolvency
	 	 	66	 
	27.1.4. Remedy on Occurrence of Event of Default
	 	 	66	 
	27.1.5. Computation of Rent for Purposes of Default
	 	 	67	 
	27.1.6. Remedy on Occurrence of a Non-Monetary Breach
	 	 	68	 
	27.1.7. No Termination; Waiver of Remedies; Certain
Limitations on Remedies of Landlord
	 	 	68	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	27.1.8. Rights of Leasehold Mortgagee
	 	 	68	 
	27.1.9. Limitation on Recourse
	 	 	68	 
	27.1.10. Landlord’s Right to Perform on Tenant’s Breach
	 	 	69	 
	27.2. Landlord’s Default
	 	 	69	 
	27.2.1. Landlord’s Liability
	 	 	69	 
	27.2.2. Tenant’s Additional Rights
	 	 	69	 
	27.2.3. Limitation on Recourse To Premises
	 	 	70	 
	27.3. Termination Procedures
	 	 	70	 
	27.4. Waiver; Remedies Cumulative
	 	 	70	 
	 
	 	 	 	 
	28. DISPUTE RESOLUTION
	 	 	71	 
	 
	 	 	 	 
	29. OBLIGATIONS RELATING TO UNAVOIDABLE
DELAY AND LANDLORD DELAY
	 	 	71	 
	 
	 	 	 	 
	30. DELIVERY OF OCCUPANCY OF PREMISES
	 	 	71	 
	30.1. Occupancy Date
	 	 	71	 
	30.2. Tenant Not Purchasing Landlord’s Business
	 	 	72	 
	 
	 	 	 	 
	31. HAZARDOUS MATERIALS
	 	 	72	 
	31.1. Abatement of Hazardous Materials
	 	 	72	 
	31.2. Landlord’s and Tenant’s Obligations
	 	 	72	 
	31.2.1. Mutual Covenants
	 	 	72	 
	31.2.2. Landlord’s Covenant Regarding Hazardous Materials
	 	 	73	 
	31.2.3. Operations and Maintenance Program
	 	 	73	 
	31.3. Tenant’s Remediation Rights and Obligations
	 	 	74	 
	31.4. Inspection; Tests
	 	 	74	 
	31.5. Termination; Abatement of Rent
	 	 	74	 
	 
	 	 	 	 
	32. MISCELLANEOUS
	 	 	74	 
	32.1. Confidentiality
	 	 	74	 
	32.2. Governing Law
	 	 	75	 
	32.3. Successors and Assigns
	 	 	75	 
	32.4. Construction and Interpretation
	 	 	75	 
	32.5. Entire Agreement and Amendment
	 	 	75	 
	32.6. Brokers’ Commissions
	 	 	76	 
	32.7. References
	 	 	76	 
	32.8. Exhibits
	 	 	76	 
	32.9. Counterparts and Signature Pages
	 	 	76	 
	32.10. Severability of Provisions
	 	 	76	 
	32.11. Number and Gender
	 	 	76	 
	32.12. Investment Tax Credit
	 	 	76	 






 









 





TABLE OF CONTENTS (cont’d)




	 	 	 	 	 
	 	 	Page(s)	 
	32.13. Identity of Landlord
	 	 	77	 
	32.14. Identity of Tenant
	 	 	77	 
	32.15. Tenant’s Representations
	 	 	77	 
	32.15.1. Organization
	 	 	77	 
	32.15.2. Power and Authority
	 	 	77	 
	32.15.3. Valid and Binding
	 	 	77	 
	32.15.4. No Conflict
	 	 	77	 
	32.15.5. No Litigation
	 	 	78	 
	32.16. Landlord’s Representations
	 	 	78	 
	32.16.1. Power and Authority
	 	 	78	 
	32.16.2. Valid and Binding
	 	 	78	 
	32.16.3. No Conflict
	 	 	78	 
	32.17. No Subordination
	 	 	78	 
	32.18. Excavation and Shoring
	 	 	78	 
	32.19. Rehabilitation
	 	 	79	 
	32.20. Interested Parties
	 	 	79	 
	32.21. Governmental Role of Landlord
	 	 	79	 
	32.22. Certain Required Provisions
	 	 	80	 
	32.23. Time
	 	 	80	 
	32.24. Equal Employment Opportunity
	 	 	80	 
	32.24.1. General Covenant
	 	 	80	 
	32.24.2. Specific Covenant
	 	 	80	 
	 
	 	 	 	 
	INDEX OF EXHIBITS
	 	 	85	 






EXHIBIT A — BUDGETED CONSTRUCTION COSTS

EXHIBIT B — WORK AGREEMENT

EXHIBIT C — MEMORANDUM OF LEASE





 











 





LEASE




     THIS LEASE (“Lease”) is executed and effective as of the 1st day of December, 1999,
by and between the UNITED STATES OF AMERICA, acting by and through the Administrator of General
Services and authorized representatives (“Landlord”), and TARIFF BUILDING ASSOCIATES, L.P., a
California limited partnership (“Tenant”).



RECITALS




     This Lease is entered into upon the basis of the following facts, understandings and
intentions of the parties (for purposes of these Recitals, terms used shall have the meanings
set forth in the Recitals and Article 1):



     A. The Premises are currently vacant.



     B. The Premises have been designated as a National Historic Landmark, and are within the area
covered by The Pennsylvania Avenue Plan -1974, as amended. Landlord has determined that the
Premises are not readily adaptable for use as a modem office building. After a public competition
seeking proposals for proposed adaptive uses for the Premises, Landlord has determined that
Tenant’s proposal for renovation and restoration of the Premises as a hotel best achieves a
combination of satisfying Landlord’s historic preservation requirements, bringing economic and
urban vitality to
the area in which the Premises are located and satisfying other public interests in the
Premises and the area. Landlord has determined that this Lease will adequately ensure the
preservation of this historic landmark for purposes of Section 111 of the NHP A (defined below).



     C. The parties desire to establish provisions which will permit and require Tenant,
subject to the terms and conditions of this Lease, among other things, (i) to design the Hotel;
(ii) to apply for and diligently pursue certain permits for the Hotel;
(iii) to renovate, furnish and equip the Premises as a Hotel conforming to the Hotel Standard and
the Historic Preservation Standards; and (iv) subject to the terms of this Lease, to continuously
maintain and operate the Hotel throughout the Term.



     D. Tenant desires to lease the Premises, and Landlord is willing to lease the
Premises to Tenant, on the terms and conditions contained in this Lease, subject only to
(i) Landlord’s obligation to deliver occupancy as provided in this Lease, (ii) the termination
rights set forth in this Lease and (iii) the other terms and conditions of this Lease. Landlord
acknowledges that Tenant is leasing only the Premises, and that Tenant is not assuming any
obligations with respect to prior operations on the Premises except as expressly provided in this
Lease.



     E. Following execution of this Lease and in accordance herewith, the parties intend that
Tenant will diligently pursue the design, plans, permits and approvals for the
Hotel, with which effort Landlord shall cooperate as more fully set forth herein and in the
Work Agreement, and as more fully set forth herein, Tenant shall endeavor to obtain the



 









 




financing necessary to procure the funds necessary for the improvements Tenant is required to make
to the Premises pursuant to the provisions of this Lease.




     F. The parties desire to enter into this Lease on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises of the parties, the parties hereto agree as follows (each provision of the
foregoing Recitals is an integral part of this Lease and is incorporated as a part of this Lease as
though fully set forth below):


1. DEFINITIONS




     1.1. Certain Terms Defined.



     The following words, phrases, or terms shall have the following meanings:



     Actual Construction Costs: All costs of construction incurred by Tenant in
connection with the renovation and construction of the Project that are properly
capitalized in accordance with generally accepted accounting principles, and are within the
categories of costs set forth on Exhibit A. Notwithstanding the foregoing, the term “Actual
Construction Costs” shall not include the costs associated with financing the development and
construction of the Project.



     Additional Equity: All contributions of equity capital made by Tenant to pay for
Project costs of any nature to the extent such contributions exceed the initial equity
contributed by Tenant in the aggregate amount of $12,800,000.



     Adjustment Date: The first day of the sixth (6th) Lease Year and the
first day of
each fifth (5th) Lease Year thereafter.



     Adjustment Period: The five-year period between Adjustment Dates.



     Affiliate: With respect to Tenant, any Person or entity directly or indirectly
controlling, controlled by, or under common control with Tenant or Kimpton (so long as
Kimpton is the Operator). No Person shall be deemed in control of another simply by
virtue of being a partner, director, officer or holder of voting securities of any Person.
For purposes of this Lease, “control” shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of the controlled
entity.



     Alterations: Except for Tenant’s work under the Work Agreement, any additions to,
alterations or renovations of the Premises (including demolition and reconstruction thereof or
restoration pursuant to Article 22) and including installation or removal of any fixtures.



 









 





     Annual Base Rent: With respect to any Lease Year, the aggregate amount of
Monthly Base Rent payable in such Lease Year.



     Annual Statement: With respect to any Lease Year, a statement setting forth in
reasonable detail the calculation of Gross Revenues, Net Cash Flow, Percentage Rent and
Participation Rent for the immediately preceding Lease Year, prepared
in accordance with generally accepted accounting principles and the Uniform System, audited by a certified
public accountant, selected by Tenant with Landlord’s approval, which approval shall not be
unreasonably withheld or delayed. Landlord hereby approves any of PricewaterhouseCoopers LLP, Ernst
& Young LLP, Arthur Andersen LLP, Deloitte & Touche LLP, KPMG Peat Marwick LLP, Pannell, Kerr, Forster and any successor of any of the
foregoing. After delivery of the Annual Statement relating to the Lease Year in which the First
Sale takes place, Tenant shall have no further obligation to provide to Landlord, in the Annual
Statement or otherwise, any information relating to Net Cash Flow or other information necessary to
calculate Participation Rent, except to the extent necessary to calculate other Rent that continues
to be payable hereunder.



     Anti-Assignment Acts: Collectively, 41 U.S.C. § 15 and 31 U.S.C. §3727, and
comparable successor provisions of federal law.



     Applicable Laws: As defined in the Work Agreement.



     Appropriation: The taking of or damage to the Land or Premises, or any portion
thereof, by reason of any exercise of the power of eminent domain, whether by a condemnation
proceeding or otherwise, or any transfer of all or any part thereof or any interest therein in
avoidance of an exercise of the power of eminent domain.



     Assignment for Security: As defined in Section 18.1.1.



     Available Food and Beverage Revenues: With respect to any Lease Year, Gross
Food and Beverage Revenues to the extent Gross Food and Beverage Revenues exceed
Four Million Dollars ($4,000,000), as such latter amount shall increase on each of the
first four Adjustment Dates during the Term by the percentage increase in the CPI during the
Adjustment Period ending immediately before such Adjustment Date and shall be
appropriately pro-rated for any Lease Year that is not precisely twelve (12) months. After
Lease Year 21, there shall be no further CPI adjustments.



     Available Hotel Revenues: With respect to any Lease Year, Gross Hotel Revenues to the
extent Gross Hotel Revenues exceed Ten Million Dollars ($10,000,000), as such latter amount shall
increase on each of the first four Adjustment Dates during the Term by the percentage increase in
the CPI during the Adjustment Period ending immediately before such Adjustment Date and shall be
appropriately pro-rated for any Lease Year that is not precisely twelve (12) months. After Lease
Year 21, there shall be no further CPI adjustments.



 









 





     BID Taxes: Business improvement district taxes and assessments payable with respect
to the Land and Improvements in accordance with D.C. Code § 1-2274 et seq.



     Budgeted Construction Costs: The costs and expenses that Tenant anticipates will be
incurred by Tenant in connection with the construction of the Project, as set forth on Exhibit A.



     Capital Maintenance Reserve: The reserve fund maintained by Tenant pursuant to Section
5.8.2.



     Cash Flow Level 1: $4,269,000, provided, that Cash Flow Level 1 shall be reduced
by the greater of (a)$0.00 and (b) an amount equal to ten percent (10%) of the Budgeted
Construction Costs minus Actual Construction Costs; and provided, further, that Cash Flow Level
1 shall be increased by an amount equal to Seventeen and 3/10 percent (17.3%) of the amount of
any Additional Equity contributed to the Project by Tenant.



     Cash Flow Level 2: $5,254,000, provided, that Cash Flow Level 2 shall be reduced
by the greater of(a) $0.00 and (b) an amount equal to ten percent (10%) of the Budgeted
Construction Costs minus Actual Construction Costs; and provided, further, that Cash Flow Level
2 shall be increased by an amount equal to Seventeen and 3/10 percent (17.3% ) of the amount of
any Additional Equity contributed to the Project by Tenant.



     Commencement Date: The date of this Lease.



     Commencement of Construction: As defined in the Work Agreement.



     Confidential Information: Any financial information or related business information
obtained by either Landlord or Tenant after the Commencement Date from the other party (i) in
connection with the negotiation of this Lease and the Work Agreement, (ii) contained in the
Annual Statement, (iii) clearly marked “confidential” by Landlord or Tenant, as the case may be,
and appropriately legended as agreed by Landlord and Tenant, or (iv) arising out of an audit or
inspection by Landlord or its agents of Tenant’s records, including information regarding the
amount of revenues, profits or cash flow accruing to Tenant in connection with its operation of
the Premises and Proceeds from Sale or Refinancing by Tenant. Confidential Information shall also
include any documents containing Confidential Information. Notwithstanding the foregoing,
Confidential Information shall not include information that the party who
furnished the Confidential Information has disclosed publicly.



     Construction Documents: As defined in the Work Agreement.



     Contract Disputes Act: The Contract Disputes Act of 1978, as amended,
41 U.S.C. §§ 601-613.



 









 





     CPI: The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), All
Items, Washington Baltimore, DC -MD -VA -WV, CMSA, November, 1996=100, issued by the Bureau of
Labor Statistics of the United States Department of Labor. If the CPI is changed so that a base
year other than November 1996 is used, the CPI used herein shall be converted in accordance with
the conversion factor published by the Bureau of Labor Statistics. If the CPI is discontinued
during the Term, with no successor or comparable successor CPI, a similar index agreed upon by
Landlord and Tenant shall be selected and substituted.



     Debt: Debt incurred by Tenant in connection with the Project.



     Default Rate: The rate of interest equal to three (3) percentage points above the
prime rate of interest as published from time to time in The Wall Street Journal (or if the prime
rate is no longer so published a replacement rate reasonably determined by Landlord) or the
maximum rate allowed by applicable usury law, if any, whichever is lower.



     Economically Viable: The Hotel is achieving a debt coverage ratio of at least
1.30, as defined by the then-existing senior Leasehold Mortgagee, and is generating sufficient
cash flow for the owners of Tenant to realize a market rate of return on their investment as
reasonably determined by Tenant.



     Emergency Situation: A situation immediately impairing or threatening immediately to
impair the structural support or integrity ofor cause immediate damage to the Premises or other
property or causing or threatening to cause immediate injury to a Person or Persons located in or
near the Premises.



     Environmental Laws: Any federal, state, or local laws or regulations relating to
the use, generation, manufacture, installation, release, discharge, storage or disposal of
Hazardous Materials.



     Environmental Reports: Collectively, the Asbestos Survey Report for the Tariff
Building, Volume I, II, III, IV and V prepared for the Smithsonian Institution Office of Design and
Construction by Versar, Inc., dated August 30, 1991, and the Limited Phase I Environmental
Assessment for the General Post Office Building prepared for the General Services Administration by
Greenhorne & O’Mara, Inc., dated August 1, 1997.



     Event of Default: As defined in Section 27.1.



     Excluded Contractor: Any Person debarred, suspended, proposed for debarment or
suspension, or declared ineligible by any agency or instrumentality of the United States or by
the General Accounting Office or otherwise excluded from procurement or nonprocurement programs
of the United States or any agency or instrumentality thereof, and (i) included on the List of
Parties Excluded from Federal Procurement and Nonprocurement Programs maintained by the United
States General Services Administration, or successor compilation of similar information; or (ii)
which Landlord



 









 




has advised Tenant within ten (10) days after request from Tenant would be an Excluded
Contractor but for clause (i).




     Excluded Fixtures: All of the following items installed by Tenant or any Space Tenant,
to the extent that they are affixed to the Improvements and constitute fixtures (or would
constitute fixtures but for Tenant’s rights to remove them pursuant to this Lease) and are readily
removable: kitchen equipment, health club equipment, audio-visual equipment, front office
equipment, and communications equipment, and all other equipment reasonably agreed to by Landlord
and Tenant at the time of its installation; but in any event excluding the mechanical (including
heating, ventilating and air conditioning), elevator, fire detection, alarm and sprinkler,
illumination, electrical, and plumbing fixtures and systems in the Improvements, and components
thereof.




     Excluded Revenues: Collectively, to the extent otherwise included, as the case may
be, in Gross Food and Beverage Revenues or Gross Hotel Revenues;(1) any rents or other revenues
arising from or received by Tenant on account of Restaurant Leases;
(2) any expense passthroughs or reimbursements received by Tenant under Subleases; (3) revenues
from parking, unless Tenant makes more than fifteen (15) parking spaces available to Hotel guests
and/or the general public, or Tenant receives a net profit in any Quarter from off-site parking,
in which case net revenues from such on-site parking or such net profits from off-site
parking, shall be included in Gross Hotel Revenues for such Quarter, (4) federal, state,
district and municipal excise, sales, use, luxury or similar tax, bed taxes, taxes collected
directly from patrons or guests as a part of or added to the sales price of any food, beverages,
goods, services, rooms or displays, such as gross receipts, room admission, cabaret or equivalent
taxes and actually paid by Tenant; (5) cash or credit refunds to customers upon transactions
included in Gross Revenues or for cancellations of room reservations;(6) proceeds of any
insurance, judgments, settlements or condemnation awards that do not compensate Tenant for loss
of income or revenue of any kind from the sale of food and beverage items, the operation of the
banquet, public meeting rooms and similar facilities, the rental of hotel rooms, Subleases,
restaurants, parking (but such insurance proceeds shall be included in Gross Revenues to the
extent compensating for such loss of income or revenue); (7) proceeds from the sale or other
disposition (other than food and beverage inventory in the ordinary course of
business)of the Hotel or any of the assets used in connection with or forming part of
the Hotel; (8) any penalty or fee charged by Tenant for a returned check; (9) amounts written
off by Tenant as a bad debt; (10) reimbursement of the amount paid for postage, express or
delivery expense (such as room service) provided that such charge is at all times properly
segregated from the regular cash price and so identified on Tenant’s records; (12) fees and
expenses paid to Affiliates to the extent that the inclusion of such fees and expenses would
result in double counting because they have been included as received by Tenant; (13) proceeds
from any debt or equity financing or Refinancing; (14) the amount of gratuities actually paid to
employees, whether mandatory or otherwise; (15) the cost of any beverages and food provided to
employees on a complimentary basis; and (16) interest earned on any funds, including working
capital and reserves.



 









 





     Exclusive Possession: Except as otherwise agreed pursuant to the Work Agreement, the
delivery of the Premises to Tenant, free of all leases, licenses or other rights to use or occupy
all or any portion of the Premises, subject to the Permitted Exceptions, Reserved Steam Rights,
the Smithsonian Security Easement and the express terms of this Lease, so as to permit Tenant to
undertake and complete the Project free from any claim of right of possession or use (including
any right to park) by Landlord or any prior or current Space Tenant, tenant or licensee.
Exclusive Possession shall not in any event be earlier than the actual date of execution and
delivery of this Lease by and between Landlord and Tenant.



     Feasibility Period: As defined in the Work Agreement.



     FF&E: The furniture, furnishings, fixtures and equipment located or to be located in
and used in connection with the Hotel.



     FF&E Reserve: The reserve fund maintained in a segregated bank account by Tenant
pursuant to Section 5.8.1.



     First Sale: The first assignment or sublease transaction pursuant to which Tenant
sells, assigns or subleases (other than to an Affiliate of Tenant or any entity in which Tenant
or any Affiliate of Tenant has any direct or indirect ownership or equity interest) all of its
interest in this Lease in accordance with the terms hereof, or, in the case of such a sublease,
subleases the entire Premises for the entire Term less one day.



     FOIA: The Freedom of Information Act, 5 U.S.C. § 552.



     Gross Food and Beverage Revenues: The gross receipts and revenues of Tenant, Kimpton
(so long as Kimpton is the Operator) or any Affiliate of Tenant or any entity in which Tenant or
any Affiliate of Tenant has any material direct or indirect ownership or equity interest
resulting from the sale of food and beverage items at the Hotel, and all revenues received by
Space Tenants or others under Restaurant Leases (subject to deduction of Excluded Revenues), and
including net revenues or concession payments from vending machines, admission fees, cover
charges, catering operations conducted in or from the Hotel, in-room mini-bar sales, room
service, and rentals and revenues arising from banquet, conference room and other public meeting
room and similar facilities of the Hotel. Gross Food and Beverage Revenues shall be determined
in accordance with generally accepted accounting principles and the Uniform System, but shall not
include


(1) any amounts included in Gross Hotel Revenues or (2) Excluded Revenues.




     Gross Hotel Revenues: The gross receipts and revenues of Tenant, Kimpton (so long as
Kimpton is the Operator) or any Affiliate of Tenant or any entity in which Tenant or any Affiliate
of Tenant has any material direct or indirect ownership or equity interest resulting from guest
room rental, health club memberships and fees, telephone services, laundry and valet services, fees
collected for use of the Premises as a film location or the like, revenues arising from the use of
or sublicense by Tenant of the IP Rights, and all



 









 




other rents, fees or income made in, upon, or from the Hotel or the other rights and
interests granted to Tenant by Landlord pursuant to this Lease. Gross Hotel Revenues shall be
determined in accordance with generally accepted accounting principles and the Uniform System, but
shall not include (1) any amounts included in Gross Food and Beverage Revenues and (2) Excluded
Revenues. Gross Hotel Revenues shall include rents from Subleases (other than Restaurant Leases),
but not the gross receipts or revenues received by the Space Tenants under such Subleases,
provided, that, if Tenant enters into a Sublease (other than a Restaurant Lease) with an Affiliate,
the gross receipts received by such Affiliate under such Sublease shall be included in Gross Hotel
Revenues (unless otherwise included within the definition of Excluded Revenues) and the rent
received by Tenant under such Sublease shall be excluded from Gross Hotel Revenues.




     Gross Revenues: Collectively, the Gross Hotel Revenues and the Gross Food and Beverage
Revenues.



     Hazardous Materials: Collectively, (i) petroleum, (ii) asbestos,
(iii) polychlorinated biphenyls, (iv) radioactive materials, (v) radon gas or (vi) any chemical,
material or substance defined as or included in the definition of “hazardous substances,”
“hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous
waste” or “toxic substances” or words of similar impact under any applicable environmental laws,
including but not limited to, Federal Water Pollution Act, as amended, 33 U.S.C. § 1251 et seq.,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. § 9601 et seq., the Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 1801 et
seq., and Applicable Laws of the District of Columbia.




     Historic Elements: Collectively, those elements of the Premises designated for
retention and restoration or otherwise designated “historic elements” with reference to this
Lease, in or pursuant to the Memorandum of Agreement, and otherwise consistent with Section 11 of
the NHPA. However, if the requirement for a Memorandum of Agreement is waived pursuant to Section
4.2 below, then the parties shall mutually agree upon the elements of the Premises that shall
constitute the “Historic Elements.” As of the Commencement Date, Landlord and Tenant contemplate
that these elements will consist of the exterior and interior stone, including all architectural
embellishments and original exterior openings, the General Mail Room, the Dead Letter Office, the
Library, decorative ironwork throughout the Improvements, two grand stairways, window shutters,
and other elements of historic significance.



     Historic Preservation Standards: The “Standards for Rehabilitation and Guidelines
for Rehabilitating Historic Buildings” of the Secretary of the Interior (36 C.F.R. Part 67)
as these are established from time to time by the National Park Service, U.S. Department of the
Interior, or its successor, and any additional historic preservation standards applicable to
and imposed on the Premises by federal, state and



 









 




local authorities, including the Advisory Council on Historic Preservation, the Historic
Preservation Division of the District of Columbia Department of Consumer and Regulatory
Affairs, the National Capital Planning Commission, the Commission of Fine Arts, or the District
of Columbia State Historic Preservation Officer.




     Hotel: The approximately 172 room hotel with restaurants, retail spaces, meeting
rooms, and other ancillary facilities to be developed on the Premises through renovation of
existing Improvements, all in accordance with this Lease.



     Hotel Standard: As to the Hotel and associated restaurant, a first-class, but not
deluxe, standard of operation and construction, as such standard may evolve over the Term, and in
any event at least equivalent to the standard exemplified by the Hotel Monaco, San Francisco and
Scala’s Restaurant, San Francisco, as of the date hereof, both of which are owned or operated by
Tenant’s Affiliates.



     Immaterial Alterations: Alterations to the Premises that Landlord and Tenant
agree during the Feasibility Period shall constitute Immaterial Alterations.



     Improvements: The existing Tariff Commission Building/General Post Office and all
portions of the Improvements to be retained, restored and preserved in accordance with the Historic
Preservation Standards, including the Historic Elements, together with all fixtures, improvements
and appurtenances of every kind and description now located or hereafter erected, constructed, or
placed upon the Land and any and all Alterations, renewals, and replacements thereof, additions
thereto and substitutions therefor, including any basement and subgrade areas of the aforesaid
Improvements, as any of the same may be reduced or diminished by any condemnation or other taking,
excluding, however, the Tenant’s Property.



     Institutional Lender: Any entity that is any of the following: (1) any savings bank,
commercial bank or trust company (whether acting individually, or in any trust or fiduciary
capacity), savings and loan association, or building loan association that has deposits in excess
of One Billion Dollars ($1,000,000,000) (which amount shall be increased in proportion to
increases hereafter in the CPI) and is subject to the jurisdiction of the Comptroller of the
Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, or the
Federal Reserve Board, and the courts of the United States of America, any state thereof, or the
District of Columbia; (2) any insurance company, educational institution or state, municipal or
similar public employees’ welfare, pension or retirement fund or system subject to the Employee
Retirement Income Security Act, 29 U.S.C. § 1001, et seq.; (3) governmental and
quasi-governmental agencies; or (4) an entity that originates commercial mortgage loans either
for its own account or for sale or transfer, in their entirety, to another entity in the mortgage
loan business, including subsequent transferees that may hold or acquire the entire interest in
the mortgage (and any custodian, trustee or other fiduciary approved by the rating agencies, or
any servicer approved by the rating agencies to the extent approval is required) in connection
with the sale of the mortgage in any secondary



 









 




mortgage loan market, including any mortgage-backed security or real estate investment
conduit transaction or any other institutional quality rated public offering or private
placement. From and after Substantial Completion, the term “Institutional Lender” shall also
include any other type of commercial financing entity or vehicle that may from time to time
hereafter be generally accepted in the commercial real estate market for financing commercial
construction or other commercial real estate financing, including projects similar to the
Improvements. In no event however shall the term “Institutional Lender” include any Affiliate of
Tenant or any Excluded Contractor.




     Interest Rate: The rate of interest equal to five (5) percentage points above the
discount rate charged to member banks by the Federal Reserve Bank of San Francisco or the maximum
rate allowed by applicable usury law, whichever is lower.



     Internal Rate of Return: The rate of interest that, when used as the discount rate,
reduces to zero the net present value of the net cash flows (excluding any income tax benefits)
associated with the Project.



     IP Rights: All rights to trademarks, service marks and related intellectual property
rights associated with the Premises, including the following: trademarks, service marks, and other
rights, ifany, associated with the names “Tariff Commission Building”, “Tariff Building”, “The
General Post Office Building”, and the image or likeness of all or any part of the exterior and
interior of the Premises.



     Kimpton: Kimpton Hotel & Restaurant Group, Inc., a California corporation.



     Knowledge of Landlord: The current actual knowledge, without investigation, of any
person serving as Landlord’s Contracting Officer from time to time and, solely with respect to
statements made to the Knowledge of Landlord as of the Commencement Date, the current actual
knowledge, without investigation, of Elizabeth Gibson.



     Land: The parcel of land owned by Landlord which is the subject of this Lease,
located in the District of Columbia, between 7th and 8th Streets and E and
F Streets, N.W., known as Square 430, together with Landlord’s right, title and interest in and
to all appurtenant real property rights and hereditaments such as all easements, air rights,
covenants, conditions, and restrictions as necessary in connection with the use or improvement of
the Land and the Vault Space.



     Landlord’s Contracting Officer: As defined in the Work Agreement.



     Landlord Event of Default: As defined in Section 27.2.1.



     Landlord Mortgagee: As defined in Section 16.1.1.



     Landlord’s Work: As defined in the Work Agreement.



     Lease Year: The first Lease Year shall commence on the Rent Commencement



 









 




Date and shall end on the first December 31 thereafter that is at least six (6) calendar
months following the Rent Commencement Date. Each succeeding Lease Year shall be the calendar
year commencing immediately upon the expiration of the prior Lease Year, except that the last
Lease Year shall end on the last day of the Tenn.




     Leasehold Mortgage: As defined in Section 18.1.2.



     Leasehold Mortgagee: As defined in Section 18.1.3.



     Feasibility Period: As defined in the Work Agreement.



     Major Sublease: A Sublease of the entire Premises, or a substantial portion of the
hotel portion of the Premises, but excluding any sublease for providing Hotel guest services, such
as parking, storage, back of the house, health club, health and wellness facility, food and
beverage services, conference space, offices, bar, cafe, retail spaces, newsstand, a nightclub
(whether or not featuring live entertainment), discotheque, cabaret, comedy club or other
establishment featuring live performance shows of any kind.



     Management Fees: With respect to any period (for purposes of calculating Net Cash Flow
and Operating Expenses in order to determine Participation Rent, and then only until the First
Sale), a base management fee equal to the sum of (i) four percent (4%) of Gross Revenues and (ii)
the payroll costs of salaries, wages, benefits and related administrative expenses incurred by and
reimbursable to the Operator, in an aggregate amount not to exceed one percent (1% ) of Gross
Revenues, for services benefiting the Hotel. Solely for purposes of calculating Management Fees,
Gross Revenues shall be deemed to include interest income. (The foregoing definition is not
intended to limit in any respect the amount of management fees that may be paid by Tenant in
connection with the management and operation of the Premises).



     Memorandum of Agreement: Any agreement entered into under Section III (and, to the
extent applicable, Section 106) of the NHPA by the parties hereto and any applicable federal or
local historic preservation agencies that is intended to set forth the historic preservation
standards applicable to the redevelopment of the Premises.



     Milestone Date: As defined in the Work Agreement.



     Monetary Breach: As defined in Article 27.



     Monthly Base Rent: The following amounts paid each calendar month during the
following periods:




	 	•	 	From the Rent Commencement Date to the last day of Lease Year 5, Monthly Base
Rent shall be payable in the amount of$12,500.00 per month.




 









 






	 	•	 	On the first Adjustment Date, and on each Adjustment Date thereafter,
Monthly Base Rent shall be adjusted upward to reflect the percentage increase, if
any, in the CPI during the immediately preceding Adjustment Period, calculated as
follows: the Monthly Base Rent in effect as of such Adjustment Date shall be
multiplied by a fraction, the numerator of which is the CPI published most recently
prior to the Adjustment Date, and the denominator of which is the CPI published most
recently prior to the immediately preceding Adjustment Date. (On the first
Adjustment Date, the “immediately preceding Adjustment Date” shall mean the Rent
Commencement Date.)In computing such upward adjustment, the percentage increase to
Monthly Base Rent on any Adjustment Date shall not exceed twenty percent (20%) of
the Monthly Base Rent in effect during the immediately preceding Adjustment Period.




Example: Assume that the most recent CPI published prior to Lease Years 1 and 6 is, respectively,
100 and 133. On the first Adjustment Date (at the commencement of Lease Year 6), the Monthly Base
Rent would be adjusted upward to equal $15,000.




     Mortgaged Premises: As defined in Section 18.1.4.



     NHPA: The National Historic Preservation Act of 1966, as amended, 16 U.S.C. § 470
et seq. and all regulations promulgated thereunder as such statute and regulations may be
amended, and any successor act or regulations.



     Net Cash Flow: With respect to any period, the amount by which Gross Revenues exceeds
the sum of (i) Operating Expenses and (ii) the gross revenues arising from Restaurant Leases
attributable to such period. Notwithstanding anything in this Lease to the contrary, (A) the
following shall not be deducted for purposes of calculating Net Cash Flow: (1) interest and
principal payments on debt, (2) any expenditure paid from the FF&E Reserve, (3) any expenditure
paid from the Capital Maintenance Reserve,
(4) incentive Management Fees payable to the Operator, other than the Management Fees, (5)
depreciation and amortization, and (6) income taxes; and (B) Gross Revenues for purposes of
calculating Net Cash Flow shall include any rents received by Tenant under Restaurant Leases
(but not including any reimbursement of expense passthroughs or reimbursements received by
Tenant under Restaurant Leases).




     Non-Monetary Breach: As defined in Article 27.



     Notice to Mortgagee: As defined in Section 18.5.1.



     Occupancy Date: The date of Commencement of Construction, or, if earlier, the date, if
any, on which Landlord delivers Exclusive Possession of the Premises to Tenant pursuant to Section
2.1 (e.g., to commence demolition work) prior to the Commencement of Construction.



     Operating Expenses: All costs and expenses actually incurred by Tenant in operating
the Premises, including costs and expenses of a nonrecurring or extraordinary
nature, and including (1) all Hotel employee payroll and related costs, cost of food, beverage
and merchandise sold, cost of services provided guests, including guest laundry,



 









 




telephone, room expenses, supplies, parking-related costs and expenses but only to the extent
that they exceed parking revenues, restaurant and banquet expenses and reservation expenses, (2)
all other operating costs, including maintenance, security, human resources, information
systems, administrative and general overhead expenses, equipment rental costs, expenses related
to rental property, including cost of tenant improvements to retail spaces, legal, accounting,
audit and tax preparation fees related to the operation of the Hotel, utilities, steam and other
energy costs, (3) fixed charges excluding interest expense and excluding principal payments,but
including the cost of all insurance (4) all Rent and Vault Rent, other than Participation Rent,
(5) all amounts paid into the FF &E Reserve and the Capital Maintenance Reserve, (6) federal,
state, district and municipal excise, sales, use, luxury or similar tax, bed taxes, taxes
collected directly from patrons or guests as a part of or added to the sales price of any goods,
services, rooms or displays, such as gross receipts, room admission, cabaret or equivalent
taxes, gross receipts taxes, franchise taxes, license fees, employment taxes and Personal
Property Taxes, (7) Management Fees, (8) marketing and franchise fees, if any, (9) other costs
and expenses payable to Operator or an Affiliate of Tenant for an allocated portion of the
expenses reasonably incurred by Tenant in operating and maintaining the
Premises, including insurance, advertising, central reservations and
central purchasing of goods and services used in connection with the Hotel, and
(10) amortization of capital expenditures not paid out of the FF&E Reserve, the Capital
Maintenance Reserve, or any other reserve described above; provided that Operating Expenses
shall not include any of the following: (a) amounts paid or reimbursed out of the FF&E Reserve,
the Capital Maintenance Reserve, or any other reserve described above, (b) any Excluded Revenues
or any expenses related thereto, (c) payments to any Affiliate of Tenant or any entity in which
Tenant or any Affiliate of Tenant owns any equity interest to the extent such payments exceed
reasonable market amounts, (d) expenses that properly should be capitalized, (e) amounts
included in Operating Expenses in prior years, (f) penalties or any other amounts to the extent
payable as a result of negligence of Tenant or any default by Tenant under any obligations, (g)
amounts actually reimbursed by others, (h) costs relating to financing or sale of Tenant’s
interest in the Premises (but such amounts may be taken into account in calculating Proceeds
from Sale or Refinancing), and (i) Tenant’s overhead and other costs not relating to operation
of the Premises, except for those included within Management Fees.





 









 








     Operator: The Person designated by Tenant to serve as the operator and manager of the
operations of the Hotel



     Participation Rent: The following amounts to be paid by Tenant to Landlord pursuant to
Section 5.3: With respect to each Lease Year, (i) twenty percent (20%) of Net Cash Flow for such
Lease Year, to the extent Net Cash Flow for such Lease Year exceeds Cash Flow Level 1 but is less
than or equal to Cash Flow Level 2, plus
(ii) Twenty-Five percent (25%) of Net Cash Flow for such Lease Year in excess of Cash Flow Level 2.
For purposes of determining the amount of Participation Rent payable during the first Lease Year
and the Lease Year in which the First Sale occurs or the earlier termination of the Term, Cash
Flow Level 1 and Cash Flow Level 2 shall be adjusted to equal the product of the respective Cash
Flow Level multiplied by a fraction, the numerator of which is the number of days in such period,
and the denominator of which is three hundred sixty-five (365).



     Percentage Food and Beverage Rent: The following percentage of Available Food
and Beverage Revenues for such Lease Year:



	 	 	 	 	 

	Commencement Date -end of Lease Year 5
	 	 	3.0	%
	Lease Year 6 - Lease Year 7
	 	 	3.5	%
	Lease Year 8 — end of Term
	 	 	4.5	%






     Percentage Rent: For any Lease Year, the Percentage Room Rent and Percentage Food
and Beverage Rent for such Lease Year.



     Percentage Room Rent: Percentage Room Rent shall be the following percentage of
Available Hotel Revenues for such Lease Year:



	 	 	 	 	 

	Commencement Date — end of Lease Year 5
	 	 	3.0	%
	Lease Year 6 - Lease Year 7
	 	 	3.5	%
	Lease Year 8 - Lease Year 9
	 	 	4.5	%
	Lease Year 10 - Lease Year 15
	 	 	5.5	%
	Lease Year 16 - Lease Year 25
	 	 	6.5	%
	Lease Year 26 - Lease Year 30
	 	 	7.0	%
	Lease Year 31 - Lease Year 40
	 	 	7.5	%
	Lease Year 41 - Lease Year 50
	 	 	8.0	%
	Lease Year 50 - end of Term
	 	 	8.5	%






     Permitted Exceptions: Matters disclosed on the title and land survey to be
obtained by Tenant during the Feasibility Period, excluding any mortgages, deeds of trust or other
encumbrances securing obligations for the payment of money.



     Permitted Use: The construction and operation of the Hotel, including associated uses
such as (i) retail, restaurant, reception and lobby area, (ii) banquet, conference and public
meeting rooms and facilities, and (iii) other uses from time to time customarily



 









 




related to or in connection with providing Hotel guest services, including parking, storage,
back of the house, health club, health and wellness facility, food and beverage
services, conference space, offices, bar, cafe, retail, a nightclub (whether or not featuring
live entertainment), a discotheque, cabaret, comedy club
or other establishment featuring live performance shows of any kind; such associated uses being
permitted to the extent that in the aggregate they do not reduce the number of hotel rooms to
fewer than 145.




     Personal Property Taxes: All taxes, excises, levies, any other fees or charges of
any kind foreseen or unforeseen which are levied, assessed, confirmed or imposed by any public
authority upon, measured by or reasonably attributable to the cost or value of Tenant’s
equipment, furniture, fixtures and other personal property located in the Premises, or other
personal property leased to Tenant pursuant to the terms and provisions of this Lease.



     Person or Persons: Individuals, groups, partnerships, estates, limited liability
companies, joint ventures, firms, associations, corporations, trusts, any federal, state or
municipal governmental bureau, department or agency thereof, governmental officials,
administrative bodies or tribunals, or any other form of business or legal entity.



     Premises: The Land and the Improvements.



     Proceeds from Sale or Refinancing: The net cash realized by Tenant from the First
Sale or any Refinancing that occurs at or prior to the First Sale, after deducting all transfer
and recordation taxes, costs and other expenses related to the transaction, including all
financing costs and all fees and expenses of attorneys, accountants, consultants,
engineers, surveyors and other professionals, provided, that, if any such fees and expenses
are payable to an Affiliate or to a Person in which Tenant or an Affiliate owns more than a 10%
equity interest, such fees and expenses shall be deducted only to the extent such fees do not
exceed the market rate payable for comparable services if rendered by unrelated third parties.
In the case of the First Sale, the “net cash” realized by Tenant
shall be reduced by all amounts
necessary to retire any preexisting Debt,
including all principal, accrued interest, origination fees, prepayment fees and penalties,
makewhole premiums, exit fees and similar fees and costs associated with such Debt. In the case
of a Refinancing, the “net cash” realized by Tenant shall be reduced by (i) all amounts paid to
retire any preexisting Debt, including all principal, accrued interest, origination fees,
prepayment fees and penalties, make-whole premiums, exit fees and similar fees and costs
associated with such Debt, and in the case of the First Sale or a Refinancing, (ii) all amounts
reasonably designated by Tenant for reinvestment in the Premises or Hotel, and all amounts
considered reasonably appropriate by Tenant to fund the FF&E Reserve, the Capital Maintenance
Reserve or any other reserve reasonably established by Tenant to provide for the repair and/or
replacement of FF&E and capital expenditures, and (iii) all amounts considered reasonably
appropriate by Tenant to provide for the continued timely payment ofall expenses incurred in
connection with the maintenance and
operation of the Premises.



 









 





     Project: As defined in the Work Agreement.



     Proposed Sale Terms: As defined in Section 16.2.1.



     Quarter: Each separate and consecutive period of three (3) full calendar months within
each Lease Year beginning on the Rent Commencement Date; provided, however, if the Rent
Commencement Date is not the first day of a calendar quarter (i.e., January March, April — June,
July — September, or October — December), then the first Quarter of the first Lease Year shall
include the period from the Rent Commencement Date to the first day of the calendar quarter next
following the Rent Commencement Date, and the last Quarter shall end on the expiration or earlier
termination of the Term.



     Quarterly Statement: With respect to any Quarter, an unaudited statement setting forth
in reasonable detail the calculation of Gross Revenues and Percentage Rent, and, until the final
distribution following the First Sale, also showing Net Cash Flow and Participation Rent (if any)
for the immediately preceding Quarter, prepared in accordance with generally accepted accounting
principles and the Uniform System. After delivery of the Quarterly Statement relating to the
Quarter in which the First Sale takes place, Tenant shall have no further obligation to provide to
Landlord in the Quarterly Statement any information relating to Net Cash Flow or other information
necessary to calculate Participation Rent, except to the extent necessary to calculate other Rent
that continues to be payable hereunder.



     Real Property Taxes: All taxes and assessments, general and special, ordinary and
extraordinary, foreseen and unforeseen, now or hereafter levied, assessed, confirmed or imposed by
any public authority upon the real property comprising the Premises, the Land, the Improvements, or
any part thereof or interest therein including the leasehold estate hereunder, but excluding BID
Taxes, sales and use taxes, corporate franchise taxes, unemployment compensation taxes, hotel
occupancy taxes, rent for Vault Space, local, state and federal, personal, partnership or corporate
income taxes measured by the gross or net income of Landlord or Tenant from all sources,
inheritance or estate taxes, franchise or capital stock taxes, recordation or transfer taxes or
Personal Property Taxes.



     Refinancing: Any financing that takes place prior to the First Sale which results
in (i) an increase in the aggregate Debt secured by Leasehold Mortgages or (ii) any new Debt or
new Leasehold Mortgage that replaces or repays in whole or in part the Debt secured by an
existing Leasehold Mortgage.



     Rehabilitation: The work performed by Tenant on the Improvements in
accordance with the Work Agreement.



 









 





     Release: Any release of Hazardous Materials from the Premises, or any disposal or
placement or existence of any Hazardous Materials in, on or from the Premises in violation of any
Environmental Laws.



     Rent: The Annual Base Rent, Percentage Rent, Participation Rent and any other
payment of money that Tenant is obligated to make under this Lease.



     Rent Commencement Date: As defined in the Work Agreement.



     Reserved Steam Rights: Landlord’s rights to inspect, repair, replace, alter, add to
and maintain the Steam Line pursuant to Section 2.5.



     Restaurant Lease: An instrument or agreement to which Tenant is a party, pursuant to
which Tenant grants to another Person the right or license to use, occupy and possess for a
specified term a portion of the Premises for the purpose ofoperating a restaurant, cafe, bar,
nightclub (whether or not featuring live entertainment), cabaret or comedy club.



     Smithsonian Security Easement: As defined in Section 2.6.



     Space Tenant: Any tenant under a Sublease.



     Steam Line: the General Services Administration Heating Operations and Transmission
District central steam trunk line, steam station and electric service, serving the Premises and
other properties.



     Sublease: An instrument or agreement to which Tenant is a party, pursuant to which
Tenant grants to another Person the right or license to use, occupy and possess for a specified
term a portion of the Premises for any purpose including operating a retail store, newsstand,
parking operation, health club, athletic facility, other service establishment or other use
permitted by Applicable Laws, including without limitation any Restaurant Lease but excluding any
Leasehold Mortgage.



     Substantial Completion: As defined in the Work Agreement.



     Temporary Appropriation: As defined in Section 23.5.



     Tenant’s Property: All (1) Excluded Fixtures; and (2) signs, equipment, appliances,
furniture, furnishings, inventory, supplies and other tangible and intangible personal property
installed in or used in connection with the Premises by Tenant, or any Space Tenant, except for
items constituting fixtures under Applicable Laws.



     Term: The Term of this Lease determined in accordance with Article 4, subject to the
provisions of this Lease regarding termination.



 









 





     Transferee: Any assignee or sublessee of all or any part of Tenant’s interest under
this Lease.



     Unavoidable Delay: Delay due to federal or local governmental acts or omissions (other
than rightful action of Landlord consistent with this Lease), strikes, lockouts, acts of God,
inability to obtain labor or materials due to supply shortages in the construction industry, enemy
action, civil commotion, shortage or interruption of utilities, fuel or power, fire, unavoidable
casualty or other similar causes beyond the reasonable control of the party claiming the benefit of
delay (financial inability or negligence excepted).



     Uniform System: The Uniform System of Accounts for the Lodging Industry, Ninth
Revised Edition, 1996, as the same may from time to time be amended or supplemented, except to
the extent that any such amendment or supplement would in any material respect adversely affect
any rights of Landlord, Tenant or any Leasehold Mortgagee under this Lease or would result in any
change in the amount of any payment either party is obligated to make or entitled to receive
under this Lease, including the amount of Rent due and payable hereunder.



     Vault Space: All underground vault space contiguous with the Land that is available
for Tenant’s use as mutually agreed in writing by Landlord and Tenant, and which Tenant in its
sole discretion elects to lease or use in connection with its operation of the Premises; however
in no event shall Vault Space include any space subject to the Reserved Steam Rights.



     Work Agreement: That certain Work Agreement of even date herewith by and between
Landlord and Tenant, attached as Exhibit B.


2. PREMISES




     2.1. Lease of Land and Improvements. In accordance with the powers granted by Congress
under Section 111 of the NHPA, as amended, 16 U.S.C. § 470h-3, Landlord hereby leases the Premises
to Tenant, and Tenant hereby leases the Premises, on the terms, covenants, and conditions set forth
in this Lease, subject to the Permitted Exceptions, the Reserved Steam Rights, and the Smithsonian
Security Easement, and in consideration of the rents to be paid and the covenants specified herein
to be performed by Tenant. Landlord shall deliver portions of the Premises to permit Tenant to
perform certain discrete construction, demolition or Hazardous Materials abatement work at such
time or times as Landlord and Tenant may mutually agree. After the expiration of the Feasibility
Period, Landlord shall deliver Exclusive Possession of the entire Premises to Tenant within thirty
(30) days after Tenant notifies Landlord that Tenant desires to take Exclusive Possession of the
entire Premises, provided, that, in no event shall Landlord be obligated to deliver Exclusive
Possession of the Premises to Tenant prior to issuance by Landlord of a notice to proceed in
accordance with the terms of Section 6.4 of the Work Agreement. During the Term, Landlord also
shall make available to Tenant for use in connection with the Premises any and all permits,
approvals, applications, plans,
conditional use permits and licenses of Landlord appurtenant to the Premises.



 









 





     2.2. Vault Space. Tenant shall have the right to enter into a lease or license
agreement for Vault Space with the District of Columbia. Landlord shall join with Tenant and
execute any and all documents or instruments reasonably necessary to result in Tenant having use of
the Vault Space for the entire Tenn. Tenant shall pay all taxes, rent or other fees for such Vault
Space.



     2.3. Lease as Master Lease. The parties acknowledge that this Lease is a lease of the
Premises, with Tenant to retain ownership of Tenant’s Property during the Term of the Lease.
Landlord acknowledges that any covenants which allow Landlord certain control and rights of
approval over Tenant’s Property are provided only to insure conformance with the terms and
conditions of this Lease, but such covenants do not vest in nor shall they be construed as vesting
in Landlord an ownership interest in such property, except upon the expiration or earlier
termination of this Lease to the extent provided in this Lease. Any depreciation of Tenant’s
Property (including any leasehold improvements made by Tenant) shall accrue to Tenant.



     2.4. “As Is” Condition. Subject to Article 31, Landlord’s obligation to perform
Landlord’s Work, and the other express obligations of Landlord under this Lease, Tenant agrees to
accept the Premises on the Occupancy Date in their “as is” physical condition as of the Occupancy
Date. Landlord represents that it has delivered to Tenant all material written information, data,
documents, reports, notices and other materials that, to the Knowledge of Landlord, are in
Landlord’s possession and control and that relate to the existence of Hazardous Materials, if any,
on, in, under or about the Land and the Improvements and to the environmental, mechanical and
structural condition of the Land and Improvements. To the Knowledge of Landlord, except as set
forth in the Environmental Reports, the Premises are not in violation of any Environmental Laws,
and there are no material Hazardous Materials on, in, or under the Land or Improvements. Tenant
acknowledges that, except as expressly set forth in this Section 2.4, and subject to Landlord’s
obligations with respect to Hazardous Materials in Article 31, Landlord has made no
representations, statements or warranties, express or implied, in respect of the Land and the
Improvements, the physical condition thereof, the income to be derived therefrom, the zoning or
other laws, regulations, rules and orders applicable thereto, that Tenant has relied on no such
representations, statements or warranties, and that Landlord shall in no event whatsoever be liable
for any latent or patent defects in the Land and Improvements.



     2.5.Landlord’s Access. Tenant shall permit Landlord and its agents, contractors and
representatives to enter the Premises at reasonable times, upon reasonable prior notice (except in
an Emergency Situation in which event no notice shall be required if not reasonably possible under
the circumstances), which notice may be oral, for the purpose of(a) inspecting the Premises, (b)
showing the Premises to representatives of legislative or regulatory bodies, (c) inspecting,
repairing, replacing, altering, adding to and maintaining the Steam Line, (d) performing Landlord’s
Work in accordance with the



 









 




schedule to be agreed upon pursuant to the Work Agreement, or ( e) making any necessary
repairs to the Premises and performing any work therein that may be necessary by reason of Tenant’s
failure to make any such repairs or perform any such work; provided that, except in an Emergency
Situation (or other situation that Landlord reasonably determines requires action before the
expiration of thirty (30) days after notice), Landlord shall have given Tenant a notice specifying
such repairs or work and Tenant shall have failed to make such repairs or to do such work within
thirty (30) days after the giving of such notice. In connection with any such entry (except in the
event of an Emergency Situation), Landlord shall (i) use reasonable efforts to minimize the
interference with or disruption to Tenant’s or any Space Tenant’s business or operations on the
Premises; and (ii) not exercise its rights of entry with unreasonable frequency. In any case where
Landlord exercises its right to enter upon the Premises pursuant to this Section 2.5, Landlord
shall, to the extent reasonably practicable, allow Tenant or its designee to accompany Landlord on
the Premises while Landlord is present thereon. Except as provided in the Work Agreement, Section
7.1, Section 12.2 and Article 31, nothing in this Section or this Lease shall imply any duty upon
the part of Landlord to do any work and performance thereof by Landlord shall not constitute a
waiver of Tenant’s default in failing to perform the same. Landlord, during the progress of any
such work, may keep and store at the Premises all necessary materials, tools, supplies and
equipment. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business
or other damage of Tenant or any Space Tenant or other party claiming by, through or under Tenant,
by reason of exercising its rights pursuant to clauses (c ), (d) and ( e) of the first sentence of
this Section and the obligations of Tenant under this Lease shall not be affected thereby, but
nothing hereinbefore set forth shall be construed to relieve Landlord from liability for its
wrongful acts or negligence or the wrongful acts or negligence of its agents or employees.




     2.6. Access by the Smithsonian Institution. The Smithsonian Institution (and its
successors and assigns) shall have the right to enter the Premises to inspect, maintain, repair and
replace the existing fiber optic security communications line in the Premises subject to the terms
and conditions set forth in an easement agreement (the “Smithsonian Security Easement”) for such
purposes to be entered into by Landlord and the Smithsonian Institution during the Feasibility
Period. The Smithsonian Security Easement shall be subject to Tenant’s reasonable approval and
shall not grant the Smithsonian Institution materially greater access rights than those granted to
Landlord with respect to the Steam Line in Section 2.5.



     2.7. Public Access. From and after the date of Substantial Completion, Tenant shall
allow organized tour groups to enter the Premises to tour the historically and architecturally
significant portions of the main lobby and the courtyard of the Premises at times scheduled in
advance by such groups with the Operator. All such tours shall be subject to such reasonable rules
and time restrictions as Tenant may from time to time formulate; provided that no fees (except to
the extent reasonably calculated to cover Tenant’s costs associated therewith) shall be charged for
such tours without the prior
written consent of Landlord.



 









 





     2.8. Signs. Tenant shall have the exclusive right to use the Improvements and exterior
walls of the Improvements for signs pertaining to the business conducted by Tenant or Space Tenants
on the Premises, which signs shall comply with all Applicable Laws and the Applicable Building
Code, provided, however, that all signs visible from the exterior of the Improvements shall be
subject to the prior approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed.



     2.9.Compliance with Historic Preservation Standards. Tenant shall at all times during
the Term maintain on staff or retain as an outside consultant an individual who is not disapproved
by Landlord (which disapproval may be based only on Landlord’s reasonable good faith assertion that
the selected individual has a poor reputation or lacks the requisite experience) and who has
experience in the maintenance of historic buildings, who shall be responsible for ensuring that
Tenant has in place and enforces rules and procedures intended to ensure that the Premises are
operated, maintained and repaired by Tenant in accordance with the Historic Preservation Standards
and the Memorandum of Agreement.



3. [RESERVED]




4. TERM




     4.1. Commencement. This Lease, and the terms, covenants and conditions contained
herein, shall commence and be effective as of the Commencement Date. The Term shall end at 12:01
a.m. on the Sixtieth (60th) anniversary date of the Commencement Date, unless sooner terminated
as provided herein.



     4.2. Lease Conditional on Memorandum of Agreement. Tenant understands that this Lease
constitutes a federal undertaking for the purpose of Section 111 of the NHPA, 16 U.S.C. Section
470h-3. Subject to the remaining provisions of this Section, Landlord and Tenant shall each use its
good faith efforts to cause the Memorandum of Agreement to be prepared and executed in accordance
with 36 CFR Part 800. Tenant shall comply with all terms and conditions of the Memorandum of
Agreement. This Lease is expressly conditioned on execution and delivery of the Memorandum of
Agreement by all required parties thereto, but failure of such condition shall not deprive Tenant
of its right to reimbursement for Reimbursable Project Expenses under the Work Agreement. Tenant
shall not commence construction of the Project until the Memorandum of Agreement is executed and
delivered by all required parties thereto and the other requirements for such commencement of
construction in the Work Agreement are satisfied. Notwithstanding any other provision of this
Lease, the requirement for execution of the Memorandum of Agreement may be waived as provided in
Section 5.1.5 of the Work Agreement. Each of Landlord and Tenant shall have the right to approve
the Memorandum of Agreement in its sole discretion.



 









 





     4.3. Holding Over. If Tenant shall hold possession of the Premises after the Term with
Landlord’s consent, Tenant shall become a tenant from month-to-month upon the same terms and
conditions specified in this Lease for the period immediately prior to such holding over, except
that the Monthly Base Rent, Percentage Rent and Participation Rent shall be increased to 200% of
the amount of such rent that would have been payable pursuant to the provisions of this Lease if
the Term had continued during such holdover period. Tenant shall continue in such status until the
tenancy shall be terminated by either party upon not less than thirty (30) days prior notice of
intention to terminate the tenancy, subject to all of the conditions, provisions, and obligations
of this Lease as existed during the last month of the Term, so far as applicable to a short-term
tenancy. Notwithstanding the foregoing, if Tenant is at any time after the Term in default under
the terms of this Lease, Landlord shall have the right to terminate the Lease immediately and
Tenant hereby waives any and all rights and privileges, so far as is permitted by law, which Tenant
might otherwise have to the service of any notice to quit or of Landlord’s intention to re-enter or
to institute legal proceedings, which notice may otherwise be required to be given. In the event
Landlord elects not to treat Tenant as a tenant by the month, then Tenant shall be a tenant at
sufferance and Landlord’s acceptance of the above-described rent shall not in any manner adversely
affect Landlord’s other rights and remedies, including Landlord’s right to evict Tenant and recover
damages in accordance with this Lease and Applicable Laws.



5. RENT AND RESERVES.




     5.1. Annual Base Rent. During the Term, Tenant shall pay to Landlord the Annual Base
Rent for the Premises in the amount and at the times and in the manner hereinafter specified.
During the period from the Rent Commencement Date until the end of the Term, Tenant shall pay as
rental for the Premises, the Annual Base Rent, in the amount of the Monthly Base Rent specified in
Section 1.1 for each calendar month of each Lease Year, payable in advance on the first day of each
calendar month thereafter during said Lease Year.



     5.2. Percentage Rent. Commencing on the Commencement Date, and during the remainder of
the Term, Tenant shall pay to Landlord, if applicable, at the times and in the manner hereinafter
specified, the Percentage Rent. Percentage Rent shall only be payable to the extent that the amount
of Percentage Rent calculated during any Lease Year shall exceed the Annual Base Rent payable
during such Lease Year. If the Percentage Rent so calculated is less than the Annual Base Rent for
any Lease Year, then no Percentage Rent shall be due and payable by Tenant for said Lease Year.
Commencing on the Commencement Date, Percentage Rent shall be calculated on a Lease Year basis and
paid in quarterly installments within forty-five (45) days after the end of each Quarter during the
Term. With respect to any partial or full Lease Year, the Lease Year installment of the Percentage
Rent shall be: (i) the amount, if any, then due based upon the calculation of Percentage Rent
provided in Section 5.2 based on the current Lease Year, less (ii) the aggregate amount of the
Annual Base Rent having theretofore been payable for such Lease Year.



 









 





     5.3. Participation Rent.



          5.3.1. Commencing on the Commencement Date, and during the remainder of the Term, Tenant shall
pay to Landlord, if applicable, at the times and in the manner hereinafter specified, the
Participation Rent. Notwithstanding anything to the contrary in this Lease, Tenant’s obligation to
pay Participation Rent shall terminate as of the date of the First Sale. Commencing on the
Commencement Date, Participation Rent shall be calculated on a Lease Year basis and paid in
estimated payments on a Quarterly basis within forty-five (45) days after the end of each Quarter
in which, or after the date that, the Net Cash Flow for the current year exceeds Cash Flow Level 1,
and Participation Rent shall be reconciled on or prior to the date that is one hundred twenty (120)
days after the expiration of each Lease Year during the Term.




     5.4. Proceeds from Sale or Refinancing. Tenant shall distribute the net cash
constituting Proceeds from Sale or Refinancing as follows:



          5.4.1. First, to Tenant, in an amount sufficient to return to all of Tenant’s partners, as
a group, all outstanding capital contributions made by such partners to Tenant, together with an
Internal Rate of Return of Seventeen and 3/10 percent (17.3%) on all invested capital; and




          5.4.2. Second, twenty percent (20%) to Landlord and eighty percent (80%) to Tenant.




          5.4.3. Notwithstanding anything to the contrary in this Lease, but subject to the remaining
provisions of this Section 5.4.3, Landlord shall have no right to any Proceeds from Sale or
Refinancing after the distribution of proceeds as provided herein with respect to the First Sale.
In the event any amounts are placed in reserve or otherwise deducted from Proceeds from Sale or
Refinancing pursuant to clauses (ii) or (iii) of the definition thereof and such reserved or
deducted amounts later are distributed to or for the benefit of partners (or other equity owners)
of Tenant, then Landlord’s share of such distributed amounts shall be paid to Landlord at the time
of such distributions in the additional amounts which Landlord would have received had such
distributed amounts not been placed in reserve or otherwise so deducted, together with any interest
previously earned on such distributed reserves. In the event any proceeds of any Debt are
distributed to or for the benefit of partners (or other equity owners) of Tenant, such distribution
shall be treated for purposes of this Section 5.4 as if it were the Proceeds from Sale or
Refinancing. The preceding sentence shall not apply to Debt that otherwise is deemed a Refinancing
or to Debt which is incurred after the First Sale.




          5.4.4. Promptly after the Rent Commencement Date, Tenant shall provide Landlord a statement
in reasonable detail of Tenant’s calculation of Cash Flow Level 1 and Cash Flow Level 2 and any
related information reasonably requested by Landlord.





 









 








     5.5. Statements.



          5.5.1. Annual Statement. Within ninety (90) days after the end of each Lease Year,
Tenant shall furnish Landlord with the Annual Statement for the preceding Lease Year. The Annual
Statement shall be certified as correct by Tenant’s or Operator’s Chief Financial Officer. Tenant
shall pay to Landlord with the Annual Statement the amount of any unpaid Rent due and payable in
accordance with this Article 5, together with interest on such amount accrued from the forty-fifth
(45th) day following the end of the Quarter in which the Rent accrued until paid in
full, at the Interest Rate. If the Annual Statement indicates that the aggregate amount of Rent
paid in the preceding Lease Year exceeded Tenant’s actual liability for such Rent, then Tenant
shall deduct the net overpayment from its next monthly payment(s) of Rent. In addition, Tenant
shall deliver to Landlord such supporting documentation as Landlord shall reasonably request for
the purpose of verifying the calculations set forth in the Annual Statement.




          5.5.2. Quarterly Statement. Within forty-five (45) days after the end of each
Quarter, Tenant shall furnish Landlord with the Quarterly Statement for the preceding Quarter.
The Quarterly Statement shall be certified as correct by Tenant’s or Operator’s Chief Financial
Officer.




          5.5.3. Statement in Connection with First Sale or Prior Refinancing.




     Tenant shall deliver to Landlord such supporting documentation as Landlord shall reasonably
request for the purpose of verifying the calculation of Landlord’s participation in Proceeds from
Sale or Refinancing.



     5.6. Audit Of Annual Statements. Landlord may, once with respect to each Lease Year,
but not later than four (4) years after the end of such Lease Year, cause an audit of the Gross
Revenues and Net Cash Flow and the FF&E Reserve and Capital Maintenance Reserve of Tenant for the
business conducted on the Premises to be made by a certified public accountant of Landlord’s
selection against whom Tenant has no reasonable objection, and if any Annual Statement or Quarterly
Statement made by Tenant to Landlord shall be found to be in error such that Tenant’s payment of
Rent has in the aggregate been understated for any Lease Year by an amount in excess of four
percent (4%) of the Rent due and payable in such Lease Year, then Tenant shall immediately pay the
cost of such audit, as well as the Rent shown to be payable by Tenant to Landlord as a result
thereof together with interest thereon at the Interest Rate. Otherwise, the cost of such audit
shall be paid by Landlord, and additional Rent, if any, and interest thereon at the Interest Rate
shall be paid promptly to Landlord. Each Annual Statement shall be conclusive and binding on
Landlord and Tenant after the date that is four (4) years after Landlord’s receipt of such Annual
Statement. Prior to the expiration of such four (4) year period, (i) the acceptance of Rent by
Landlord shall neither bar nor preclude Landlord from claiming that it did not receive the full
amount of such Rent for any particular past Lease Year and (ii) the payment of Rent by Tenant shall
neither bar nor preclude Tenant from claiming that it overpaid such Rent for any particular past
Lease Year.



 









 





     5.7. Retention Of Records. Tenant shall, for a period of four (4) years after the end
of each Lease Year, or, for such period as an audit or proceeding relating to Rent hereunder is in
progress, keep safe and intact all of the records, books, accounts and other data which are
regularly kept by Tenant in the ordinary course of its business to establish Gross Revenues,
Percentage Rent, Participation Rent (until the First Sale) and any authorized exceptions and
deductions there from and any other amounts payable to or from Tenant pursuant to this Lease, and
shall, upon reasonable advance notice, make the same available to Landlord, Landlord’s auditor,
representative or agent for examination, inspection or audit at any time during said period.



     5.8. Contributions To Reserves.



          5.8.1. FF&E Reserve. Within thirty (30) days after the end of each Quarter during
the Term, Tenant shall deposit an amount equal to at least three percent (3%) of the Gross Revenues
attributable to such Quarter into a segregated bank account established and maintained for the
benefit of the Project solely for the purpose of holding reserves to be used for the repair,
replacement and maintenance of FF&E (the “FF&E Reserve”). The amounts so deposited in the FF&E
Reserve, including all interest earned thereon, shall be continually maintained in such reserve
account until such time(s) as Tenant deems it advisable in its discretion to withdraw such amounts
for use in replacing, substituting, repairing or restoring the FF&E. Upon expiration or termination
of this Lease, or the entry into any new lease pursuant to Section 18.8, the funds in the FF&E
Reserve shall be the property of Tenant; provided that, upon termination of this Lease at Tenant’s
option pursuant to Section 7.5 or Section 22.1.2, the FF&E Reserve shall be allocated between
Landlord and Tenant in accordance with the corresponding termination provision.




          5.8.2. Capital Maintenance Reserve. Within sixty (60) days after the end of the first
Quarter of the tenth (10th) Lease Year of the Term, and within sixty (60) days after the end of
each Quarter thereafter during the Term, Tenant shall deposit an amount equal to two percent (2%)
of the Gross Revenues attributable to such Quarter into a segregated bank account established and
maintained for the benefit of the Project solely for the purpose of holding reserves to be used for
the repair, replacement and maintenance of the Historic Elements and the Premises (the “Capital
Maintenance Reserve”). The amounts so deposited in the Capital Maintenance Reserve, including all
interest earned thereon, shall be continually maintained in such reserve account until such time(s)
as Tenant deems it advisable in its discretion to withdraw such amounts for use in fulfilling its
obligation to repair, make replacements to, and maintain the Historic Elements and the Premises in
accordance with the terms of this Lease. Upon the expiration or termination of this Lease, or the
entry into any new lease pursuant to Section 18.8, the funds in the Capital Maintenance Reserve
shall be the property of Landlord and shall be transferred promptly to Landlord.





 









 








          5.8.3. Tenant’s Obligation to Deliver Statements and to Make Deposits.




     Tenant shall deliver to Landlord within forty-five (45) days after the end of each Quarter a
statement setting forth the amount of funds held at the end of such Quarter in each of the FF&E
Reserve and the Capital Maintenance Reserve and an accounting in reasonable detail of the flow of
funds to and from such reserve accounts during such Quarter.



     5.9. Deposits and Contributions as Rent. Tenant’s obligation to make distributions to
Landlord pursuant to Section 5.4 and contributions to reserves pursuant to Section 5.8 shall be
deemed an obligation on the part of Tenant to pay Rent.



     5.10. General Rent Provisions. All payments of Rent, and any other sums payable by
Tenant pursuant to this Lease, shall be in lawful money of the United States and payable by check
without setoff (except as otherwise expressly permitted under the terms of Articles 11 and 31 of
this Lease), prior notice, deduction or demand, to Landlord at General Services Administration,
Post Office Box 70697, Chicago, Illinois 60673, or at such other address as Landlord may from time
to time designate by notice to Tenant. At Landlord’s option, after reasonable prior notice to
Tenant, payments of Rent pursuant to this Lease shall be payable by wire transfer or other
electronic means to such account as Landlord may from time to time designate by notice to Tenant.
If for any reason this Lease shall be terminated at any time other than the end of the month
through no fault of Tenant and when Tenant shall not otherwise be in default under this Lease,
Landlord shall refund to Tenant any prepaid but unearned rent allocable to the remainder of the
month during which such termination shall occur. Upon expiration or earlier termination of this
Lease, Tenant promptly shall pay any Rent (including Participation Rent and Percentage Rent)
through the effective date of the expiration or termination. Any such amounts that cannot be
determined fully shall be estimated at such time and reconciled as soon thereafter as is
practicable.



     5.11. Net Lease. It is the purpose and intention of Landlord and Tenant that all Rent
shall be absolutely net to Landlord without any abatement, deduction, counterclaim, set-off or
offset whatsoever (except as expressly provided in Article 11 and Article 31 of this Lease and
Section 6.12 of the Work Agreement), so that this Lease shall yield net, to Landlord when due
hereunder, the Annual Base Rent and other Rent during the Term and that all costs, expenses and
charges of every kind and nature relating to the Premises shall be paid by Tenant. Tenant shall
also pay all taxes, assessments, and utility expenses in accordance with and to the extent provided
in Articles 11 and 12.



6. STANDARD OF OPERATION AND USE




     6.1. Permitted Use. Tenant and any Space Tenants will only use the Premises during
the Term for a Permitted Use. Notwithstanding the foregoing to the contrary, if at any time after
the fifth (5th) Lease Year, operation of the Premises for the Permitted Use is not
Economically Viable, then with the prior consent of Landlord, which consent shall not be
unreasonably withheld, conditioned, or delayed, Tenant shall have the right to



 









 




change the Permitted Use. Among the factors to be considered by Landlord in granting or
withholding such consent (which may be conditioned on Tenant obtaining any necessary approvals of
the National Capital Planning Commission or other governmental authorities) shall be compliance
with the NHPA (including amendment of the Memorandum of Agreement if so required), continued
reasonable public access as required by Section 2.7 and as otherwise practical, consistency with
the criteria that resulted in Landlord’s selection of Tenant as tenant hereunder, and whether
Tenant’s request is reasonable in light of the prevailing economic and market conditions.
Landlord may condition its consent to a change in the Permitted Use upon renegotiation of the
Rent to reflect the economic aspects of the changed use and amendment of the Hotel Standard to
reflect the prospective use. Tenant shall cause the operation, management, maintenance and repair
of the Premises to comply with the Hotel Standard (as may have been modified in the event of a
change in the Permitted Use) throughout the Term.




     6.2. Certain Uses. Subject to its right of contest as provided in Section 7.4,
Tenant shall not use or occupy, nor permit or suffer the Premises or any part thereof to be used
or occupied for any unlawful or illegal business, use or purpose, or for any business, use or
purpose deemed disreputable or extra hazardous, or in such manner as to constitute a nuisance of
any kind, public or private, or for any purpose or in any way in violation of this Lease, the
certificate of occupancy or of any present or future Applicable Laws or the Applicable Building
Code, or which may make void or voidable any insurance then in force on the Premises. Tenant
shall, immediately upon the discovery of any such unlawful, illegal, disreputable, extra
hazardous or other use or purpose prohibited by this Section 6.2, take all reasonably necessary
steps, legal or equitable, including the exercise of remedies available to Tenant under any
Restaurant Leases or other Subleases whose subtenants are in violation of the foregoing
requirements, or under Applicable Laws or the Applicable Building Code, to cause the
discontinuance of such use. Tenant covenants, at Tenant’s sole cost and expense, to promptly
comply with and abide by all applicable restrictions, conditions, reservations, covenants and
other matters to which title to the Premises is subject. Without the prior written consent of
Landlord in each instance, Tenant shall not apply for any variances, special exceptions or other
changes in the zoning category, land use classification, building restrictions, parking
requirements or the like for the Premises, provided that Tenant may file applications for any
special exception, variance or waiver which is required in order to complete the construction and
Rehabilitation work in the Premises in accordance with the Work Agreement. Tenant shall not
submit its leasehold estate in the Premises to a condominium or cooperative regime or plan of
ownership, except as approved by Landlord in accordance with Section 6.1.




     6.3. No Use By Public Without Restriction. Tenant shall not suffer or permit the
Premises or any portion thereof to be used by the public without restriction or in such manner as
might reasonably tend to impair title to the Premises or any portion thereof, or in such manner
as might reasonably make possible a claim or claims of adverse usage
or adverse possession by the public, as such, or of implied dedication of the Premises or
any portion thereof.



 









 





     6.4. Continuous Occupancy. From and after the date of Substantial Completion, Tenant
(or its permitted successors) shall, throughout the entire Term, continuously and uninterruptedly
occupy and operate the hotel portion of the Premises (after Substantial Completion in accordance
with the schedule set forth in the Work Agreement) for the Permitted Uses; provided, however, that
Tenant’s obligations under this Section 6.4 shall be suspended during any period (i) of
restoration, repair, replacement or rebuilding undertaken by Tenant pursuant to this Lease, (ii) of
condemnation of the Premises or any interest therein, (iii) during which improvements are being
made to any portion of the Premises or other space within the Premises prior to occupancy thereof
by a new tenant or Space Tenant, (iv) of capital improvements undertaken by Tenant pursuant to
Article 8, (v) of transition in connection with an assignment of the Lease, a Sublease of the
Premises or space therein or a change in the Operator, or (vi) where otherwise prevented by reasons
or causes reasonably beyond Tenant’s control (excluding Tenant’s financial inability), all of the
foregoing limited, however, to the amount of space that reasonably and prudently in Tenant’s
discretion is affected thereby and for such time as is reasonably required in any of the foregoing
circumstances, or where otherwise prevented by reason or causes reasonably beyond Tenant’s control
(excluding Tenant’s financial inability) and provided that Tenant shall give Landlord reasonable
prior notice of any cessation or suspension of occupancy or operation pursuant to this Section.
Notwithstanding anything to the contrary in this Section 6.4, after delivery of reasonable prior
notice to Landlord, Tenant may reduce the number of operating guest rooms to fewer than one hundred
forty five (145), but in no event to fewer than fifty (50), in the event that, and for so long as,
Tenant reasonably determines in light of prevailing economic conditions that it is not economically
feasible to operate more than such reduced number of guest rooms. Nothing contained in this Section
6.4 is intended to limit, reduce or otherwise affect Tenant’s obligations under Section 2.7.


7. REPAIRSANDMAINTENANCE




     7.1. Tenant. Tenant shall, at Tenant’s sole expense upon the Occupancy Date and
thereafter during the Term: (i) keep and maintain the Premises and all FF&E used in connection with
the Hotel (or cause the same to be kept and maintained) in good and sanitary order, condition and
repair (permitting for reasonable wear and tear) in compliance with the Hotel Standard; (ii) except
as provided in Section 7.4, comply with all laws, ordinances, rules, regulations, or orders of all
governmental authorities now in force or which may hereafter be in force which generally control,
regulate or affect the Premises; and (iii) keep clean and free from snow, ice, rubbish and
obstructions the sidewalks, Vault Space, gutters and curbs comprising, in front of or adjacent to,
the Premises, promptly after such items may accumulate. Tenant shall not be deemed to be in
possession of the Premises or to have any obligation under this Article 7, until the Occupancy
Date. Until the Occupancy Date (i) Landlord shall perform all repairs and maintenance and other
work necessary to cause the Premises to comply with Applicable Laws and the Applicable Building
Code to the extent applicable to a vacant building and (ii) Landlord shall manage, repair, preserve
and maintain the Premises and the Historic



 









 




Elements in accordance with Landlord’s currently applicable “mothball” maintenance program,
including any repairs and maintenance required by reason of casualty.




     7.2. Landlord. Subject to Landlord’s obligations under the Work Agreement and its
obligation to provide Steam Service in accordance with Section 12.2, after the Occupancy Date,
Landlord shall have no obligation to furnish any services, utilities or facilities whatsoever to
the Premises. Upon the Occupancy Date, and subject to Landlord’s obligations under Section 7.1,
Section 12.2 and Article 31, Landlord shall have no duty or obligation to make any alteration,
change, improvement, replacement, restoration, Rehabilitation or repair to, or to demolish any part
of, the Improvements, and Tenant shall assume sole responsibility for the condition, operation,
repair, alteration, improvement, replacement, Rehabilitation, maintenance and management of the
Premises during the Term.



     7.3. Compliance with Laws. From and after the Occupancy Date, Tenant, at its sole cost
and expense, shall comply with the Applicable Building Code and any and all Applicable Laws,
irrespective of the nature of the work required to be done, extraordinary as well as ordinary, of
federal, state, city or other governmental, public or quasi-public authorities now existing or
hereafter created, and of any and all of their departments and bureaus, and of any applicable fire
rating bureau or other body exercising similar functions with respect to policies of insurance
affecting the Premises, sidewalks comprising a part or in front thereof or adjacent thereto and/or
any Vault Space, or requiring the removal of any encroachment, or affecting the construction,
maintenance, use or occupation of the Premises, whether or not the same involve or require any
structural changes or additions, and irrespective of whether or not such particular use to which
the Premises, or any part thereof, may be put. After the Occupancy Date, Tenant also shall comply
with any and all provisions and requirements of any fire, liability or other insurance policy
required to be carried by Tenant under the provisions of this Lease.



     7.4. Contest of Obligation. Tenant shall have the right, in appropriate proceedings,
at its sole cost and expense, diligently and in good faith to contest or seek to have reviewed or
abated the application of any law, ordinance, rule or regulation which a governmental or
quasi-governmental authority seeks to enforce, including the interpretation or manner of
application of the Historic Preservation Standards to the Premises, provided, that, Tenant shall
not challenge the general applicability of the Historic Preservation Standards to the Premises.
During any such contest, Tenant shall have the right to defer its compliance with any such law,
ordinance, rule or regulation upon the conditions that (i) Tenant shall furnish to Landlord prior
notice of such contest and reasonable evidence that Tenant has the ability to satisfy any costs
that are reasonably likely to result from Tenant’s decision to defer compliance with any such law,
ordinance, rule or regulation pending resolution of such contest, (ii) no such deferral shall be
permitted pursuant to this Section 7.4 with respect to actions of Landlord as landlord under this
Lease, but, subject to the other requirements of this Section 7.4, such deferral shall be permitted
with respect to governmental rules or regulations promulgated by



 









 




Landlord in its capacity as a governmental authority, (iii) no such deferral shall limit
Tenant’s obligations as provided elsewhere in this Lease to keep, operate and maintain the Premises
in good order, condition and repair and in accordance with the Hotel Standard, (iv) no such
deferral shall limit Tenant’s obligations to protect and preserve the Historic Elements and
structure and major systems of the Improvements (including any parts of the Improvements that are
involved in any then-pending contest, review or abatement pursued or sought by Tenant), and (v) no
such deferral shall be permitted if at any time the Premises or any part thereof shall be in danger
of being forfeited or if Landlord shall be in danger of being subject to liability or penalty by
reason of noncompliance. Any contest instituted by Tenant shall be commenced and prosecuted to
final adjudication by Tenant as soon as reasonably possible. Landlord shall reasonably cooperate
with Tenant in any such contest to such extent as Landlord may reasonably deem proper (including
joining in any contest, application, request for review, and the like), however Landlord shall not
be subject to any liability for the payment of any costs or expenses in connection with any such
proceeding and Tenant covenants to indemnify and save Landlord harmless from any such costs or
expenses.




     7.5. Certain Termination Rights.



          7.5.1. Uneconomic or Infeasible Costs. Except to the extent occasioned by fire or
other casualty covered by Article 22, or any Release of Hazardous Materials not covered by Section
31.5 and not caused by Tenant or its agents, employees, Space Tenants, contractors or
subcontractors, if, after Substantial Completion, the cost to Tenant of making the repair,
alteration, addition or improvement (to the extent of available insurance proceeds and Capital
Maintenance Reserve and, to the extent not reasonably required or prudently reserved for
replacement of FF&E, the FF&E Reserve) would, in Tenant’s reasonable good faith business judgment,
make the continuing use of the Premises not Economically Viable, and such cost to comply in the
aggregate (in excess of available insurance proceeds and Capital Maintenance Reserve and, to the
extent not reasonably required or prudently reserved for replacement of FF&E, the FF&E Reserve) is
equal to or greater than five times the Annual Base Rent for the Lease Year during which such
repair or other obligation of Tenant shall occur, then Tenant shall have the right to elect in its
sole discretion to terminate this Lease by notice to Landlord given within ninety (90) days after
the obligation to make such repair, alteration, addition or improvement is imposed. In the event
that such obligation is anticipated in advance, Tenant shall give notice as soon as is reasonably
feasible. Notice of termination given hereunder shall be accompanied by Tenant’s certificate
affirming Tenant’s conclusion that the cost of the repair, alteration, addition or improvement
makes continuing use of the Premises uneconomic or infeasible to Tenant under the standards herein
specified. Termination of the Lease under Tenant’s notice shall be effective sixty (60) days after
the date Tenant delivers such notice.




          7.5.2. Last Five Years. During the last five (5) Lease Years, if pursuant to this
Article 7 Tenant becomes obligated to make or install any repairs, Alterations, additions or
improvements to the Premises (including by reason of any casualty) with an





 









 







actual useful life in excess of the then remaining Term, then Tenant shall notify Landlord of
such repairs, Alterations, additions or improvements and Tenant shall be obligated to pay for the
portion of the reasonable cost equal to the ratio (expressed as a percentage) which the then
remaining number of Lease Years (or fractional portion thereof) in the Term bears to the actual
useful life of such repairs, Alterations, additions or improvements. Tenant’s notice shall state
the itemized cost and useful life of the item, and Landlord’s balance as described in clause (ii)
below, and shall inform Landlord of its option in the next sentence. Within forty-five (45) days
after Tenant gives such notice, Landlord shall elect, at its option, by notice to Tenant either to
(i) waive Tenant’s obligation to make such repairs, Alterations, additions or improvements to the
extent that the basic integrity of the Building structures and systems will not be adversely
affected and the cost thereof exceeds the available insurance proceeds and Capital Maintenance
Reserve, or (ii) to be obligated to pay for the balance of the cost of such repairs, Alterations,
additions or improvements in excess of available insurance proceeds and Capital Maintenance
Reserve. In the event Landlord does not give said notice, Landlord shall be deemed to have elected
option (i). In any event Tenant shall not cause or permit waste and shall preserve the integrity of
the Building structures and systems, and shall preserve and reasonably protect the Historic
Elements.




          7.5.3. Distribution of Insurance Proceeds and Reserves. In the event of any
termination of this Lease pursuant to this Section 7.5 or Article 31, all insurance proceeds made
available by the Leasehold Mortgage, the Capital Maintenance Reserve, and the FF&E Reserve, shall
be distributed in accordance with the last two sentences of Section 22.1.2.




8. ALTERATIONS




     8.1. Right To Make Alterations.



          8.1.1. Tenant shall not make any Alterations without the prior approval or consent of
Landlord, which shall not be unreasonably withheld; provided that Tenant shall have the right
without Landlord’s consent to make Immaterial Alterations unless an uncured Event of Default then
exists.




          8.1.2. All Alterations shall constitute Tenant’s Property and shall remain the property of
Tenant during the Term, subject to Article 9. All Alterations, when completed, shall be consistent
with the Hotel Standard and the Historic Preservation Standards and shall be of such a character as
not to materially reduce the value and utility of the Premises below its value and utility
immediately before construction of such Alterations was commenced.




          8.1.3. The provisions of Section 6.3 of the Work Agreement (applicable to the initial
Rehabilitation) shall apply to all Alterations.




     8.2. Additional Requirements. No Alterations shall be undertaken until Tenant shall
have delivered to Landlord insurance policies or certificates therefor issued by
responsible insurers, bearing notations evidencing the payment of premiums or



 









 




accompanied by other evidence satisfactory to Landlord of such payments, for workers’ compensation
and employer liability insurance covering all Persons employed in connection with the Alterations
and with respect to whom death or bodily injury claims could be asserted against Landlord, Tenant
or the Premises, and, unless the liability insurance then in effect with respect to the Premises
shall cover the risk, owner’s protective liability insurance expressly covering the additional
hazards resulting from the Alterations with limits not less than those, and otherwise subject to
the same conditions and requirements set forth in, Article 13 with respect to the liability
insurance required thereunder. If under the provisions of any fire, liability or other insurance
policy or policies then covering the Premises or any part thereof any consent to such Alterations
of said insurance company or companies issuing such policy or policies shall be required to
continue and keep such policy or policies in full force and effect, Tenant shall obtain such
consents and pay any additional premiums or charges therefor that may be imposed by said insurance
company or companies. In connection with any Alterations involving demolition or substantial
construction or reconstruction, Tenant shall maintain and provide to Landlord at Tenant’s sole cost
and expense builder’s risk insurance required to be maintained by Tenant under the terms of the
Work Agreement during the original construction and Rehabilitation work in accordance with the Work
Agreement. All Alterations shall be performed in a good and workmanlike manner in accordance with
the Applicable Building Code and all Applicable Laws. Promptly upon completion of any Alterations
that would require a Building Permit if the Premises were privately owned, at Tenant’s cost, Tenant
shall deliver to Landlord record drawings as required by Section 6.4.3 of the Work Agreement as to
the initial construction of the Project.



9. TENANT’S PROPERTY, ETC.




     9.1. Ownership of Tenant’s Property. Subject to Article 8 and the other provisions of
this Lease, Tenant shall have the right to install, remove, alter, add to, and/or replace in or
upon the Premises such improvements, fixtures and personal property as Tenant deems desirable. All
improvements, fixtures and personal property installed by Tenant in or upon the Premises, whether
or not affixed to the Premises, shall remain the property of Tenant until expiration or earlier
termination of this Lease. Upon expiration of the Term, or earlier termination of this Lease,
Tenant shall have the right (but shall not be required) to remove all or any Excluded Fixtures, in
which event Tenant shall retain its title thereto provided, however, that Tenant shall repair all
damage caused by such removal at Tenant’s sole cost and expense. Title to all of Tenant’s Property
not removed by Tenant shall automatically vest in Landlord upon expiration of the Term or earlier
termination of this Lease.



     9.2. Leased and Financed Property, Etc. Landlord acknowledges that Tenant or a Space
Tenant may lease from or finance with an unrelated third party all or a portion of the personal
property or Excluded Fixtures that are removable without material damage to the Premises. Upon
request, Landlord shall promptly execute and deliver any confirmations or acknowledgments that may
reasonably be required by any existing or proposed lessor or financing party in connection with the
leasing or financing of any such



 









 




property, which shall include only: (1) an acknowledgment by Landlord that any claims, title
or interest that such lessor or financing party may have in, against or with respect to any such
fixtures, equipment or other personal property are superior to any statutory right of distraint or
other statutory lien of Landlord with respect thereto; and (2) the agreement, acknowledgement and
confirmation of Landlord that, as between Landlord and such lessor or financing party, the lessor
or financing party shall have the right to remove any or all of the leased or financed property
from the Premises at any time or times at or prior to the expiration or termination of the Term,
subject to reasonable requirements of Landlord to protect the balance of the Premises. Upon request
by Tenant, Landlord shall enter into an agreement with any such lessor or financing party to
provide it with copies of notices of defaults that might give rise to termination of this Lease.




     9.3. Name of Building; Intellectual Property. Landlord hereby grants to Tenant for the
Term, to the extent Landlord has ownership rights in the IP Rights and the undersigned signatory
has the right to make this grant for Landlord, a royalty-free nonexclusive license to use the IP
Rights and to license to others the right to use the IP Rights in connection with Tenant’s use of
the Premises, subject to Landlord’s reservation of the right to use the IP rights in books or other
media describing Landlord’s real property holdings generally and not in competition with Tenant or
its licensees of such IP Rights. Tenant shall have the right, but not the obligation, to use any
name, including any name included in the IP Rights, in connection with the Hotel and any
restaurant, business or other concession located in or on the Premises. Tenant shall have no
obligation to use any name included in the IP Rights.


10. MECHANICS’ LIENS




     10.1. No Liens. If any mechanic’s lien or other lien, charge, or order for the payment
of money shall be filed against the Premises or Landlord’s reversionary interest in the Land or
Improvements, Tenant shall, at its own cost and expense, cause such lien, charge, or order to be
discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or other
means within thirty (30) days after notice of the filing thereof. If any mechanic’s or other lien
shall at any time be filed against Landlord’s reversionary interest in the Land or Improvements for
work performed by or for Tenant, and Tenant fails to have the lien discharged in the same manner as
provided above, and if such lien shall continue for an additional thirty (30) days after notice by
Landlord to Tenant, then, in addition to any other right or remedy, Landlord may, but shall not be
obligated to, discharge the same either by paying or bonding off of record the amount claimed to be
due, and any amount so paid or incurred by Landlord with all costs and expenses incurred by
Landlord in connection therewith, together with interest at the Default Rate accruing from the
date(s) of Landlord’s payment(s), shall be paid by Tenant to Landlord on demand.



 









 





     10.2. No Consent of Landlord. Nothing in this Lease shall be deemed or construed in
any way as constituting the consent or request of Landlord, express or implied by inference or
otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any
labor or the furnishing of any materials for any specific improvement, alteration to or repair of
the Premises or any part thereof. Notice is hereby given, and Tenant shall cause all construction
agreements pertaining to the Land or Improvements to provide that Landlord shall not be liable for
any work performed or to be performed at the Premises for Tenant or any subtenant or for any
materials furnished or to be furnished at the Premises for any of the foregoing, and that no
mechanic’s or other lien for such work or materials shall attach to or affect the estate of
Landlord in and to the Land or Improvements.



     10.3. Notice of Liens. Should any lien be filed against the Land or Improvements or
should any action of any character affecting the title thereto be commenced, each party hereto
shall give to the other party notice thereof as soon as notice of such lien or action comes to the
knowledge of the notifying party.



11. TAXES




     11.1. Real Property Taxes. Landlord currently pays no Real Property Taxes and makes no
payments in lieu of such taxes to the District of Columbia or any other jurisdiction based upon its
interest in the Land and Improvements. Tenant shall not, directly or indirectly, voluntarily agree
to pay any such Real Property Taxes or to make payments in lieu of such Real Property Taxes to the
District of Columbia or any other jurisdiction or otherwise consent to the imposition of Real
Property Taxes. Payment by Tenant of a real property tax bill presented by the District of Columbia
shall not be deemed a voluntary agreement to pay, but shall be subject to Landlord’s right to
contest pursuant to Section 11.6. Tenant shall give Landlord prompt notice of any real property tax
assessment or bill indicating that the District of Columbia intends to tax the Premises or Tenant’s
interest therein. Subject to the third (3rd) preceding sentence, if the Land or
Improvements are or become subject to Real Property Taxes during the Term, for any reason
whatsoever, such taxes or payments shall be the responsibility of Landlord; provided that
Landlord’s obligations to pay such amounts shall be limited to available appropriated funds of
Landlord. To the extent that funds are not available for Landlord to make such payments, (A) Tenant
shall pay such taxes or other payments as and when due and payable and (B) Tenant shall have the
right to deduct the amount of such payments (together with interest at the Interest Rate on the
outstanding amount of such payments from the date such payments are made by Tenant) from the next
and succeeding payments of Rent owed by Tenant to Landlord under this Lease until exhausted.



     11.2. BID Taxes. Landlord currently does not pay BID Taxes applicable to the Land
and Improvements. Tenant shall be obligated, throughout the Term, to pay BID Taxes to the
extent the same are assessed against the Land, Premises and/or Improvements or are otherwise
due and payable.



 









 





     11.3. Personal Property Taxes. Subject to the provisions of Section 11.4, Tenant shall
pay, prior to delinquency, all Personal Property Taxes levied during the Term to the full extent of
installments falling due during or with respect to the Term and shall deliver to Landlord within
ten (10) days after payment thereof copies of the receipted bills or receipts endorsed by the tax
collecting authority showing such payment to have been made before the date such payment would
become delinquent. All such Personal Property Taxes shall be paid by Tenant directly to the levying
authority. Landlord shall cooperate with Tenant in endeavoring to cause all bills for Personal
Property Taxes payable by Tenant hereunder to be sent directly to Tenant, but in the event the tax
collection agency will not so agree, then Landlord shall promptly tender the same to Tenant upon
receipt of any such bills.



     11.4. Election To Pay In Installments. If, by law, any taxes payable by Tenant
hereunder may be paid in installments at the option of the taxpayer, Tenant may exercise such
option to pay the same in installments as they may become due during the Term, so long as all
such installment payments are required to be made prior to the expiration of the Tenn.



     11.5. Proration. All taxes required to be paid by Tenant under this Article 11, when
paid for an annual or other specified term, shall be apportioned for the first and last tax years
therefor in the Term, so that the portion payable by Tenant in respect of each of such tax years
shall be only such proportion as the number of days covered by the Term in such respective tax
years bears to the total number of days for which such payment is payable.



     11.6. Contest. Landlord and Tenant shall each have the right, at its own cost and
expense and in its own name or in the name of the other party, to seek to contest or have reviewed,
reduced, equalized, or abated any assessment related to taxes payable by the contesting party. The
contesting party shall post security in the amount of such contested taxes or assessments, plus
estimated costs, penalties and interest, or post a bond of a responsible corporate surety in such
amount or such higher amount as is required to stay the obligation to pay such taxes and prevent
any penalty. Upon the termination of such proceedings, the contesting party shall pay the amount of
such taxes or part thereof as finally determined in such proceedings, together with any costs, fees
(including attorneys’ fees and disbursements), interest, penalties or other liabilities in
connection therewith, and upon such payment, the contesting party may cause the release of any bond
or other security given in connection with such contest. If at any time payment of the whole or any
part of such tax or assessment shall become necessary in order to prevent the termination by sale
or otherwise of the right of redemption of the Premises, or to prevent eviction of Landlord or
Tenant because of nonpayment, then the contesting party shall timely pay to the taxing authority
the amount necessary to prevent such termination or eviction and deliver to the non-contesting
party within ten (10) days thereafter receipted bills or receipts endorsed by the tax collecting
authority, and failing such delivery the non-contesting party shall have the right so to pay the
taxing authority. Any such payment, and any costs or expenses incurred by the non-contesting party
in connection



 









 




therewith (including reasonable attorneys’ fees) shall be promptly paid by the contesting
party within twenty (20) days after demand by the non-contesting party. If required, and provided
that the non-contesting party shall incur no risk or cost, the noncontesting party shall join with
the contesting party and execute any and all documents, applications, petitions, instruments, or
complaints necessary for any such protest, contest, review or other proceedings, desired or
conducted by the contesting party; provided that upon final determination of any such contest,
review or proceedings, the contesting party shall pay the taxes for which it is responsible
hereunder as they are finally determined and all penalties, interests, costs, and expenses which
may thereupon be due or have resulted therefrom. Any Real Property Taxes payable by Tenant as
contesting party under this Section 11.6 shall be subject to reimbursement by Landlord as and to
the extent provided in Section 11.1.



12. UTILITIES AND SERVICES




     12.1. Tenant Pays For Its Utilities. Tenant shall pay one hundred percent (100%) of
all charges incurred by Tenant or which would be a charge or lien against the Premises for
electric, gas, heat, water, telephone or other communication service, or other utilities or
services provided to the Premises during the Term.



     12.2. Steam Service. During the Term, Landlord shall cause the Premises to be served
with steam by the Steam Line for the purpose of providing hot water and heat to the Premises in
accordance with the standards, terms and conditions to be set forth in a separate agreement to be
negotiated in good faith between Landlord and Tenant during the Feasibility Period, which agreement
shall be in recordable form and shall provide, among other things, that (i) so long as Landlord
provides steam service to any other building located on the Steam Line in the District of Columbia,
Landlord shall provide such steam service to the Premises, and in no event shall Landlord cease
providing such steam service without giving Tenant at least three (3) years prior notice, and (ii)
in the event that Landlord sells, delegates, assigns or otherwise transfers to a successor steam
provider its rights and/or obligations to provide steam service, Landlord shall impose on such
successor steam provider the obligation to provide steam service to the Premises on reasonable
market terms and conditions. Notwithstanding anything to the contrary in this Section 12.2, Tenant
shall have the right, upon prior notice to Landlord, as set forth in the separate steam service
agreement to be negotiated between Landlord and Tenant, to terminate steam service to the Premises
as of the date specified by Tenant in such notice.



     12.3. Landlord’s Liability. Landlord shall not in any event whatsoever be liable for
any injury or damage to any property or to any Person happening on, in or about the Premises and
its appurtenances, nor for any injury or damage to the Premises or to any property belonging to
Tenant or any other Person which may be caused by any fire or breakage, or by the use, misuse or
abuse of any of the elevators, hatches, openings, installations, stairways or hallways, or which
may arise from any other cause whatsoever unless caused by the breach of this Lease by Landlord
or the wrongful acts



 









 




or negligence of Landlord or its agents or employees for which Landlord would be liable
under this Lease or Applicable Laws. During the Term, subject to Landlord’s obligation to provide
steam service in accordance with Section 12.2, Landlord shall not be liable for any failure of
water supply, gas or electric current, nor for any injury or damage to any property or any Person
or to the Premises caused by or resulting from gasoline, oil, steam, gas, electricity, or
hurricane, tornado, flood, wind or similar storms or disturbances, or water, rain or snow which
may leak or flow from the street, sewer, gas mains or subsurface area or from any part of the
Premises, or leakage of gasoline or oil from pipes, appliances, sewer or plumbing works therein,
or from any other place, nor for interference with light or other incorporeal hereditaments by
anybody, or caused by any public or quasi-public work, unless any of the foregoing results from
the wrongful acts or negligence of Landlord in its capacity as a party to this Lease, or its
agents or employees in their capacities as agents or employees of Landlord for which Landlord
would be liable under this Lease or Applicable Laws.



13. INSURANCE




     13.1. Tenant’s Fire And Extended Coverage. Tenant at its sole expense shall procure
and maintain in full force and effect from the Occupancy Date and during the entire Term
thereafter, all risk property and boiler and machinery coverage, including demolition, building
ordinance coverage, earthquake, flood, and business income coverage on: (a) Improvements on the
Land typically and customarily insured, to the typical and customary limits of such coverage and
including insurance for Tenant’s Property; (b) all risk builders risk coverage for the building
materials, supplies, and equipment during construction of the Project; and (c) the improvements and
leasehold improvements, in amounts not less than the full cost of replacement thereof with like
kind and quality sufficient to prevent operation of co-insurance limitations from and after the
date the Hotel commences operations. The amount of such insurance shall initially be no less than
Forty-Five Million Seven Hundred Thousand Dollars ($45,700,000.00); provided that during such time
as the Premises remain vacant prior to Tenant commencing construction work therein, all risk
property insurance shall be maintained in the amount of Forty-Five Million Seven Hundred Thousand
Dollars ($45,700,000.00). At least every two years Tenant shall from time to time, or upon request
by Landlord, notify Landlord of the amount which a qualified appraiser selected by Tenant and
reasonably acceptable to Landlord, reasonably deems to be the full insurance cost of replacement
thereof with like kind and quality, which amount is subject to the dispute resolution provisions of
Article 28. If Tenant so elects, such insurance may provide for a “deductible” in an amount up to
the amount customarily provided in insurance carried by Kimpton (or by Tenant and its Affiliates if
Kimpton no longer is an Affiliate of Tenant) but not more than One Hundred Thousand Dollars
($100,000), or such commercially reasonable deductible in excess of One Hundred Thousand Dollars
($100,000) as may from time to time after the Commencement Date be applicable. All policies
evidencing such insurance (except for business interruption insurance) shall name Landlord as an
additional insured and/or loss payee as appropriate, as its interest may appear, shall be



 









 




payable jointly to Tenant and Landlord for use by Tenant pursuant to the provisions of Article
22. Provided that the Leasehold Mortgagee under any Leasehold Mortgage has agreed in writing (in
form and substance reasonably satisfactory to Tenant and Landlord) that insurance proceeds shall be
available for use by Tenant and/or Landlord for the purpose of compliance with Article 22, and that
such mortgagee or Tenant shall pay the costs, if any, required for an endorsement naming it as such
an insured, such insurance may name such mortgagee or beneficiary as an additional insured and/or
loss payee as appropriate, as its interest may appear.




     13.2. Tenant’s Worker’s Compensation, Employer Liability, Commercial General Liability And
Commercial Automobile Liability Coverage. Tenant at its sole expense shall procure and maintain
in full force and effect from the Commencement Date, and for the remaining Term: (a) workers’
compensation and employer’s liability insurance required under applicable District of Columbia laws
covering all Tenant’s employee’s with such deductible limits generally set by Tenant or by hotels
operated by its Affiliates; and (b) commercial general liability and commercial automobile
liability insurance to provide coverage to the public, or to any invitee, Space Tenant or Landlord,
arising out of or related to the use of or resulting from any accident or occurrence to Persons or
loss or damage to property occurring in or upon the Premises, any perimeter sidewalks and
passageways, including common areas, immediately adjacent thereto, or in Tenant-operated or
licensed vehicles transporting guests, invitees, or other Persons to or from the Premises, with
limits of liability of not less than: (i) Commercial General Liability (Occurrence Form -Limits Per
Location) -Each Occurrence $10,000,000, Products/Completed Operations $10,000,000, Personal Injury
and Advertising Injury $10,000,000, Fire Damage $1,000,000, General Aggregate $10,000,000 (such
commercial general liability insurance to also include coverage for employer’s liability, employee
benefits liability, innkeepers legal liability, policy/security guard liability, and liquor
liability), and (ii) Commercial Automobile Liability (Occurrence Form -Any Auto, Hired Autos &
Non-Owned Autos) Combined Single Limit of$10,000,000 including coverage for garage liability and
garage keepers legal liability. The commercial general liability insurance shall include, without
limitation, contractual liability coverage. If Tenant so elects, such commercial general liability
and commercial automobile liability insurance may provide for a “deductible” in an amount not to
exceed $100,000 as to any portion of the coverage required hereunder. Tenant’s commercial general
liability policy and commercial automobile policy or policies shall name Landlord as an additional
insured. The amounts provided in this Article shall increase each Lease Year by the percentage
increase in the CPI.



     13.3. Policies And Certificates. All policies required under this Lease shall be
effected under valid and enforceable policies, issued by responsible insurers licensed to do
business in the District of Columbia of recognized responsibility which hold a Best’s rating of
A-X or greater. Tenant shall from time to time deliver to Landlord and to any other named insured
hereunder who so requests copies of policies or certificates of insurance showing that such
policies are in effect. All policies providing for self-insurance or “deductibles” may permit one
or more of the named insureds to assume the



 









 




right to defend or adjust claims which reasonably appear to be susceptible of settlement or
final resolution within the limits of the self-insurance. The coverage provided by such policies
shall not be limited, reduced or diminished by virtue of the waivers contained in Article 14 and
Section 13.5. Should Tenant fail to acquire, maintain or renew any insurance required to be
maintained by it under this Article 13, or to pay the premium therefor, then Landlord, at its
option, but without obligation so to do, may procure such insurance, and any sums expended by it
to procure any such insurance shall be forthwith repaid upon demand with interest at the Default
Rate. Tenant shall obtain written agreements from each insurer under policies required to be
maintained by them, to notify all additional insureds named thereunder at least ten (10) days
prior to cancellation or reduction in coverage under any such policy to a level less than that
required to be maintained under this Lease.




     13.4. Blanket Coverage. Any policy required to be maintained hereunder by either
party may be maintained under a so-called “blanket policy” insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder is provided on a
per location basis and is not thereby diminished.



     13.5. Subrogation Waiver. All risk property, and boiler and machinery insurance policy
or policies shall provide that the insurance company waives all rights of recovery by way of
subrogation against Landlord or Tenant. Commercial general liability and commercial automobile
liability insurance policies shall provide that the insurance company waives all rights of recovery
by way of subrogation against Landlord. In the instance of commercial general liability and
commercial automobile liability insurance, the provisions of this Section 13.5 are intended to
restrict Tenant (as permitted by law) to recovery against insurance carriers to the extent of such
coverage, and waive fully, and for the benefit of Landlord, any rights and/or claims which might
give rise to a right of subrogation in any insurance carrier.



     13.6. Tenant Insurance Primary. Tenant shall have all of the above required policies
endorsed to reflect that they are primary over any other insurance or self insurance of Landlord.


14. INDEMNIFICATION OF LANDLORD




     14.1. Tenant’s Obligation. Tenant shall indemnify and hold harmless Landlord for any
legal liability, suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including reasonable attorneys’ fees and disbursements which may be imposed upon or
incurred by or asserted against Landlord by reason of any tax attributable to the execution,
delivery or recording of this Lease or a memorandum hereof.



     14.2. Survival of Provision. Tenant’s obligation to indemnify Landlord pursuant to
Section 7.4, Section 18.14 and this Article 14 shall survive the expiration or earlier termination
of this Lease, but only in respect of acts and occurrences arising on or prior
to the later of the expiration or earlier termination of this Lease.



 









 





     14.3. Obligation Not Affected By Failure of Insurance Carriers. Except as otherwise
expressly provided in this Lease or the Work Agreement, the obligations of Tenant under this
Article shall not in any way be affected by the absence in any case of covering insurance or by
the failure or refusal of any insurance carrier to perform any obligation on its part under
insurance policies affecting the Premises.



     14.4. Tenant to Defend Claims Against Landlord. If any claim, action or proceeding is
made or brought against Landlord by reason of any event as to which Tenant is indemnifying Landlord
pursuant to this Article, then, upon demand by Landlord, Tenant, at its sole cost and expense,
shall resist or defend such claim, action or proceeding in Landlord’s name, as the case may be, if
necessary, by the attorneys for Tenant’s insurance carrier (if such claim, action or proceeding is
covered by insurance), otherwise by such attorneys as Landlord shall approve, which approval shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, at its expense, Landlord
may engage its own attorneys to defend it or to assist in its defense.


15. ASSIGNMENT AND SUBLETTING




     15.1. Operator. Tenant has designated Kimpton to serve as the initial Operator, and
Landlord hereby acknowledges and agrees to such designation. Tenant shall have the right to retain
any successor management company selected by it to serve as Operator without the consent of
Landlord, provided that (a) the proposed Operator is not an Excluded Contractor and (b) Tenant
provides reasonable substantiation to Landlord that the proposed Operator, or any entity or Person
which owns a controlling interest in such Operator (e.g., a parent corporation or general partner)
(i) has demonstrable prior successful experience in operating hotels and restaurants of similar or
better quality than the Hotel and (ii) has the capability to manage a property of historic
significance. Tenant shall provide Landlord with at least one hundred twenty (120) days’ prior
notice of any termination of an operating agreement with an Operator, and with at least thirty (30)
days’ prior notice of Tenant’s designation of a substitute Operator, which latter notice shall
include the information regarding such substitute Operator as is required in accordance with this
Section 15.1. For purposes of this Section 15.1, Tenant may satisfy its obligation to substantiate
that the successor Operator has the capability to manage a property of historic significance by
demonstrating that such successor Operator has retained a Person (such as an employee or
consultant) who previously has provided facilities management services to the Project or to other
properties of historic significance.



     15.2. Assignment or Major Sublease. Tenant shall have the right without approval or
consent of Landlord but with fifteen (15) days prior notice to Landlord to assign this Lease or
any interest herein or sublease part or all of the Premises to one or more Affiliate(s) to the
extent not prohibited by the Anti-Assignment Acts and provided that the Transferee is not an
Excluded Contractor. In no event, however, shall there be more than one Person comprising Tenant
under this Lease at any particular time. Except as so provided, Tenant shall not voluntarily or
involuntarily, by operation of law



 









 




or otherwise, assign this Lease or enter into a Major Sublease without the prior written
consent of Landlord which consent shall not be unreasonably withheld, conditioned or delayed as
provided in Section 15.5. Landlord’s consent to one assignment or Major Sublease shall not be
deemed to be a consent to any subsequent assignment or Major Sublease. Following a permitted
assignment of all right, title and interest of Tenant pursuant to this Lease, dissolution of the
assignor in accordance with Applicable Laws shall not be a default by Tenant under this Lease.




     15.3. Deemed Assignments.



          15.3.1. For purposes of Section 15.2, (i) if Tenant is a Partnership, the sale, assignment or
transfer of any general partner’s interest in such partnership, or (ii) if Tenant is a corporation,
joint venture, limited liability company or other entity (other than a partnership), the transfer
of interests in such corporation or other entity resulting in a change of control of such
corporation, joint venture or other entity (excepting any corporation whose stock is listed and
publicly traded on a recognized stock exchange), whether by operation of law or otherwise, and
whether by sale, assignment or transfer of any issued and outstanding capital stock of any such
corporation or by the issuance of any additional stock in any such corporation by sale, assignment
or other transfer, shall be regarded as, and subject to the same provisions concerning, an
assignment of this Lease or Sublease of the entire Premises, or substantially the entire Premises.
Notwithstanding the foregoing provisions of this Section 15.3 to the contrary, (i) the sale,
assignment or transfer to an Affiliate or to a Leasehold Mortgagee of any general or limited
partner interest or other ownership interest in a partnership, joint venture, or other entity which
is Tenant under this Lease, or (ii) any transfer in the voting control of Tenant to an Affiliate or
to a Leasehold Mortgagee of any corporation (excepting a corporation whose stock is listed and
publicly traded on a recognized stock exchange), which is a general partner of any partnership or
is a venturer in any joint venture that is Tenant under this Lease or
 (iii) the formation of a new joint venture, new partnership or other new entity by a Leasehold
Mortgagee and Tenant (or any Affiliate of Tenant or some or all of the general and limited partners
of Tenant), said new joint venture, new partnership or other new entity thence becoming Tenant
under this Lease, shall not require Landlord’s prior consent provided that (i) Tenant gives to
Landlord (A) thirty (30) days advance notice of said occurrence identifying Leasehold Mortgagee,
(B) executed counterparts of all instruments effecting said occurrence, (C) an executed counterpart
of an instrument of assumption of all of the seller’s, assignor’s or transferor’s obligations under
this Lease by said Leasehold Mortgagee, and (D) any such transaction involving a Leasehold
Mortgagee is effected to further secure the Leasehold Mortgage or in enforcement of the remedies
under the Leasehold Mortgage, and (E) no such party is an Excluded Contractor.




          15.3.2. Nothing contained in this Section 15.3 shall be construed to prevent a transfer of
the interest of any limited partner of any limited partnership which may be Tenant hereunder, or
to require Landlord’s consent to such transfer.





 









 








          15.3.3. Nothing contained in this Section 15.3 shall be construed as prohibiting the entry
by Tenant into any Sublease including any Restaurant Lease or to impose any requirement that
Tenant obtain Landlord’s consent to any Sublease or Restaurant Lease, other than a Major
Sublease.




          15.3.4. Nothing contained in this Section 15.3 shall be construed as prohibiting the
granting by Tenant of a Leasehold Mortgage that is made subject to and otherwise in accordance
with the terms, covenants and provisions of this Lease, or the foreclosure (or deed in lieu
thereof) of any such Leasehold Mortgage.




     15.4. Costs and Expenses. Tenant shall pay to Landlord the reasonable cost of
attorneys’ and other professional fees in connection with any request for assignment or
subletting up to One Thousand Dollars ($1,000) (which amount shall be increased in proportion to
increases hereafter in the CPI).



     15.5. Reasonable Consent.



          15.5.1. Landlord shall not unreasonably withhold, condition or delay its consent to any
proposed assignment of the Lease or a Major Sublease of the Premises or any portion thereof.
Landlord shall not disapprove any proposed assignment of this Lease or Major Sublease for reasons
that would not be reasonable grounds for a private Landlord to disapprove such transaction;
provided that in no event shall any Transferee be an Excluded Contractor. Among the factors to be
considered by Landlord in determining whether to consent may be: (i) the proposed Transferee’s
proof of authority, qualification to do business, and legal status; (ii) the nature and quality of
the hotel business proposed to be carried on in the Premises is in material compliance with the
terms of this Lease; (iii) evidence reasonably satisfactory to Landlord submitted by Tenant or
otherwise available to Landlord that the proposed Transferee or subtenant has a satisfactory
business reputation; (iv) Tenant reasonably establishes that the proposed assignee has (1)
demonstrable prior successful experience in operating (either itself or a Person holding a
controlling interest in the assignee either directly in having directly operated or indirectly in
having previously retained a hotel management company to operate) hotels and restaurants of similar
or better quality than the one required to be operated on the Premises by Tenant, (2) sufficient
capability (either directly or indirectly by retaining an experienced Person (such as an employee
or consultant or controlling Person) to manage properties of historic significance, and (3)
sufficient financial wherewithal to perform its obligations under this Lease.




          15.5.2. In the event the proposed assignee is an entity which does not itself have either
direct or indirect demonstrable successful prior experience in operating hotels of similar or
better quality and thus also does not have a good general business reputation as a hotel owner or
Operator as required by Section 15.5. 1 (iii) and (iv), the proposed assignee may satisfy Section
15.5.I(iii) and (iv) by reasonably establishing to Landlord’s satisfaction that: (a) it or an
entity or Person owning a controlling interest in it has demonstrable successful prior experience
in operating an active business (other than as a mere passive investor) or in actively developing
real estate of value comparable to the





 









 







Premises; (b) it has a very good general business reputation in the business in which it has
been engaged; (c) it retains under a written operating agreement, a copy of which shall be provided
to Landlord along with Tenant’s request for consent to assignment, a hotel management company which
has demonstrable successful prior experience in operating hotels of generally comparable quality as
the Hotel; and (d) such hotel management company meets the criteria set forth in Section 15.1.
Landlord shall approve or disapprove any proposed assignment within twenty (20) days after request
therefor from Tenant together with written presentation by Tenant of sufficiently detailed
information pursuant to Section 15.5.1(i) through Section 15.5. 1 (iv) above. If Landlord shall
disapprove of any such proposed assignment, such disapproval shall include Landlord’s stated
reasons for such disapproval in reasonable detail. If (i) Landlord fails to approve or disapprove
any proposed assignment within such twenty (20) day period, (ii) Tenant thereafter makes a second
request for Landlord’s approval of the proposed assignment and (iii) Landlord fails to approve or
disapprove the proposed assignment within ten (10) days after Tenant’s second request, then Tenant
shall have the right to recover all reasonable additional costs and expenses incurred by Tenant
(and to such other relief as may be available to Tenant at law or in equity) by reason of
Landlord’s failure timely to respond or Landlord’s wrongful disapproval, and such rights shall
arise immediately after the expiration of such ten (10) day period, without regard to any cure
period that otherwise would be applicable pursuant to this Lease, including without limitation the
cure period in Section 27.2.1. Notwithstanding the foregoing, in order for any assignment or other
transfer to be effective for any purpose under this Lease, the proposed assignee must assume in
writing the performance of all of the terms, covenants, and conditions on the part of Tenant to be
performed hereunder from and after the date of such assignment or other transfer. In the event an
assignment is approved by Landlord but not completed within one (1) year after said approval, any
future assignment to the approved party shall again be subject to re-approval pursuant to this
Section 15.5. Without limiting the other provisions to which Section 19.2 applies, any request for
Landlord’s consent pursuant to this Section 15.5.2 shall comply with Section 19.2.




          15.5.3. Nothing contained in this Section 15.5 shall be construed as prohibiting the granting
by Tenant of a Leasehold Mortgage which is made subject to and otherwise in accordance with the
terms, covenants and provisions of this Lease, or the foreclosure (or deed in lieu thereof) of any
such Leasehold Mortgage.




     15.6. Subleases and Restaurant Leases. Nothing in this Article 15 shall require
Landlord’s consent to any bona fide Restaurant Lease or other Sublease other than a Major
Sublease. Tenant shall give Landlord at least fifteen (15) days prior notice of any Sublease. In
no event may the subtenant be an Excluded Contractor. Any Space Tenant and its operations shall
be commensurate with the Hotel Standard. Any Sublease hereunder or assignment of this Lease shall
be subject to the terms and conditions of this Lease, and the rights of any subtenant or assignee
thereunder in no event shall be greater than the rights of Tenant pursuant to this Lease. If not
sooner terminated, any Sublease, and the rights of any assignee of Tenant under any assignment,
shall terminate upon the expiration or termination of the Term.




 









 








     15.7. Anti-Assignment Acts Limitation. To the extent that any intended assignment or
Sublease that otherwise is permitted by the express provisions of this Lease, or any
non-disturbance agreement or any instrument which this Lease requires Landlord to execute in
connection therewith, violates or is limited by the Anti-Assignment Acts, Landlord agrees to
cooperate with Tenant to avoid such violation or limitation to the extent legal and proper so to
do, by waiving the pertinent provisions of the Anti-Assignment Acts applicable thereto, but only to
the extent legal and proper so to do.




	16.	 	SALE OR MORTGAGE OF LANDLORD’S INTEREST;
	 
	 	 	TENANT’S RIGHT OF FIRST REFUSAL; TENANT’S OPTION





     16.1. Landlord’s Right To Assign. During the Term, Landlord shall have the right and
power at any time and from time to time to mortgage or otherwise create one or more security
interests affecting the fee estate in the Premises, and to renew, modify, replace, consolidate,
extend or refinance any such mortgage or other instrument, subject, however, to the following:



          16.1.1. Nothing contained in any such mortgage shall give the holder of any such mortgage
(a “Landlord Mortgagee”) any greater rights with respect to the rights and interest of Tenant
under this Lease, or the covenants, conditions and restrictions set forth herein, the leasehold
estate created hereunder, or any Leasehold Mortgage given by Tenant hereunder, than those of
Landlord.




          16.1.2. Unless Landlord would then be entitled to do so under the terms of this Lease, the
Landlord Mortgagee shall not, in the exercise of any of its rights arising or which may arise out
of any such mortgage, or any instrument modifying or amending the same or entered into in
substitution or replacement thereof, disturb or deprive Tenant or any Leasehold Mortgagee of its
possession or right to possession of the Premises, or of any part thereof under this Lease, or any
right or privilege created for or inuring to the benefit of Tenant or any Leasehold Mortgagee under
this Lease or any Leasehold Mortgage except to the extent Landlord has the right to do so.




          16.1.3. Any such mortgage shall provide that the holder of such mortgage, upon serving
Landlord with any notice of a material default by Landlord under such mortgage, will promptly send
a copy of such notice to Tenant;




          16.1.4. Landlord and its mortgagee shall, upon request, execute, acknowledge and deliver to
Tenant, an agreement, prepared at the sole cost and expense of Tenant, in form reasonably
satisfactory to Tenant and its Leasehold Mortgagee, between Landlord, Tenant and the holder of
such mortgage, agreeing to all of the provisions of this Section 16.1.




 









 





          16.1.5. The term “mortgage” as used in this Section 16.1 shall include a deed of trust,
security agreement and financing statement, collateral assignment of leases and rent, and other
similar security instruments.




     16.2. Right of First Offer. If Landlord shall at any time desire to assign
Landlord’s interest in this Lease, in whole or in part, or sell or exchange all or part of the
Land and Improvements (any such transaction being sometimes referred to below in this section as
a “sale”), to an entity that is not an agency or instrumentality of the United States, then
Tenant shall have the rights set forth in this Section 16.2.



          16.2.1. Notice. Landlord shall give notice to Tenant of Landlord’s desire to assign
Landlord’s interest in this Lease, in whole or in part, or sell or exchange all or part of the Land
and Improvements and the price and other essential terms and conditions of a sale which Landlord is
willing to accept (“Proposed Sale Terms”).




          16.2.2. Option Exercise. For a period of ninety (90) days after the date on which
Landlord gives notice to Tenant of the Proposed Sale Terms, Tenant shall have the exclusive right
and option to make the purchase of the entire Premises in accordance with the Proposed Sale Terms.
If Tenant desires to exercise its option, Tenant shall give Landlord notice to that effect within
said ninety (90) day period, time being of the essence. If Tenant timely exercises its option,
settlement shall be consummated within ninety (90) days after the expiration of said initial ninety
(90) day period in strict accordance with the Proposed Sale Terms.




          16.2.3. Option Not Exercised. If the aforesaid option is not timely exercised by
Tenant, then Landlord shall be free to make a sale of the Premises or other transaction on the
open market to an outside party, provided that such sale or other transaction shall be made at a
price and upon terms and conditions not materially less favorable to Landlord than those set out
in the Proposed Sale Terms. A purchase price which is not more than five percent (5%) less than
the purchase price set forth in the Proposed Sale Terms shall be deemed not materially less
favorable to Landlord.




          16.2.4. Delayed Sale. If settlement of a sale of the Premises to an outside party is
not consummated by Landlord within twenty-four (24) months from the expiration of said initial
ninety (90) day period, then the above-specified procedures shall be repeated.




          16.2.5. Less Favorable Offer. If during said twenty-four (24)-month period Landlord
shall receive or obtain a bona fide written offer acceptable to Landlord for the purchase of the
Premises and the price and other terms and conditions of such written offer are materially less
favorable to Landlord than those set out in the Proposed Sale Terms, then Landlord shall promptly
give notice to Tenant of the purchase price and other essential terms and conditions contained in
such written offer. A true copy of the written offer (except for the name of the buyer) shall be
attached to the notice. For a period of sixty (60) days after the date on which such notice is
given by Landlord, Tenant shall have the exclusive right and option to make the purchase of the
entire Premises at





 









 







the same price and upon the same terms and conditions as are set out in the written offer. If
Tenant desires to exercise its option, Tenant shall give Landlord notice to that effect within said
sixty (60) day period, time being of the essence. If Tenant timely exercises its option, settlement
shall be made within the same time and upon the same terms and conditions as are set forth in the
written offer. If the option is not timely exercised by Tenant, then Seller shall be free to make
the sale to the bona fide offeror; provided that the sale shall be made within the same time and at
the same price and in substantial accordance with the other terms and conditions as are set forth
in the written offer. If Tenant fails to timely exercise its option, then the right of first
refusal shall be deemed extinguished upon consummation of the sale pursuant to the written offer;
provided that if such sale is not consummated pursuant to the written offer, the procedures above
specified shall be repeated in all respects.




          16.2.6. Exclusions. The procedures above specified shall not be applicable to (a) a
sale in lieu of condemnation, (b) transfers resulting from mergers, dissolutions, liquidations,
consolidations, reorganizations or contributions to capital, (c) transfers to parent, subsidiary,
affiliated or related corporations or other Persons related to Landlord, (d) transfers by way of a
sale, gift or devise (including a trust) to or for any Person related to Landlord (including any
successor governmental agency, corporation, department, division or the like to GSA), or to any
transfer from one such related Person to another. For the purpose of this Section, if the then
owner of the Premises shall be an individual, a related Person shall include a wife, lineal
descendant or spouse of such descendant, ancestor or sibling (whether by the whole or half blood),
a partnership of which such owner is a member, a joint venture or ownership in common which
includes such owner or a corporation, the majority of whose securities is owned by such owner, or
anyone or more of the foregoing Persons.




          16.2.7. Foreclosure. The above-specified procedures further shall not be applicable
in the event of any sale of the Premises incidental to the exercise of any remedy provided for in
any mortgage of the Premises created by Landlord, including sale or transfer by deed in lieu of
foreclosure.




          16.2.8. Default. If Tenant is in Default at the time Landlord desires to sell the
Premises, then the above-specified procedures shall not be applicable, and Landlord may proceed to
sell the Premises without negotiating with or offering to sell the Premises to Tenant.




          16.2.9. Non-Assignable. Except for a collateral assignment by Tenant to the holder
of the Institutional Mortgage most senior in lien priority, Tenant’s rights under this Section
16.2 shall not be assignable or transferable separate and apart from this Lease, it being the
intent of the parties that such rights and this Lease shall be owned by one and the same Person
who shall be the Tenant hereunder.




     16.3. Sale by Landlord. Subject to the provisions of Section 16.2 above, Landlord
may at any time freely sell, convey, assign or transfer, in whole or in part, its interest in
the Premises and this Lease, so long as any such transferee shall assume



 









 




all of Landlord’s obligations under this Lease as modified pursuant to this Section 16.3,
from and after the effective date of transfer; however, if there are multiple owners of
Landlord’s estate in the Premises, they shall designate a single Person as their agent for
purposes of collecting the Rent, receiving notices or other communications hereunder to
Landlord and acting with respect to any consents or approvals required to be obtained from
Landlord hereunder. In the event that Landlord at any time sells, conveys, assigns, or
transfers, in whole or in part, its interest in the Premises and/or this Lease, to a
transferee that does not have the sovereign powers of Landlord contemplated by this Lease,
Landlord and Tenant shall amend and modify this Lease equitably so as to reflect the changed
status of Landlord by reason of such transfer.




     16.4. Merger. In the eventuality of a transfer of Landlord’s interest in this Lease to
Tenant, such transfer shall not terminate this Lease by merger or otherwise so long as any
Leasehold Mortgage encumbers the Premises. Without limiting the generality of the foregoing, upon
any such transfer Tenant shall, upon the written request of any Leasehold Mortgagee, execute,
acknowledge and deliver to the Leasehold Mortgagee a new mortgage containing the same terms and
conditions in recordable form covering Tenant’s fee interest in the Premises and securing the
performance by Tenant of all of the obligations secured by the Leasehold Mortgage.


17. LEASE STATUS REPORTS; LEGAL OPINIONS




     17.1. Lease Status Reports. Landlord and Tenant hereby agree that within twenty
(20) days after receipt of a written request from the other party, it shall execute, acknowledge
and deliver a certificate certifying to the knowledge of Tenant or, as the case may be, the
Landlord’s Contracting Officer, to the extent accurate: (1) that Substantial Completion has
occurred, (2) that this Lease has not been modified and is in full force and effect (or, if there
have been modifications, that this Lease is in full force and effect as modified, and stating the
modifications); (3) the date to which Rent has been paid; (4) whether or not, to the knowledge of
the party executing such certificate, the requesting party under this Lease is in default under
this Lease, whether any notice has been received by or delivered to said party of any event of
default which has not been cured, except as to defaults specified in the certificate and whether or
not any event has occurred which, but for the expiration of the applicable time period, would
constitute an event of default under this Lease; and (5) such other matters as may reasonably be
requested by the requesting party with respect to the status of this Lease and the performance or
non-performance by the other party of its obligations hereunder. The certificate may not be relied
upon except to the extent the certificate expressly provides that it may be relied upon; Landlord
shall be required to provide for reliance on the certificate only to the same extent as other
certificates then generally being issued by Landlord to parties to lease transactions may be relied
upon. Tenant acknowledges that such certificates currently issued by Landlord would preclude Tenant
or any Leasehold Mortgagee from relying on them.




 












 





     17.2. Legal Opinions.



          17.2.1. Landlord’s Legal Opinion. Within thirty (30) days after a request by Tenant,
Landlord shall cause its Regional Counselor other appropriate counsel to deliver a formal written
legal opinion on behalf of Landlord, addressed to and for the benefit of Tenant, any Leasehold
Mortgagee, any Person or entity providing financing for the development of construction of any
Improvements, and/or such other Persons or entities as Tenant may reasonably designate (including
participants in any financing arrangements, and the assignee(s) of any Person or entity providing
debt or equity financing), passing on the due authorization, execution and delivery of this Lease
by Landlord and compliance of this Lease with the NHP A, to the extent that such counsel concurs
therein, which legal opinion may contain appropriate qualifications. The opinion shall provide that
it may be relied upon by all Leasehold Mortgagees.




          17.2.2. Tenant’s Legal Opinion. Within thirty (30) days after any request by Landlord,
Tenant shall cause its general counselor outside law firm to deliver a formal written legal opinion
on behalf of Tenant, addressed to and for the benefit of Landlord, and/or such other Persons or
entities as Landlord may reasonably designate (including mortgagees or potential purchasers),
passing on such legal matters relating to this Lease as Landlord shall reasonably request,
including the due authorization, execution and delivery of this Lease and the enforceability of
this Lease against Tenant, to the extent that such counsel concurs therein, which legal opinion may
contain appropriate qualifications.



18. LEASEHOLD MORTGAGES




     18.1. Definitions. For purposes of this Article 18, the following terms shall have
the meanings hereinafter set forth:



          18.1.1. Assignment For Security. “Assignment For Security” shall mean a
transaction or transactions in which Tenant, in a bona fide debt financing:
(a) assigns all or any portion of its interest under this Lease and/or any Construction Documents
or contracts relating to the Project, to an Institutional Lender for the purpose of securing Debt;
and/or (b) executes a deed of trust for the benefit of an Institutional Lender with respect to all
or any portion of its interest under this Lease for the purpose of securing Debt; and/or (c)
executes a mortgage for the benefit of an Institutional Lender with respect to all or any portion
of its interest under this Lease for the purpose of securing Debt; and/or (d) sells and assigns to
an Institutional Lender and leases or subleases back from such Institutional Lender all or any
portion of its interest under this Lease, in connection with a transaction where Tenant obtains
Debt, repayment of which is secured in whole or in part, or becomes an obligation in whole or in
part incurred by Tenant in the transaction in which such assignment, deed of trust, mortgage or
assignment and sublease back is delivered or consummated.





 









 








          18.1.2. Leasehold Mortgage. “Leasehold Mortgage” shall mean the encumbrance created by
an Assignment for Security, including a mortgage, deed of trust, assignment or other instrument
regardless of the form of the transaction. A Leasehold Mortgage shall include all of the
instruments of encumbrance made by Tenant in connection with the Assignment for Security, including
encumbrances executed by the assignee, reassignments and related transactions.




          18.1.3. Leasehold Mortgagee. “Leasehold Mortgagee” shall mean the secured party
under a Leasehold Mortgage regardless of the type of interest created in such secured party by
the Assignment for Security under such Leasehold Mortgage.




          18.1.4. Mortgaged Premises. “Mortgaged Premises” shall mean Tenant’s interest under
this Lease and in the Improvements encumbered by a Leasehold Mortgage.




     18.2. Permitted Assignments For Security. Tenant shall have the right, subject to the
terms and conditions of this Article 18, to enter into Assignments for Security so long as Tenant
(or a successor taking by assignment pursuant to Article 15) remains liable to the extent provided
for in this Lease for performance of all obligations on Tenant’s part to be performed hereunder,
and no encumbrance is placed thereby on the Land and Improvements, other than a Leasehold Mortgage
on the leasehold interest created by this Lease or by equipment or personal property leases. No
Leasehold Mortgage shall encumber or otherwise cover any interest of Landlord in the Premises. No
Leasehold Mortgage shall encumber or otherwise cover any interest in real property other than
Tenant’s interest in the Premises and any Sublease under this Lease except that, after Substantial
Completion, a Leasehold Mortgage also may cover other property of Tenant. No Leasehold Mortgagee,
nor any entity claiming by, through or under such Leasehold Mortgagee, shall acquire any greater
rights in the Premises, Improvements, the leasehold estate or the Subleases than Tenant has under
this Lease except as otherwise provided in this Article 18. All such Leasehold Mortgages shall be
subject to all of the conditions, covenants and obligations of this Lease and to the rights of
Landlord hereunder, except as otherwise provided in this Article 18. Tenant shall promptly deliver
to Landlord a true copy of each Leasehold Mortgage and any assignment thereof. Any Leasehold
Mortgage shall provide that the Leasehold Mortgagee shall send to Landlord copies of all notices of
default sent to Tenant in connection with the Leasehold Mortgage or the Debt secured thereby.



     18.3. No Merger or Termination By Reason Of Foreclosure, Sale or Surrender. Subject to
the provisions of Section 18.5, (i) this Lease shall not be subject to termination by Landlord
solely by reason of or upon the commencement of judicial or nonjudicial foreclosure of any
Leasehold Mortgage, and (ii) this Lease shall not be subject to termination by Landlord solely by
reason of the acquisition by a Leasehold Mortgagee through a foreclosure proceeding of the
Mortgaged Premises, or Tenant’s interest therein by resort to any remedy for default under or
pursuant to a Leasehold Mortgage or an Assignment for Security, or conveyance in lieu of
foreclosure thereof, provided that upon



 









 




any such event the Leasehold Mortgagee agrees to be bound by this Lease. No sale or transfer
(whether by corporate merger, consolidation, operation of law, or otherwise) of the Land and
Improvements or the Premises, or any portion thereof, to Tenant, and no purchase or other
acquisition of this Lease, or any interest herein by Landlord, shall terminate this Lease by merger
or otherwise, so long as any Leasehold Mortgage encumbers the Mortgaged Premises. So long as a
Leasehold Mortgage is in effect, Tenant shall not voluntarily surrender and Landlord shall not
accept a voluntary surrender, cancellation or other voluntary termination of this Lease by Tenant
without the prior written consent of the Leasehold Mortgagee unless such surrender or termination
is on account of Tenant’s default hereunder and Landlord has first given each relevant Leasehold
Mortgagee the opportunity to exercise its rights as provided in this Article 18 and then subject to
such Leasehold Mortgagee rights.




     18.4. Leasehold Mortgagee Succeeds to Tenant’s Interest; Liability of Leasehold Mortgagee
Limited. Subject to the provisions of Sections 18.5 and 18.6, upon notice from the Leasehold
Mortgagee to Landlord that it is taking possession and upon the assumption of possession of the
Mortgaged Premises for any purpose, prior to completion of foreclosure proceedings, a Leasehold
Mortgagee shall have all of the rights of Tenant and the duty to perform all of Tenant’s
obligations hereunder. Except as otherwise provided for in the immediately preceding sentence, no
Leasehold Mortgagee shall be liable to perform, or be liable in damages for failure to perform, any
of the obligations of Tenant, unless and until such Leasehold Mortgagee actually enters and takes
possession of the Mortgaged Premises or is deemed a mortgagee in possession under Applicable Laws
as a result of foreclosure or other Leasehold Mortgagee default proceedings or surrender or
assignment in lieu thereof in which event the Leasehold Mortgagee shall be liable to perform all of
Tenant’s obligations under the Lease, after foreclosure, including Tenant’s obligation to complete
the its work. Except to the extent provided above or elsewhere in this Article, a Leasehold
Mortgagee’s liability shall be dependent upon its right to possession and if any foreclosure or
other possessory proceedings are terminated prior to assumption of possession, such Leasehold
Mortgagee shall have no liability hereunder.



     18.5. Right of Leasehold Mortgagee To Cure Default. No act or failure to act on the
part of Tenant which would entitle Landlord under the terms of this Lease, or by law, to
terminate this Lease, whether as a result of a default by Tenant or as a result of Tenant’s
failure to meet a Milestone Date, shall result in a termination of this Lease unless:



          18.5.1. Notice. Landlord shall have first given notice (“Notice to Mortgagee”) by
certified or registered mail of Tenant’s act or failure to act, to the Leasehold Mortgagee of
record that constitutes the superior lien on the leasehold estate created by this Lease
(provided that Landlord shall have received notice of such Leasehold Mortgage pursuant to
Section 18.14 below), and specifying the act or failure to act on the part of Tenant which
could or would give basis to Landlord’s rights; and






 









 








          18.5.2. Failure To Cure. Such Leasehold Mortgagee, after receipt of such Notice
to Mortgagee, has failed or refused to correct or cure the condition complained of within the
time permitted hereunder. The date of delivery of the notice to the Leasehold Mortgagee shall
be deemed to be the date which commences the Leasehold Mortgagee’s cure period. Such notice
may be given to such Leasehold Mortgagee at any time regardless of whether Tenant’s cure
period for its breach shall have lapsed. In the event of any breach that can be cured by the
payment of money, the time for such cure period shall be the same period available to Tenant
but not less than fifteen (15) days from receipt of such Notice to Mortgagee. In the event of
any breach that cannot be cured by the payment of money, the Leasehold Mortgagee shall have a
reasonable time thereafter so long as the Leasehold Mortgagee is diligently attempting to
obtain possession of the Premises and thereafter diligently attempting to cure the default and
subject to the limitations set forth below; provided, however, that nothing contained in this
Section 18.5.2 shall be deemed to impose any obligation or liability on any such Leasehold
Mortgagee to correct or cure any such breach that cannot be cured by the payment of money in
the event such Leasehold Mortgagee does not obtain possession of the Premises. As used herein,
“reasonable time” shall mean and include both time necessary diligently to obtain possession
of the Premises, if the Leasehold Mortgagee elects to do so, which election shall be made
within thirty (30) days of Landlord’s notice given under Section 18.5.1, and time to cure the
breach. Such election notice shall state the period the Leasehold Mortgagee reasonably expects
it will require to obtain possession and thereafter to cure such breach, that the Leasehold
Mortgagee intends to diligently obtain possession (by foreclosure or enforcement of its other
remedies) and thereafter to diligently cure all such breaches of Tenant. The Leasehold
Mortgagee shall keep Landlord reasonably informed in writing, with at least monthly written
updates, of its progress in obtaining possession and curing any such breach. “Reasonable time”
shall also include, in addition to the time to elect to obtain possession, the time during
which the Leasehold Mortgagee may be prevented from foreclosing and/or obtaining possession of
the Premises as a result of bankruptcy proceedings, and time necessary to correct or cure the
breach using due diligence; provided if such condition is determined to exist, in no event
shall such cure period be less than (i) thirty (30) days after the date the Leasehold
Mortgagee first obtains possession of the Premises, or (ii) if the breach of Tenant is of a
nature which cannot be cured within thirty (30) days, then commencement of cure within such
thirty (30) day period’ and the time necessary diligently thereafter to proceed to complete
such cure. Neither an Event of Default described in Article 25, nor any other Event of Default
that solely arises from the status of Tenant and therefore cannot be cured by a Leasehold
Mortgagee (as opposed to breaches relating to the condition or operation of the Premises),
shall be deemed a default permitting Landlord to terminate the Leasehold Mortgagee’s
possession. Notwithstanding the foregoing, to the extent permitted at law, the Leasehold
Mortgagee need not take possession until it forecloses. In the event of any Emergency
Situation, nothing in this Article shall preclude Landlord from taking all actions available
to Landlord under this Lease in connection therewith.





 









 








          18.5.3. Certain Limitations on Liability of Leasehold Mortgagee. Notwithstanding
anything to the contrary herein contained, this Section 18.5 shall not be deemed to impose any
obligation or liability on any Leasehold Mortgagee to correct or cure any default of Tenant or
other condition herein specified in the event such Leasehold Mortgagee does not obtain possession
of the Premises, but to the extent that a Leasehold Mortgagee elects to undertake cure of such
default or condition pursuant hereto, such Leasehold Mortgagee shall act with diligence in
accordance with the terms and conditions herein specified. Notwithstanding the foregoing, a
Leasehold Mortgagee shall not be obligated to continue efforts to obtain possession of the Premises
or to continue in possession of the Premises and may abandon such at any time in its sole
discretion upon notice to Landlord. Abandonment by a Leasehold Mortgagee of efforts to obtain
possession or to continue in possession of the Premises, or failure of a Leasehold Mortgagee to
cure any default under this Lease shall be without any liability to Landlord, but immediately upon
such abandonment Landlord shall be entitled to invoke its rights under this Article 18 including
Landlord’s right to terminate this Lease in the event of the failure of a Leasehold Mortgagee to
cure any default in accordance with the terms of this Article 18.




     18.6. Assignment After Cure. So long as a Leasehold Mortgagee has timely cured any
breach that can be cured by the payment of money or has timely and diligently commenced to cure any
other breach of Tenant as required of a Leasehold Mortgagee pursuant to this Article 18 and
continues to perform the obligations specifically required to be performed by Tenant pursuant to
this Lease, such Leasehold Mortgagee shall have, subject to Landlord’s rights under Section 18.6.2,
the right to assign this Lease to any Person, upon obtaining Landlord’s prior consent pursuant to
Section 15.5, which assignee shall assume all the obligations hereunder and go into possession and
occupancy of the Mortgaged Premises for the uses and purposes hereof. Upon such assignment by the
Leasehold Mortgagee, the Leasehold Mortgagee shall be relieved of all further liability for
performance of the obligations hereof arising from and after the date of such assignment. No act or
failure to act on the part of Tenant which would entitle Leasehold Mortgagee under the terms of the
Leasehold Mortgage, this Lease, or by law, to assume or assign or otherwise transfer Tenant’s
rights shall be effective unless:



          18.6.1. Notice. The Leasehold Mortgagee shall have given notice of Tenant’s act
or failure to act to Landlord; and




          18.6.2. Failure to Cure. Landlord, after receipt of such notice, has failed to pay
in full any amounts secured by the Leasehold Mortgage, within thirty (30) days after receipt of
such notice and the Leasehold Mortgagee shall have the right during such thirty (30) day period
to concurrently pursue all legal and equitable rights it has against Tenant; provided, however,
that nothing contained in this Section 18.6.2 shall be deemed to impose any obligation or
liability on Landlord to pay such amounts. Upon such payment, Landlord shall be entitled to any
rights of the Leasehold Mortgagee in the Premises.





 









 








     18.7. Continuing Offer. The covenants and provisions contained in this Lease with
respect to the rights, powers and benefits of a Leasehold Mortgagee constitute a continuing offer
to any such Leasehold Mortgagee, which shall be deemed to have been accepted by any Leasehold
Mortgagee, who by entering into an Assignment for Security and accepting a Leasehold Mortgage or
requiring an Assignment for Security pursuant to a Leasehold Mortgage or by entry or foreclosure
under a Leasehold Mortgage, assumes the obligations herein set forth with respect to and to the
extent required of such Leasehold Mortgagee.



     18.8. New Lease and Survival. If, prior to the expiration of the stated Term, this
Lease shall terminate for any reason, or be rejected or disaffirmed pursuant to any bankruptcy
law or other law affecting creditors’ rights, any Transferee approved by Landlord pursuant to
this Article 18 and Section 15.5 or any Leasehold Mortgagee shall have the right, exercisable
by notice to Landlord within thirty (30) days after the effective date of such termination, to
enter into a new written lease of the Premises with Landlord. The term of said new lease shall
begin on the date of the termination of this Lease and shall continue for the remainder of the
Term. Such new lease shall otherwise contain the same terms and conditions as those set forth
herein except for requirements which have already been performed and are no longer applicable.
The parties intend that such new lease shall have the same priority relative to other rights or
interests to or in the Premises, or any portion thereof, as this Lease, and Landlord shall
discharge or cause to be subordinated to such new lease any lien or encumbrance created by
Landlord which is specifically required by the terms hereof to be subordinated to this Lease or
enter into a subordination and nondisturbance agreement with respect thereto. In partial
consideration for the new lease, the Leasehold Mortgagee (or such designee) shall pay to
Landlord all amounts necessary to cure any breach that can be cured by the payment of money,
and all monetary amounts due under the terms of the Lease from the date of such termination,
rejection or disaffirmation through the date the new lease commences, and to commence and
diligently pursue the cure of any other breach as provided in Section 18.5. Upon such payment,
the Leasehold Mortgagee (or such designee) shall be subrogated to all rights of Landlord to
recover the amounts so paid from Tenant. From the date on which any Leasehold Mortgagee shall
serve upon Landlord a notice of the exercise of its right to a new lease, such Leasehold
Mortgagee may use and enjoy the Premises without hindrance by Landlord provided such Leasehold
Mortgagee performs all of Tenant’s obligations as provided in this Article 18 and subject to
any right of Tenant under Applicable Laws. The provisions of this Section 18.8 shall survive
the termination of this Lease and shall continue in full force and effect thereafter to the
same extent as if this Article 18 were a separate and independent contract among Landlord,
Tenant and such Leasehold Mortgagee. To the extent that any new lease or any instrument which
this Lease requires Landlord to execute in connection therewith or in connection with any
Leasehold Mortgage otherwise would be prohibited by the Anti-Assignment Acts or other
Applicable Laws (but not including regulations relating to suspension or debarment of



 









 




government contractors), Landlord agrees to cooperate with the Leasehold Mortgagee (as proposed
Tenant under the new lease) to avoid such violation or limitation, by waiving the pertinent
provisions of the Anti-Assignment Acts applicable thereto, but only to the extent legal and proper
so to do.




     18.9. Additional Rights of Leasehold Mortgagee. Any Leasehold Mortgage of the
leasehold estate created hereunder may be so conditioned as to provide that as between the
Leasehold Mortgagee and Tenant, the Leasehold Mortgagee, upon curing any breach on the part of
Tenant that can be cured by payment of money and diligently pursuing the cure of any other breach
as required under Section 18.5, shall thereby be subrogated to any or all of the rights of Tenant
under this Lease. A Leasehold Mortgagee who, upon default by Tenant, cures any Monetary Breach and
performs the other obligations of this Lease to be performed by Tenant in accordance with the
provisions of Section 18.5 may, if it so elects in writing, pending foreclosure of its Leasehold
Mortgage, enter into possession of the Premises after having first assumed the obligations of
Tenant under this Lease and subject to the rights of Tenant under Applicable Laws.



     18.10. Multiple Mortgagees. If more than one Leasehold Mortgagee should request a new
lease pursuant to Section 18.8, Landlord shall enter into a new lease with the Leasehold Mortgagee
whose Leasehold Mortgage constitutes the superior lien on the leasehold estate created hereunder,
or with the designee of such Leasehold Mortgagee. Landlord may, and in so doing shall be without
liability to Tenant or any Leasehold Mortgagee, rely on a mortgagee title insurance policy issued
by a title insurance company doing business within the District of Columbia in determining which
Leasehold Mortgagee’s lien is the superior one entitling the Leasehold Mortgagee to a new lease
under Section 18.8.



     18.11. Condemnation Proceeds. If more than one Leasehold Mortgagee asserts a right to
condemnation or private sale proceeds payable to, or for the account of, Tenant in accordance with
the provisions of Article 23, then subject to the provisions of Article 23 and the terms of the
applicable Leasehold Mortgage, Tenant’s share of the condemnation or private sale proceeds shall be
distributed in accordance with the directions of the Leasehold Mortgagee whose Leasehold Mortgage
constitutes the superior lien on the leasehold estate created hereunder.



 









 





     18.12. Execution of Documents. Upon request of Tenant, Landlord shall (and shall
cause any Landlord Mortgagee to) execute and deliver from time to time any agreement or document
which may reasonably be deemed necessary to implement the provisions of this Article 18, provided
that subordination of Landlord’s fee interest and the security interest of any Landlord Mortgagee
shall not be required. Tenant shall reimburse Landlord for all reasonable attorneys’ fees paid to
private outside counsel, up to One Thousand Dollars ($1,000) by reason of any such agreement
(which amount shall be increased in proportion to increases hereafter in the CPI).



     18.13. Notice. Tenant shall notify Landlord in writing of the name and address of the
holder of the Leasehold Mortgage of record that constitutes the superior lien on the leasehold
estate created hereunder and amount of the Leasehold Mortgage held by such Leasehold Mortgagee
within twenty (20) days after the Leasehold Mortgage is recorded. Any notices to any Leasehold
Mortgagee by Landlord shall be given to the address specified in such notice or in any such
subsequent notice received by Landlord.



     18.14. Disputes Over Lien Priority. If a dispute arises as to the priority of the lien
of any Leasehold Mortgage, in the absence of any agreement among the pertinent Leasehold Mortgagees
establishing a different priority, a search of the District of Columbia land records by the title
company or agent from whom the most current owner’s or Leasehold Mortgagee’s policy of title
insurance was obtained (or, if there is no such policy, the priority stated in a current title
report issued by a title company or agent designated by Landlord and legally doing business in the
District of Columbia) shall be conclusive. The cost of such title report shall be borne by the
party raising such dispute. Tenant and each Leasehold Mortgagee involved in a lien priority dispute
shall indemnify and hold harmless Landlord from any claim, liability, or other out-of-pocket
expense (including reasonable attorney’s fees) arising from or incurred in connection with each
such dispute, and each Leasehold Mortgage shall expressly so provide for the benefit of Landlord.


19. NOTICE; APPROVALS




     19.1. Procedure. Subject to the further requirements of Section 18.5.1, if
applicable, all notices, payments, objections, consents, approvals, demands, submissions,
deliveries, requests, and other communications pursuant to or in connection with this Lease shall
be in writing and shall be deemed given upon delivery with a written receipt (or upon refusal of
delivery or receipt) at the appropriate address indicated below
either: (1) by registered or certified United States mail, return receipt requested, postage prepaid; or
(2) by hand; or (3) by a nationally recognized overnight delivery service; or (4) by any other
method agreed upon by Landlord and Tenant:








 









 








	 	 	 

	To Landlord:

	 	U.S. General Services Administration
	 

	 	Portfolio Management -Suite 7600 7th & D Streets, S.W.
	 

	 	Washington, D.C. 20407
	 

	 	Attn: Asset Manager, Square 430
	 
	With a copy to:

	 	U.S. General Services Administration
	 

	 	Office of Regional Counsel, Suite 7048 7th & D Streets,
S.W.
	 

	 	Washington, D.C. 20407
	 

	 	Attn: Regional Counsel
	 
	To Tenant:

	 	c/o Kimpton Hotel & Restaurant Group
	 

	 	222 Kearny Street, Suite 200
	 

	 	San Francisco, CA 94108
	 

	 	Attn: Chief Financial Officer
	 
	With a copy to:

	 	Arnold & Porter
	 

	 	555 12th Street, N.W.
	 

	 	Washington, D.C. 20004
	 

	 	Attn: Gary E. Humes, Esq.





Either party may change its mailing address at any time by giving notice of such change to the
other party in the manner provided herein at least ten (10) days prior to the date such change is
effected.




     19.2. Form and Effect of Notice. Every notice (including any notice requesting a
consent or approval but excluding any notice granting or withholding of consent or approval under
this Lease) given to a party hereto shall comply with the following requirements. Each such notice
shall state: (i) the Article and Section of this Lease pursuant to which the notice is given; (ii)
the period of time within which the recipient of the notice must respond or if no response is
required, a statement to that effect; (iii) if the notice requests a consent or approval, if
applicable, that the reasons for any denial of consent or approval must be set forth in the
response to the notice; and (iv) if applicable, that the failure to respond to the notice within
the stated time period shall be deemed to be the equivalent of the recipient’s approval, consent to
or satisfaction with the subject matter of the notice. In no event shall notice be deemed given nor
shall a recipient’s approval of or consent to the subject matter of a notice be deemed given by
recipient’s failure to object or respond thereto if such notice did not fully comply with the
requirements of this Article 19. In addition, unless a time period for approval with respect to a
party’s consent is otherwise specifically provided for elsewhere in this Lease, a failure to
provide a required approval within the time period requested in the request for approval will not
result in a waiver of the requirement of approval. No waiver of this Section 19.2 shall be inferred
or implied from any act (including conditional approvals, if any) of a party hereto, unless such
waiver shall be in writing, specifying the nature and extent of the waiver.



 









 





     19.3. Approvals. Unless otherwise provided in this Lease, whenever approval, consent
or satisfaction is required of either party, it shall not be unreasonably withheld or delayed. If
either party considers that the other has unreasonably withheld or delayed a consent, it shall so
notify the other party within ten (10) days after receipt of notice of denial or, as the case may
be, within twenty (20) days after making its request for the consent in the case of an alleged
unreasonable delay. Failure to so notify the other party within the time periods set forth in the
preceding sentence shall constitute a waiver of any right the first party might otherwise have to
bring an action or proceeding to enforce any such provision or for other relief therefor (but shall
not preclude a subsequent request for the same consent). Whenever approval, consent or satisfaction
is required of either party hereto, and such party disapproves, the reasons therefor shall be
stated in reasonable detail in writing. The consent, approval or satisfaction by a party to or of
any act or request by the other party shall not be deemed to waive or render unnecessary consent,
approval or satisfaction to or of any similar or subsequent acts or requests.


20. RECORDATION, COVENANTS RUNNING WITH THE LAND




     20.1. Recordation of Memorandum of Lease. Within thirty (30) days after expiration
of the Feasibility Period, if this Lease has not theretofore been terminated, the parties shall
simultaneously execute and acknowledge a Memorandum of Lease in the form attached hereto as
Exhibit C, to be recorded by Tenant at its sole cost and expense among the land records of the
District of Columbia immediately upon full execution of such Memorandum of Lease.



     20.2. Covenants Running With the Land. All of the provisions, rights, powers,
covenants, agreements, obligations, conditions and restrictions set forth in this Lease are
intended to be and shall be construed as covenants running with the land, binding upon, inuring to
the benefit of and enforceable by the parties hereto and their heirs, successors (by merger,
consolidation or otherwise), assigns, devisees, administrators, representatives, lessees and all
other Persons acquiring the Premises, Land and Improvements, Landlord’s reversionary interest
and/or any portion thereof, or any interest therein, whether by operation of law or in any manner
whatsoever. All of the provisions of this Lease for the Term shall be covenants running with the
land pursuant to Applicable Laws. It is expressly agreed that each covenant to do or refrain from
doing some act on the Premises hereunder: (i) is for the benefit of the Premises and is a burden
upon the Land and Improvements; (ii) runs with the Premises and the Land and Improvements; and
(iii) shall benefit or be binding upon each successive owner during its ownership of the Premises
and/or the Land and Improvements, or any portion thereof, and each Person having an interest
therein derived in any manner through any owner of any portion thereof.



 









 






	21.	 	NO PARTNERSHIP





     Nothing contained in this Lease shall be construed as creating any type or manner of
partnership or joint venture with or between Landlord and Tenant. Nothing contained in this Lease
shall be construed to confer upon Landlord any ownership interest or equity stake in Tenant’s
business, nor shall anything contained in this Lease be construed as creating any type or manner of
partnership, joint venture or joint enterprise with or between Landlord and Tenant. Landlord shall
not be liable for any debts incurred by Tenant. The provisions of Article 5 relating to Percentage
Rent and Participation Rent based upon Tenant’s performance are included solely for the purpose of
providing a method whereby the rent hereunder is to be measured and ascertained.




	22.	 	DAMAGE OR DESTRUCTION OF PREMISES; CONSTRUCTION OBLIGATIONS AND STANDARDS





     22.1. Insured Casualty.



          22.1.1. Tenant’s Obligation to Repair. In the event of fire or other casualty
resulting in damage to or destruction of the Premises, or any portion thereof, after the
Occupancy Date, from any cause covered under the property insurance carried, or required to be
carried, by Tenant pursuant to Article 13, and except as otherwise provided below, Tenant shall,
subject to Article 8 and further subject to any Leasehold Mortgagee not having defaulted in its
obligations to make such insurance proceeds available as described in Section 22.1.3, diligently
repair the Premises so that, after completion of such repair, the Premises will be of like
quality and kind as the Premises prior to such damage and such damage or destruction shall in no
way annul or void this Lease in whole or in part. For purposes of this Section 22.1.1 “like
quality and kind” shall be construed in accordance with the applicable insurance policies.
Landlord shall reasonably cooperate with Tenant and reasonably assist Tenant to the extent
required in the process of adjusting and settling insurance claims at no risk or cost to
Landlord. If Landlord elects to require Tenant to restore or repair the Premises to a standard
higher than “like quality and kind,” Tenant shall do so if Landlord agrees in writing to pay the
additional cost thereof on a mutually agreed basis (without any obligation of Landlord so to do).




          22.1.2. Termination Right on Certain Casualties. If (i) prior to the Occupancy Date
the cost of repair or restoration of the Premises from fire or other casualty damage exceeds Three
Million Dollars ($3,000,000), (ii) prior to Substantial Completion the cost to Tenant of
remediating Hazardous Materials exceeds the aggregate available amount of: (1) the aggregate
available amount of insurance proceeds; plus (2) any applicable deductible; plus (3) the amount
reasonably budgeted by Tenant prior to the expiration of the Feasibility Period (or such higher
amount as Tenant may budget prior to the discovery of the associated need for remediation) to pay
for the remediation of Hazardous Materials; plus (4) such additional amounts as Landlord shall
elect to agree





 









 







in writing to pay on a mutually agreed basis (without any obligation to do so), or (iii) after
the Occupancy Date the cost of repair or restoration of any damage or destruction of the Premises
covered by insurance, as specified in Section 22.1.1 above, exceeds the aggregate available amount
of: (1) insurance proceeds plus any applicable deductible; plus (2) Capital Maintenance Reserve;
plus (3) FF&E Reserve to extent not reasonably required for anticipated replacement of FF&E; plus
(4) such additional amounts as Landlord shall elect to agree in writing to pay on a mutually agreed
basis (without any obligation so to do); then, in any such event, Tenant shall have the right to
terminate this Lease, and all ofits obligations hereunder, in the same manner as specified in
Section 23.3. If Tenant terminates hereunder, Landlord shall receive all insurance proceeds payable
to Tenant (after payment to any Leasehold Mortgagee) on account of the damage or destruction,
except that portion attributable to the value of Tenant’s leasehold Alterations and additions made
by Tenant to the Premises, including the Project and Tenant’s personal property, Trade Fixtures,
Tenant’s Property, business interruption insurance covering Tenant’s business revenues, and other
losses suffered by Tenant covered by such insurance proceeds, which portion shall be paid to
Tenant. The Capital Maintenance Reserve shall be distributed to Landlord, and the FF&E Reserve
shall be distributed one-half (1/2) to Landlord and one-half (1/2) to Tenant.




     22.1.3. Use of Proceeds. If Tenant does not terminate this Lease pursuant to Section
22.1.2, the proceeds of any award with respect to fire or casualty insurance (but not any award
with respect to business interruption or similar insurance) shall be deposited with an account
controlled by a Leasehold Mortgagee (or, if there is no Leasehold Mortgage, a separate account
established by Tenant for the benefit of the Project) and applied solely to pay the cost of repair
or restoration, as the work progresses and provided that a Leasehold Mortgagee may require that
such proceeds shall not be disbursed unless there are sufficient sums available to complete the
repair and restoration pursuant to this Lease. Upon completion of such work, any remaining fire and
casualty insurance proceeds shall be payable to Tenant.


23. APPROPRIATION




     23.1. Total Taking. In the event of an Appropriation of all of the Premises, Land
and Improvements this Lease shall terminate as of the date of such Appropriation, and Rent and
other expenses and charges shall be prorated as of such date.



     23.2. Partial Taking: Repair and Restoration By Tenant. In the event of an
Appropriation of less than all of the Premises, all expenses and charges, including the Annual Base
Rent and other Rent payable by Tenant hereunder for the portion of the Premises remaining shall be
equitably reduced for the remainder of the Term based on the extent to which such Appropriation
interferes with the efficacious and economical use or operation of or the conduct of any business
therein by Tenant, or any Person holding under Tenant. Tenant shall make all necessary repairs or
Alterations to the Premises so as to constitute the remaining portion of the Premises as a complete
unit, except that Tenant shall have no obligation to make such repairs when this Lease is
terminated as hereinafter



 









 




provided; provided that, if the Appropriation is by Landlord, Tenant shall be obligated to
perform such work described above in this sentence only to the extent of proceeds available from
the award made as a result of the Appropriation.




     23.3. Rights Of Termination. If an Appropriation occurs prior to the Occupancy Date,
and if such Appropriation is material in the reasonable opinion of Tenant, then Tenant, at its
election, may at any time before thirty (30) days after the Occupancy Date terminate this Lease by
notice to Landlord. It shall be deemed reasonable for Tenant to terminate this Lease on the ground
that the Appropriation is material in the event that awards payable by reason thereof are not
sufficient to pay substantially all costs to be incurred for the work of repair, replacement or
restoration resulting from the Appropriation. If Tenant does not elect to terminate this Lease by
reason of such Appropriation, then and in that event, occupancy shall be delivered on the terms,
covenants and conditions herein set forth and all of the proceeds or other awards payable by reason
thereof shall be assigned and payable as provided elsewhere in this Article. In the event (i) of
any Appropriation of a portion of the Premises or Improvements of such magnitude that it is not
economically or practically feasible to restore the Premises or to continue operations therein in
an economically feasible or financially viable manner; or (ii) of any material Appropriation during
the last five (5) years of the Term, then Tenant shall have the right to terminate this Lease. Such
termination shall be effected by notice to Landlord given within thirty (30) days from the earlier
of(a) the date of the exercise of Appropriation or (b) the date possession of the portion of the
Premises is taken, damaged, or appropriated.



     23.4.Allocation Of Award. With respect to an Appropriation after the Commencement
Date, the award shall be allocated and distributed in the following order of priority: (i) to
Leasehold Mortgagees, in the order of their respective priority, in payment of the indebtedness
secured by their respective Leasehold Mortgages, up to but not exceeding the portion of the award
allocated to the value of Tenant’s interest in the Premises under this Lease and to Tenant in the
amount of the balance of such value; (ii) to Landlord Mortgagees in the order of their respective
priority, in payment of the indebtedness secured by their respective Landlord Mortgages, up to but
not exceeding the portion of the award allocated to the value of Landlord’s interest in the Land
and the Improvements (except for this leasehold interest) taken by the Appropriation including its
reversionary interest in the Premises pursuant to the terms of this Lease, and to Landlord in the
amount of balance of such value; (iii) if this Lease does terminate due to the Appropriation, to
Landlord for the cost of repairing the Premises; (iv) if this Lease does not terminate due to the
Appropriation, to Tenant for the cost of repairing the Premises; (v) to each party, pro rata, for
any expenses or disbursements reasonably and necessarily incurred or paid by such party for or in
connection with the Appropriation proceedings; and (vi) to Landlord and Tenant, the balance of the
award, apportioned equitably. In the event any award or condemnation does not allocate the award to
the interests of (i), (ii), (iii), (iv), (v) and (vi) above, the parties will petition the
appropriate court for such a determination.



 









 





     23.5. Temporary Appropriation. If all or any portion of the Premises, and/or Tenant’s
Property is taken by an Appropriation for a temporary period (a “Temporary Appropriation”), this
Lease shall not terminate and Tenant shall continue to perform and observe all of its obligations
(including rent) hereunder as though such Appropriation had not occurred, except only to the extent
that it may be prevented from so doing by reason of such Appropriation. During the time of such
Temporary Appropriation, rent and other monetary obligations of Tenant will be subject to equitable
reduction, and Tenant shall have the right to terminate only on the grounds set forth in Section
23.3(ii), or as otherwise provided in this Lease. In the event of such an Appropriation for a
temporary period, Tenant shall be entitled to receive the entire amount of any award made (whether
paid by way of damages, rent or otherwise) and Landlord assigns such award to Tenant, unless the
period of governmental occupancy extends beyond the then remaining Term, in which case the award
for the Premises shall be apportioned between Landlord and Tenant as of the date of termination of
the Term and, in such apportionment, Landlord shall receive the full amount, if any, of any portion
of such award which represents compensation specifically awarded for the cost of restoration of the
Premises at the termination of any such Temporary Appropriation. Tenant shall, at the termination
of any Temporary Appropriation, restore the Premises as nearly as may be reasonably possible to the
condition in which the same was prior to such taking, but Tenant shall not be required to do such
restoration work if on or prior to the date of such termination the Term shall have expired.



     23.6. Representation. Landlord and Tenant shall each have the right to represent their
respective interest in each Appropriation proceeding or negotiation and to make full proof of its
claims. Landlord and Tenant agree not to enter into any agreement, settlement, sale or transfer to
or with the condemnor without notice to and the consent of Landlord, Landlord Mortgagee, Tenant and
the Leasehold Mortgagee, which consent shall not be unreasonably withheld or delayed. Landlord and
Tenant shall each execute and deliver to the other any instruments that may be reasonably required
to effectuate or facilitate the provisions of this Lease relating to condemnation.




	24.	 	SURRENDER OF PREMISES





     24.1. Required Condition. Subject to the provisions of Articles 22 and 23, upon
expiration of the Term or earlier termination hereof, Tenant shall surrender the Premises in good
order, condition and repair, reasonable wear and tear and damage by casualty excepted, free and
clear of any Subleases, occupancies, liens and encumbrances arising under or as a result of
Tenant’s use or occupancy, or any activities, direct or indirect of Tenant, its Affiliates, its
agents, contractors, employees, subtenants, licensees, visitors, or invitees. The exception in the
previous sentence for reasonable wear and tear and damage by casualty shall not limit Tenant’s
obligations in the other provisions of this Lease with respect to the condition and repair of the
Premises. Tenant shall remove all of Tenant’s Property constituting personal property and shall
leave on the Premises all of Tenant’s Property constituting real property improvements and
fixtures, provided, however, that
Tenant shall have the right, but not the obligation, to remove the Excluded Fixtures, and



 









 




shall repair damages caused by such removal. Any property left by Tenant on expiration
or termination of the Term, subject to the foregoing, shall automatically become the
property of Landlord from and after such date. Any surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall terminate all or any existing Subleases or subtenancies.




     24.2. Termination Before Substantial Completion. If this Lease is terminated prior to
Substantial Completion, Tenant shall assign and deliver to Landlord as Landlord’s sole property all
architectural, engineering and other plans, drawings, specifications and studies performed for
Tenant and relating to the Premises. In order to assure Landlord that it will have the legal right
to use the aforesaid plans, drawings, specifications and the like if Landlord becomes entitled to
such items as hereinabove provided, Tenant shall include in its agreements with the architects,
engineers and other professionals who prepared such items and who have any proprietary rights with
respect to such items (including the rights to use thereof in connection with the Premises)
provisions whereby Tenant and Landlord shall have the right to use such plans and other materials
in connection with the Hotel. In furtherance and not in limitation thereof, Tenant (referred to
below as “Owner”) shall use commercially reasonable efforts to include as such provisions the
following:




     “The drawings, specifications and other documents prepared by the Architect for this
Project (“Documents”) are instruments of the Architect’s service and, unless otherwise
provided, the Architect shall be deemed the author of these Documents and shall retain all
common law, statutory and other reserved rights, including the copyright. For the purpose
of completing this Project or for any other purpose, Architect and its sub consultants
hereby (i) grant to Owner an irrevocable, fully paid-up, perpetual, worldwide license to
copy and use such Documents for completion of this Project or for any other purpose and
(ii) consent to the use by Owner, and of the modification by other design professionals
retained by Owner, of the Documents. The Architect will have no responsibility or liability
to the Owner with respect to any modification to the Documents made by the Owner or any
other design professional retained by the Owner. Furthermore, except where the Architect is
found to be liable for such claim, damage or loss, the Owner shall hold Architect harmless
from any such claim, damage or loss arising out of (a) the modification of the Documents by
Owner or another design professional retained by Owner or (b) Owner’s use of the Documents
on another Project. The Owner shall be permitted to retain copies, including reproducible
copies, of the Documents for information and reference in connection with the Owner’s use
and occupancy of the Project.”




     “All drawings, specifications and other documents whether in tangible or
intangible form including documents or computer programs, are works for hire and will
remain the property of the Owner, whether the Project is completed or not. It is
acknowledged by both parties that the architectural design of the Project will be
unique, and the Architect will not replicate or otherwise use the



 









 







overall design for any other project. The Architect may retain other original
documents not requested by Owner so long as reproducible copies of such documents are
delivered to the Owner by the Architect. The Owner may use all documents prepared by
the Architect or its subconsultants to complete the Project, for additions to this
Project or for any other purpose, and the Architect and its subconsultants consent to
the modification by other design professionals retained by the Owner of the drawings,
specifications and other documents prepared by the Architect and its subconsultants. In
the event the Architect is terminated prior to completion of the Project and the Owner
uses the Drawings, Specifications or other documents to complete the Project, the
Architect will have no liability or responsibility to the Owner with respect to any
modification to the drawings, specifications or other documents made by the Owner or
any other design professional retained by Owner. The Architect will have no
responsibility or liability to the Owner with respect to the Owner’s use of the
drawings, specifications or other documents for additions to the Project or for other
projects without the Architect’s prior written consent. The Owner shall hold Architect
harmless from (i) any claim to the extent caused by Owner’s use of the drawings,
specifications and other documents for other projects or additions to this Project and
(ii) in the event this Agreement is terminated and the Owner uses another design
professional to complete the drawings, specifications and other documents, any claim to
the extent caused by modification of the drawings, specifications and other documents
by such other design professional.”




     “To the extent that any writings or works of authorship may not, by operation of
law, be works made for hire, this Agreement shall constitute an irrevocable assignment
by the Architect to the Owner of the ownership of, and all rights of copyright in, such
items, and the Owner shall have the right to obtain and hold in its own name rights or
copyright, copyright registrations and similar protections which may be available in
such works. The Architect agrees to give the Owner or its designees all assistance
reasonably required to perfect such rights. In the event Architect utilizes
subconsultants in performing work for the Owner, the Architect shall obtain for the
Owner ownership of, and all rights of copyright in, the writings or other works of
authorship created by any such subconsultants.




     “Owner may terminate this Agreement at any time by giving ten (10) days’ notice
thereof. If such termination shall be without cause, Owner shall remain liable for the
amounts specified elsewhere in this Agreement. Upon any termination, all copies of the
plans, specifications and working drawings shall be delivered to Owner.”



 









 






     “Notwithstanding the foregoing, Architect acknowledges and consents to the use and
ownership by GSA, or its designees or assignees, of said plans and specifications in
accordance with the Lease between the Owner (as Tenant) and The United States of America,
acting by and through the Administrator of General Services (as Landlord) for Square 430 in
Washington, D.C., and Architect agrees to deliver copies of said plans and specifications
to GSA upon written request from GSA accompanied by a certification from GSA’s Regional
Counselor Regional Administrator that GSA is entitled to said plans and specifications
pursuant to said Lease, provided (i) GSA agrees to pay the Architect’s reasonable
duplication expenses and (ii) the Architect shall have been paid the outstanding fees due
the Architect from the Owner at the time of delivery to GSA. Architect agrees that GSA
shall not be liable for payment of the Architect’s fees.”



     Landlord and Tenant agree that Landlord shall not have the legal right to use the aforesaid
plans, drawings, specifications and the like until the architects, engineers, and other
professionals who prepared such items and who have proprietary rights with respect to such items
have been paid any outstanding fees to which they are entitled for the preparation of such items to
the date of assignment of such plans, drawings, specifications and the like to Landlord, and Tenant
may include such understanding in any agreement with its architects, engineers, and other
professionals. The payment of such outstanding fees shall be the obligation of Tenant. In the event
Tenant shall not have paid such fees to such professionals, Landlord may pay such fees, on behalf
of Tenant, in order to obtain the legal right to use any plans, drawings, specifications and the
like and Tenant shall immediately pay to Landlord, without the need for notice or demand, the
amount of such fees paid by Landlord on behalf of Tenant, as additional Rent hereunder. Landlord
shall pay no fees to any professionals, on behalf of Tenant, as provided herein, until thirty (30)
days have elapsed from the date Landlord has given notice to Tenant of Landlord’s intention to make
such payment(s) in the event Tenant shall not have paid such fees.


References to “Architect” and “plans and specifications” shall be appropriately revised if the
agreement is with a professional other than an architect.




     24.3. Other Contracts and Subleases. On the last day of the Term, or upon any earlier
termination of this Lease, or upon re-entry by Landlord upon the Premises pursuant to Article 27,
Tenant shall deliver to Landlord Tenant’s executed counterparts of all Subleases and any service
and maintenance contracts then affecting the Premises, maintenance records for the Premises for the
immediately preceding Lease Year, all original licenses and permits then pertaining to the
Premises, permanent certificates of occupancy then in effect for the Improvements, and copies of
all warranties and guarantees then in effect which Tenant has received in connection with any work
or services performed in the Premises, together with a duly executed assignment thereof to
Landlord.



 









 






	25.	 	INSOLVENCY OR BANKRUPTCY.





     Upon the happening of any of the following events, Landlord shall have the rights specified
under Section 27.1 upon the occurrence of an “Event of Default” thereunder:
(i) the admission by Tenant in writing of its inability to pay its debts as they become due;
(ii) the filing by Tenant of a petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or future statute, law
or regulation, the filing by Tenant of an answer admitting or failing timely to contest a material
allegation of a petition filed against Tenant in any such proceeding or, if within ninety (90) days
after the commencement of any proceeding against Tenant seeking any reorganization, or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any present or future
statute, law or regulation, such proceeding shall not have been dismissed; (iii) the appointment of
a receiver or trustee to take possession of all or substantially all of the assets of Tenant if not
discharged within ninety (90) days; (iv) a general assignment by Tenant for the benefit of
creditors; (v) any action or proceeding commenced by Tenant under any insolvency or bankruptcy act,
or under any other statute or regulation having as its purpose the protection of creditors, or any
such action commenced against Tenant and not discharged within ninety (90) days after the date of
commencement; or (vi) the attachment, execution or other judicial seizure of all or substantially
all of Tenant’s assets or the Premises, if such attachment or other seizure remains undismissed or
undischarged for a period of thirty (30) business days after the levy thereof.


26. QUIET ENJOYMENT BY TENANT




     26.1. Quiet Enjoyment. Landlord covenants that, upon Tenants paying the rent and
performing all of the terms, covenants and conditions on Tenant’s part to be observed and performed
hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises hereby demised free of
claims of any Person claiming under or through Landlord.



     26.2 Compliance With Applicable Laws. At Tenant’s request, Landlord shall join in any
filings necessary so that the Premises comply with the Applicable Building Code and all Applicable
Laws, ordinances, rules and regulations governing the division or parcelization of real property
for purposes of lease, sale or financing subject to Landlord’s right to finance pursuant to Section
16.1, so that this Lease shall constitute a lawful conveyance to Tenant of a leasehold estate in
the Premises and so that Tenant shall not be disturbed in its quiet enjoyment of the Premises
pursuant to this Article 26.


27. DEFAULT; RIGHTS ON CERTAIN TERMINATION EVENTS




     27.1. Tenant’s Default. The occurrence of any of the following shall constitute an
“Event of Default” by Tenant:



 









 





          27.1.1. Monetary Breach.




               27.1.1.1. Any breach by Tenant of any obligation under this Lease to timely pay Rent, or any
other monetary sum as required pursuant to this Lease, which breach continues uncured for a period
of five (5) business days after notice of such failure by Landlord to Tenant.



               27.1.1.2. Any failure by Tenant to pay to Landlord, within five (5) days after notice by
Landlord to Tenant, the full amount of any money damages awarded to Landlord pursuant to a final
resolution of any dispute pursuant to Article 28 on account of the occurrence of a Non-Monetary
Breach (including any action brought by Landlord on account of the expenditure by Landlord of sums
to remedy a Non-Monetary Breach in accordance with the terms of Section 27.1.6.).


Interest at the Default Rate shall be payable on any amounts due from Tenant from the due date.
In addition, if Landlord shall be required to give any notices of default more than two (2) times
in any twelve (12) month period for Annual Base Rent or Percentage Rent which is five (5) or more
calendar days late, or of any other material defaults, Tenant shall thereafter for the following
twelve (12) months pay a late payment fee equal to five percent (5%) of any amount of Rent which
is not paid within five (5) calendar days after its due date.




          27.1.2. Non-Monetary Breach. Any breach by Tenant of any terms, obligations,
conditions, agreements or covenants under this Lease, other than a breach pursuant to Section
27.1.1 or 27.1.3, such breach continuing for thirty (30) days after notice of such breach, or if
such breach is not reasonably susceptible of cure within such 30-day period, then, so long as
Tenant immediately upon notice, and continuously and diligently thereafter pursues such cure until
such breach is cured in fact, Tenant shall have a reasonable time thereafter to remedy such breach.
As used in this Section 27.1.2, a “reasonable time” shall mean the time reasonably necessary to
cure a breach (such as, by way of example, the period of time necessary to exercise Tenant’s
remedies under a Sublease if a Space Tenant thereunder is in default), which period of time shall
not exceed six (6) months, provided, that, such six (6) month period shall be extended to the
extent additional time is reasonably necessary to obtain judicial relief or other third party or
governmental actions or consents necessary to cure such breach.




          27.1.3. Insolvency. The occurrence of an event specified in Article 25.




     An Event of Default under Section 27.1.1 shall hereinafter be referred to as a “Monetary
Breach”; and any Event of Default under Sections 27.1.2 or an event specified in Section 27.1.3
shall hereinafter be referred to as a “Non-Monetary Breach”.



          27.1.4. Remedy on Occurrence of Event of Default. In the event of the occurrence of
an Event of Default, then Landlord shall have the following rights subject, however, to the
provisions of Sections 9.2, 18 and this Article 27:




               27.1.4.1. Termination. In the event of the occurrence of an Event



 









 




of Default, Landlord shall have the right, after the giving of notice required hereunder,
and subject to the rights granted in Article 18, and this Article 27 and only upon issuance of a
final resolution pursuant to Article 28, to terminate this Lease, and at any time thereafter
recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and
any other Person occupying the same, by any lawful means, and again repossess and enjoy the
Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at
law or in equity by reason of Tenant’s default or of such termination.




               27.1.4.2. Continuation After Default. Subject to the limits set forth in Sections
27.1.7 and 27.1.9, in the event of the occurrence of an Event of Default, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant’s right to possession under
Section 27.1.4.1, and Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Rent as it becomes due. Notwithstanding any such election to have
this Lease remain in full force and effect, Landlord may, at any time thereafter, elect by notice
to Tenant to terminate this Lease and Tenant’s right to possession of the Premises for any
previous Event of Default which remains uncured, or for any subsequent uncured Event of Default.
Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a
receiver upon application of Landlord to protect Landlord’s interest under this Lease shall not
constitute an election to terminate Tenant’s right to possession. In addition, Landlord, by
thirty (30) days’ prior notice to Tenant, shall have the right to terminate Tenant’s right to
possession but not this Lease, in which event Tenant shall be relieved of all obligations that
cannot feasibly be fulfilled without possession.



               27.1.4.3. Damages Upon Termination. If Landlord terminates this Lease pursuant to the
provisions of Section 27.1.4.1, in addition to any other rights and remedies to which Landlord may
be entitled under Applicable Laws, Landlord shall be entitled to recover from Tenant, subject to
the limits set forth in Section 27.1.9: (i) the worth at the time of award of the unpaid Rent, and
other monetary amounts payable by Tenant hereunder, including those which had been earned at the
time of termination; and
(ii) any other amount necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom.



               27.1.4.4. Worth at the Time of Award. The “worth at the time of award” of the amounts
referred to in Section 27.1.4.3(i) shall be computed with interest at the Default Rate.



               27.1.4.5. Time of Award. As used herein, the term “time of award” shall mean either
the date upon which Tenant pays to Landlord the amount recoverable by Landlord as hereinabove
set forth or the date of entry of determining the amount recoverable, whichever first occurs in
accordance with Article 28.



 









 





          27.1.5. Computation of Rent for Purposes of Default. For purposes of
Section 27.1.4.3, unpaid Rent which would have accrued and become payable under this Lease
shall consist of the sum of: (i) the total Annual Base Rent for the balance of the Term, plus
(ii) a computation of all other Rent for the balance of the Term present valued at the Default
Rate.




          27.1.6. Remedy on Occurrence of a Non-Monetary Breach. In addition to any other
rights, Landlord shall also have the right to bring an action or actions for specific performance
of the obligation in default and/or for interim and permanent prohibitory or mandatory injunctive
relief to restrain Tenant from committing or continuing a Non-Monetary Breach. In any event, but
subject to the specific limitations contained in this Article 27, Landlord shall have recourse to
all appropriate legal and equitable remedies upon an Event of Default. Any judgment for damages
obtained by Landlord on account of any Event of Default hereunder shall bear interest at the
Default Rate.




          27.1.7. No Termination; Waiver of Remedies; Certain Limitations on Remedies of
Landlord. In no event shall any Non-Monetary Breach of this Lease by Tenant entitle Landlord
(or any Person acting under Landlord) to cancel, rescind, void or otherwise terminate this Lease,
or any of the terms, covenants, conditions, rights or obligations of Tenant hereunder, except in
compliance with this Article 27. If Landlord brings any action or actions to recover possession of
the Premises on account of an Event of Default, including a proceeding for unlawful detainer,
Tenant shall be permitted an affirmative defense in any such proceeding for any continuing breach
of this Lease by Landlord that prevents Tenant’s cure of such Event of Default or is a material
cause thereof. Any statute or law prohibiting the assertion of such a defense in any such
proceeding brought by Landlord now or hereafter in force, is hereby unconditionally and irrevocably
waived by Landlord to the extent permitted by law. In any event, and notwithstanding anything to
the contrary contained in this Lease or pursuant to any right or remedy available to Landlord at
law or in equity, except for the provisions with respect to a Monetary Breach where Landlord shall
be limited only by the law applicable to unlawful detainer, Landlord shall have no right to
terminate this Lease prior to a final resolution of any dispute pursuant to Article 28 on account
of the occurrence of a Non-Monetary Breach. Tenant shall abide by the final resolution pursuant to
Article 28.




          27.1.8. Rights of Leasehold Mortgagee. Notwithstanding anything to the contrary
contained in this Lease, any lien in favor of Landlord obtained to enforce any remedy of Landlord
and any levy of execution thereon shall be subject to any applicable rights of any Leasehold
Mortgagee under Article 18.




          27.1.9. Limitation on Recourse. Notwithstanding anything to the contrary contained in
this Lease, Landlord shall look solely to Tenant’s estate and interest in the Premises, and
Tenant’s insurance or condemnation proceeds and reserves and proceeds of the Premises for the
satisfaction of Landlord’s remedies for the recovery of any judgment against Tenant for breach of
Tenant’s obligations under this Lease, including any cause of action accruing on or after the
Commencement Date. Tenant, or if Tenant is a partnership, its employees, partners whether general
or limited, or if Tenant is a





 









 







corporation, its directors, officers or shareholders, and in any event the employees thereof
and of any Operator, and the officers, directors, shareholders, and employees of all of them, shall
not otherwise be personally liable for any obligations hereunder or for any such judgment or
performance. There shall be no levy of execution upon such judgment against the assets of any of
the Persons indicated in the preceding sentence (nor shall such Persons be named in any such action
against Tenant) other than Tenant’s estate and interest in the Premises, and Tenant’s insurance or
condemnation proceeds and reserves and proceeds of the Premises.




          27.1.10. Landlord’s Right to Perform on Tenant’s Breach. In addition to any other
right or remedy of Landlord under this Lease upon the occurrence of any breach by Tenant that is
not cured within the applicable cure period and without waiving or releasing Tenant from any
obligation of Tenant under this Lease, Landlord may (but shall not be required to) upon as much
advance notice to Tenant as is reasonable and practicable, enter the Premises, at reasonable times
and upon reasonable prior notice (except in the event of an Emergency Situation in which case
notice shall not be required if not reasonably practicable under the circumstances) and cure such
Event of Default or Emergency Situation for the account of Tenant. All sums paid by Landlord and
all costs and expenses incurred by Landlord in connection with such cure, together with interest
thereon at the Default Rate, from the respective dates of Landlord’s incurrence of each item of
cost or expense, shall be payable by Tenant on demand. If Tenant fails promptly to pay such costs
and expenses, Landlord, in addition to its right to sue to recover such costs and expenses, may
deduct and offset such amounts against any amounts payable pursuant to this Lease by Landlord to
Tenant, if any.




     27.2. Landlord’s Default.



          27.2.1. Landlord’s Liability. If Landlord breaches any of its material obligations
under this Lease (“Landlord Event of Default”) and such breach continues for longer than thirty
(30) days after receipt by Landlord of notice thereof from Tenant (except that if such breach
cannot reasonably be cured within such thirty (30) day period, Landlord shall not be in default
if Landlord commences, within such period, such cure and thereafter diligently using all
reasonable efforts prosecutes the same to completion), then, subject to the next sentence,
Landlord shall be liable to Tenant for such amounts to which Tenant may be entitled in law or
equity in any action brought by Tenant against Landlord on account of such breach. In no event
however shall Landlord be liable for consequential or punitive damages. Subject to the foregoing
limitation of liability, Tenant shall have the right to invoke all appropriate legal and
equitable remedies on the occurrence of a Landlord Event of Default.




          27.2.2. Tenant’s Additional Rights. If Landlord fails to perform any of its material
obligations under this Lease, and such failure continues uncured after notice and expiration of the
applicable time period under Section 27.2.1, then in addition to all other rights and remedies of
Tenant under this Lease and at law or equity, Tenant shall have the right (but shall not be
obligated to), upon as much advance notice to Landlord as is reasonable and practicable, to cure
such breach on behalf of Landlord and upon demand





 









 







by Tenant, Landlord shall promptly pay to Tenant the reasonable costs and expenses of such
cure, together with interest at the Default Rate (or if lower the rate provided by Applicable Laws
for late payments by Landlord). When Tenant makes demand for payment, Tenant shall furnish Landlord
an itemized statement of the reasonable costs and expenses incurred for cure.




          27.2.3. Limitation on Recourse To Premises. Nothing in this Lease shall constitute an
agreement by Landlord that the Premises or any part thereof or interest therein shall be subject to
lien, levy, attachment, forfeiture or other process.




     27.3. Termination Procedures. Whenever Tenant is granted a specific right to
terminate this Lease, Tenant shall exercise such right in accordance with the following terms
and conditions. Upon the occurrence of an event or circumstance giving rise to a right of
termination, Tenant shall, if Tenant elects to exercise such right, give notice of such exercise
to Landlord and, if required, to any Leasehold Mortgagee or Landlord Mortgagee. Unless another
time period is specified in this Lease, this Lease shall terminate thirty (30) days after such
notice is given.



     27.4. Waiver; Remedies Cumulative. Failure of Landlord to declare a Tenant Event of
Default or of Tenant to declare a Landlord Event of Default immediately upon the occurrence
thereof, or delay in taking any action in connection therewith, shall not waive such Event of
Default or default, but Landlord and Tenant shall have the right to declare any such Event of
Default at any time thereafter. No waiver by either party of any default under this Lease or any
agreement, term, covenant or condition contained in this Lease shall be effective or binding on
such party unless made in writing by such party and no such waiver shall be implied from any
omission by a party to take action with respect to such default or other such matter. No express
written waiver of any default or other such matter shall affect any other default or matter or
cover any other period of time other than any default and/or period of time specified in such
express waiver. One or more written waivers of any default or other matter under any provision of
this Lease shall not be deemed to be a waiver of any subsequent default in the performance of the
same provision or any other term or provision contained in this Lease. Subject to the specific
provisions to the contrary in this Lease, all of the remedies permitted or available to a party
under this Lease or at law or in equity shall be cumulative and not alternative and invocation of
any such right or remedy (including any termination right under this Lease) shall not constitute a
waiver or election of remedies with respect to any other permitted or available right or remedy. In
connection with the foregoing provisions, Landlord and Tenant each acknowledge, warrant and
represent that it has been fully informed with respect to and represented by counsel of choice in
connection with the rights and remedies and the waivers contained in this Article 27 and after such
advice and consultation, has presently and actually intended, with full knowledge of its rights and
remedies otherwise available at law or in equity, entered into this Lease.



 









 






	28.	 	DISPUTE RESOLUTION





     In the event of any disputes under this Lease, Landlord and Tenant shall follow the procedures
under the Contract Disputes Act. If a dispute arises out of or relates to this Lease, or the breach
thereof, and if said dispute cannot be settled through negotiation, Landlord and Tenant shall first
try in good faith to settle the dispute by mediation, before resorting to litigation. Landlord
agrees that Landlord’s Contracting Officer shall not issue any final determination regarding any
claim by Tenant until and unless such mediation has been concluded, or either Landlord or Tenant
advises the other that a resolution of the dispute by mediation does not appear likely within a
reasonable time. During the Feasibility Period, Landlord and Tenant shall use reasonable efforts to
agree upon more specific dispute resolution rules and procedures.




	29.	 	OBLIGATIONS RELATING TO UNAVOIDABLE DELAY AND LANDLORD DELAY





     In the event of Unavoidable Delay, performance shall be excused for the period of the delay
and the period for such performance shall be extended for a period equivalent to the actual delay
caused thereby, except that the foregoing shall in no way affect or apply to: (i) the length of the
Term; (ii) subject to the express terms of the Work Agreement as to whether and when the Rent
Commencement Date has occurred, any obligations to pay Rent or any other sums; or (iii) any other
provision of this Lease specifically not subject to Unavoidable Delay; and provided further that
(a) the party seeking to extend its time for performance shall give the other party written notice
promptly after the first party shall have obtained knowledge of such delay, and in any event not
later than twenty-one
(21) days after the first party shall have obtained knowledge of such delay, and
(b) nothing herein contained shall excuse any party from exercising all due diligence and taking
all necessary actions reasonably possible under the circumstances to terminate any delaying cause
herein specified at the earliest possible time and to mitigate the effects of such delay. As
promptly as is feasible after the occurrence of an Unavoidable Delay or Landlord Delay, the party
seeking the benefit of the delay shall deliver to the other party a proposed plan to mitigate the
effects of any such Unavoidable Delay or Landlord Delay and the party seeking the benefit of the
delay shall promptly commence and diligently pursue such mitigation plan. Upon the occurrence of
any Landlord Delay or Unavoidable Delay, Landlord and Tenant shall promptly execute an amendment to
this Lease correspondingly extending the time for performance.




	30.	 	DELIVERY OF OCCUPANCY OF PREMISES





     30.1. Occupancy Date.



     Landlord will be deemed to have delivered possession of the Premises to Tenant and Tenant
shall be deemed to occupy the Premises upon the Occupancy Date. Notwithstanding the foregoing,
Tenant shall have the right to enter upon the Premises
prior to the Occupancy Date in accordance with the terms of the Work Agreement.



 









 





     30.2. Tenant Not Purchasing Landlord’s Business.



     Landlord acknowledges that Tenant is not purchasing, assuming or undertaking any assets,
rights, obligations or liabilities in connection with the operation of any business in the
Premises conducted by Landlord or its tenants. Specifically, but without limiting the generality
of the foregoing, Tenant shall have no responsibility for any claims by employees, tenants,
guests, licensees, third party creditors or any creditors of Landlord or its tenants secured by
any fixtures, personal property or Improvements of Landlord contained within the Premises or
obligations with respect to any employees’ unfunded vested retirement rights or other liabilities
of Landlord.


31. HAZARDOUS MATERIALS




     The parties agree as follows with respect to the existence or use of Hazardous Materials
on the Land, Improvements and Premises:



     31.1. Abatement of Hazardous Materials. In addition to the renovation and other work
described in the Work Agreement, the Project shall include remediation of existing Hazardous
Materials. Landlord’s obligations to pay or reimburse Tenant for abatement costs as provided in
Section 31.2, other than Landlord’s obligation to fund the Land10rdFunded Work shall be limited to
available appropriated funds of Landlord. To the extent such funds are not available to reimburse
Tenant for such costs incurred by Tenant but for which Landlord is responsible as provided in
Section 31.2, Tenant shall have the right to deduct the amount of such costs from succeeding Rent
owed by Tenant to Landlord under this Lease, in the amounts determined by the environmental
consulting firm referred to in Section 31.2 (or as otherwise agreed by the parties), together with
interest at the Interest Rate accruing on the outstanding amount of such payments beginning on the
date Tenant makes payment, provided that, if Tenant is unable timely to obtain financing on terms
satisfactory to Tenant to fund Landlord’s remediation obligations under this Section 31.1, Tenant
shall have the right to (i) terminate this Lease by notice to Landlord or (ii) to the extent
consistent with Applicable Laws, defer performance of such obligations until such time as Landlord
makes adequate funds available to Tenant.



     31.2. Landlord’s and Tenant’s Obligations.



          31.2.1. Mutual Covenants. If the actual or suspected Release of Hazardous Materials
on, about, under or in the Premises comes to the knowledge of Tenant or the Knowledge of Landlord,
then the party with such knowledge shall promptly notify the other of same. Neither Landlord nor
Tenant, nor their respective agents, employees, tenants, Space Tenants, contractors or
subcontractors, shall cause or permit Hazardous Materials to be brought upon, kept or used in, on,
or about the Land and Premises except as permitted under and in full compliance with all
Environmental Laws. Landlord and Tenant shall promptly notify the other of any inquiry, test,
investigation or enforcement proceeding by or against Landlord or Tenant involving the Land and
Premises and a Hazardous Material. Landlord and Tenant shall promptly provide to the other upon





 









 







receipt the results of any inquiry, test or investigation conducted by Landlord or Tenant or
their respective Space Tenants, employees, agents or contractors to determine the presence of
Hazardous Materials on, in, under or about the Premises. Subject to Landlord’s obligations to fund
or to reimburse Tenant for a portion of the Landlord-Funded Work under the Work Agreement, Landlord
and Tenant have allocated between them during the Term the responsibility for Hazardous Materials
as follows: (i) Tenant shall be responsible for the cost of abatement of Hazardous Materials
existing in, on, under or about the Land or Improvements on the Occupancy Date to the extent the
presence and extent of such Hazardous Materials are disclosed in or reasonably inferable from the
Environmental Reports; (ii) Tenant shall be responsible for the cost of abatement of all other
Hazardous Materials existing in, on, under or about the Land or Improvements on the Occupancy Date
to the extent that the aggregate of such costs plus the costs described in clause (i) do not exceed
$1,000,000; (iii) Landlord shall be responsible for the abatement and cost of abatement of all
Hazardous Materials existing in, on, under or about the Land or Improvements on the Occupancy Date
other than those described in clause (i) or (ii) above except that Tenant shall be responsible for
Hazardous Materials released by Tenant or its agents or employees in, on, under, about or from the
Land or Improvements; (iv) Landlord shall be responsible for all Hazardous Materials released by
Landlord or its agents or employees in, on, under, about or from the Land or Improvements after the
Commencement Date; and (v) Tenant shall be responsible for all Hazardous Materials released in, on,
under, about or from the Land or Improvements after the Occupancy Date except as provided in clause
(iv) next above. If Landlord is responsible for abatement costs described in clauses (iii) or (iv)
of the next preceding sentence, Landlord and Tenant shall agree on a procedure for inspecting and
abating existing Hazardous Materials and for allocating the cost thereof in accordance with this
Section 31.2. If possible the procedure shall include retention of an environmental consulting firm
that will have discretion to determine which costs are abatement costs for which Landlord is
responsible as described below and which costs are abatement or other Project costs for which
Tenant is responsible. LANDLORD MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE CONDITION
OR STATE OF THE LAND OR ITS EXISTING IMPROVEMENTS EXCEPT AS SET FORTH IN SECTION 2.4.




          31.2.2. Landlord’s Covenant Regarding Hazardous Materials. Landlord shall not
Release or cause any Release of Hazardous Materials into the Premises in violation of any
Environmental Laws.




          31.2.3. Operations and Maintenance Program. In the event any Release of Hazardous
Materials shall occur on the Land or Premises, which Release or cost of cleanup of which is
Tenant’s responsibility, Tenant shall promptly retain experienced consultants to prepare an
operations and maintenance program (“O&M Program”) addressing in detail the manner in which Tenant
will remediate such Release of Tenant Materials. Such O&M Program shall be submitted to Landlord
for Landlord’s prior approval, which approval shall not be unreasonably withheld, conditioned or
delayed. Promptly after Landlord approves Tenant’s O&M Program, Tenant shall remediate any





 









 







such Release of Tenant Materials in a commercially reasonable manner and within a commercially
reasonable time and in any event Tenant shall remediate any Hazardous Materials at the Premises or
released therefrom within the time required by Environmental Laws.




     31.3. Tenant’s Remediation Rights and Obligations. Tenant shall comply with, and shall
include covenants in all Subleases with all of its subtenants to cause them to comply with,
Environmental Laws relating to the Premises as a result of contamination by Tenant or its users,
occupants, employees, agents, contractors, licensees, subtenants, or assignees during the period of
Tenant’s actual occupancy of the Land.



     31.4. Inspection; Tests. Tenant and its consultants, agents, employees and
engineers and any prospective lenders or their consultants or contractors shall have the right,
after notice to Landlord, and subject to the express terms of the Work Agreement, to enter upon
the Land and Improvements for the purpose of performing tests as Tenant shall reasonably deem
appropriate to determine the existence and extent of Hazardous Materials in or on the Land and
Improvements. A request to inspect by Tenant’s lender shall be deemed reasonable. Tenant shall
promptly cause any damage to the Premises resulting from such tests to be repaired at no cost to
Landlord.



     31.5. Termination; Abatement of Rent. If (a) Hazardous Materials exist in, on, under
or about the Land or Premises as of the Occupancy Date or (b) Hazardous Materials are Released on
the Land or Premises after the Occupancy Date, which Release or the cleanup of which is Landlord’s
responsibility and the existence of or Release of Hazardous Materials pursuant to the foregoing
subclauses (a) or (b) substantially interferes with Tenant’s use or occupancy of the Premises for
the Permitted Use, other than a Release for which Tenant or its agents, employees, Space Tenants,
contractors or subcontractors are responsible, then, in such event (i) Annual Base Rent and Tenant
charges shall abate pro-rata during the period of such interference to the extent thereof, and (ii)
if such interference prevents Tenant from operating its business in the Premises for a period in
excess of one (1) year, Tenant, at its option, shall have the right to terminate this Lease.


32. MISCELLANEOUS




     32.1. Confidentiality. Landlord shall keep confidential, as confidential commercial or
financial information, and shall not divulge to any Person any Confidential Information, provided,
however, Landlord shall not be precluded from making disclosure regarding Confidential Information
(i) in circumstances in which Tenant consents, which consent shall not be unreasonably withheld,
(ii) to Landlord’s counsel, accountants, and other professional advisors, who are not employees of
Landlord, provided that such counsel, accountants and advisors are instructed in writing not to
disclose the Confidential Information, (iii) to Landlord’s employees who need to know such
information in performance of their duties on behalf of the United States, and (iv) as required by
law. If Landlord receives a request for Confidential Information



 









 




pursuant to FOIA, Landlord shall promptly notify Tenant of such request and shall follow its
procedures for processing FOIA requests for confidential commercial or financial information in
accordance with the standards set forth in 41 CFR Part 105-60 as it may be amended or any successor
regulation.




     32.2. Governing Law. This Agreement shall be governed by the federal laws of the
United States of America, and if such laws are not applicable to the issue in question, then this
Agreement shall be governed by the laws of the District of Columbia.



     32.3. Successors and Assigns. The agreements, terms, covenants and conditions herein
shall bind and inure to the benefit of Landlord and Tenant and their respective heirs, personal
representatives, successors and (except as otherwise provided herein) assigns.



     32.4. Construction and Interpretation. The captions, headings or titles to the
Articles and Sections of this Lease and the Table of Contents are not a part of this Lease, are for
convenience of reference only, and shall have no effect upon the construction or interpretation of
any part thereof. All provisions of this Lease have been negotiated by Landlord and Tenant at arm’s
length and with full representation of their respective legal counsel and neither party shall be
deemed the drafter of this Lease. The language of this Lease shall not be construed for or against
either party by reason of the authorship or alleged authorship of any provision hereof or by reason
of the status of the respective parties as Landlord or Tenant. “Including,” “includes,” and
“include” or words to similar effect shall be construed as followed by “without limitation.”
Certain terms used in this Lease are defined in the Exhibits hereto. Except as the context
otherwise requires any reference in this Lease or the Work Agreement to a Section or Article number
refers to the corresponding section or article in the respective document in which the reference
appears.



     32.5. Entire Agreement and Amendment. This Lease (including the Exhibits annexed
hereto and made part hereof) contains all the representations, promises, agreements, conditions,
inducements and understandings between Landlord and Tenant relative to the Premises and there are
no promises, agreements, conditions, understandings, inducements, warranties or representations,
oral or written, expressed or implied, between them other than as herein set forth or expressly
referenced herein and made a part hereof. This Lease supersedes that certain Site Access Agreement
dated May 15, 1998, by and between Landlord and Tenant, to the extent such Site Access Agreement
otherwise would have remained in force and effect as of the Commencement Date. This Lease may be
modified only by an agreement in writing signed by each of the parties. This Lease shall not be
amended, altered, modified or rescinded, or (except in accordance with the provisions contained in
Article 18 following Tenant’s default) terminated prior to the expiration of the Term, without the
prior written consent of the senior Leasehold Mortgagee.



 









 





     32.6. Brokers’ Commissions. Landlord represents and warrants to Tenant that
Landlord has not incurred, directly or indirectly, any obligation to pay any real estate
commission, brokerage commission or finder’s fee to any agent, broker, salesperson or finder in
connection with this transaction. Tenant represents and warrants to Landlord that Tenant has not
incurred, directly or indirectly, any obligation to pay any real estate commission, brokerage
commission or finder’s fee to any agent, broker, salesperson or finder in connection with this
transaction.



     32.7. References. Unless otherwise specified, all references herein to the Table of
Contents, or a given Article, Section or subsection refer to the Table of Contents, Article,
Section or subsection of this Lease and references to a “party” or “parties” shall refer to
Landlord or Tenant, or both, as the context may require. The use herein of the words “successors
and assigns” or “successors or assigns” of Landlord or Tenant shall be deemed to include the
permitted assigns of any Landlord or Tenant.



     32.8. Exhibits. The Exhibits listed in the Table of Contents or to which reference is
made in this Lease or the Exhibits, shall be deemed incorporated herein or in the Exhibits in full
whether or not actually attached hereto or thereto.



     32.9. Counterparts and Signature Pages. This Lease may be executed in two or more
counterpart copies, all of which counterparts shall have the same force and effect as if all
parties hereto had executed a single copy of this Lease.



     32.10. Severability of Provisions. If any term or provision of this Lease, or the
application thereof to any Person or circumstance, shall be invalid or unenforceable, the remainder
of this Lease, or the application of such term or provision to Persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.



     32.11. Number and Gender. Whenever the context requires, the singular number shall
include the plural, the plural the singular, and the use of any gender shall include all genders.



     32.12. Investment Tax Credit. Tenant shall exert its reasonable, diligent efforts to
obtain the maximum permitted and allowable investment tax credits arising from Tenant’s
Rehabilitation and construction work performed pursuant to the terms of the Work Agreement and,
subject to the provisions and limitations of the United States Internal Revenue Code, Tenant shall
retain all such investment tax credits. Tenant and Landlord shall cooperate to file such reasonable
documents as may be required or necessary under the Internal Revenue Code, and the Regulations
thereunder, for Tenant to obtain such investment tax credits at no risk or cost to Landlord and
provided that Tenant obtaining such credits shall not constitute a condition to Tenant’s
obligations hereunder, failure to obtain such credits shall not excuse or delay any obligations of
Tenant hereunder and Landlord makes no representation or warranty that such credits will be
available to Tenant.



 









 





     32.13. Identity of Landlord. On the Commencement Date, Landlord shall mean the
United States of America, acting by and through the Administrator of General Services and
authorized representatives. After the Commencement Date, “Landlord” shall mean only the fee owner
in question of the Land and Improvements so that if the United States of America or any successor
fee owner of the Land and Improvements ceases to have any interest in the Land and Improvements
by reason of a sale or transfer of the same in accordance with the terms of this Lease, the
seller or transferor shall be and hereby is entirely freed and relieved of all agreements,
covenants and obligations of Landlord hereunder to be performed after the date of such sale or
transfer, provided, that the purchaser or transferee of the Land and Improvements expressly
assumes and agrees to carry out any and all agreements, covenants and obligations of Landlord
hereunder accruing from and after the date of such sale or transfer. Nothing herein shall relieve
Landlord from any liability with respect to agreements, covenants and obligations required to be
performed prior to the date of any such sale or transfer of Landlord’s interest in the Land and
Improvements.



     32.14. Identity of Tenant. On the Commencement Date, Tenant shall mean Tariff Building
Associates, L.P., a California limited partnership. Thereafter, “Tenant” shall mean the initial
Tenant’s permitted successors and assigns with respect to all or substantially all of the initial
Tenant’s interest in and to this Lease.



     32.15. Tenant’s Representations. Tenant hereby makes the following
representations and warranties, solely for the benefit of Landlord, as of the
Commencement Date:



          32.15.1. Organization. Tenant is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California.




          32.15.2. Power and Authority. The Persons executing this Lease on behalf of Tenant
have the full right, power and authority to execute and deliver this Lease as Tenant’s act and
deed and to bind Tenant hereto. Tenant has the full right, power and authority, and has obtained
all necessary authorizations and consents, to enter into and perform its obligations under this
Lease.




          32.15.3. Valid and Binding. The Lease is a legal, valid and binding obligation
of Tenant, enforceable against Tenant in accordance with its terms.




          32.15.4. No Conflict. The execution and delivery of this Lease by Tenant will not
result in a breach of the terms or provisions of, or constitute a default (or a condition that,
upon notice or lapse of time, or both, would constitute a default) under its organizational
documents or any indenture, agreement or obligation by which Tenant is bound, and will not
constitute a violation of any law, order, rule or regulation applicable to Tenant.





 









 








          32.15.5. No Litigation. No litigation is being threatened or prosecuted against
Tenant or Kimpton that might impair Tenant’s ability to execute and deliver this Lease or perform
any of its obligations hereunder.




     32.16. Landlord’s Representations. Landlord hereby makes the following representations
and warranties, solely for the benefit of Tenant, as of the Commencement Date:



          32.16.1. Power and Authority. Landlord has full power and authority to enter into
this Lease on behalf of the United States of America. The Persons executing this Lease on behalf
of Landlord have the full right, power and authority to execute and deliver this Lease as
Landlord’s act and deed and to bind Landlord hereto. Landlord is a valid and existing agency of
the United States Federal Government and has full power and authority, and has obtained all
necessary authorizations and consents, to enter into and perform its obligations under this
Lease.




          32.16.2. Valid and Binding. The Lease is a legal, valid and binding obligation
of Landlord, enforceable against Landlord in accordance with its terms.




          32.16.3. No Conflict. The execution and delivery of this Lease by Landlord will not
result in a breach of the terms or provisions of, or constitute a default (or a condition that,
upon notice or lapse of time, or both, would constitute a default) under its authorizing or other
legislation or regulations, or any agreement or obligation by which Landlord is bound, and will not
constitute a violation of any law, order, rule or regulation applicable to Landlord.




     32.17. No Subordination. Landlord’s fee interest in the Premises and this Lease, as
the same may be modified, amended or renewed, shall not be subject or subordinate
(a) to any Leasehold Mortgage now or hereafter placed upon Tenant’s interest in this Lease, or
(b) any other liens or encumbrances hereafter affecting Tenant’s interest in this Lease. Nothing
in this Section 32.17 shall alter Tenant’s right to create a Leasehold Mortgage affecting only
Tenant’s interest in the Premises and this Lease pursuant to Article 18.



     32.18. Excavation and Shoring.



          32.18.1. General. Subject to Section 32.18.2 below, Tenant shall allow Landlord or
the District of Columbia, or other governmental or quasi-governmental agency or utility company
desiring to excavate an abutting street, to enter the Premises and shore up an intervening wall
or foundation during such excavation, provided that Landlord or such other adjoining owner,
government agency or utility company shall comply with the Applicable Building Code and all
Applicable Laws, to the same extent as would be required if the Premises were privately owned and
provided that no such activity shall in any way interfere with Tenant’s use of the Premises.
Landlord hereby assigns to Tenant any and all rights to sue for or recover against the District
of Columbia or other governmental or quasi-governmental agency or utility company, or





 









 







the parties causing such damages, the amounts expended or losses sustained by Tenant because
of the provisions of this paragraph requiring Tenant to repair any damages sustained by such
excavations, construction work, or other work, or, if such assignment not be permitted by law,
Landlord agrees to bring any action in Landlord’s name required to enforce such rights for the
benefit of Tenant, subject to reimbursement by Tenant for all reasonable costs and expenses
thereof, including attorneys’ fees.




          32.18.2. Limitation. If Landlord shall excavate on adjoining property which it owns
and in so doing shall cause damage to Tenant or the Premises, Landlord shall be responsible to
Tenant to pay for such damage and the foregoing provisions of this Section 32.18.2 shall not be
construed as a release by Tenant of any separate claim which Tenant may have against Landlord for
such damage.




     32.19. Rehabilitation. Tenant recognizes that the construction and Rehabilitation work
to be performed by Tenant in accordance with the terms of the Work Agreement is an especial
consideration to the entry into this Lease by Landlord. Tenant agrees that in connection with any
excavation of any property abutting, adjoining or otherwise affecting the Improvements, Tenant
shall request the owner of the abutting, adjoining or affecting property to take all measures
reasonably required in the case of structures of similar age, construction and condition to shore
up any intervening or affected wall or foundation of the Improvements during such excavation, but
Tenant does not make any representation that the work will not affect the Premises. In addition, in
the event of such excavation by Tenant, Tenant shall be subject to all responsibilities otherwise
applicable to it under this Section 32.19.



     32.20. Interested Parties. No member or delegate to Congress, or elected official of
the Government of the United States or the Government of the District of Columbia, shall be
admitted to any share or part of this Lease, or to any benefit that may arise therefrom;
provided, however, that this provision shall not be construed as extending to any Person who may
be a shareholder or other beneficial owner of any publicly held corporation or other entity, if
this Lease is for the general benefit of such corporation or other entity.



     32.21. Governmental Role of Landlord. Tenant acknowledges that Landlord, and any
successor public agency, in its capacity as a public agency in the pursuit of its legislative
mandate, may from time to time promulgate regulations, Historic Preservation Standards and other
standards, programs and policies having the force and effect of law of general applicability to
property located within those areas of the District of Columbia within its jurisdiction, conduct
public hearings or meetings on matters relating to such areas, undertake street widening, street
narrowing, relocation of utilities and other public service facilities, repavement of streets and
sidewalks, landscaping and other public improvements in the vicinity immediately adjacent to the
Premises, and generally do all other things permitted or required from time to time by its enabling
legislation. Tenant further acknowledges that nothing contained in this Lease shall be construed as
to preclude, limit or restrain the foregoing authority of Landlord and that no actions taken



 









 




by Landlord pursuant to such authority (except to the extent as expressly provided in this
Lease) shall entitle Tenant to any abatements, set-offs, or reductions in the Annual Base
Rent, Percentage Rent, Participation Rent or any other rights against Landlord (in its capacity as
Landlord) under this Lease, and Landlord acknowledges that nothing contained in this Lease shall be
construed so as to preclude, limit or restrain Tenant from taking any action to challenge any
actions taken by Landlord pursuant to such authority (except to the extent as may be expressly
provided in this Lease).




     32.22. Certain Required Provisions. Tenant represents to Landlord that in connection
with the negotiation and execution of this Lease, Tenant has not violated any of the provisions of
Section 14 of Public Law Number 92-578, and that Tenant will not violate any of the provisions of
said Section 14 of Public Law Number 92-578 during the term of this Lease or thereafter with
respect to any matter pertaining to this Lease or the Premises. During the Feasibility Period,
Landlord and Tenant shall agree as to any additional clauses that are required to be incorporated
into this Lease by reason of any applicable federal law or regulation, and shall execute a
corresponding amendment to this Lease.



     32.23. Time. Time is of the essence of each provision of this Lease in which
time is an element.



     32.24. Equal Employment Opportunity.



          32.24.1. General Covenant.




     Tenant covenants and agrees that it shall neither commit nor permit discrimination or
segregation by reason of race, creed, color, religion, national origin, ancestry, sex, age,
disability or marital status in the sale, transfer or assignment of its interest under this Lease
or in the subleasing, use or occupancy of the Premises or any part thereof including any services,
privileges, accommodations, and activities provided in connection therewith, or in connection with
the maintenance, repair or replacement of the Improvements and that it shall comply with all
applicable federal, state and local laws, ordinances, rules and regulations from time to time in
effect prohibiting any such discrimination or segregation. Tenant further agrees to include the
foregoing provision in all Subleases with respect to the Premises or any portion thereof by
amendment thereto if necessary.



          32.24.2. Specific Covenant




     (a) If, during any 12-month period (including the 12 months preceding the award of this
contract), Tenant (referred to below as the “Contractor”) has been or is awarded nonexempt
federal contracts and/or subcontracts that have an aggregate value in excess of $1 0,000, the
Contractor shall comply with subparagraphs (b)(1) through (11) below. Upon request, the
Contractor shall provide information necessary to determine the applicability of this clause.



 









 






	 	(b)	 	During performing this contract, the Contractor agrees as follows:






	 	(1)	 	The Contractor shall not discriminate against any employee or
applicant for employment because of race, color, religion, sex, or national
origin. However, it shall not be a violation of this clause for the Contractor
to extend a publicly announced preference in employment to Indians living on
or near an Indian reservation, in connection with employment opportunities on
or near an Indian reservation, as permitted by 41 CFR Part 60-1.5.
	 
	 	(2)	 	The Contractor shall take affirmative action to ensure that
applicants are employed, and that employees are treated during employment,
without regard to their race, color, religion, sex, or national origin. This
shall include, but not be limited to, (i) employment, (ii) upgrading, (iii)
demotion, (iv) layoff or termination, (v) rates of payor other forms of
compensation, and (vi) selection of training, including apprenticeship.
	 
	 	(3)	 	The Contractor shall post in conspicuous places available to
employees and applicants for employment the notices to be provided by
Landlord’s Contracting Officer that explains this clause.
	 
	 	(4)	 	The Contractor shall, in all solicitations or advertisement
for employees placed by or on behalf of the Contractor, state that all
qualified applicants will receive consideration for employment without regard
to race, color, religion, sex, or national origin.
	 
	 	(5)	 	The Contractor shall send, to each labor union or
representative of workers with which it has a collective bargaining agreement
or other contract or understanding, the notice to be provided by Landlord’s
Contracting Officer advising the labor union or workers’ representative of the
Contractor’s commitments under this clause, and post copies of the notice in
conspicuous places available to employees and applicants for employment.
	 
	 	(6)	 	The Contractor shall comply with Executive Order 11246, as
amended, and the rules, regulations, and orders of the Secretary of Labor.
	 
	 	(7)	 	The Contractor shall furnish to the contracting agency all
information required by Executive Order 11246, as amended, and by the rules,
regulations, and orders of the Secretary of Labor. The Contractor shall also
file Standard Form 100 (EEO-1), or any successor form, as prescribed in 41 CFR
Part 60-1. Unless the Contractor has filed within the twelve (12) months
preceding the




 









 






	 	 	 	date of contract award, the Contractor shall, within thirty (30) days
after contract award, apply to either the regional Office of Federal
Contract Compliance Programs (OFCCP) or the local office of the Equal
Employment Opportunity Commission for the necessary forms.
	 
	 	(8)	 	The Contractor shall permit access to its books, records, and
accounts by the contracting agency or the OFCCP for the purpose of conducting
on-site compliance evaluations and complaint investigations. The Contractor
shall permit the Government to inspect and copy any books, accounts, records
(including computerized records), and other material that may be relevant to
the matter under investigation and pertinent to compliance with Executive
Order 11246, as amended, and rules and regulations that implement the
Executive Order.
	 
	 	(9)	 	If the OFCCP determines that the Contractor is not in
compliance with this clause or any rule, regulation, or order of the Secretary
of Labor, this contract may be canceled, terminated, or suspended in whole or
in part and the contractor may be declared ineligible for further Government
contracts, under the procedures authorized in Executive Order 11246, as
amended. In addition, sanctions may be imposed and remedies invoked against
the Contractor as provided in Executive Order 11246, as amended, the rules,
regulations, and orders of the Secretary of Labor, or as otherwise provided by
law.
	 
	 	(10)	 	The Contractor shall include the terms and conditions of
subparagraph (b)(1) through (11) of this clause in every subcontract or
purchase order that is not exempted by the rules, regulations, or orders of
the Secretary of Labor issued under Executive Order 11246, as amended, so that
these terms and conditions will be binding upon each subcontractor or vendor.
	 
	 	(11)	 	The Contractor shall take such action with respect to any
subcontract or purchase order as the contracting agency may direct as a means
of enforcing these terms and conditions, including sanctions for
noncompliance; provided, that if the Contractor becomes involved in, or is
threatened with, litigation with a subcontractor or vendor as a result of any
direction, the Contractor may request the United States to enter into the
litigation to protect the interest of the United States.






	 	(c)	 	Notwithstanding any other clause in this Lease, disputes relative to this
Section 32.24.2 will be governed by the procedures in 41 CFR Part 60-1.1.





[signature page follows]





 









 








     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year
first above written.


TENANT



TARIFF BUILDING ASSOCIATES, L.P.,
A California limited partnership



By: Square 430, Inc.,

a California corporation,

its General Partner




	 	 	 	 	 

	BY:

	 	/s/ J. Kirke Wrench
 

J. Kirke Wrench
	 	 
	 

	 	Chief Financial Officer	 	 






LANDLORD




UNITED STATES OF AMERICA, acting by and

through the Administrator of General Services

and authorized representatives




	 	 	 	 	 

	By:

	 	/s/ Robert G. Roop
 

Robert G. Roop
	 	 
	 

	 	Contracting Officer	 	 
	 

	 	National Capital Region	 	 






 









 





INDEX OF EXHIBITS



Exhibit Description





	 	 	 	A            Budgeted Construction Costs
	 
	 	 	 	B            Work Agreement
	 
	 	 	 	C            Memorandum of Lease