Exhibit
10.25


 


LEASE AGREEMENT


 


Dated as of February 16,
2005


 


By and Between


 


HPT IHG PR, INC.,


AS LANDLORD,


 


AND


 


INTERCONTINENTAL HOTELS (PUERTO
RICO) INC.,


AS TENANT


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE 1  DEFINITIONS

  
	
  1.1

  	
   

  	
  Additional Charges

  	
   

  	
   

  	 

	
  1.2

  	
   

  	
  Additional Rent

  	
   

  	
   

  	 

	
  1.3

  	
   

  	
  Affiliate or Affiliated Person

  	
   

  	
   

  	 

	
  1.4

  	
   

  	
  Agreed Upon Procedure Letter

  	
   

  	
   

  	 

	
  1.5

  	
   

  	
  Agreement

  	
   

  	
   

  	 

	
  1.6

  	
   

  	
  Applicable Law

  	
   

  	
   

  	 

	
  1.7

  	
   

  	
  Applicable Percentage

  	
   

  	
   

  	 

	
  1.8

  	
   

  	
  Arbitration

  	
   

  	
   

  	 

	
  1.9

  	
   

  	
  Award

  	
   

  	
   

  	 

	
  1.10

  	
   

  	
  Base Total Hotel Sales

  	
   

  	
   

  	 

	
  1.11

  	
   

  	
  Base Year

  	
   

  	
   

  	 

	
  1.12

  	
   

  	
  Business Day

  	
   

  	
   

  	 

	
  1.13

  	
   

  	
  Capital Addition

  	
   

  	
   

  	 

	
  1.14

  	
   

  	
  Capital Expenditure

  	
   

  	
   

  	 

	
  1.15

  	
   

  	
  Capital Replacements

  	
   

  	
   

  	 

	
  1.16

  	
   

  	
  Claim

  	
   

  	
   

  	 

	
  1.17

  	
   

  	
  Code

  	
   

  	
   

  	 

	
  1.18

  	
   

  	
  Commencement Date

  	
   

  	
   

  	 

	
  1.19

  	
   

  	
  Condemnation

  	
   

  	
   

  	 

	
  1.20

  	
   

  	
  Condemnor

  	
   

  	
   

  	 

	
  1.21

  	
   

  	
  Consumer Price Index

  	
   

  	
   

  	 

	
  1.22

  	
   

  	
  Debt Service Coverage Ratio

  	
   

  	
   

  	 

	
  1.23

  	
   

  	
  Default

  	
   

  	
   

  	 

	
  1.24

  	
   

  	
  Disbursement Rate

  	
   

  	
   

  	 

	
  1.25

  	
   

  	
  Easement Agreement

  	
   

  	
   

  	 

	
  1.26

  	
   

  	
  Entity

  	
   

  	
   

  	 

	
  1.27

  	
   

  	
  Environment

  	
   

  	
   

  	 

	
  1.28

  	
   

  	
  Environmental Laws

  	
   

  	
   

  	 

	
  1.29

  	
   

  	
  Event of Default

  	
   

  	
   

  	 

	
  1.30

  	
   

  	
  Excess Total Hotel Sales

  	
   

  	
   

  	 

	
  1.31

  	
   

  	
  Expiration Date

  	
   

  	
   

  	 

	
  1.32

  	
   

  	
  Extended Terms

  	
   

  	
   

  	 

	
  1.33

  	
   

  	
  FF&E Estimate

  	
   

  	
   

  	 

	
  1.34

  	
   

  	
  FF&E Reserve

  	
   

  	
   

  	 

	
  1.35

  	
   

  	
  Financial Officer’s Certificate

  	
   

  	
   

  	 

	
  1.36

  	
   

  	
  Fiscal Month

  	
   

  	
   

  	 

	
  1.37

  	
   

  	
  Fiscal Year

  	
   

  	
   

  	 

	
  1.38

  	
   

  	
  Fixed Term

  	
   

  	
   

  	 

	
  1.39

  	
   

  	
  Fixtures

  	
   

  	
   

  	 

	
  1.40

  	
   

  	
  GAAP

  	
   

  	
   

  	 

	
  1.41

  	
   

  	
  Government Agencies

  	
   

  	
   

  	 

	
  1.42

  	
   

  	
  Guarantor

  	
   

  	
   

  	 

	
  1.43

  	
   

  	
  Guaranty

  	
   

  	
   

  	 




 


i





















 


	
  1.44

  	
   

  	
  Hazardous Substances

  	
   

  	
   

  
	
  1.45

  	
   

  	
  Hotel

  	
   

  	
   

  
	
  1.46

  	
   

  	
  Hotel Mortgage

  	
   

  	
   

  
	
  1.47

  	
   

  	
  Hotel Mortgagee

  	
   

  	
   

  
	
  1.48

  	
   

  	
  IHG

  	
   

  	
   

  
	
  1.49

  	
   

  	
  Impositions

  	
   

  	
   

  
	
  1.50

  	
   

  	
  Insurance Requirements

  	
   

  	
   

  
	
  1.51

  	
   

  	
  Interest Rate

  	
   

  	
   

  
	
  1.52

  	
   

  	
  Land

  	
   

  	
   

  
	
  1.53

  	
   

  	
  Landlord

  	
   

  	
   

  
	
  1.54

  	
   

  	
  Landlord Liens

  	
   

  	
   

  
	
  1.55

  	
   

  	
  Landlords Taxes

  	
   

  	
   

  
	
  1.56

  	
   

  	
  Lease year

  	
   

  	
   

  
	
  1.57

  	
   

  	
  Leased Improvements

  	
   

  	
   

  
	
  1.58

  	
   

  	
  Leased Intangible Property

  	
   

  	
   

  
	
  1.59

  	
   

  	
  Leased Personal Property

  	
   

  	
   

  
	
  1.60

  	
   

  	
  Lien

  	
   

  	
   

  
	
  1.61

  	
   

  	
  Managed Hotels

  	
   

  	
   

  
	
  1.62

  	
   

  	
  Material Repair

  	
   

  	
   

  
	
  1.63

  	
   

  	
  Minimum Rent

  	
   

  	
   

  
	
  1.64

  	
   

  	
  New Management Agreement

  	
   

  	
   

  
	
  1.65

  	
   

  	
  NOI

  	
   

  	
   

  
	
  1.66

  	
   

  	
  Notice

  	
   

  	
   

  
	
  1.67

  	
   

  	
  Officers Certificate

  	
   

  	
   

  
	
  1.68

  	
   

  	
  Operating Costs

  	
   

  	
   

  
	
  1.69

  	
   

  	
  Parent

  	
   

  	
   

  
	
  1.70

  	
   

  	
  Permitted Encumbrances

  	
   

  	
   

  
	
  1.71

  	
   

  	
  Permitted Use

  	
   

  	
   

  
	
  1.72

  	
   

  	
  Person

  	
   

  	
   

  
	
  1.73

  	
   

  	
  Pledged Hotels

  	
   

  	
   

  
	
  1.74

  	
   

  	
  Pooled FF&E Hotel

  	
   

  	
   

  
	
  1.75

  	
   

  	
  Portfolio Manager

  	
   

  	
   

  
	
  1.76

  	
   

  	
  Portfolio Purchaser

  	
   

  	
   

  
	
  1.77

  	
   

  	
  Portfolio Owner

  	
   

  	
   

  
	
  1.78

  	
   

  	
  Property

  	
   

  	
   

  
	
  1.79

  	
   

  	
  Purchase Agreement

  	
   

  	
   

  
	
  1.80

  	
   

  	
  Records

  	
   

  	
   

  
	
  1.81

  	
   

  	
  Rent

  	
   

  	
   

  
	
  1.82

  	
   

  	
  Repairs

  	
   

  	
   

  
	
  1.83

  	
   

  	
  SEC

  	
   

  	
   

  
	
  1.84

  	
   

  	
  Specially Designated or Blocked Person

  	
   

  	
   

  
	
  1.85

  	
   

  	
  State

  	
   

  	
   

  
	
  1.86

  	
   

  	
  Subsidiary

  	
   

  	
   

  
	
  1.87

  	
   

  	
  Successor Landlord

  	
   

  	
   

  



 


ii





















 


	
  1.88

  	
   

  	
  System Fees

  	
   

  	
   

  
	
  1.89

  	
   

  	
  Tax Exemption Decree

  	
   

  	
   

  
	
  1.90

  	
   

  	
  Tenant

  	
   

  	
   

  
	
  1.91

  	
   

  	
  Tenant Management Agreement

  	
   

  	
   

  
	
  1.92

  	
   

  	
  Tenant Manager

  	
   

  	
   

  
	
  1.93

  	
   

  	
  Tenant's Personal Property

  	
   

  	
   

  
	
  1.94

  	
   

  	
  Term

  	
   

  	
   

  
	
  1.95

  	
   

  	
  Total Hotel Sales

  	
   

  	
   

  
	
  1.96

  	
   

  	
  Uniform System of Accounts

  	
   

  	
   

  
	
  1.97

  	
   

  	
  Unsuitable for its Permitted Use

  	
   

  	
   

  
	
  1.98

  	
   

  	
  Work

  	
   

  	
   

  
	
  ARTICLE 2  PROPERTY AND TERM

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Property

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Condition of Property

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Fixed Term

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Extended Term

  	
   

  	
   

  
	
  ARTICLE 3  RENT

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Rent

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Late Payment of Rent, Etc

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Net Lease

  	
   

  	
   

  
	
  3.4

  	
   

  	
  No Termination, Abatement, Etc

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Waiver

  	
   

  	
   

  
	
  ARTICLE 4  USE OF THE PROPERTY

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Permitted Use

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Compliance with Legal/Insurance
  Requirements, Etc

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Environmental Matters

  	
   

  	
   

  
	
  ARTICLE 5  MAINTENANCE AND REPAIRS

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Maintenance and Repair

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Tenant’s Personal Property

  	
   

  	
   

  
	
  5.3

  	
   

  	
  At End Of Term

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Tenant Management Agreement

  	
   

  	
   

  
	
  ARTICLE 6  IMPROVEMENTS, ETC

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Material Repairs

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Emergency Expenditures

  	
   

  	
   

  
	
  6.3

  	
   

  	
  No Tie-In

  	
   

  	
   

  
	
  ARTICLE 7  LIENS

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Liens

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Landlord’s Lien

  	
   

  	
   

  
	
  ARTICLE 8  PERMITTED CONTESTS

  	
   

  	
   

  
	
  ARTICLE 9  INSURANCE AND INDEMNIFICATION

  	
   

  	
   

  
	
  9.1

  	
   

  	
  General Insurance Requirements

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Replacement Cost

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Waiver of Subrogation

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Form Satisfactory, Etc

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Blanket Policy

  	
   

  	
   

  



 


iii





















 


	
  9.6

  	
   

  	
  No Separate Insurance

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Indemnification of Landlord

  	
   

  	
   

  
	
  ARTICLE 10  CASUALTY

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Insurance Proceeds

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Damage or Destruction

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Damage Near End of Term

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Tenant’s Property

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Restoration of Tenant’s Property

  	
   

  	
   

  
	
  10.6

  	
   

  	
  No Abatement of Rent

  	
   

  	
   

  
	
  10.7

  	
   

  	
  Waiver

  	
   

  	
   

  
	
  ARTICLE 11  CONDEMNATION

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Total Condemnation, Etc

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Partial Condemnation

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Abatement of Rent

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Temporary Condemnation

  	
   

  	
   

  
	
  11.5

  	
   

  	
  Condemnation Near End of Term

  	
   

  	
   

  
	
  11.6

  	
   

  	
  Allocation of Award

  	
   

  	
   

  
	
  ARTICLE 12  DEFAULTS AND REMEDIES

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Events of Default

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Remedies

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Waiver

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Application of Funds

  	
   

  	
   

  
	
  12.5

  	
   

  	
  Landlord’s Right to Cure Tenant’s Default.

  	
   

  	
   

  
	
  ARTICLE 13  HOLDING OVER

  	
   

  	
   

  
	
  ARTICLE 14  LANDLORD’S DEFAULT

  	
   

  	
   

  
	
  ARTICLE 15  SUBLETTING AND ASSIGNMENT.

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Subletting and Assignment

  	
   

  	
   

  
	
  15.2

  	
   

  	
  Required Sublease Provisions

  	
   

  	
   

  
	
  15.3

  	
   

  	
  Permitted Sublease

  	
   

  	
   

  
	
  15.4

  	
   

  	
  Sublease Limitation

  	
   

  	
   

  
	
  15.5

  	
   

  	
  Permitted Assignments

  	
   

  	
   

  
	
  15.6

  	
   

  	
  Sale by Landlord

  	
   

  	
   

  
	
  ARTICLE 16  ESTOPPEL CERTIFICATES

  	
   

  	
   

  
	
  ARTICLE 17  LANDLORD’S RIGHT TO INSPECT

  	
   

  	
   

  
	
  ARTICLE 18  EASEMENTS

  	
   

  	
   

  
	
  18.1

  	
   

  	
  Grant of Easements

  	
   

  	
   

  
	
  18.2

  	
   

  	
  Exercise of Rights by Tenant

  	
   

  	
   

  
	
  18.3

  	
   

  	
  Permitted Encumbrances

  	
   

  	
   

  
	
  ARTICLE 19  HOTEL MORTGAGES

  	
   

  	
   

  
	
  19.1

  	
   

  	
  Landlord May Grant Liens

  	
   

  	
   

  
	
  19.2

  	
   

  	
  Notice to Mortgagee and Superior Landlord

  	
   

  	
   

  
	
  ARTICLE 20  MISCELLANEOUS

  	
   

  	
   

  
	
  20.1

  	
   

  	
  Limitation on Payment of Rent

  	
   

  	
   

  
	
  20.2

  	
   

  	
  No Waiver

  	
   

  	
   

  



 


iv





















 


	
  20.3

  	
   

  	
  Remedies Cumulative

  	
   

  	
   

  
	
  20.4

  	
   

  	
  Severability

  	
   

  	
   

  
	
  20.5

  	
   

  	
  Acceptance of Surrender

  	
   

  	
   

  
	
  20.6

  	
   

  	
  No Merger of Title

  	
   

  	
   

  
	
  20.7

  	
   

  	
  Conveyance by Landlord

  	
   

  	
   

  
	
  20.8

  	
   

  	
  Quiet Enjoyment

  	
   

  	
   

  
	
  20.9

  	
   

  	
  Recordation of Lease

  	
   

  	
   

  
	
  20.10

  	
   

  	
  Notices

  	
   

  	
   

  
	
  20.11

  	
   

  	
  Trade Area Restriction

  	
   

  	
   

  
	
  20.12

  	
   

  	
  Construction

  	
   

  	
   

  
	
  20.13

  	
   

  	
  Counterparts; Headings

  	
   

  	
   

  
	
  20.14

  	
   

  	
  Applicable Law, Etc

  	
   

  	
   

  
	
  20.15

  	
   

  	
  Right to Make Agreement

  	
   

  	
   

  
	
  20.16

  	
   

  	
  Nonrecourse

  	
   

  	
   

  
	
  20.17

  	
   

  	
  Attorneys’ Fees

  	
   

  	
   

  
	
  20.18

  	
   

  	
  Securities Filings

  	
   

  	
   

  
	
  20.19

  	
   

  	
  Arbitration

  	
   

  	
   

  
	
  20.20

  	
   

  	
  Tax Exemption Decree

  	
   

  	
   

  
	
  20.21

  	
   

  	
  Cooperation

  	
   

  	
   

  
	
  20.22

  	
   

  	
  Private Letter Ruling

  	
   

  	
   

  
	
  20.23

  	
   

  	
  Affiliated Manager

  	
   

  	
   

  
	
  20.24

  	
   

  	
  Enforceability Not Affected by Leased Real Property

  	
   

  	
   

  



 


v





















 


LEASE AGREEMENT


 


THIS LEASE AGREEMENT is entered into as of
this 16th day of February, 2005, by and between HPT IHG PR, INC., a Puerto Rico
corporation, as landlord (“LANDLORD”), and INTERCONTINENTAL HOTELS (PUERTO
RICO) INC., a Puerto Rico corporation, as tenant (“TENANT”).


 


WITNESSETH:


 


WHEREAS, Landlord owns or leases the Property
(this and other capitalized terms used and not otherwise defined herein having
the meanings ascribed to such terms in ARTICLE 1); and


 


WHEREAS, Landlord wishes to lease the
Property to Tenant and Tenant wishes to lease the Property from Landlord, all
subject to and upon the terms and conditions herein set forth;


 


NOW, THEREFORE, in consideration of the
mutual covenants herein contained and other good and valuable consideration,
the mutual receipt and legal sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, (i) the
terms defined in this Article shall have the meanings assigned to them in
this Article and include the plural as well as the singular, (ii) all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in accordance with GAAP, (iii) all references in this Agreement to
designated “Articles,” “Sections” and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Agreement, and (iv) the words
“herein,” “hereof,” “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision.


 


1.1                                 “ADDITIONAL
CHARGES” shall have the meaning given such term in SECTION 3.1.3 (a).


 


1.2                                 “ADDITIONAL
RENT” shall have the meaning given such term in SECTION 3.1.2 (a).


 





















 


1.3                                 “AFFILIATE”
or “AFFILIATED PERSON” shall mean, with respect to any Person, (a) in the case
of any such Person which is a partnership, any partner in such partnership, (b)
in the case of any such Person which is a limited liability company, any member
of such company, (c) any other Person which is a Parent, a Subsidiary, or a
Subsidiary of a Parent with respect to such Person or to one or more of the
Persons referred to in the preceding clauses (a) and (b), and (d) any other
Person who is an officer, director, trustee or employee of, or partner in or
member of, such Person or any Person referred to in the preceding clauses (a),
(b) and (c).


 


1.4                                 “AGREED
UPON PROCEDURE LETTER” shall mean a letter from Ernst & Young or another
firm of independent certified public accountants (the “auditor”) selected by
Tenant and approved by Landlord (which approval shall not be unreasonably
withheld or delayed) which letter shall, subject to the limitations and
conditions imposed by the auditor, address the following components and such
other reasonable matters as Landlord and the auditor shall reasonably agree: 


 


(a)                                  That auditor has
tested Tenant’s systems of internal controls.


 


(b)                                 That
auditor has verified that the information provided was generated from the same
reporting systems as Tenant uses for its regular periodic accounting and
reporting.


 


(c)                                  That
auditor has verified the mathematical accuracy of the Officer’s Certificate
delivered with such Agreed Upon Procedure Letter.


 


(d)                                 That
auditor has recomputed the annual calculation of System Fees, contributions to
the FF&E Reserve, expenditures from the FF&E Reserve, and the
Additional Rent.


 


(e)                                  That
auditor has confirmed that the Hotel is subjected to audit procedures by Tenant’s
internal audit department, if any, and reviewed work papers provided in
connection therewith. If auditor has performed hotel level audit procedures at
the Hotel, auditor shall so state and list the procedures performed and results
obtained. In any event at least three of the Pooled FF&E Hotels shall be
subjected to audit procedures each Fiscal Year by either internal audit or the
auditor. 


 


2





















 


1.5                                 “AGREEMENT”
shall mean this Lease Agreement, including the Exhibits attached hereto, as it
and they may be amended from time to time as herein provided.


 


1.6                                 “APPLICABLE
LAW” shall mean all federal, State, county, municipal, local and other governmental
statutes, laws, rules, orders, regulations, by-laws, ordinances, judgments,
decrees and injunctions affecting the Property, Landlord, or Tenant or the
maintenance, construction, alteration or operation of the Property, whether now
or hereafter enacted or in existence, including, without limitation, (a)
Environmental Laws, (b) all permits, licenses, authorizations, certificates and
regulations necessary to operate the Property for its Permitted Use, (c) all
covenants, agreements, ground leases, restrictions and encumbrances contained
in any instruments at any time in force affecting the Property, including those
which may (i) require material repairs, modifications or alterations in or to
the Property or (ii) in any way materially and adversely affect the use and
enjoyment thereof, but excluding any requirements arising as a result of
Landlord’s status as a real estate investment trust, (d) the Tax Exemption
Decree, the Puerto Rico Tourism Development Act of 1993 and the regulations
thereunder, (e) the outcome of any arbitration, or (f) any collective
bargaining agreement or other agreement or legal requirement pertaining to any
union representing employees of the Hotel.


 


1.7                                 “APPLICABLE
PERCENTAGE” shall mean the following percentages for the corresponding periods:


 


	
  Year

  	
   

  	
  Rate

  	
   

  
	
  2005

  	
   

  	
  0

  	
  %

  
	
  2006

  	
   

  	
  0

  	
  %

  
	
  2007

  	
   

  	
  3.0

  	
  %

  
	
  2008

  	
   

  	
  3.5

  	
  %

  
	
  2009

  	
   

  	
  4.0

  	
  %

  
	
  2010

  	
   

  	
  4.5

  	
  %

  
	
  Thereafter

  	
   

  	
  5.0

  	
  %

  



 


1.8                                 “ARBITRATION”
shall mean an arbitration conducted in accordance with the terms of SECTION 20.19.


 


1.9                                 “AWARD”
shall mean all compensation, sums or other value awarded, paid or received by
virtue of a total or partial Condemnation of any of the Property (after
deduction of all reasonable legal fees and other reasonable costs and expenses,


 


3





















 


including, without limitation, expert witness fees, incurred by
Landlord in connection with obtaining any such award).


 


1.10                           “BASE
TOTAL HOTEL SALES” shall mean Total Hotel Sales for the Base Year.


 


1.11                           “BASE
YEAR” shall mean the 2006 Fiscal Year; PROVIDED, HOWEVER, if there shall occur
a casualty, Condemnation or other force majeure event with respect to the Hotel
which causes a material decline in Total Hotel Sales for the Hotel or a force
majeure event in Canada, the United States or Caribbean region or in any
relevant market that results in a ten percent (10%) annual decline in REVPAR
for the Upscale segment or other appropriate segment, as determined by Smith
Travel Research, in Canada, the United States or Caribbean region or in the
relevant market, which, in either case, causes a material decline in Total
Hotel Sales for the Hotel for the 2006 Fiscal Year, the Base Year shall be
adjusted to be the first full Fiscal Year of operation of the Hotel after the
resolution of any such casualty, Condemnation or force majeure event and the
return of the Hotel to its substantially normal status. 


 


1.12                           “BUSINESS
DAY” shall mean any day other than Saturday, Sunday, or any other day on which
banking institutions in The Commonwealth of Massachusetts or the State of New
York are authorized by law or executive action to close.


 


1.13                           “CAPITAL
ADDITION” shall mean any renovation, repair or improvement to the Property (or
portion thereof), the cost of which constitutes a Capital Expenditure.


 


1.14                           “CAPITAL
EXPENDITURE” shall mean any expenditure treated as capital in nature in
accordance with GAAP.


 


1.15                           “CAPITAL
REPLACEMENTS” shall mean, collectively, replacements and renewals to the
FF&E and Capital Additions.


 


1.16                           “CLAIM”
shall mean any claim, charge, lien, attachment, levy or encumbrance.


 


1.17                           “CODE”
shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the
Treasury Regulations promulgated thereunder, each as from time to time amended,
and any reference to any statutory or regulatory provision shall be deemed to
be a reference to any successor statutory or regulatory provision. 


 


4





















 


1.18                           “COMMENCEMENT
DATE” shall mean the date of this Agreement.


 


1.19                           “CONDEMNATION”
shall mean (a) the exercise of any governmental power with respect to the
Property, whether by legal proceedings or otherwise, by a Condemnor of its
power of condemnation, (b) a voluntary sale or transfer of the Property by
Landlord to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending, or (c) a taking or voluntary
conveyance of all or part of the Property, or any interest therein, or right
accruing thereto or use thereof, as the result or in settlement of any condemnation
or other eminent domain proceeding affecting such Property, whether or not the
same shall have actually been commenced.


 


1.20                           “CONDEMNOR”
shall mean any public or quasi-public Person, having the power of Condemnation.


 


1.21                           “CONSUMER
PRICE INDEX” shall mean the Consumer Price Index for all Urban Consumers, U.S.
City Average, published by the United States Bureau of Labor Statistics or if
such index is no longer published, such other index as is published in
substitution thereof.


 


1.22                           “DEBT
SERVICE COVERAGE RATIO” shall mean, with respect to any loan or other debt
secured by a Hotel Mortgage, the quotient obtained by dividing (a) the NOI of
the properties securing such loan or other debt for the twelve (12) months
ending on the date on which such Hotel Mortgage is granted by (b) regularly
scheduled interest and principal payments projected to be paid thereunder
during the first (1st) twelve (12) months after the first day of the month next
after such date.


 


1.23                           “DEFAULT”
shall mean any event or condition which with the giving of notice and/or lapse
of time would ripen into an Event of Default.


 


1.24                           “DISBURSEMENT
RATE” shall mean a per annum rate equal to the greater of (x) nine (9%) percent
and (y) the sum of the rate for fifteen (15) year U.S. Treasury Obligations, as
published in THE WALL STREET JOURNAL, plus three hundred eighty (380) basis
points.


 


1.25                           “EASEMENT
AGREEMENT” shall mean any conditions, covenants and restrictions, easements,
declarations, licenses and other agreements which are Permitted Encumbrances
and such


 


5





















 


other agreements as may be granted in accordance with SECTION 19.1.


 


1.26                           “ENTITY”
shall mean any corporation, general or limited partnership, limited liability
company or partnership, stock company or association, joint venture,
association, company, trust, bank, trust company, land trust, business trust,
cooperative, any government or agency, authority or political subdivision thereof
or any other entity.


 


1.27                           “ENVIRONMENT”
shall mean soil, surface waters, ground waters, land, biota, sediments, surface
or subsurface strata and ambient air.


 


1.28                           “ENVIRONMENTAL
LAWS” shall mean all applicable laws, statutes, regulations, rules, ordinances,
codes, licenses, permits and orders, from time to time in existence, of all
courts of competent jurisdiction and Government Agencies, and all applicable
judicial and administrative and regulatory decrees, judgments and orders,
including common law rulings and determinations, relating to injury to, or the
protection of, real or personal property or human health or the Environment,
including, without limitation, all valid and lawful requirements of courts and
other Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements (including,
without limitation, treatment or storage tanks, or water, gas or oil wells), or
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the Environment, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances, underground improvements
(including, without limitation, treatment or storage tanks, or water, gas or
oil wells), or pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature.


 


1.29                           “EVENT
OF DEFAULT” shall have the meaning given such term in SECTION 12.1.


 


1.30                           “EXCESS
TOTAL HOTEL SALES” shall mean with respect to any Lease Year, or portion
thereof, the amount of Total Hotel Sales for such Property for such Lease Year,
or portion thereof, in excess of Base Total Hotel Sales for the equivalent
period in the Base Year.


 


6





















 


1.31                           “EXPIRATION
DATE” shall mean the date on which the Term shall expire.


 


1.32                           “EXTENDED
TERMS” shall have the meaning given such term in SECTION 2.4.


 


1.33                           “FF&E
ESTIMATE” shall have the meaning given such term in SECTION 5.1.2 (c).


 


1.34                           “FF&E
RESERVE” shall mean an interest-bearing account established for funds to be
held in reserve for Capital Replacements in Landlord’s name at a bank selected
by Landlord.


 


1.35                           “FINANCIAL
OFFICER’S CERTIFICATE” shall mean, as to any Person, a certificate of the chief
executive officer, chief financial officer or chief accounting officer (or such
officers’ authorized designee) of such Person, duly authorized, accompanying
the financial statements required to be delivered by such Person pursuant to
SECTIONS 3.1.2 or 5.3, in which such officer shall certify (a) that such
statements have been properly prepared in accordance with GAAP and are true,
correct and complete in all material respects and fairly present the
consolidated financial condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby,
and (b) in the event that the certifying party is an officer of Tenant and the
certificate is being given in such capacity, certify that no Event of Default
has occurred and is continuing hereunder.


 


1.36                           “FISCAL
MONTH” shall mean each calendar month in the Term or each partial calendar
month in the Term.


 


1.37                           “FISCAL
YEAR” shall mean each calendar year in the Term and each partial calendar year
in the Term.


 


1.38                           “FIXED
TERM” shall have the meaning given such term in SECTION 2.3.


 


1.39                           “FIXTURES”
shall have the meaning given such term in SECTION 2.1(d).


 


1.40                           “GAAP”
shall mean generally accepted accounting principles, as adopted in the United
States of America, consistently applied.


 


1.41                           “GOVERNMENT
AGENCIES” shall mean any court, agency, authority, board (including, without
limitation, environmental protection, planning and zoning, and the Puerto Rico
Tourism


 


7





















 


Company), bureau, commission, department, office or instrumentality of
any nature whatsoever of any governmental or quasi-governmental unit of the
United States, or any State, municipality, county or any political subdivision
of any of the foregoing, whether now or hereafter in existence, having
jurisdiction over Tenant or the Property or any portion thereof or the Hotel
operated thereon.


 


1.42                           “GUARANTOR”
shall have the meaning given to the term “Guarantor” under the Guaranty.


 


1.43                           “GUARANTY”
shall mean the Guaranty Agreement of even date herewith made by IHG for the
benefit of, INTER ALIA, Landlord, as the same may be amended, supplemented or
replaced from time to time.


 


1.44                           “HAZARDOUS
SUBSTANCES” shall mean any substance:


 


(a)                                  the
presence of which requires or may hereafter require notification, investigation
or remediation under Applicable Law; or


 


(b)                                 which
is or becomes defined as a “hazardous waste,” “hazardous material” or “hazardous
substance” or “pollutant” or “contaminant” under Applicable Law including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and the
regulations promulgated thereunder; or


 


(c)                                  which
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any Government Agencies; or


 


(d)                                 the
presence of which on the Property, or any portion thereof, causes or materially
threatens to cause an unlawful nuisance upon the Property, or any portion
thereof, or to adjacent properties or poses or materially threatens to pose a
hazard to the Property, or any portion thereof, or to the health or safety of
persons; or


 


(e)                                  without
limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds; or


 


8





















 


(f)                                    without
limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea
formaldehyde foam insulation; or


 


(g)                                 without
limitation, which contains or emits radioactive particles, waves or material;
or


 


(h)                                 without
limitation, which constitutes materials that are now or may hereafter be
subject to regulation pursuant to the Medical Waste Tracking Act of 1988 or any
requirement promulgated by any Government Agencies.


 


1.45                           “HOTEL”
shall mean the hotel being operated on the Property.


 


1.46                           “HOTEL
MORTGAGE” shall mean any first mortgage, first deed-of-trust or first deed to
secure debt and other related security documents granted in connection
therewith now or hereafter granted by Landlord to secure a loan to, or other
debt of, Landlord or its Affiliated Persons which is made by an institutional
lender, investment bank, publicly traded investment fund or other similar
Person regularly making loans secured by hotels or incurred in connection with
the issuance of a mortgage backed security, which loan or debt provides for (i)
level payments of interest and principal and (ii) amortization and other terms
which are commercially reasonable.


 


1.47                           “HOTEL
MORTGAGEE” shall mean the holder of the Hotel Mortgage.


 


1.48                           “IHG”
shall mean InterContinental Hotels Group PLC, its successors and assigns.


 


1.49                           “IMPOSITIONS”
shall mean collectively, all taxes (including, without limitation, all taxes
imposed under the laws of any State, as such laws may be amended from time to
time, and all ad valorem, sales and use, or similar taxes as the same relate to
or are imposed upon Landlord (or its shareholders), Tenant or the business
conducted upon the Property), assessments (including, without limitation, all
assessments for public improvements or benefit, whether or not commenced or
completed prior to the date hereof), water, sewer or other rents and charges,
excises, tax levies, fees (including, without limitation, license, volume of
business taxes, permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or special, ordinary
or extraordinary, or foreseen or unforeseen, of every character in respect of
the Property or the business conducted


 


9





















 


thereon by Tenant (including all interest and penalties thereon due to
any failure in payment by Tenant), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Landlord’s interest in the Property, (b) the Property or any
part thereof or any rent therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with the Property or the leasing or
use of the Property or any part thereof by Tenant; PROVIDED, HOWEVER, the term “Impositions”
shall not include (i) Landlord’s Taxes or (ii) any construction license tax or
excise tax attributable to items to be used in or with respect to Capital
Replacements which shall be a part of the cost of Capital Replacements.


 


1.50                           “INSURANCE
REQUIREMENTS” shall mean all terms of any insurance policy required by this
Agreement and all requirements of the issuer of any such policy and all orders,
rules and regulations and any other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) binding upon
Landlord, Tenant or the Property.


 


1.51                           “INTEREST
RATE” shall mean a rate, not to exceed the maximum legal interest rate, equal
to the greater of (i) twelve percent (12%) per annum and (ii) two and one-half
percent (2.5%) per annum in excess of the Disbursement Rate determined as of
the first day that interest accrues on any amount to which such Interest Rate
is to be applied.


 


1.52                           “LAND”
shall have the meaning given such term in SECTION 2.1(a).


 


1.53                           “LANDLORD”
shall have the meaning given such term in the preambles to this Agreement and
shall also include its permitted successors and assigns.


 


1.54                           “LANDLORD
LIENS” shall mean liens on or against the Property or any payment of Rent (a)
which result from any act of, or any Claim against, Landlord or any owner of a
direct or indirect interest in the Property, or which result from any violation
by Landlord of any terms of this Agreement or the Purchase Agreement, or (b)
which result from liens in favor of any taxing authority by reason of any tax
owed by Landlord or any fee owner of a direct or indirect interest in the
Property; PROVIDED, HOWEVER, that “LANDLORD LIENS” shall not include any lien
resulting from any tax for which Tenant is obligated to pay or indemnify
Landlord against until such time as Tenant shall


 


10





















 


have already paid to or on behalf of Landlord the tax or the required
indemnity with respect to the same.


 


1.55                           “LANDLORD’S
TAXES” shall mean any of the following, collectively, (a) any tax based on net
income imposed on Landlord or its shareholders, (b) any gross or net revenue
tax of Landlord or its shareholders, (c) any transfer fee or other tax imposed
with respect to the sale, exchange or other disposition by Landlord of the
Property or the proceeds thereof, (d) any single business tax, gross receipts
tax (including, without limitation, the Puerto Rico municipal license tax),
transaction privilege, rent, franchise, capital stock or similar taxes as the
same relate to or are imposed upon Landlord or its shareholders, (e) any
interest or penalties imposed on Landlord as a result of the failure of Landlord
to file any return or report timely and in the form prescribed by law or to pay
any tax or imposition, except to the extent such failure is a result of a
breach by Tenant of its obligations pursuant to SECTION 3.1.3, (f) any impositions
that are enacted or adopted by their express terms as a substitute for any tax
that would not have been payable by Tenant pursuant to the terms of this
Agreement or (g) any impositions imposed as a result of a breach of covenant or
representation by Landlord in any agreement governing Landlord’s conduct or
operation or as a result of the gross negligence or willful misconduct of
Landlord; PROVIDED, HOWEVER, the term Landlord Taxes shall not include any
construction license tax or excise tax attributable to items to be used in or
with respect to Capital Replacements which shall be a part of the cost of
Capital Replacements.


 


1.56                           “LEASE
YEAR” shall mean any Fiscal Year or portion thereof, commencing with the 2005
Fiscal Year, during the Term.


 


1.57                           “LEASED
IMPROVEMENTS” shall have the meaning given such term in SECTION 2.1(b).


 


1.58                           “LEASED
INTANGIBLE PROPERTY” shall mean the following items of intangible property: all
hotel licensing agreements and other service contracts, equipment leases,
booking agreements and other arrangements or agreements affecting the
ownership, repair, maintenance, management, leasing or operation of the
Property to which Landlord is a party; all books, records and files relating to
the leasing, maintenance, management or operation of the Property belonging to
Landlord; all transferable or assignable permits, certificates of occupancy,
operating permits, sign permits, development rights and approvals, certificates,
licenses, warranties and guarantees, rights to deposits, trade names, service
marks, telephone


 


11





















 


exchange numbers identified with the Property, and all other
transferable intangible property, miscellaneous rights, benefits and privileges
of any kind or character belonging to Landlord with respect to the Property
other than liquor licenses; provided, however, that “Leased Intangible Property”
shall not include items that are acquired by Tenant on and after the date
hereof or owned by Tenant before the date hereof, in either case to the extent
not conveyed to Landlord.


 


1.59                           “LEASED
PERSONAL PROPERTY” shall have the meaning given such term in SECTION 2.1(e).


 


1.60                           “LIEN”
shall mean any mortgage, security interest, pledge, collateral assignment, or
other encumbrance, lien or charge of any kind, or any transfer of property or
assets for the purpose of subjecting the same to the payment of indebtedness or
performance of any other obligation in priority to payment of its general
creditors.


 


1.61                           “MANAGED
HOTELS” has the meaning given to the term “Hotels” in the New Management
Agreement.


 


1.62                           “MATERIAL
REPAIR” shall mean a repair the cost of which exceeds $250,000; PROVIDED,
HOWEVER, on January 1 of each year starting in 2006, said $250,000 shall
be adjusted to reflect the percentage change in the Consumer Price Index since
the prior January 1.


 


1.63                           “MINIMUM
RENT” shall mean (i) for the period prior to January 1, 2006, an annual
amount equal to Five Million Eight Hundred Twelve Thousand Five Hundred Dollars
($5,812,500), and (ii) for the period after January 1, 2006, an annual
amount equal to Six Million One Hundred Thirty-One Thousand Two Hundred Fifty
Dollars ($6,131,250).


 


1.64                           “NEW
MANAGEMENT AGREEMENT” has the meaning given such term in the Guaranty.


 


1.65                           “NOI”
shall mean, with respect to any property, for any period, the Gross Operating
Profit (as defined in the Uniform System of Accounts) of such property for such
period net of, for such period and such property, real and personal property
taxes and casualty and liability insurance premiums, an imputed reserve for
capital replacements equal to five percent (5%) of gross revenues and an
imputed management fee equal to three percent (3%) of gross revenues.


 


12





















 


1.66                           “NOTICE”
shall mean a notice given in accordance with SECTION 20.10.


 


1.67                           “OFFICER’S
CERTIFICATE” shall mean a certificate signed by an officer or other duly
authorized individual of the certifying Entity duly authorized by the board of
directors or other governing body of the certifying Entity.


 


1.68                           “OPERATING
COSTS” shall mean, collectively, all reasonable and customary costs and
expenses of the Hotel that are normally charged as an operating expense under
GAAP including, without limitation or duplication:


 


(a)                                  the
cost of Inventories (as defined under the Uniform System of Accounts), wages,
salaries and employee fringe benefits, advertising and promotional expenses,
the cost of personnel training programs, utility and energy costs, operating
licenses and permits, maintenance costs, and equipment rentals;


 


(b)                                 all
expenditures made for maintenance and repairs to keep the Hotel in good
condition and repair (other than Capital Additions and other Capital
Expenditures);


 


(c)                                  premiums
for insurance required under this Agreement;


 


(d)                                 the
System Fees;


 


(e)                                  real
estate and personal property taxes and expenses;


 


(f)                                    audit,
legal and accounting fees and expenses except to the extent Tenant is to
reimburse Landlord therefor pursuant to SECTION 3.1.2 (f);


 


(g)                                 rent
or lease payments under ground leases or for equipment used at the Hotel in the
operation thereof; and


 


(h)                                 Minimum
Rent, Additional Rent and Additional Charges.


 


Except as expressly provided herein,
Operating Costs shall not include any fees or charges payable to Tenant, Tenant
Manager or any of their Affiliates or any items corresponding to


 


13





















 


exclusions from Total Hotel Sales (e.g., sales taxes) or items
otherwise expressly excluded from Operating Costs.


 


1.69                           “PARENT”
shall mean, with respect to any Person, any Person which owns directly, or
indirectly through one or more Subsidiaries or Affiliated Persons, fifty
percent (50%) or more of the voting or beneficial interest in, or otherwise has
the right or power (whether by contract, through ownership of securities or
otherwise) to control, such Person.


 


1.70                           “PERMITTED
ENCUMBRANCES” shall mean all rights, restrictions, and easements of record set
forth on Schedule B to the applicable owner’s or leasehold title insurance
policy issued to Landlord or its Affiliate in connection with the transactions
contemplated by the Purchase Agreement with respect to such Property, plus any
other encumbrances as may be “Permitted Encumbrances” under the Purchase
Agreement or as may have been consented to in writing by Landlord and Tenant
from time to time.


 


1.71                           “PERMITTED
USE” shall mean, with respect to the Property, any use of such Property
permitted pursuant to SECTION 4.1.1.


 


1.72                           “PERSON”
shall mean any individual or Entity, and the heirs, executors, administrators,
legal representatives, successors and assigns of such Person where the context
so admits.


 


1.73                           “PLEDGED
HOTELS” shall mean, with respect to any loan or other debt secured by a Hotel
Mortgage, collectively, the hotels which secure such loan or other debt.


 


1.74                           “POOLED
FF&E HOTEL” shall mean the Property and, so long as Landlord and Portfolio
Purchaser are Affiliates of each other, the Managed Hotels, collectively.


 


1.75                           “PORTFOLIO
MANAGER” shall have the meaning given to the term “Manager” in the New
Management Agreement and shall include the “Canadian Manager” thereunder.


 


1.76                           “PORTFOLIO
PURCHASER” shall have the meaning given to the term “Purchaser” in the New
Management Agreement.


 


1.77                           “PORTFOLIO
OWNER” shall have the meaning given to the term “Owner” under the New
Management Agreement.


 


14





















 


1.78                           “PROPERTY”
shall have the meaning given such term in SECTION 2.1.


 


1.79                           “PURCHASE
AGREEMENT” shall mean that certain Amended and Restated Stock Purchase
Agreement pursuant to which an Affiliate of Landlord acquired the stock of the
corporation that owns the Hotel from an Affiliate of Tenant.


 


1.80                           “RECORDS”
shall have the meaning given such term in SECTION 7.2.


 


1.81                           “RENT”
shall mean, collectively, the Minimum Rent, Additional Rent and Additional
Charges.


 


1.82                           “REPAIRS”
shall have the meaning given such term in SECTION 5.1.1.


 


1.83                           “SEC”
shall mean the United States Securities and Exchange Commission.


 


1.84                           “SPECIALLY
DESIGNATED OR BLOCKED PERSON” shall mean (i) a Person designated by the US
Department of Treasury’s Office of Foreign Assets Control from time to time as
a “specially designated national or blocked person” or similar status, (ii) a
Person described in Section 1 of the US Executive Order 13224, issued September 23,
2001, or (iii) a Person otherwise identified by Government Agencies as a person
or entity with which Landlord or Tenant is prohibited from transacting
business. As of the Commencement Date, a list of such designations and the text
of the Executive Order are published at: www.ustreas.gov/offices/enforcement/ofac.


 


1.85                           “STATE”
shall mean the Commonwealth of Puerto Rico.


 


1.86                           “SUBSIDIARY”
shall mean, with respect to any Person, any Entity (a) in which such Person
owns directly, or indirectly through one or more Subsidiaries, twenty percent
(20%) or more of the voting or beneficial interest or (b) which such Person
otherwise has the right or power to control (whether by contract, through
ownership of securities or otherwise).


 


1.87                           “SUCCESSOR
LANDLORD” shall have the meaning given such term in SECTION 19.1.


 


1.88                           “SYSTEM
FEES” shall mean a reservation and marketing fee of three percent (3.0%) of
rooms revenue, (ii) a Priority Club Fee of four and three-quarters percent
(4.75%) of all qualifying folio revenue at a Hotel to Priority Club (i.e., the


 


15





















 


loyalty program of the “INTERCONTINENTAL” brand) members, (iii) a
Technology Fee equal to $10.80 per guest room per month, (iv) an e-mail service
fee equal to $15.00 per e-mail user per month and (v) an accounting fee of
$15.00 per month per guest room, which fees shall be subject to increases on
the terms and conditions that the corresponding fees under the New Management
Agreement are subject to increase thereunder.


 


1.89                           “TAX
EXEMPTION DECREE” shall mean the concession dated December 15, 2004 and
issued by the Puerto Rico Tourism Company to Landlord (or its predecessor in
name), as the same may be amended, replaced, renewed, split, bifurcated and/or
supplemented from time to time.


 


1.90                           “TENANT”
shall have the meaning given such term in the preambles to this Agreement and
shall also include its permitted successors and assigns.


 


1.91                           “TENANT
MANAGEMENT AGREEMENT” shall mean any management agreement entered into by
Tenant with respect to all or any portion of the Property, together with all
amendments, modifications and supplements thereto.


 


1.92                           “TENANT
MANAGER” shall mean any manager under a Tenant Management Agreement.


 


1.93                           “TENANT’S
PERSONAL PROPERTY” shall mean all motor vehicles and consumable inventory and
supplies, furniture, furnishings, movable walls and partitions, equipment and
machinery and all other tangible personal property of Tenant, if any, acquired
by Tenant on and after the date hereof or owned by Tenant before the date
hereof (in each case, if not conveyed to Landlord), and located at the Property
or used in Tenant’s business at the Property and all modifications,
replacements, alterations and additions to such personal property installed at
the expense of Tenant, other than any items included within the definition of
Fixtures or Leased Personal Property or which are to be paid for with amounts
in the FF&E Reserve.


 


1.94                           “TERM”
shall mean, collectively, the Fixed Term and the Extended Terms, to the extent
properly exercised pursuant to the provisions of SECTION 2.4, unless
sooner terminated pursuant to the provisions of this Agreement.


 


1.95                           “TOTAL
HOTEL SALES” shall mean for any period all revenues and receipts of any nature
derived directly or indirectly from the Hotel or from the use or operation
thereof, including, without limitation, room sales; food and beverage


 


16





















 


sales; gaming revenues determined in accordance with industry
standards; telephone, telegraph, fax and internet revenues; rental or other
payments from lessees, sublessees, concessionaires and others occupying or
using space or rendering services at the Hotel (but not the gross receipts of
such lessees, sublessees or concessionaires); and the actual cash proceeds of
business interruption, use, occupancy or similar insurance; PROVIDED, HOWEVER,
that Total Hotel Sales shall not include the following (and there shall be
appropriate deductions made in determining Total Hotel Sales for): gratuities
or service charges in the nature of a gratuity added to a customer’s bill;
federal, State or municipal excise, value added, sales or use taxes, room
taxes, or any other taxes collected directly from patrons or guests or included
as part of the sales price of any goods or services; the State’s share of slot
machine revenue at the Hotel; interest received or accrued with respect to the
funds in the FF&E Reserve; any refunds, rebates, discounts and credits of a
similar nature, given, paid or returned in the course of obtaining Total Hotel
Sales or components thereof; insurance proceeds (other than proceeds from
business interruption or other loss of income insurance); condemnation proceeds
(other than for a temporary taking); credits or refunds made to customers,
guests or patrons; sums and credits received by Landlord for lost or damaged
merchandise; proceeds from the sale or other disposition of the Hotel, any part
thereof, of FF&E or any other assets of the Hotel; or proceeds of any
financing or re-financing; and any other matters specifically excluded from
Total Hotel Sales pursuant to this Agreement.


 


1.96                           “UNIFORM
SYSTEM OF ACCOUNTS” shall mean the Uniform System of Accounts for the Lodging
Industry, Ninth Revised Edition, 1996, as published by the Educational
Institute of the American Hotel and Motel Association, as it may be amended
from time to time.


 


1.97                           “UNSUITABLE
FOR ITS PERMITTED USE” shall mean a state or condition of the Hotel such that
(a) following any damage or destruction to the Hotel, the Hotel cannot be
operated in the good faith judgment of Tenant or Landlord on a commercially
practicable basis and it cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such damage or
destruction and otherwise as required under SECTION 10.2.4 hereof, within
twelve (12) months following such damage or destruction or such shorter period
of time as to which business interruption insurance is available to cover Rent
and other costs related to the Hotel


 


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following such damage or destruction, or (b) as the result of a partial
taking by Condemnation, the Hotel cannot be operated, in the good faith
judgment of Tenant or Landlord, on a commercially practicable basis in light of
then existing circumstances.


 


1.98                           “WORK”
shall have the meaning given such term in SECTION 10.2.4.


 


ARTICLE 2


 


PROPERTY AND TERM


 


2.1                                 PROPERTY.
Upon and subject to the terms and conditions hereinafter set forth, Landlord
leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title
and interest in and to all of the following, collectively, the “PROPERTY”):


 


(a)                                  those
certain tracts, pieces and parcels of land, as more particularly described in
EXHIBIT A attached hereto and made a part hereof (the “LAND”);


 


(b)                                 all
buildings, structures and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes,
conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently situated upon the Land
(collectively, the “LEASED IMPROVEMENTS”);


 


(c)                                  all
easements, rights and appurtenances relating to the Land and the Leased
Improvements;


 


(d)                                 all
equipment, machinery, fixtures, and other items of property, now or hereafter
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning systems
and apparatus, sprinkler systems and fire and theft protection equipment, all
of which, to the maximum extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding
all items included within the category of Tenant’s Personal Property
(collectively, the “FIXTURES”);


 


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(e)                                  all
machinery, equipment, furniture, furnishings, moveable walls or partitions,
computers or trade fixtures or other personal property of any kind or
description used or useful in Tenant’s business on or in the Leased
Improvements, and located on or in the Leased Improvements, and all modifications,
replacements, alterations and additions to such personal property, except
items, if any, included within the category of Fixtures, but specifically
excluding all items included within the category of Tenant’s Personal Property
(collectively, the “LEASED PERSONAL PROPERTY”);


 


(f)                                    all
of the Leased Intangible Property; and


 


(g)                                 any
and all leases of space in the Leased Improvements.


 


2.2                                 CONDITION
OF PROPERTY. Tenant acknowledges receipt and delivery of possession of the
Property and Tenant accepts the Property in its “as is” condition, subject to
the rights of parties in possession, the existing state of title, including all
covenants, conditions, restrictions, reservations, mineral leases, easements
and other matters of record or that are visible or apparent on the Property,
all Applicable Law, and such other matters which would be disclosed by an
inspection of the Property and the record title thereto or by an accurate
survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE PROPERTY AND ALL OF
THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR
EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD
IN RESPECT OF THE CONDITION OF THE PROPERTY. LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE PROPERTY OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
TENANT. Tenant knowingly and expressly waives the warranties against latent and
hidden defects implied by the Civil Code of Puerto Rico upon lessors of real
property with respect to the lease of real property, including, but not limited
to warranties for hidden defects implied under Articles 1363(2) and 1373 of the
Civil Code of Puerto Rico.


 


2.3                                 FIXED
TERM. The initial term of this Agreement (the “FIXED TERM”) shall commence on
the Commencement Date and shall expire December 31, 2029.


 


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2.4                                 EXTENDED
TERM. Provided the term of the New Management Agreement is simultaneously
extended in accordance with the terms of the New Management Agreement, the Term
may be extended, at Tenant’s option, for up to two (2) consecutive periods
(collectively, the “EXTENDED TERMS”) of fifteen (15) years each pursuant to a
written notice to Landlord given at least two (2) years prior to the then
Expiration Date. If Tenant fails to give notice of its election not to exercise
either of its options to extend the Term on or before the date which is the day
prior to the date that is two (2) years prior to the then Expiration Date or if
the Portfolio Manager fails to give notice of its election not to exercise
either of its options to extend the term of the New Management Agreement on or
before the date which is the day prior to the date that is two (2) years prior
to the then Expiration Date, Tenant shall be deemed to have exercised the
applicable extension option.


 


Each Extended Term shall commence on the day
succeeding the expiration of the Fixed Term or the preceding Extended Term, as
the case may be. All of the terms, covenants and provisions of this Agreement
shall apply to each such Extended Term, except that Tenant shall have no right
to extend the Term beyond the expiration of the Extended Terms. If Tenant shall
give Notice that it elects not to extend the Term in accordance with this SECTION 2.4,
this Agreement shall automatically terminate at the end of the Term then in
effect and Tenant shall have no further option to extend the Term of this
Agreement. Otherwise, the extension of this Agreement shall be automatically
effected without the execution of any additional documents; it being understood
and agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.


 


If Tenant gives notice of its election not to
extend the Term or if the Portfolio Manager gives notice of its election not to
extend the term of the New Management Agreement, or if Tenant shall have no
further right to extend the Term, then at any time during the last two years of
the Term, Landlord may terminate this Agreement and the Term on not less than
thirty (30) days’ prior written notice.


 


ARTICLE 3


 


RENT


 


3.1                                 RENT.
Tenant shall pay, in lawful money of the United States of America which shall
be legal tender for the payment of public and private debts, without offset,
abatement, demand or


 


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deduction (unless otherwise expressly provided in this Agreement),
Minimum Rent and Additional Rent to Landlord and Additional Charges to the
party to whom such Additional Charges are payable, during the Term. All
payments to Landlord shall be made by wire transfer of immediately available
federal funds or by other means acceptable to Landlord in its sole discretion.
Rent for any partial Fiscal Month shall be prorated on a per diem basis.


 


3.1.1                        MINIMUM RENT.


 


(a)                                  PAYMENTS.
Minimum Rent shall be paid in advance on the first Business Day of each Fiscal
Month; PROVIDED, HOWEVER, that the first payment of Minimum Rent shall be
payable on the Commencement Date (and, if applicable, such payment shall be
prorated as provided in the last sentence of the first paragraph of SECTION 3.1).


 


(b)                                 ADJUSTMENTS
OF MINIMUM RENT FOLLOWING DISBURSEMENTS UNDER SECTIONS 5.1.3 (b), 10.2.3 or
11.2. Effective on the date of each disbursement to pay for the cost of any
repairs, maintenance, renovations or replacements pursuant to SECTIONS 5.1.3
(b), 10.2.3 or 11.2, the annual Minimum Rent shall be increased by a PER ANNUM
amount equal to the Disbursement Rate times the amount so disbursed. If any
such disbursement is made during any month on a day other than the first
Business Day of a Fiscal Month, Tenant shall pay to Landlord on the first
Business Day of the immediately following Fiscal Month (in addition to the
amount of Minimum Rent payable with respect to such Fiscal Month, as adjusted
pursuant to this paragraph (b)) the amount by which Minimum Rent for the
preceding Fiscal Month, as adjusted for such disbursement on a per diem basis, exceeded
the amount of Minimum Rent paid by Tenant for such preceding Fiscal Month.


 


3.1.2                        ADDITIONAL RENT.


 


(a)                                  AMOUNT.
Tenant shall pay additional rent (“ADDITIONAL RENT”) with respect to the
Property with respect to each Lease Year beginning with the 2007 Lease Year, in
an amount, not less than zero, equal to seven and one-half percent (7.5%) of
Excess Total Hotel Sales for such Property.


 


(b)                                 FISCAL
MONTH INSTALLMENTS. Installments of Additional Rent for each Lease Year or
portion thereof


 


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shall be calculated and paid with respect to
each Fiscal Month in arrears on the twenty-fifth day of the succeeding Fiscal
Month, based on Total Hotel Sales for the year-to-date as of the last day of
the preceding month and the Total Hotel Sales for the year-to-date for the
corresponding period during the Base Year. On or before the twenty-fifth (25th)
day after the end of each Fiscal Month, Tenant shall furnish Landlord with
detailed operating statements setting forth the results of operations at the
Hotel with respect to such month and year-to-date showing Total Hotel Sales, rooms
revenues, revenue per available room, occupancy percentage and average daily
rate, Operating Costs, deposits to, and expenditures from, the FF&E Reserve
and Additional Rent together with a Financial Officer’s Certificate. Such
statements may be provided electronically to Landlord.


 


(c)                                  YEAR
END STATEMENTS. Not less than ten (10) days prior to the date on which Landlord
or any of its Affiliates are required to file audited financial statements with
the SEC (but in all events on or before February 15 of each year), Tenant
shall deliver to Landlord a Financial Officer’s Certificate setting forth for
the prior Lease Year Total Hotel Sales, Operating Costs, the calculation of
Additional Rent and deposits to, and expenditures from, the FF&E Reserve
together with an Agreed Upon Procedure Letter with respect thereto. The cost of
obtaining such letter shall be an Operating Cost.


 


(d)                                 RECONCILIATION.
If any amounts due to Landlord as shown in a Financial Officer’s Certificate or
audit provided pursuant to SECTIONS 3.1.2 (f) or 5.3 exceed the amounts
previously paid with respect thereto to Landlord, Tenant shall pay such excess
to Landlord at such time as the Financial Officer’s Certificate or audit is
delivered, together with interest at the Interest Rate from the date due. (Any
such interest which accrues after the day that is ten (10) Business Days after
the date on which such Financial Officer’s Certificate is delivered or is due
and any such interest which results from Tenant’s willful understatement of
amounts due to Landlord shall not be Operating Costs.) If Additional Rent due
as shown in a Financial Officer’s Certificate or audit is less than the amount previously
paid with respect thereto to Landlord, Landlord shall be entitled to retain the
same but Tenant shall be credited such overpayment against the next installment
of Additional Rent. In no event shall (i) any


 


22





















 


amount previously deposited in the FF&E
Reserve be withdrawn therefrom or (ii) the amount of Minimum Rent be subject to
adjustment pursuant to this SECTION 3.1.2 (d).


 


(e)                                  ADDITIONAL
INFORMATION. In addition, Tenant shall provide Landlord with information
relating to the Hotel, Tenant and its Affiliates that (i) may be required in
order for Landlord or its Affiliates to prepare financial statements in
accordance with GAAP or to comply with Applicable Law including, without
limitation, any applicable tax or securities laws and regulations and the SEC’s
interpretation thereof, (ii) may be required for Landlord or any of its
Affiliates to prepare tax returns, or (iii) is of the type that Tenant or its
Affiliated Persons customarily prepares for other hotel owners or itself.


 


(f)                                    AUDIT.
At Landlord’s election and at Landlord’s cost except as otherwise provided
herein, a certified audit of the Hotel’s operations may be performed annually,
and after the Expiration Date, by a nationally recognized, independent
certified public accounting firm appointed by Landlord. In the event that
Landlord elects to have such an audit performed, Landlord must give notice of
its election within twelve (12) months after its receipt of the applicable
year-end Financial Officer’s Certificate corresponding to such Lease Year and
given pursuant to SECTION 3.1.2 (c). Any dispute concerning the
correctness of an audit shall be settled by Arbitration. Tenant shall pay the
cost of any audit revealing an understatement of Additional Rent by more than
three percent (3%) in the aggregate, and such cost shall not be an Operating
Cost. In the event that either no notice of audit is given within said twelve
(12) months, or no audit is in fact commenced within eighteen (18) months after
receipt of such year-end Financial Officer’s Certificate, such operating
statement will constitute the final statement for that Fiscal Year, deemed to
have been approved by Landlord.


 


(g)                                 In
the event that this Agreement is terminated by Landlord pursuant to SECTION 12.1,
then all of Tenant’s Personal Property shall immediately and automatically be
transferred to Landlord and become, without the requirement of any action or
undertaking by any party, Landlord’s sole property and shall remain upon the
Property and/or the Hotel and be surrendered with the Property and/or the Hotel
without disturbance, molestation or injury.


 


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(h)                                 SURVIVAL.
The terms of this SECTION 3.1.2 shall survive the expiration or earlier
termination of the Term.


 


3.1.3                        ADDITIONAL CHARGES. In addition
to the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay, or
cause to be paid, to the appropriate parties and discharge as and when due and
payable the following (collectively, “ADDITIONAL CHARGES”):


 


(a)                                  IMPOSITIONS.
Subject to ARTICLE 8 relating to permitted contests, all Impositions
before any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early payment) may
be added for non-payment, such payments to be made directly to the taxing
authorities (or other payees) where feasible, and shall promptly, upon request,
furnish to Landlord copies of official receipts or other reasonably
satisfactory proof evidencing such payments. If any such Imposition may, at the
option of the taxpayer, lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition), Tenant may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay such
installments during the Term as the same become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Where Tenant’s
direct payment of Impositions (and the filings therefor) are not feasible, Landlord
shall cooperate with Tenant to effect the payment of such Impositions (and make
the filings therefor), it being understood that the amount of any such
Imposition remains Tenant’s responsibility and Landlord is only cooperating to
assist in remitting such amount; Tenant, at its expense, shall to the extent
required or permitted by Applicable Law, prepare and file all other tax returns
and reports in respect of any other Imposition as may be required. Landlord
shall, at its expense and to the extent required or permitted by Applicable
Law, prepare and duly and timely file all tax returns and pay all taxes due in
respect of Landlord’s Taxes (other than those with respect to Impositions) as
may be required by Government Agencies, so as to avoid the imposition of any
fine, penalty, interest or cost (other than any opportunity cost as a result of
a failure to take advantage of any discount for early payment). Provided no
Event of Default shall have occurred and be continuing, notwithstanding any provision


 


24





















 


of this agreement or any other agreement
including, without limitation, the Purchase Agreement, to the contrary, if any
refund shall be due from any taxing authority in respect of any Imposition paid
by Tenant, the same shall be paid over to or retained by Tenant. Landlord and
Tenant shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Property as may be necessary
to prepare any required returns and reports. In the event Government Agencies
classify the Property covered by this Agreement as personal property, Tenant
shall file all personal property tax returns in such jurisdictions where it may
legally so file. Each party shall, to the extent it possesses the same, provide
the other, upon request, with cost and depreciation records necessary for
filing returns for the Property so classified as personal property. Where
Landlord is legally required to file personal property tax returns for property
covered by this Agreement, Landlord shall provide Tenant with copies of
assessment notices in sufficient time for Tenant to file a protest. All
Impositions assessed against such personal property shall be (irrespective of
whether Landlord or Tenant shall file the relevant return) paid by Tenant not
later than the last date on which the same may be made without interest or
penalty, subject to the provisions of ARTICLE 8. Landlord and Tenant
shall, upon the other’s request, consult with each other in order to avoid the
imposition of withholding taxes upon either party, the Property or otherwise concerning
the operation thereof.


 


Landlord shall
give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of
which Landlord at any time has knowledge; PROVIDED, HOWEVER, that Landlord’s
failure to give any such notice shall in no way diminish Tenant’s obligation
hereunder to pay such Impositions. To the extent Landlord is legally required
to file a tax return for an Imposition and Tenant is not permitted under
Applicable Law to make such filing, Landlord shall provide Tenant with a copy
of the return in sufficient time for Tenant to pay the Imposition; PROVIDED,
HOWEVER, that Landlord’s failure to provide such copy shall in no way diminish
Tenant’s obligation hereunder to pay such Impositions.


 


(b)                                 UTILITY
CHARGES. All charges for electricity, power, gas, oil, water and other
utilities used in connection with the Property.


 


25










 













 


(c)                                  INSURANCE
PREMIUMS. All premiums for the insurance coverage required to be maintained
pursuant to ARTICLE 9.


 


(d)                                 OTHER
CHARGES. All other amounts, liabilities and obligations, including, without
limitation, all amounts payable under any equipment leases and all agreements
to indemnify Landlord under SECTIONS 4.3.2 and 9.7.


 


(e)                                  TAX
EXEMPTION DECREE EXPENDITURES. Notwithstanding any provision of this Agreement
or any other agreement including, without limitation, the Purchase Agreement,
to the contrary, any amounts required to be expended or invested under any of
the Tax Exemption Decree, the Puerto Rico Tourism Development Act of 1993 or
the regulations thereunder on (i) promotion, publicity, marketing for the
Hotel; (ii) compliance with adequate safety, health, sanitation and protection
standards for guests at the Hotel; (iii) personnel training and retraining;
(iv) handicapped facilities for the Hotel; (v) conservation, improvement and
maintenance of the Hotel and of the environmental and aesthetic infrastructure;
or (vi) any similar purposes or activity. If the Tax Exemption Decree, the
Puerto Rico Tourism Development Act of 1993 or the regulations thereunder
preclude Tenant from complying with the terms of the foregoing, then Landlord
and Tenant shall negotiate in good faith an amendment to this Agreement to deal
with such eventuality with the intent that SECTION 3.3 be given full
effect and that all Rents and other amounts payable by Tenant hereunder qualify
as “rents from real property” within the meaning of Section 856(d) of the
Code. Nothing contained in this SECTION 3.1.3 (e) is intended to, nor
shall, limit Tenant’s rights under SECTIONS 5.1.2 OR 5.1.3.


 


3.1.4                        REIMBURSEMENT FOR ADDITIONAL
CHARGES. If Tenant pays or causes to be paid property taxes or similar or other
Additional Charges attributable to periods after the end of the Term, whether
upon expiration or sooner termination of this Agreement (other than termination
by reason of an Event of Default), Tenant may, within a reasonable time after
the end of the Term, provide Notice to Landlord of its estimate of such
amounts. Landlord shall promptly reimburse Tenant for all payments of such
taxes and other similar Additional Charges that are attributable to any period
after the Term of this Agreement.


 


3.2                                 LATE
PAYMENT OF RENT, ETC. If any installment of Minimum Rent shall not be paid
within twenty-five (25) days


 


26





















 


after its due date or if any Additional Rent or Additional Charges (but
only as to those Additional Charges which are payable directly to Landlord)
shall not be paid within ten (10) days after its due date, Tenant shall pay
Landlord, on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Interest Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof.


 


In the event of any failure by Tenant to pay
any Additional Charges when due, Tenant shall promptly pay and discharge, as
Additional Charges, every fine, penalty, interest and cost which is added for
non-payment or late payment of such items. Landlord shall have all legal,
equitable and contractual rights, powers and remedies provided either in this
Agreement or by statute or otherwise in the case of non-payment of the
Additional Charges as in the case of non-payment of the Minimum Rent and
Additional Rent.


 


3.3                                 NET
LEASE. The Rent shall be absolutely net to Landlord so that this Agreement
shall yield to Landlord the full amount of the installments or amounts of the
Rent throughout the Term, subject to any other provisions of this Agreement
which expressly provide otherwise including any provisions for adjustment or
abatement of such Rent.


 


3.4                                 NO
TERMINATION, ABATEMENT, ETC. Except as otherwise specifically provided in this
Agreement, each of Landlord and Tenant, to the maximum extent permitted by law,
shall remain bound by this Agreement in accordance with its terms and shall not
take any action without the consent of the other to modify, surrender or
terminate this Agreement. In addition, except as otherwise expressly provided
in this Agreement, Tenant shall not seek, or be entitled to, any abatement,
deduction, deferment or reduction of the Rent, or set-off against the Rent, nor
shall the respective obligations of Landlord and Tenant be otherwise affected
by reason of: (a) any damage to or destruction of the Property or any portion
thereof from whatever cause or any Condemnation; (b) the lawful or unlawful
prohibition of, or restriction upon, Tenant’s use of the Property, or any
portion thereof, or the interference with such use by any Person or by reason
of eviction by paramount title; (c) any claim which Tenant may have against
Landlord by reason of any default or breach of any warranty by Landlord under
this Agreement or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord


 


27





















 


or any assignee or transferee of Landlord; or (e) any other cause
whether similar or dissimilar to any of the foregoing, except as otherwise
specifically provided in this Agreement.


 


3.5                                 WAIVER.
Tenant hereby waives all rights arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law (a) to modify, surrender or
terminate this Agreement or quit or surrender the Property or any portion
thereof, or (b) which would entitle Tenant to any abatement, reduction,
suspension or deferment of the Rent or other sums payable or other obligations
to be performed by Tenant hereunder. The obligations of Tenant hereunder shall
be separate and independent covenants and agreements, and the Rent and all
other sums payable by Tenant hereunder shall continue to be payable in all
events unless the obligations to pay the same shall be terminated pursuant to
the express provisions of this Agreement.


 


ARTICLE 4


 


USE OF THE PROPERTY


 


4.1                                 PERMITTED
USE.


 


4.1.1 PERMITTED USE. Tenant shall, at all
times during the Term, subject to temporary periods for the repair of damage
caused by casualty or Condemnation, continuously use and operate the Property
as full service luxury resort hotel and casino and any uses incidental thereto.
Tenant shall not use or permit to be used the Property or any portion thereof
for any other use without the prior written consent of Landlord, which approval
shall not be unreasonably withheld, delayed or conditioned. Tenant shall not
change the brand of the Hotel without Landlord’s prior written consent, it
being agreed that, on the Commencement Date, the Hotel shall be operated under
the “INTERCONTINENTAL” brand. No use shall be made or permitted to be made of
the Property and no acts shall be done thereon which will cause the
cancellation of any insurance policy covering such Property or any part thereof
(unless another adequate policy is available), nor shall Tenant sell or
otherwise provide or permit to be kept, used or sold in or about the Property
any article which may be prohibited by law or by the standard form of fire
insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriter’s regulations. Tenant shall, at its sole cost,
comply with all Insurance Requirements.


 


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4.1.2                        NECESSARY APPROVALS. Tenant
shall proceed with all due diligence and exercise reasonable efforts to obtain
and maintain all approvals necessary to use and operate, for its Permitted Use,
the Property and the Hotel located thereon under Applicable Law.


 


4.1.3                        LAWFUL USE, ETC. Tenant shall
not use or suffer or permit the use of the Property or Tenant’s Personal
Property, if any, for any unlawful purpose. Tenant shall not, and shall direct
the Tenant Manager not to, commit or suffer to be committed any waste on the
Property, or in the Hotel, nor shall Tenant cause or permit any unlawful
nuisance thereon or therein. Tenant shall not, and shall direct the Tenant
Manager not to, suffer nor permit the Property, or any portion thereof, to be
used in such a manner as (i) may materially and adversely impair Landlord’s
title thereto or to any portion thereof, or (ii) may reasonably allow a claim
or claims for adverse usage or adverse possession by the public, as such, or of
implied dedication of the Property or any portion thereof.


 


4.2                                 COMPLIANCE
WITH LEGAL/INSURANCE REQUIREMENTS, ETC. Subject to the provisions of ARTICLE 8
and SECTION 5.1.3 (b), Tenant, at its sole expense, shall (i) comply with
all Applicable Law and Insurance Requirements in respect of the use, operation,
maintenance, repair, alteration and restoration of the Property and with the
terms of any ground lease, sublease or parking lease affecting the Property,
(ii) perform all obligations of the landlord under any sublease affecting the
Property and (iii) procure, maintain and comply with all licenses, permits and
other authorizations and agreements required for any use of the Property and
Tenant’s Personal Property, if any, then being made, and for the proper
erection, installation, operation and maintenance of the Property or any part
thereof.


 


4.3                                 ENVIRONMENTAL
MATTERS.


 


4.3.1                        RESTRICTION ON USE, ETC. During
the Term and any other time that Tenant shall be in possession of the Property,
Tenant shall not store on, release or spill upon, dispose of or transfer to or
from the Property any Hazardous Substance. During the Term and any other time
that Tenant shall be in possession of the Property, Tenant shall maintain (and
shall direct the Tenant Manager to maintain) the Property at all times free of
any Hazardous Substance except for those which are customarily used at other
hotels like the Hotel and are in compliance with all Environmental Laws. Tenant
shall promptly: (a) upon receipt of notice or knowledge and shall direct the


 


29





















 


Tenant Manager upon receipt of notice or knowledge promptly to, notify
Landlord in writing of any material change in the nature or extent of Hazardous
Substances at the Property, (b) transmit to Landlord a copy of any report which
is required to be filed with respect to the Property pursuant to the Emergency Planning
and Community Right-to-Know Act or any other Environmental Law, (c) transmit to
Landlord copies of any citations, orders, notices or other governmental
communications received by Tenant or its agents or representatives with respect
to Hazardous Substances or violations or alleged violations of Environmental
Law (collectively, an “ENVIRONMENTAL NOTICE”), which Environmental Notice
requires a written response or any action to be taken and/or if such Environmental
Notice gives notice of and/or presents a material risk of any material
violation of any Environmental Law and/or presents a material risk of any
material cost, expense, loss or damage, (d) subject to the provisions of ARTICLE 8,
observe and comply with all Environmental Laws relating to the use, storage,
maintenance and disposal of Hazardous Substances and all orders or directives
from any official, court or agency of competent jurisdiction relating to the
use, storage or maintenance or requiring the removal, treatment, containment or
other disposition of Hazardous Substances, and (e) pay or otherwise dispose of
any fine, charge or Imposition related to Hazardous Substances or violations of
Environmental Law.


 


If, at any time prior to the termination of
this Agreement, Hazardous Substances (other than those permitted under this
Agreement) are discovered on the Property, Tenant shall take all actions and
incur any and all expenses, as are required by any Governmental Agency and by
Environmental Law, (i) to clean up and remove from and about the Property all
Hazardous Substances thereon, (ii) to contain and prevent any further
discharge, release or threat of discharge or release of Hazardous Substances on
or about the Property and (iii) to use good faith efforts to eliminate any
further discharge, release or threat of discharge or release of Hazardous
Substances on or about the Property.


 


4.3.2                        INDEMNIFICATION OF LANDLORD.
Tenant shall protect, indemnify and hold harmless Landlord and each Hotel
Mortgagee, their trustees, officers, agents, employees and beneficiaries, and
any of their respective successors or assigns with respect to this Agreement
(collectively, the “INDEMNITEES” and, individually, an “INDEMNITEE”) for, from
and against any and all debts, liens, claims, obligations, liabilities,
sanctions, losses, causes of action, administrative orders or


 


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notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorney’s and technical consultant’s fees and expenses)
imposed upon, incurred by or asserted against any Indemnitee resulting from,
either directly or indirectly, the presence during the Term (or any other time
Tenant shall be in possession of the Property) in, upon, over or under the
Land, soil, surface water or ground water of the Property or any properties
surrounding the Property of any Hazardous Substances in violation of any
Environmental Law or otherwise. Tenant’s duty herein includes, but is not
limited to, costs associated with personal injury or property damage claims as
a result of the presence prior to the expiration or sooner termination of the
Term and the surrender of the Property to Landlord in accordance with the terms
of this Agreement of Hazardous Substances in, upon, over or under the Land,
soil, surface water or ground water of the Property in violation of any
Environmental Law or otherwise. Upon Notice from Landlord or any other of the
Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost and
expense, of any indemnification duties set forth herein, in which event Tenant
shall not be liable for payment of any duplicative attorneys’ fees incurred by
any Indemnitee.


 


Tenant shall, upon demand, pay to Landlord,
as an Additional Charge, any cost, expense, loss or damage (including, without
limitation, reasonable attorneys’ fees) incurred by Landlord and arising from a
failure of Tenant to observe and perform the requirements of this SECTION 4.3,
which amounts shall bear interest from the date incurred until paid by Tenant
to Landlord at the Interest Rate.


 


4.3.3                        SURVIVAL. The provisions of
this SECTION 4.3 shall survive the expiration or sooner termination of
this Agreement.


 


ARTICLE 5


 


MAINTENANCE AND REPAIRS


 


5.1                                 MAINTENANCE
AND REPAIR.


 


5.1.1                        TENANT’S GENERAL OBLIGATIONS.
Subject to SECTION 6.1 hereof, Tenant shall, at its sole cost and expense
(except as expressly provided in SECTION 5.1.3 (b)), keep the Property and
all private roadways, sidewalks and curbs appurtenant thereto (and Tenant’s
Personal Property) in good order and repair, reasonable wear and tear excepted
(whether or not the need for such repairs occurs as a result of Tenant’s


 


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use, any prior use, Insurance Requirements, the elements or the age of
the Property or Tenant’s Personal Property or any portion thereof), and shall promptly
make all repairs, corrections, maintenance, alterations, improvements, renovations,
installations, renewals and additions (collectively, “REPAIRS”) thereto of
every kind and nature, whether interior or exterior, structural or nonstructural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term (concealed or
otherwise). All Repairs shall be made in a good, workmanlike manner, consistent
with industry standards for like hotels and casinos in like locales, in
accordance with all applicable federal, State, territorial and local statutes,
ordinances, codes, rules and regulations relating to any such work. Tenant
shall not take or omit to take any action, the taking or omission of which
would materially and adversely impair the value or the usefulness of the Property
or any material part thereof for its Permitted Use.


 


Any and all alterations, additions, improvements, and fixtures which
may be made or installed by either the Landlord or the Tenant upon the Property
and/or the Hotel and which in any manner are attached to the floors, walls or
ceilings (including, without limitation, any linoleum or other floor covering
of similar character which may be cemented or otherwise adhesively affixed to
the floor, and any electrical, plumbing, heating, ventilating and/or air
conditioning system and equipment), shall, upon the termination or expiration
of this Agreement, immediately and automatically be transferred to Landlord and
become, without the requirement of any action or undertaking by any party,
Landlord’s sole property and shall remain upon the Property and/or the Hotel
and be surrendered with the Property and/or the Hotel as a part thereof without
disturbance, molestation or injury.


 


5.1.2                        FF&E
RESERVE.


 


(a)                                  The FF&E Reserve,
all amounts deposited therein, and all Capital Replacements shall belong to
Landlord.


 


(b)                                 Beginning
on February 25, 2007 and on the twenty-fifth day of every month
thereafter, Tenant shall transfer into the FF&E Reserve an amount equal to
the Applicable Percentage of Total Hotel Sales for the prior month.


 


(c)                                  Not
less than sixty (60) days prior to the first day of each Fiscal Year after the
2005 Fiscal Year, Tenant shall submit to Landlord for Landlord’s approval a
proposed estimate of expenditures from the FF&E Reserve for the


 


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ensuing full or partial Fiscal Year, as the
case may be (the “FF&E ESTIMATE”). If Landlord fails to disapprove of a
proposed FF&E Estimate within thirty (30) days after the submission thereof
to Landlord for its approval, the same shall be deemed approved. Together with
each such FF&E Estimate, Tenant shall provide to Landlord a proposed
five-year capital plan for the Hotel for Landlord’s review and approval. Tenant
will provide Landlord with the material data and information utilized in
preparing the FF&E Estimates or any revisions thereof. Tenant will not be
deemed to have made any guaranty, warranty or representation whatsoever in
connection with the FF&E Estimates, except that the proposed FF&E
Estimates reflect Tenant’s best professional estimates of the matters they
describe. The FF&E Estimate for the 2005 Fiscal Year shall have been
delivered by Tenant to Landlord on or before the Commencement Date.


 


(d)                                 In
the event Landlord disapproves or raises any objections to the proposed
FF&E Estimate, or any portion thereof, or any revisions thereto, Landlord
and Tenant shall cooperate with each other in good faith to resolve the
disputed or objectionable items. If Landlord disapproves of a proposed FF&E
Estimate, Landlord will disapprove on a specific line-by-line basis to the
extent reasonably practical. Any dispute with respect to a proposed FF&E
Estimate which is not resolved by the parties within thirty (30) days after the
submission thereof to Landlord shall be resolved by Arbitration.


 


(e)                                  All
expenditures from the FF&E Reserve shall be (as to both the amount of each
such expenditure and the timing thereof) both reasonable and necessary, given
the objective that the Hotel will be maintained and operated to a standard
comparable to competitive hotels. All amounts from the FF&E Reserve shall
be paid to Persons who are not Affiliated Persons of Tenant without markup or
allocated internal costs by Tenant or its Affiliated Persons except that Tenant
may use Affiliated Persons to provide goods and services if Landlord has
granted its prior written approval thereof.


 


(f)                                    Tenant
shall, consistent with the FF&E Estimate approved by Landlord, from time to
time make expenditures from the FF&E Reserve to pay for Capital
Replacements made during the Term. Tenant shall not materially deviate from the
FF&E Estimate approved by Landlord without the prior approval of Landlord,
except in the case of emergency where


 


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immediate action is necessary to prevent
imminent harm to person or property. Notwithstanding anything in this Agreement
to the contrary, no additional cost or expense shall be incurred or paid in connection
with any Capital Replacements made during the last two (2) years of the Term to
the extent attributable solely to complying with the InterContinental brand standards.


 


(g)                                 Any
amounts remaining in the FF&E Reserve at the close of each Lease Year will
be carried forward and retained in the FF&E Reserve. Any and all portions
of the Hotel which are scrapped or removed in connection with the making of any
major or non-major repairs, renovations, additions, alterations, improvements,
removals or replacements shall be disposed of by Tenant and any net proceeds
thereof shall be deposited in the FF&E Reserve and not included in Total
Hotel Sales. In addition, any proceeds from the sale of FF&E no longer
necessary to the operation of the Hotel shall be added to the FF&E Reserve.


 


(h)                                 Subject
to the terms of SECTION 5.1.2 (j), Tenant shall be the only party entitled
to withdraw funds from the FF&E Reserve until a Default shall occur.


 


(i)                                     Upon
the expiration or earlier termination of the Term, Tenant shall disburse to
Landlord, or as Landlord shall direct, all amounts remaining in the FF&E
Reserve after payments of all expenses on account of Capital Replacements
appropriately incurred by Tenant during the Term.


 


(j)                                     So
long as the Managed Hotels are Pooled FF&E Hotels, it is understood and
agreed that funds deposited in the FF&E Reserve pursuant to this Agreement
and the Reserve Account under New Management Agreement shall be maintained and
used on a consolidated basis such that all amounts to be deposited in the
FF&E Reserve and such Reserve Account shall be deposited in a single
account and Portfolio Manager and Tenant may apply any funds therein to any of
the Pooled FF&E Hotels in accordance with the terms of this Agreement and
the New Management Agreement.


 


(k)                                  Notwithstanding
anything contained herein to the contrary, if Landlord advises Tenant that in
Landlord’s opinion, the fair market value of all personal property of Landlord
at, about or which forms a part of the Property is equal to or exceeds thirteen
and one half percent (13.5%) of the fair market value of the Property, Tenant
and its


 


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Affiliates shall not use funds from the
FF&E Reserve or which are required to be expended pursuant to any purchase
agreement to purchase additional personal property for use at, about or as part
of the Property without Landlord’s prior written consent, which consent may be
granted or withheld in Landlord’s sole and absolute judgment.


 


5.1.3                        LANDLORD’S
OBLIGATIONS.


 


(a)                                  Except
as otherwise expressly provided in this Agreement, Landlord shall not, under
any circumstances, be required to build or rebuild any improvement on the
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Property, whether ordinary or
extraordinary, structural or nonstructural, foreseen or unforeseen, or to make
any expenditure whatsoever with respect thereto, or to maintain the Property in
any way. Except as otherwise expressly provided in this Agreement, Tenant
hereby waives, to the maximum extent permitted by law, the right to make
repairs at the expense of Landlord pursuant to any law in effect on the date
hereof or hereafter enacted. Landlord shall have the right to give, record and post,
as appropriate, notices of nonresponsibility under any mechanic’s lien laws now
or hereafter existing.


 


(b)                                 Subject
to the terms of SECTION 5.1.3 (c), if funds in the FF&E Reserve shall
be insufficient for necessary and permitted expenditures thereof and the amount
of such expenditures exceeds the amount on deposit in the FF&E Reserve,
Tenant may, at its election, give Landlord Notice thereof, which Notice shall
set forth, in reasonable detail, the nature of the required Capital
Replacement, the estimated cost thereof and such other information with respect
thereto as Landlord may reasonably require. Provided that no Default shall have
occurred and be continuing and Tenant shall otherwise comply with the
applicable provisions of ARTICLE 6, Landlord shall, within twenty (20)
Business Days after such Notice, subject to and in accordance with the
applicable provisions of ARTICLE 6, disburse such required funds to Tenant
for deposit in the FF&E Reserve and, upon such disbursement, the Minimum
Rent shall be adjusted as provided in SECTION 3.1.1 (b). Tenant shall
include a good faith projection of funds required pursuant to this SECTION 5.1.3
(b) in the FF&E Estimate.


 


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(c)                                  Unless
and until the Affiliates of Portfolio Manager which sold the Pooled FF&E
Hotels to the Portfolio Purchaser and the stock of Landlord to the Portfolio
Purchaser have expended $25,000,000 (net of any applicable value added tax that
is refundable) of their own funds to make Capital Replacements at the Pooled
FF&E Hotels, Landlord shall have no obligation to make or to cause its
Affiliates to make any advances to the FF&E Reserve pursuant to SECTION 5.1.3
(b).


 


5.1.4                        NONRESPONSIBILITY OF LANDLORD,
ETC. All materialmen, contractors, artisans, mechanics and laborers and other
persons contracting with Tenant with respect to the Property, or any part
thereof, are hereby charged with notice that liens on the Property or on
Landlord’s interest therein are expressly prohibited and that they must look
solely to Tenant to secure payment for any work done or material furnished to
Tenant or for any other purpose during the term of this Agreement.


 


Nothing contained in this Agreement 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 materialmen for the performance of any labor or the
furnishing of any materials for any alteration, addition, improvement or repair
to the Property or any part thereof or as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to the filing of any lien
against the Property or any part thereof nor to subject Landlord’s estate in
the Property or any part thereof to liability under any mechanic’s lien law of
any State in any way, it being expressly understood Landlord’s estate shall not
be subject to any such liability.


 


5.2                                 TENANT’S
PERSONAL PROPERTY. Tenant shall provide and maintain throughout the Term all
such Tenant’s Personal Property as shall be necessary in order to operate in
compliance with all Applicable Laws and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Permitted Use.


 


5.3                                 AT
END OF TERM.


 


5.3.1                        YIELD UP.
Upon the expiration or sooner termination of this Agreement:


 


(a)                                  Tenant
shall vacate and surrender the Property to Landlord in substantially the same
condition in which the


 


36





















 


Property was in on the Commencement Date,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Agreement, reasonable wear and tear (and
casualty damage and Condemnation, in the event that this Agreement is
terminated following a casualty or Condemnation in accordance with ARTICLE 10
or ARTICLE 11) excepted.


 


(b)                                 Within
sixty (60) days following the effective date of such expiration or earlier
termination, Tenant will submit to Landlord an audited final accounting of
Total Hotel Sales, Additional Rent and deposits to and withdrawals from the
FF&E Reserve and all accounts between Landlord and Tenant through the
effective date of such expiration or earlier termination, the cost of which
audit shall be shared equally by Tenant and Landlord and shall not be an
Operating Cost and shall be performed by Ernst & Young or another
accounting firm selected by Tenant and approved by Landlord. Said final
accounting shall be accompanied by a Financial Officer’s Certificate and will
promptly be submitted by Tenant to Landlord for its approval. Landlord shall
not unreasonably withhold or delay its approval of the final accounting and any
such disapproval shall contain reasonably detailed explanation for disapproval.
Within thirty (30) days after delivery of such final accounting, the parties
will make appropriate adjustments to any amounts previously paid or due under
this Agreement.


 


(c)                                  On
the effective date of such expiration or earlier termination, Tenant will
deliver to Landlord all Records of the Hotel, provided that Tenant may retain
copies of any of the same for Tenant’s records. Notwithstanding the foregoing,
Tenant will not be required to deliver to Landlord any information or materials
(including, without limitation, software, database, manuals and technical
information) which are proprietary property of Tenant.


 


(d)                                 On
the effective date of such expiration or earlier termination, Tenant will
deliver (and cause Tenant Manager to deliver) any and all keys or other access
devices of the Property to Landlord.


 


(e)                                  On
the effective date of such expiration or earlier termination, Tenant will
assign to Landlord or its designee, and Landlord or such designee will assume,
all booking, reservation, service and operating contracts


 


37





















 


relating exclusively to the occupancy or
operation of the Hotel and entered into in the ordinary course of business by
Tenant. Landlord agrees to indemnify and hold Tenant harmless from liability or
other obligations under any such agreements relating to acts or occurrences,
including Landlord’s or such designee’s failure to perform, on or after the
effective date of such assignment.


 


(f)                                    Tenant
will assign (and will cause Tenant Manager to assign) to Landlord or its
designee any assignable licenses and permits pertaining to the Property and
will otherwise reasonably cooperate with Landlord as may be necessary for the
transfer of any and all licenses and permits pertaining to the Property or the
Hotel to Landlord or Landlord’s designee.


 


(g)                                 Tenant
shall release and transfer to Landlord any funds of Landlord which are held or
controlled by Tenant or Tenant Manager.


 


(h)                                 Landlord
shall have the right to operate the Hotel without modifying the structural
design of same and without making any Material Repair, notwithstanding the fact
that such design or certain features thereof may be proprietary to Tenant or
its Affiliates and/or protected by trademarks or service marks held by Tenant
or an Affiliate, provided that such use shall be confined to the Hotel.
Further, provided that the Hotel then satisfies the InterContinental brand
standards (unless the Hotel fails to satisfy such brand standards due to a breach
hereof by Tenant), Landlord shall be entitled (but not obligated) to operate
the Hotel under the InterContinental name for a period of one (1) year
following such termination or expiration in consideration for which Landlord
shall pay the then standard franchise and system fees for such brand and comply
with the other applicable terms and conditions of the form of franchise
agreement then being entered into with respect to Intercontinental hotels.


 


(i)                                     Tenant
shall transfer (and shall cause Tenant Manager to transfer) to Landlord the
telephone numbers used in connection with the operation of the Hotel (but not
the InterContinental brand generally).


 


(j)                                     Tenant
shall, and shall cause Tenant Manager to, cooperate with Landlord’s or its
designee’s efforts to engage employees of the Hotel.


 


38





















 


(k)                                  If
requested by Landlord prior to such expiration or earlier termination of this
Agreement, Tenant shall (or shall cause Tenant Manager to) continue to manage
under the InterContinental brand after such expiration or earlier termination
for up to one (1) year, on such reasonable terms (which shall include an
agreement to reimburse Tenant (or Tenant Manager, as the case may be) for its
reasonable out-of-pocket costs and expenses, and reasonable administrative
costs and a management fee of three percent (3%) of Total Hotel Sales) with
respect to which Landlord and Tenant shall reasonably agree.


 


5.3.2                        PURCHASE RIGHTS. Subject to SECTION 3.1.2
(g) and SECTION 5.1.1, Landlord shall have the option, to be exercised
within thirty (30) days after the expiration or termination of this Agreement,
to purchase Tenant’s Personal Property for an amount equal to the then net
market value thereof (which shall be (i) the current replacement cost thereof
as determined by agreement of the parties or, (ii) in the absence of such
agreement, an amount determined by appraisal, less accumulated depreciation on
Tenant’s books pertaining thereto), subject to, and with appropriate price
adjustments for, all equipment leases, conditional sale contracts, UCC-1
financing statements and other encumbrances to which such personal property is
subject.


 


5.3.3                        SURVIVAL. The provisions of
this SECTION 5.3 shall survive the expiration or earlier termination of
this Agreement.


 


5.4                                 TENANT
MANAGEMENT AGREEMENT. Tenant shall not, without Landlord’s prior written
consent (which consent shall not be unreasonably withheld, delayed or
conditioned), enter into, or amend or modify the provisions of any Tenant Management
Agreement. Any Tenant Management Agreement shall be subordinate to this
Agreement and shall provide, INTER ALIA, (a) that all amounts due from Tenant
to the Tenant Manager shall be subordinate to all amounts due from Tenant to
Landlord (provided that, as long as no Event of Default has occurred and is continuing,
Tenant may pay all amounts due to a Tenant Manager pursuant to a Tenant
Management Agreement) and (b) for termination thereof, at Landlord’s option,
upon the termination of this Agreement. Tenant shall not take any action, grant
any consent or permit any action under any Tenant Management Agreement which
might have a material adverse effect on Landlord, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, delayed
or conditioned.


 


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ARTICLE 6


 


IMPROVEMENTS, ETC.


 


6.1                                 MATERIAL
REPAIRS. Except as set forth in SECTION 6.2, prior to making any Material
Repair, Tenant shall submit, to Landlord in writing, a proposal setting forth,
in reasonable detail, the proposed Material Repair and shall provide to
Landlord such plans and specifications, and such permits, licenses, contracts
and such other information concerning the same as Landlord may reasonably
request. Landlord shall have twenty (20) Business Days to approve or disapprove
all materials submitted to Landlord, in connection with any such proposal;
provided, however, (i) Landlord may not withhold its approval of a Material
Repair with respect to such items as are (A) required in order for the Hotel to
comply with applicable InterContinental brand standards consistently applied to
InterContinental hotels generally (except during the last two (2) years of the
Term) or the requirements of this Agreement; or (B) required by reason of or
under any Insurance Requirement or Applicable Law, or otherwise required for
the continued safe and orderly operation of the Hotel and (ii) Landlord’s
approval shall not be required with respect to the cost of any proposed Material
Repair if the same is set forth as a separate line item in the then applicable
approved FF&E Estimate. If Landlord fails to disapprove of such Material
Repair within such twenty (20) Business Days, Landlord shall be deemed to have
approved same.


 


6.2                                 EMERGENCY
EXPENDITURES. In the event that a condition should exist in or about the Hotel
of an emergency nature or in violation of Applicable Law or any Insurance
Requirements, including structural conditions, which requires immediate repair
necessary to prevent imminent danger or damage to persons or property, Tenant
is hereby authorized to take all steps and to make all expenditures necessary
to repair and correct any such condition, regardless of whether provisions have
been made in the applicable FF&E Estimate for any such expenditures or if
sufficient funds exist in the FF&E Reserve. Upon the occurrence of such an
event or condition, Tenant will communicate to Landlord all available
information regarding such event or condition as soon as reasonably possible
and will take reasonable steps to obtain Landlord’s approval before incurring
such expenses. Expenditures under this SECTION 6.2 shall be paid from the
FF&E Reserve to the extent such expenditure is properly considered a
Capital Replacement.


 


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6.3                                 NO
TIE-IN. No Capital Replacement shall be made which would tie-in or connect the
Hotel with any other improvements on property adjacent to the Hotel (and not
part of the Land) including, without limitation, tie-ins of buildings or other
structures or utilities (other than connections to public or private utilities)
without the prior written approval of Landlord, which approval may be granted
or withheld in Landlord’s sole and absolute discretion.


 


ARTICLE 7


 


LIENS


 


7.1                                 LIENS.
Subject to ARTICLE 8, Tenant shall not, directly or indirectly, create or
allow to remain and shall promptly discharge, at its expense, any lien,
encumbrance, attachment, title retention agreement or claim upon the Property
or Tenant’s leasehold interest therein or any attachment, levy, claim or
encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b)
restrictions, liens and other encumbrances which are consented to in writing by
Landlord, (c) liens for those taxes of Landlord which Tenant is not required to
pay hereunder, (d) subleases permitted by ARTICLE 15, (e) liens for
Impositions so long as the same are not yet due and payable, (f) liens of mechanics,
laborers, materialmen, suppliers or vendors incurred in the ordinary course of
business that are not yet due and payable, (g) the Hotel Mortgage or other
liens which are the responsibility of Landlord pursuant to the provisions of ARTICLE 19
and (h) Landlord Liens and any other voluntary liens created by Landlord.


 


7.2                                 LANDLORD’S
LIEN. In addition to any statutory landlord’s lien and in order to secure
payment of the Rent and all other sums payable hereunder by Tenant, and to
secure payment of any loss, cost or damage which Landlord may suffer by reason
of Tenant’s breach of this Agreement, Tenant hereby grants unto Landlord, to
the maximum extent permitted by Applicable Law, a security interest in and an
express contractual lien upon Tenant’s Personal Property (except motor vehicles
and liquor and casino licenses and permits), and Tenant’s interest in all
ledger sheets, files, records, documents and instruments (including, without limitation,
computer programs, tapes and related electronic data processing) relating to
the operation of the Hotel (the “RECORDS”) and all proceeds therefrom, subject
to any Permitted Encumbrances; and such Tenant’s Personal Property shall not be
removed from the Property at any time when a Default has occurred and is
continuing.


 


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Upon Landlord’s request, Tenant shall execute
and deliver to Landlord financing statements in form sufficient to perfect the
security interest of Landlord in Tenant’s Personal Property and the proceeds
thereof in accordance with Applicable Law. During the continuance of a Default,
Tenant hereby grants Landlord an irrevocable limited power of attorney, coupled
with an interest, to execute all such financing statements in Tenant’s name,
place and stead. The security interest herein granted is in addition to any
statutory lien for the Rent.


 


ARTICLE 8


 


PERMITTED CONTESTS


 


Tenant shall have the right to contest the
amount or validity of any Imposition or Applicable Law concerning the Property
by appropriate legal proceedings, conducted in good faith and with due
diligence, provided that (a) the foregoing shall in no way be construed as
relieving, modifying or extending Tenant’s obligation to pay any Claims as
finally determined, (b) such contest shall not cause Landlord or Tenant to be
in default under any mortgage or deed of trust encumbering the Property or any
interest therein or result in or reasonably be expected to result in a lien
attaching to the Property, (c) no part of the Property nor any Rent therefrom
shall be in any immediate danger of sale, forfeiture, attachment or loss, (d)
Tenant shall indemnify and hold harmless Landlord from and against any cost,
claim, damage, penalty or reasonable expense, including reasonable attorneys’
fees, incurred by Landlord in connection therewith or as a result thereof and
(e) Landlord is not exposed to any risk for criminal or civil liability.
Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be subjected
to any liability therefor (including, without limitation, for the payment of
any costs or expenses in connection therewith). If Tenant shall fail (x) to pay
or cause to be paid any Claims when finally determined, (y) to provide
reasonable security therefor or (z) to prosecute or cause to be prosecuted any
such contest diligently and in good faith, Landlord may, upon reasonable notice
to Tenant (which notice shall not be required if Landlord shall reasonably
determine that the same is not practicable), pay such charges, together with
interest and penalties due with respect thereto, and Tenant shall reimburse
Landlord therefor, upon demand, as Additional Charges.


 


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ARTICLE 9


 


INSURANCE AND INDEMNIFICATION


 


9.1                                 GENERAL
INSURANCE REQUIREMENTS. Tenant shall, at all times during the Term and at any
other time Tenant shall be in possession of the Property, keep the Property,
and all property located therein or thereon, insured against the risks and in
the amounts as follows and shall maintain, with respect to the Property, the
following insurance:


 


(a)                                  “Special
Form” property insurance, including insurance against loss or damage by fire,
vandalism and malicious mischief, terrorism (if available on commercially
reasonable terms), earthquake, explosion of steam boilers, pressure vessels or
other similar apparatus, now or hereafter installed in the Hotel, with
equivalent coverage as that provided by the usual extended coverage
endorsements, in an amount equal to one hundred percent (100%) of the then full
replacement cost of the property requiring replacement (excluding foundations)
from time to time, including an increased cost of construction endorsement;


 


(b)                                 Business
interruption and blanket earnings plus extra expense under a rental value
insurance policy or endorsement covering risk of loss during the lesser of the
first twelve (12) months of reconstruction or the actual reconstruction period
necessitated by the occurrence of any of the hazards described in subparagraph
(a) above, in such amounts as may be customary for comparable properties
managed or leased by Tenant or its Affiliates in the surrounding area and in an
amount sufficient to prevent Landlord from becoming a co-insurer;


 


(c)                                  Commercial
general liability insurance, including bodily injury and property damage (on an
occurrence basis and on a 1993 ISO CGL form or on a form customarily maintained
by similarly situated hotels, including, without limitation, broad form
contractual liability, independent contractor’s hazard and completed operations
coverage, aggregate limit as applicable) in an amount not less than Two Million
Dollars ($2,000,000) per occurrence and umbrella coverage of all such claims in
an amount not less than Fifty Million Dollars ($50,000,000) per occurrence;


 


(d)                                 Flood
insurance (if the Hotel is located in whole or in part within an area
identified as an area having


 


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special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, as amended, or the Flood Disaster Protection Act of 1973, as amended (or
any successor acts thereto)) and insurance against such other hazards and in
such amounts as may be available under the National Flood Insurance Program and
customary for comparable properties in the area;


 


(e)                                  Worker’s
compensation insurance coverage provided by the Puerto Rico State Insurance
Fund for all persons employed by Tenant at the Hotel with statutory limits and
otherwise with limits of and provisions in accordance with the requirements of
applicable local, territorial, State and federal law.


 


(f)                                    Employment
practices liability insurance with limits of Twenty Five Million Dollars
($25,000,000); and


 


(g)                                 Such
additional insurance as may be required, from time to time by (i) Applicable
Law, (ii) any Hotel Mortgagee or (iii) which is otherwise reasonably required
upon advance notice to Tenant given in accordance with the terms hereof.


 


9.2                                 REPLACEMENT
COST. “REPLACEMENT COST” as used herein, shall mean the actual replacement cost
of the property requiring replacement from time to time, including an increased
cost of construction endorsement, less exclusions provided in the standard form
of fire insurance policy. In the event either party believes that the then full
replacement cost has increased or decreased at any time during the Term, such
party, at its own cost, shall have the right to have such full replacement cost
redetermined by an independent accredited appraiser approved by the other,
which approval shall not be unreasonably withheld or delayed. The party
desiring to have the full replacement cost so redetermined shall forthwith, on
receipt of such determination by such appraiser, give Notice thereof to the
other. The determination of such appraiser shall be final and binding on the
parties hereto until any subsequent determination under this SECTION 9.2,
and Tenant shall forthwith conform the amount of the insurance carried to the
amount so determined by the appraiser.


 


9.3                                 WAIVER
OF SUBROGATION. Landlord and Tenant agree that (insofar as and to the extent
that such agreement may be effective without invalidating or making it
impossible to secure insurance coverage from responsible insurance companies
doing business in the State) with respect to any property loss which


 


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is covered by insurance then being carried by Landlord or Tenant,
respectively, the party carrying such insurance and suffering said loss
releases the other of and from any and all claims with respect to such loss;
and they further agree that their respective insurance companies shall have no
right of subrogation against the other on account thereof, even though extra
premium may result therefrom. In the event that any extra premium is payable by
Tenant as a result of this provision, Landlord shall not be liable for
reimbursement to Tenant for such extra premium.


 


9.4                                 FORM
SATISFACTORY, ETC. All insurance policies and endorsements required pursuant to
this ARTICLE 9 shall be fully paid for, nonassessable and be issued by
insurance carriers authorized to do business in the State, having a general
policy holder’s rating of no less than B++ in Best’s latest rating guide. All
such policies described in SECTIONS 9.1(a) through (d) shall include no
deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) and, with
the exception of the insurance described in SECTIONS 9.1(e), shall name Landlord
and the Hotel Mortgagee as additional insureds, as their interests may appear.
All loss adjustments shall be payable as provided in ARTICLE 10, except that
losses under SECTIONS 9.1(c) and 9.1(e) shall be payable directly to the party
entitled thereto. Tenant shall cause all insurance premiums to be paid and shall
deliver policies or certificates thereof to Landlord prior to their effective
date (and, with respect to any renewal policy, prior to the expiration of the
existing policy). All such policies shall provide Landlord (and the Hotel Mortgagee
if required by the same) thirty (30) days prior written notice of any material
change or cancellation of such policy. In the event Tenant shall fail to effect
such insurance as herein required, to pay the premiums therefor or to deliver
such policies or certificates to Landlord or the Hotel Mortgagee at the times
required, Landlord shall have the right, upon Notice to Tenant, but not the
obligation, to acquire such insurance and pay the premiums therefor, which amounts
shall be payable to Landlord, upon demand, as Additional Charges, together with
interest accrued thereon at the Interest Rate from the date such payment is
made until the date repaid.


 


9.5                                 BLANKET
POLICY. Notwithstanding anything to the contrary contained in this ARTICLE 9,
Tenant’s obligation to maintain the insurance herein required may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant, provided, that (a) the coverage thereby
afforded will not be reduced or diminished from


 


45





















 


that which would exist under a separate policy meeting all other
requirements of this Agreement, and (b) the requirements of this ARTICLE 9
are otherwise satisfied.


 


9.6                                 NO
SEPARATE INSURANCE. Tenant shall not take out separate insurance, concurrent in
form or contributing in the event of loss with that required by this ARTICLE 9,
or increase the amount of any existing insurance by securing an additional
policy or additional policies, unless all parties having an insurable interest
in the subject matter of such insurance, including Landlord and all Hotel
Mortgagees, are included therein as additional insureds and the loss is payable
under such insurance in the same manner as losses are payable under this Agreement.
In the event Tenant shall take out any such separate insurance or increase any
of the amounts of the then existing insurance, Tenant shall give Landlord
prompt Notice thereof.


 


9.7                                 INDEMNIFICATION
OF LANDLORD. Notwithstanding the existence of any insurance provided for herein
and without regard to the policy limits of any such insurance, Tenant shall
protect, indemnify and hold harmless Landlord for, from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including, without limitation, reasonable attorneys’
fees), to the maximum extent permitted by law, imposed upon or incurred by or
asserted against Landlord by reason of (a) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Property or
adjoining sidewalks or rights of way, (b) any past, present or future use,
misuse, non-use, condition, management, maintenance or repair by Tenant or
anyone claiming under Tenant of the Property or Tenant’s Personal Property or
any litigation, proceeding or claim by governmental entities or other third
parties to which Landlord is made a party or participant relating to the
Property or Tenant’s Personal Property or such use, misuse, non-use, condition,
management, maintenance, or repair thereof including, failure to perform
obligations (other than Condemnation proceedings to which Landlord is made a
party), (c) any Impositions that are the obligations of Tenant to pay pursuant
to the applicable provisions of this Agreement (except if and to the extent
such Imposition results from Landlord’s willful failure to comply with the
terms of SECTION 20.20), (d) any failure on the part of Tenant or anyone
claiming under Tenant to perform or comply with any of the terms of this
Agreement. Tenant, at its expense, shall contest, resist and defend (x) any such
claim, action or proceeding asserted or instituted against


 


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Landlord or may compromise or otherwise dispose of the same, with
Landlord’s prior written consent (which consent may not be unreasonably
withheld, delayed or conditioned), (y) the termination or non-renewal of any
ground, underlying or parking lease due to any act or omission of Tenant and
(z) the loss or non-renewal of the Tax Exemption Decree due to any act or
omission of Tenant. The obligations of Tenant under this SECTION 9.7 are
in addition to the obligations set forth in SECTION 4.3 and shall survive
the expiration or sooner termination of this Agreement.


 


ARTICLE 10


 


CASUALTY


 


10.1                           INSURANCE
PROCEEDS. Except as provided in the last clause of this sentence, all proceeds
payable by reason of any loss or damage to the Property, or any portion
thereof, and insured under any policy of insurance required by ARTICLE 9
(other than the proceeds of any business interruption insurance) shall be paid
directly to Landlord (subject to the provisions of SECTION 10.2) and all loss
adjustments with respect to losses payable to Landlord shall require the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
delayed or conditioned. If Tenant is required to reconstruct or repair the
Property as provided herein, such proceeds shall be paid out by Landlord from
time to time for the reasonable costs of reconstruction or repair of such Property
necessitated by such damage or destruction, subject to and in accordance with
the provisions of SECTION 10.2.4. Provided no Default or Event of Default
has occurred and is continuing, any excess proceeds of insurance remaining
after the completion of the restoration shall be paid to Tenant. In the event
that the provisions of SECTION 10.2.1 are applicable, the insurance proceeds
shall be retained by the party entitled thereto pursuant to SECTION 10.2.1.


 


10.2                           DAMAGE
OR DESTRUCTION.


 


10.2.1                  DAMAGE OR DESTRUCTION OF PROPERTY.
If, during the Term, the Property shall be totally or partially destroyed and
the Hotel located thereon is thereby rendered Unsuitable for Its Permitted Use,
(i) Tenant may, by the giving of Notice thereof to Landlord, within sixty (60)
days after the date of such casualty, terminate this Agreement or (ii) Landlord
may terminate this Agreement on not less than sixty days’ written notice to
Tenant. If this Agreement is terminated by reason of or in connection with any
casualty, the insurance proceeds shall


 


47





















 


be allocated equitably by agreement of Landlord and Tenant, or, if
Landlord and Tenant fail to agree within a reasonable time, by Arbitration.


 


10.2.2                  PARTIAL DAMAGE OR DESTRUCTION. If,
during the Term, the Property shall be totally or partially destroyed but the
Hotel is not rendered Unsuitable for Its Permitted Use, Tenant shall promptly
restore the Hotel as provided in SECTION 10.2.4 unless this Agreement is
terminated as to the Hotel as provided in SECTION 10.2.3.


 


10.2.3                  INSUFFICIENT INSURANCE PROCEEDS. If
this Agreement is not otherwise terminated pursuant to this ARTICLE 10 and
the cost of the repair or restoration of the Property exceeds the amount of net
insurance proceeds received by Landlord and Tenant on account of such casualty,
Tenant shall give Landlord Notice thereof which notice shall set forth in
reasonable detail the nature of such deficiency and whether Tenant shall pay
and assume the amount of such deficiency (Tenant having no obligation to do so,
except that, if Tenant shall elect to make such funds available, the same shall
become an irrevocable obligation of Tenant pursuant to this Agreement). In the
event Tenant shall elect not to pay and assume the amount of such deficiency,
Landlord shall have the right (but not the obligation), exercisable at Landlord’s
sole election by Notice to Tenant, given within sixty (60) days after Tenant’s
notice of the deficiency, to elect to make available for application to the
cost of repair or restoration the amount of such deficiency; PROVIDED, HOWEVER,
in such event, upon any disbursement by Landlord thereof, the Minimum Rent
shall be adjusted as provided in SECTION 3.1.1 (b). In the event that
neither Landlord nor Tenant shall elect to make such deficiency available for
restoration, either Landlord or Tenant may terminate this Agreement by Notice
to the other, whereupon, this Agreement shall terminate and insurance proceeds
shall be distributed as provided in SECTION 10.2.1. It is expressly
understood and agreed, however, that, notwithstanding anything in this
Agreement to the contrary, Tenant shall be strictly liable and solely
responsible for the amount of any deductible and shall, upon any insurable
loss, pay over the amount of such deductible to Landlord at the time and in the
manner herein provided for payment of the applicable proceeds to Landlord.


 


10.2.4                  DISBURSEMENT OF PROCEEDS. In the
event Tenant is required to restore the Property pursuant to SECTION 10.2
and this Agreement is not terminated as to the Property pursuant to this ARTICLE 10,
Tenant shall commence promptly and continue diligently to perform the repair
and restoration of the Property


 


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(hereinafter called the “WORK”), so as to restore the Property in
material compliance with Applicable Law and so that such Property shall be, to
the extent practicable, substantially equivalent in value and general utility
to its general utility and value immediately prior to such damage or
destruction. Subject to the terms hereof, Landlord shall advance the insurance
proceeds and any additional amounts payable by Landlord pursuant to SECTION 10.2.3
or otherwise deposited with Landlord to Tenant regularly during the repair and restoration
period so as to permit payment for the cost of any such restoration and repair.
Any such advances shall be made not more than monthly within ten (10) Business
Days after Tenant submits to Landlord a written requisition and substantiation
therefor on AIA Forms G702 and G703 (or on such other form or forms as may be
reasonably acceptable to Landlord). Landlord may, at its option, condition
advancement of such insurance proceeds and other amounts on (i) the absence of
any Event of Default, (ii) its approval of plans and specifications of an
architect satisfactory to Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned), (iii) general contractors’ estimates, (iv)
architect’s certificates, (v) unconditional lien waivers of general contractors,
if available, (vi) evidence of approval by all governmental authorities and
other regulatory bodies whose approval is required, (vii) if Tenant has elected
to advance deficiency funds pursuant to SECTION 10.2.3, Tenant depositing
the amount thereof with Landlord and (viii) such other certificates as Landlord
may, from time to time, reasonably require.


 


Landlord’s obligation to disburse insurance
proceeds under this ARTICLE 10 during the last two (2) years of the Term
(including any automatic renewals thereof) shall be subject to the release of
such proceeds by the Hotel Mortgagee to Landlord. If the Hotel Mortgagee shall
be unwilling to disburse insurance proceeds in accordance with the terms of
this Agreement, Tenant shall have the right, by the giving of Notice thereof to
Landlord within ten (10) Business Days after Tenant learns of such
unwillingness, to treat the Property as rendered Unsuitable for Its Permitted
Use for purposes of SECTION 10.2.1. Tenant’s obligation to restore the
Property pursuant to this ARTICLE 10 shall be subject to the release of
available insurance proceeds by the applicable Hotel Mortgagee to Landlord or
directly to Tenant.


 


10.3                           DAMAGE
NEAR END OF TERM. Notwithstanding any provisions of SECTIONS 10.1 or 10.2 to
the contrary, if damage to or destruction of the Property occurs during the
last two (2)


 


49





















 


years of the Term (including any automatic Extended Terms) and if such
damage or destruction cannot reasonably be expected to be fully repaired and
restored prior to the date that is twelve (12) months prior to the end of the
Term, the provisions of SECTION 10.2.1 shall apply as if such Property had
been totally or partially destroyed and the Hotel thereon rendered Unsuitable
for Its Permitted Use.


 


10.4                           TENANT’S
PROPERTY. All insurance proceeds payable by reason of any loss of or damage to
any of Tenant’s Personal Property shall be paid to Tenant and, to the extent
necessary to repair or replace Tenant’s Personal Property in accordance with SECTION 10.5,
Tenant shall hold such proceeds in trust to pay the cost of repairing or
replacing damaged Tenant’s Personal Property. 


 


10.5                           RESTORATION
OF TENANT’S PROPERTY. If Tenant is required to restore the Property as
hereinabove provided and this Agreement is not terminated as to such Property
pursuant to the terms of ARTICLE 10, Tenant shall either (a) restore all
alterations and improvements made by Tenant and Tenant’s Personal Property, or
(b) replace such alterations and improvements and Tenant’s Personal Property
with improvements or items of the same or better quality and utility in the
operation of such Property.


 


10.6                           NO
ABATEMENT OF RENT. Except as expressly provided herein, this Agreement shall
remain in full force and effect and Tenant’s obligation to make all payments of
Rent and to pay all other charges as and when required under this Agreement
shall remain unabated during the Term notwithstanding any damage involving the
Property (provided that Landlord shall credit against such payments any amounts
paid to Landlord as a consequence of such damage under any business
interruption insurance obtained by Tenant hereunder). The provisions of this ARTICLE 10
shall be considered an express agreement governing any cause of damage or
destruction to the Property and, to the maximum extent permitted by law, no
local or State statute, laws, rules, regulation or ordinance in effect during
the Term which provide for such a contingency shall have any application in
such case.


 


10.7                           WAIVER.
Tenant hereby waives any statutory rights of termination which may arise by
reason of any damage or destruction of the Property, or any portion thereof.


 


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ARTICLE 11


 


CONDEMNATION


 


11.1                           TOTAL
CONDEMNATION, ETC.  If either (i) the
whole of the Property shall be taken by Condemnation or (ii) a Condemnation of
less than the whole of the Property renders the Property Unsuitable for Its
Permitted Use, this Agreement shall terminate, and Tenant and Landlord shall
seek the Award for their interests as provided in SECTION 11.6.


 


11.2                           PARTIAL
CONDEMNATION.  In the event of a
Condemnation of less than the whole of the Property such that such Property is
still suitable for its Permitted Use, Tenant shall commence promptly and
continue diligently to restore the untaken portion of the applicable Leased
Improvements so that such Leased Improvements shall constitute a complete
architectural unit of the same general character and condition (as nearly as
may be possible under the circumstances) as such Leased Improvements existing
immediately prior to such Condemnation, in material compliance with all
Applicable Law, subject to and unless this Agreement is terminated pursuant to
the provisions of this SECTION 11.2. If the cost of the repair or
restoration of the affected Property exceeds the amount of the Award, Tenant
shall give Landlord Notice thereof which notice shall set forth in reasonable
detail the nature of such deficiency and whether Tenant shall pay and assume
the amount of such deficiency (Tenant having no obligation to do so, except
that if Tenant shall elect to make such funds available, the same shall become
an irrevocable obligation of Tenant pursuant to this Agreement). In the event
Tenant shall elect not to pay and assume the amount of such deficiency,
Landlord shall have the right (but not the obligation), exercisable at Landlord’s
sole election by Notice to Tenant given within sixty (60) days after Tenant’s
Notice of the deficiency, to elect to make available for application to the
cost of repair or restoration the amount of such deficiency; PROVIDED, HOWEVER,
in such event, upon any disbursement by Landlord thereof, the Minimum Rent
shall be adjusted as provided in SECTION 3.1.1 (b). In the event that
neither Landlord nor Tenant shall elect to make such deficiency available for
restoration, either Landlord or Tenant may terminate this Agreement and the
entire Award shall be allocated as set forth in SECTION 11.6.


 


Subject to the terms hereof, Landlord shall
contribute to the cost of restoration that part of the Award necessary to
complete such repair or restoration, together with severance and other damages
awarded for the taken Leased Improvements and any


 


 


51





















 


other amounts deposited with or payable by Landlord, to Tenant
regularly during the restoration period so as to permit payment for the cost of
such repair or restoration. Landlord may, at its option, condition advancement
of such Award and other amounts on (i) the absence of any Event of Default,
(ii) its approval of plans and specifications of an architect satisfactory to
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned), (iii) general contractors’ estimates, (iv) architect’s
certificates, (v) unconditional lien waivers of general contractors, if
available, (vi) evidence of approval by all governmental authorities and other
regulatory bodies whose approval is required, (vii) if Tenant has elected to
advance deficiency funds pursuant to the preceding paragraph, Tenant depositing
the amount thereof with Landlord and (viii) such other certificates as Landlord
may, from time to time, reasonably require. Landlord’s obligation under this SECTION 11.2
to disburse the Award and such other amounts shall be subject to (x) the
collection thereof by Landlord and (y) during the last two (2) years of the
Term (including any exercised renewals thereof), the release of such Award by
the applicable Hotel Mortgagee. If the Hotel Mortgagee shall be unwilling to
disburse Award proceeds in accordance with the terms of this Agreement, Tenant
shall have the right, by the giving of Notice thereof to Landlord within ten
(10) Business Days after Tenant learns of such unwillingness, to treat the
Property as rendered Unsuitable for Its Permitted Use for purposes of SECTION 11.1.
Tenant’s obligation to restore the Property shall be subject to the release of
the Award by the applicable Hotel Mortgagee to Landlord or directly to Tenant.


 


11.3                           ABATEMENT
OF RENT.  Other than as specifically
provided in this Agreement, this Agreement shall remain in full force and
effect and Tenant’s obligation to make all payments of Rent and to pay all
other charges as and when required under this Agreement shall remain unabated
during the Term notwithstanding any Condemnation involving the Property, or any
portion thereof. The provisions of this ARTICLE 11 shall be considered an
express agreement governing any Condemnation involving the Property and, to the
maximum extent permitted by law, no local or State statute, law, rule,
regulation or ordinance in effect during the Term which provides for such a
contingency shall have any application in such case.


 


11.4                           TEMPORARY
CONDEMNATION.  In the event of any
temporary Condemnation of the Property or Tenant’s interest therein, this
Agreement shall continue in full force and effect and Tenant shall continue to
pay, in the manner and on the terms herein


 


52





















 


specified, the full amount of the Rent. Tenant shall continue to
perform and observe all of the other terms and conditions of this Agreement on
the part of the Tenant to be performed and observed. Provided no Event of
Default has occurred and is continuing, the entire amount of any Award made for
such temporary Condemnation allocable to the Term, whether paid by way of
damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly
upon the termination of any such period of temporary Condemnation, at its sole
cost and expense, restore the Property to the condition that existed
immediately prior to such Condemnation, in material compliance with Applicable
Law, unless such period of temporary Condemnation shall extend beyond the
expiration of the Term, in which event Tenant shall not be required to make
such restoration.


 


11.5                           CONDEMNATION
NEAR END OF TERM.  Notwithstanding any
provisions of SECTIONS 11.2 or 11.3 to the contrary, if Condemnation of the
Property occurs during the last two (2) years of the Term (including any
automatic Extended Terms) and if restoration cannot reasonably be expected to
be completed prior to the date that is twelve (12) months prior to the end of
the Term, the provisions of SECTION 11.1 shall apply as if such Property
had been totally or partially taken and the Hotel thereon rendered Unsuitable
for Its Permitted Use.


 


11.6                           ALLOCATION
OF AWARD.  Except as provided in SECTION 11.4,
in any Condemnation proceedings, Landlord and Tenant shall each seek its own
Award in conformity herewith, at its own expense.


 


ARTICLE 12


 


DEFAULTS AND REMEDIES


 


12.1                           EVENTS
OF DEFAULT.  The occurrence of any one or
more of the following events shall constitute an “EVENT OF DEFAULT” hereunder:


 


(a)                                  Subject
to any applicable notice or cure provisions, Tenant’s failure to make any
payment of the Minimum Rent, Additional Rent or Additional Charges due to
Landlord or Tenant’s failure to pay any other Additional Charges or any other
sum (including, but not limited to, funding of the FF&E Reserve) payable
hereunder which has a material effect on the operation of the Property; or


 


(b)                                 Tenant’s
failure to maintain the insurance coverages required under ARTICLE 9; or


 


53





















 


(c)                                  Tenant’s
default in the due observance or performance of any of the terms, covenants or
agreements contained herein to be performed or observed by it (other than as
specified in clauses (a) and (b) above) and such default shall continue for a
period of thirty (30) days after Notice thereof from Landlord to Tenant;
PROVIDED, HOWEVER, that if such default is susceptible of cure but such cure
cannot be accomplished with due diligence within such period of time and if, in
addition, Tenant commences to cure or cause to be cured such default within
thirty (30) days after Notice thereof from Landlord and thereafter prosecutes
the curing of such default with all due diligence, such period of time shall be
extended to such period of time (not to exceed an additional one (1) year in
the aggregate) as may be necessary to cure such default with all due diligence;
or


 


(d)                                 Tenant’s
initiation or maintenance of any claim or action against Landlord in respect of
the condition of the Property; or


 


(e)                                  The
termination of the New Management Agreement pursuant to Section 5.1 or Section 10.3
thereof; or


 


(f)                                    The
occurrence of a Manager Event of Default under the New Management Agreement.


 


So long as an Event of Default shall be
outstanding, Landlord, in addition to all other remedies available to it, may
terminate this Agreement by giving Notice thereof to Tenant and upon the
expiration of the time, if any, fixed in such Notice, this Agreement shall
terminate and all rights of Tenant under this Agreement with respect thereto
shall cease. Landlord shall have and may exercise all rights and remedies
available at law and in equity to Landlord as a result of Tenant’s breach of
this Agreement.


 


Upon the occurrence of an Event of Default,
Landlord may, in addition to any other remedies provided herein, enter upon the
Property or any portion thereof and take possession of any and all of Tenant’s
Personal Property, if any, and the Records, without liability for trespass or
conversion (Tenant hereby waiving any right to notice or hearing prior to such taking
of possession by Landlord) and sell the same at public or private sale, after
giving Tenant reasonable Notice of the time and place of any public or private
sale, at which sale Landlord or its assigns may purchase all or any portion of
Tenant’s Personal Property, if any, unless otherwise prohibited by law. Unless


 


54





















 


otherwise provided by law and without intending to exclude any other
manner of giving Tenant reasonable notice, the requirement of reasonable Notice
shall be met if such Notice is given at least ten (10) days before the date of
sale. The proceeds from any such disposition, less all expenses incurred in
connection with the taking of possession, holding and selling of such property
(including, reasonable attorneys’ fees), shall be applied as a credit against
the indebtedness which is secured by the security interest granted in SECTION 7.2.
Any surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.


 


12.2                           REMEDIES.
 None of (a) the termination of this
Agreement pursuant to SECTION 12.1, (b) the repossession of the Property
or any portion thereof, (c) the failure of Landlord to re-let the Property or
any portion thereof, nor (d) the reletting of all or any of portion of the
Property, shall relieve Tenant of its accrued liability or obligations which by
their terms survive hereunder, all of which shall survive any such termination,
repossession or re-letting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Property
through and including the date of such termination. Thereafter, Tenant, until
the end of what would have been the Term of this Agreement in the absence of
such termination, and whether or not the Property or any portion thereof shall
have been re-let, shall be liable to Landlord for, and shall pay to Landlord,
as current damages, the Rent (Additional Rent to be reasonably calculated by
Landlord based on historical Total Hotel Sales) and other charges which would
be payable hereunder for the remainder of the Term had such termination not
occurred, less the net proceeds, if any, of any re-letting of the Property,
after deducting all reasonable expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage commissions,
legal expenses, attorneys’ fees, advertising, expenses of employees, alteration
costs and expenses of preparation for such reletting. Tenant shall pay such
current damages to Landlord monthly on the days on which the Minimum Rent would
have been payable hereunder if this Agreement had not been so terminated.


 


Upon such termination, whether or not
Landlord shall have collected any such current damages, Landlord shall be
entitled to liquidated damages. Landlord’s right to receive liquidated damages
has been agreed to due to the uncertainty, difficulty and/or impossibility of
ascertaining the actual damages suffered


 


55





















 


by Landlord. Further, if not for Landlord’s right to receive such
liquidated damages, Landlord’s Affiliated Person would not have entered into
the Purchase Agreement and Landlord would not have entered into this Agreement.
TENANT HEREBY ACKNOWLEDGES AND AGREES THAT SUCH LIQUIDATED DAMAGES ARE NOT A
PENALTY, BUT ARE TO COMPENSATE LANDLORD AND ITS AFFILIATES FOR THE EXPENSE AND
LOST EARNINGS WHICH MAY RESULT FROM ARRANGING SUBSTITUTE MANAGEMENT AND/OR
TENANCY FOR THE HOTEL AS WELL AS TO COMPENSATE FOR PRICE PAID FOR THE HOTEL BY
LANDLORD’S AFFILIATED PERSON. Such liquidated damages shall be equal to all
accrued but unpaid amounts due to Landlord hereunder up until the date of
termination, plus the Outstanding Balance (as defined in the Guaranty).
Landlord shall be entitled to interest, at the Interest Rate, on such
liquidated damages from the date of such termination until the date of payment
of such damages and interest. Except with respect to Landlord’s rights and remedies
for any breach or violations by Tenant of the terms of SECTION 5.3 and ARTICLE 13,
Landlord shall look solely to any collateral hereafter pledged securing Tenant’s
obligations hereunder for satisfaction of any claim of Landlord against Tenant
hereunder; PROVIDED, HOWEVER, nothing contained herein is intended to, nor
shall, limit or reduce the obligations of the Guarantor under the Guaranty or
limit Landlord’s rights with respect thereto.


 


In case of any Event of Default, re-entry,
expiration and dispossession by summary proceedings or otherwise, Landlord may
(a) relet the Property or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms which may at Landlord’s option, be
equal to, less than or exceed the period which would otherwise have constituted
the balance of the Term and may grant concessions or free rent to the extent
that Landlord considers advisable and necessary to relet the same, and (b) may
make such reasonable alterations, repairs and decorations in the Property or
any portion thereof as Landlord, in its sole and absolute discretion, considers
advisable and necessary for the purpose of reletting the Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for any failure to relet all
or any portion of the Property, or, in the event that the Property is relet,
for failure to collect the rent under such reletting. To the maximum extent
permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant
being evicted or dispossessed, or in the event of Landlord obtaining possession
of the Property, by reason of the occurrence and continuation of


 


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an Event of Default hereunder. Landlord covenants and agrees, in the
event of any termination of this Agreement as a result of an Event of Default,
to use reasonable efforts to mitigate its damages.


 


12.3                           WAIVER.
To the maximum extent permitted by Applicable Law, each of the parties hereto
waives its rights to trial by jury with respect to this Agreement or matters
arising in connection herewith. FURTHER TO THE FOREGOING, IF THIS AGREEMENT IS
TERMINATED PURSUANT TO SECTIONS 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT
PERMITTED BY LAW, (i) ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY
PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND (ii)
THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM
LIABILITY FOR RENT OR FOR DEBT.


 


12.4                           APPLICATION
OF FUNDS.  Any payments received by
Landlord under any of the provisions of this Agreement during the existence or
continuance of any Event of Default (and any payment made to Landlord rather
than Tenant due to the existence of any Event of Default) shall be applied to
Tenant’s current and past due obligations under this Agreement in such order as
Landlord may determine or as may be prescribed by the laws of the State.


 


12.5                           LANDLORD’S
RIGHT TO CURE TENANT’S DEFAULT.  If an
Event of Default shall have occurred and be continuing, Landlord, after Notice
to Tenant (which Notice shall not be required if Landlord shall reasonably
determine immediate action is necessary to protect person or property), without
waiving or releasing any obligation of Tenant and without waiving or releasing
any Event of Default, may (but shall not be obligated to), at any time thereafter,
make such payment or perform such act for the account and at the expense of
Tenant, and may, to the maximum extent permitted by law, enter upon the
Property or any portion thereof for such purpose and take all such action
thereon as, in Landlord’s sole and absolute discretion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of Tenant. All
reasonable costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred by Landlord in connection therewith, together with
interest thereon (to the extent permitted by law) at the Interest Rate from the
date such sums are paid by Landlord until repaid, shall be paid by Tenant to
Landlord, on demand.


 


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ARTICLE 13


 


HOLDING OVER


 


Any holding over by Tenant after the
expiration or sooner termination of this Agreement shall be treated as a daily
tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and
other charges herein provided (prorated on a daily basis). Tenant shall also
pay to Landlord all damages (direct or indirect) sustained by reason of any
such holding over. Otherwise, such holding over shall be on the terms and
conditions set forth in this Agreement, to the extent applicable. Nothing
contained herein shall constitute the consent, express or implied, of Landlord
to the holding over of Tenant after the expiration or earlier termination of
this Agreement.


 


ARTICLE 14


 


LANDLORD’S DEFAULT


 


If Landlord shall default in the performance or
observance of any of its covenants or obligations set forth in this Agreement
or any obligation of Landlord, if any, under any agreement affecting the
Property, the performance of which is not Tenant’s obligation pursuant to this
Agreement, and any such default shall continue for a period of five (5)
Business Days after Notice thereof with respect to monetary defaults and twenty
(20) Business Days after Notice thereof with respect to non-monetary defaults
from Tenant to Landlord and any applicable Hotel Mortgagee, or such additional
period as may be reasonably required to correct the same provided Landlord is
proceeding with due diligence to correct the same, then Tenant may declare the
occurrence of a “Landlord Default” by a second Notice to Landlord and to the
Hotel Mortgagee and Tenant shall have the right to institute forthwith any and
all proceedings permitted by law or equity (provided they are not specifically
barred under the terms of this Agreement), including, without limitation,
actions for specific performance and/or damages; provided, however, except as
may be expressly provided in this Agreement, Tenant shall have no right to
terminate this Agreement for any default by Landlord hereunder and no right,
for any such default, to offset or counterclaim against any Rent or other
charges due hereunder. In the event Landlord wrongfully terminates this
Agreement or if Tenant terminates this Agreement pursuant to any right to do so
contained herein as a result of Landlord’s breach, then, subject to Tenant’s
mitigation obligations, Tenant shall be entitled to recover as


 


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part of its damages for such wrongful termination an amount equal to
the damages suffered by Tenant on account of terminating the employment of
on-site employees of the Hotel in connection therewith.


 


If Landlord shall in good faith dispute the
occurrence of any Landlord Default and Landlord, before the expiration of the
applicable cure period, shall give Notice thereof to Tenant, setting forth, in
reasonable detail, the basis therefor, no Landlord Default shall be deemed to
have occurred and Landlord shall have no obligation with respect thereto until
final adverse, determination thereof.


 


ARTICLE 15


 


SUBLETTING AND ASSIGNMENT


 


15.1                           SUBLETTING
AND ASSIGNMENT.  Except as provided in
SECTIONS 15.3 and 15.5, Tenant shall not, without Landlord’s prior written
consent (which consent may be given or withheld in Landlord’s sole and absolute
discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer this Agreement or sublease (which term shall be deemed to include the
granting of concessions, licenses and the like but shall not be deemed to
include the lodging of hotel guests consistent with the Permitted Use), all or
any part of the Property or suffer or permit this Agreement or the leasehold
estate created hereby or any other rights arising under this Agreement to be
assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole
or in part, whether voluntarily, involuntarily or by operation of law, or
permit the use or operation of the Property by anyone other than Tenant, or the
Property to be offered or advertised for assignment or subletting. For purposes
of this SECTION 15.1, an assignment of this Agreement shall be deemed to
include any transaction which results in Tenant no longer being an Affiliated
Person of Guarantor or pursuant to which all or substantially all of Tenant’s
assets are transferred to any Person who is not an Affiliated Person of Guarantor.


 


If this Agreement is assigned or if the
Property or any part thereof are sublet (or occupied by anybody other than
Tenant and its employees or hotel guests), then Landlord may collect the rents
from such assignee, subtenant or occupant, as the case may be, and apply the
net amount collected to the Rent herein reserved, but no such collection shall
be deemed a waiver of the provisions set forth in this SECTION 15.1, the
acceptance by Landlord of such assignee, subtenant or occupant, as the case may
be, as a tenant, or a release of Tenant from the future


 


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performance by Tenant of its covenants, agreements or obligations
contained in this Agreement.


 


No subletting or assignment shall in any way
impair the continuing primary liability of Tenant hereunder (unless Landlord
and Tenant expressly otherwise agree that Tenant shall be released from all
obligations hereunder), and no consent to any subletting or assignment in a
particular instance shall be deemed to be a waiver of the prohibition set forth
in this SECTION 15.1. No assignment, subletting or occupancy shall affect
any Permitted Use; any subletting, assignment or other transfer of Tenant’s
interest under this Agreement in contravention of this SECTION 15.1 shall
be voidable at Landlord’s option.


 


15.2                           REQUIRED
SUBLEASE PROVISIONS.  Any sublease of all
or any portion of the Property entered into on or after the date hereof shall
provide (a) that it is subject and subordinate to this Agreement and to the
matters to which this Agreement is or shall be subject or subordinate; (b) that
in the event of termination of this Agreement or reentry or dispossession of
Tenant by Landlord under this Agreement, Landlord may, at its option, terminate
such sublease or take over all of the right, title and interest of Tenant, as
sublessor under such sublease, and such subtenant shall, at Landlord’s option,
attorn to Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor the Hotel Mortgagee, as holder of a mortgage
or as Landlord under this Agreement, if such mortgagee succeeds to that
position, shall (i) be liable for any act or omission of Tenant under such
sublease, (ii) be subject to any credit, counterclaim, offset or defense which
theretofore accrued to such subtenant against Tenant, (iii) be bound by any
previous modification of such sublease not consented to in writing by Landlord
or by any previous prepayment of more than one (1) month’s rent, (iv) be bound
by any covenant of Tenant to undertake or complete any construction of the
Property or any portion thereof, (v) be required to account for any security
deposit of the subtenant other than any security deposit actually delivered to
Landlord by Tenant, (vi) be bound by any obligation to make any payment to such
subtenant or grant any credits, except for services, repairs, maintenance and
restoration provided for under the sublease that are performed after the date
of such attornment, (vii) be responsible for any monies owing by Tenant to the
credit of such subtenant unless actually delivered to Landlord by Tenant, or
(viii) be required to remove any Person occupying any portion of the Property;
and (c) in the event that such subtenant receives


 


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a written Notice from Landlord or the Hotel Mortgagee stating that an
Event of Default has occurred and is continuing, such subtenant shall
thereafter be obligated to pay all rentals accruing under such sublease
directly to the party giving such Notice or as such party may direct. All
rentals received from such subtenant by Landlord or the Hotel Mortgagee, as the
case may be, shall be credited against the amounts owing by Tenant under this
Agreement and such sublease shall provide that the subtenant thereunder shall,
at the request of Landlord, execute a suitable instrument in confirmation of
such agreement to attorn. An original counterpart of each such sublease or any
assignment hereof, duly executed by Tenant and such subtenant or assignee, as
the case may be, in form and substance reasonably satisfactory to Landlord,
shall be delivered promptly to Landlord and (a) in the case of an assignment,
the assignee shall assume in writing and agree to keep and perform all of the
terms of this Agreement on the part of Tenant to be kept and performed and
shall be, and become, jointly and severally liable with Tenant for the
performance thereof and (b) in case of either an assignment or subletting,
Tenant shall remain primarily liable, as principal rather than as surety, for
the prompt payment of the Rent and for the performance and observance of all of
the covenants and conditions to be performed by Tenant hereunder.


 


The provisions of this SECTION 15.2
shall not be deemed a waiver of the provisions set forth in the first paragraph
of SECTION 15.1.


 


15.3                           PERMITTED
SUBLEASE.  Notwithstanding the foregoing,
including, without limitation, SECTION 15.2, but subject to the provisions
of SECTION 15.4 and any other express conditions or limitations set forth
herein, Tenant may, in each instance after Notice to Landlord, sublease space
at the Property for newsstand, car rental agency, business services office,
gift shop, parking garage, health club, restaurant, bar or commissary purposes
or other concessions in furtherance of the Permitted Use, so long as such
subleases (a) do not have a term in excess of the shorter of five (5) years or
the remaining Term, (b) do not demise, (i) in the aggregate, in excess of Five
Thousand (5,000) square feet of the Hotel, or (ii) for any single sublease, in
excess of One Thousand (1,000) square feet of the Hotel, (c) will not violate
or affect any Applicable Law or any Insurance Requirement, (d) Tenant shall
provide such additional insurance coverage applicable to the activities to be
conducted in such subleased space as Landlord and the Hotel Mortgagee may
reasonably require, and (e) not less than twenty (20) days prior


 


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to the date on which Tenant proposes to enter into any sublease or
concession, Tenant shall provide a copy thereof to Landlord.


 


15.4                           SUBLEASE
LIMITATION.  For so long as Landlord or
any Affiliated Person as to Landlord shall seek to qualify as a “real estate
investment trust” under the Code, anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not sublet or otherwise enter into any
agreement with respect to the Hotel on any basis such that in the opinion of
the Landlord the rental or other fees to be paid by any sublessee thereunder
would be based, in whole or in part, on either (i) the income or profits
derived by the business activities of such sublessee, or (ii) any other formula
such that any portion of such sublease rental would fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Code, or
any similar or successor provision thereto.


 


15.5                           PERMITTED
ASSIGNMENTS.  Tenant shall have the
right, without Landlord’s consent but subject to SECTION 20.23, to assign
its interest in this Agreement (a) to IHG or any Affiliate of IHG, (b) in
connection with a merger, corporate restructuring or consolidation of IHG or a
sale of all or substantially all of the assets of IHG and (c) in connection
with a sale of all or substantially all of the assets (including associated
management agreements) owned by IHG and its Affiliates relating to the
InterContinental brand. At Landlord’s election, Tenant shall assign this
Agreement to any Person who is not an Affiliate of IHG that acquires all or
substantially all of the assets of IHG relating to the InterContinental brand
and shall cause such Person to assume all of Tenant’s obligations thereafter
accruing hereunder.


 


15.6                           SALE
BY LANDLORD.  Landlord shall not sell or
otherwise transfer the Property other than to an Affiliated Person of Landlord
or in connection with a sale or transfer of all the Managed Hotels permitted
pursuant to the terms of the New Management Agreement.


 


ARTICLE 16


 


ESTOPPEL CERTIFICATES


 


At any time and from time to time, but not
more than a reasonable amount of times per year, upon not less than ten (10)
Business Days prior Notice by either party, the party receiving such Notice
shall furnish to the other an Officer’s Certificate certifying that this
Agreement is unmodified and in full force


 


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and effect (or that this Agreement is in full force and effect as
modified and setting forth the modifications), the date to which the Rent has
been paid, that no Default or an Event of Default has occurred and is
continuing or, if a Default or an Event of Default shall exist, specifying in
reasonable detail the nature thereof, and the steps being taken to remedy the
same, and such additional information as the requesting party may reasonably
request. Any such certificate furnished pursuant to this ARTICLE 16 may be
relied upon by the requesting party, its lenders and any prospective purchaser
or mortgagee of the Property or the leasehold estate created hereby.


 


ARTICLE 17


 


LANDLORD’S RIGHT TO INSPECT


 


Tenant shall permit Landlord and its
authorized representatives to inspect the Property during usual business hours
upon not less than twenty-four (24) hours’ Notice and to make such repairs as
Landlord is permitted or required to make pursuant to the terms of this
Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant’s use and operation
of the Property and further provided that in the event of an emergency, as
determined by Landlord in its reasonable discretion, prior Notice shall not be
necessary.


 


ARTICLE 18


 


EASEMENTS


 


18.1                           GRANT
OF EASEMENTS.  Provided no Event of
Default has occurred and is continuing, Landlord will join in granting and, if
necessary, modifying or abandoning such rights-of-way, easements and other
interests as may be reasonably requested by Tenant for ingress and egress, and
electric, telephone, gas, water, sewer and other utilities so long as:


 


(a)                                  the
instrument creating, modifying or abandoning any such easement, right-of-way or
other interest is satisfactory to and approved by Landlord (which approval
shall not be unreasonably withheld, delayed or conditioned); and


 


(b)                                 Landlord
receives an Officer’s Certificate from Tenant stating (i) that such grant,
modification or abandonment is not detrimental to the proper conduct of
business on such Property, (ii) the consideration, if any,


 


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being paid for such grant, modification or
abandonment (which consideration shall be paid by Tenant), (iii) that such
grant, modification or abandonment does not impair the use or value of such
Property for the Permitted Use, and (iv) that, for as long as this Agreement
shall be in effect, Tenant will perform all obligations, if any, of Landlord
under any such instrument.


 


18.2                           EXERCISE
OF RIGHTS BY TENANT.  So long as no Event
of Default has occurred and is continuing, Tenant shall have the right to
exercise all rights of Landlord under the Easement Agreements and, in
connection therewith, Landlord shall execute and promptly return to Tenant such
documents as Tenant shall reasonably request. Tenant shall perform all
obligations of Landlord under the Easement Agreements.


 


18.3                           PERMITTED
ENCUMBRANCES.  Any agreements entered
into in accordance with SECTION 18.1 shall be deemed a Permitted
Encumbrance.


 


ARTICLE 19


 


HOTEL MORTGAGES


 


19.1                           LANDLORD
MAY GRANT LIENS.  Landlord shall be
entitled to encumber the Hotel and the Property with one or more Hotel
Mortgages which are expressly subordinate to this Agreement and/or with one or
more Hotel Mortgages in accordance with the following terms and conditions:


 


(a)                                  The
loan or other debt secured by such Hotel Mortgage shall not be
cross-collateralized with other property or hotels which are not managed or
franchised by Tenant, IHG or their respective Affiliated Persons;


 


(b)                                 the
principal amount secured by such Hotel Mortgage shall not exceed the sum of
seventy five percent (75%) (or, if less than four (4) Pooled FF&E Hotels
secure such principal amount, sixty five percent (65%)) of the sum of the fair
market values, as of the date of the granting of such Hotel Mortgage, of the
Pledged Hotels and the other properties securing such principal amount;


 


(c)                                  as
of the date of the granting of such Hotel Mortgage, the Debt Service Coverage
Ratio associated with such loan or debt secured thereby shall not be less than
(i) 1.4 if fewer than four (4) Pooled FF&E Hotels secure


 


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such loan or other debt or (ii) 1.3 if four
(4) or more Pooled FF&E Hotels secure such loan or other debt; and


 


(d)                                 the
holder of such Hotel Mortgage shall execute and deliver to Tenant (Tenant
agreeing to likewise execute and deliver to such holder) a so-called
subordination, non-disturbance and attornment agreement which shall provide
that:


 


(i)                                     this
Agreement and Tenant’s rights hereunder are subject and subordinate to the
Hotel Mortgage, the lien thereof, the rights of the holder thereof and to any
and all advances made thereunder, interest thereon or costs incurred in
connection therewith;


 


(ii)                                  so
long as this Agreement is in full force and effect and there exists no Event of
Default, Tenant’s rights under this Agreement shall not be disturbed by reason
of such subordination or by reason of foreclosure of such Hotel Mortgage or
receipt of deed in lieu of foreclosure;


 


(iii)                               Tenant
shall attorn to the holder or the purchaser at any such foreclosure or the
grantee of any such deed (each, a “SUCCESSOR LANDLORD”);


 


(iv)                              in
the event of such attornment, the terms of this Agreement binding on Landlord
and Tenant shall continue in full force and effect as a direct agreement
between such Successor Landlord and Tenant, upon all the terms, conditions and
covenants set forth herein, except that the Successor Landlord shall not be (A)
bound by any payment of Rent in advance of when due; (B) bound by any amendment
or modification of this Agreement made after the date that Tenant first had
written notice of such Hotel Mortgage without the consent of the holder
thereof; (C) liable in any way to Tenant for any act or omission, neglect or
default on the part of Landlord under this Agreement; (D) obligated to perform
any work or improvements to be done by Landlord or to make any advances except
for those advances to be made pursuant to SECTION 5.1.3 (b) from and after
the date on which such Successor Landlord acquired the Hotel; or (E) subject to
any counterclaim or setoff which theretofore accrued to Tenant against
Landlord;


 


(v)                                 in
the event of a casualty or Condemnation affecting the Hotel which does not
result in the


 


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termination of this Agreement with respect to
the Hotel, the net insurance proceeds or Award shall be applied to the
restoration of the Hotel as herein provided;


 


(vi)                              such
other terms as are customary for similar agreements; and


 


(vii)                           if the
Portfolio Owner exercises its right under the New Management Agreement to cause
the Pledged Hotels which are Managed Hotels to be managed pursuant to a
separate management agreement pursuant to the terms of Section 4.3(b) of
the New Management Agreement, the parties shall make appropriate allocations in
the FF&E Reserve and any outstanding advances made by Landlord, Tenant or
their respective Affiliated Person so that the obligations allocable to the
Pooled FF&E Hotels subject to a Hotel Mortgage shall not be due from the
other Pooled FF&E Hotels and VICE VERSA. Without the consent of Tenant, the
holder of any Hotel Mortgage shall have the right to elect to be subject and
subordinate to this Agreement, such subordination to be effective upon such
terms and conditions as such holder may direct which are not inconsistent with
the provisions hereof.


 


Tenant shall be entitled to pay any overdue
regularly scheduled payments of interest and principal on any Hotel Mortgage
encumbering the Hotel and offset amounts so paid against the Rent due
hereunder.


 


19.2                           NOTICE
TO MORTGAGEE AND SUPERIOR LANDLORD.  Subsequent to the receipt by Tenant of Notice
from Landlord as to the identity of the Hotel Mortgagee, no Notice from Tenant
to Landlord as to a default by Landlord under this Agreement shall be effective
with respect to the Hotel Mortgagee unless and until a copy of the same is
given to the Hotel Mortgagee at the address set forth in the above described
Notice, and the curing of any of Landlord’s defaults within the applicable
notice and cure periods set forth in ARTICLE 14 by the Hotel Mortgagee
shall be treated as performance by Landlord.


 


ARTICLE 20


 


MISCELLANEOUS


 


20.1                           LIMITATION
ON PAYMENT OF RENT.  All agreements
between Landlord and Tenant herein are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of Rent, or
otherwise, shall the Rent or any other


 


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amounts payable to Landlord under this Agreement exceed the maximum
amount permissible under Applicable Law, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment
of any provision of this Agreement, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, or if from any circumstances Landlord should ever receive as fulfillment
of such provision such an excessive amount, then, IPSO FACTO, the amount which
would be excessive shall be applied to the reduction of the installment(s) of
Minimum Rent next due and not to the payment of such excessive amount. This
provision shall control every other provision of this Agreement and any other
agreements between Landlord and Tenant.


 


20.2                           NO
WAIVER.  No failure by Landlord or Tenant
to insist upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof, and no acceptance of
full or partial payment of Rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of any such term. To the
maximum extent permitted by law, no waiver of any breach shall affect or alter
this Agreement, which shall continue in full force and effect with respect to
any other then existing or subsequent breach.


 


20.3                           REMEDIES
CUMULATIVE.  To the maximum extent
permitted by law, each legal, equitable or contractual right, power and remedy
of Landlord or Tenant, now or hereafter provided either in this Agreement or by
statute or otherwise, shall be cumulative and concurrent and shall be in
addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant (as applicable) of any one or more of
such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Landlord of any or all of such other rights, powers and
remedies.


 


20.4                           SEVERABILITY.
 Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be
invalid, illegal or ineffective, and this Agreement shall be construed as if
such invalid, illegal or ineffective provisions had never been contained
therein.


 


20.5                           ACCEPTANCE
OF SURRENDER.  No surrender to Landlord
of this Agreement or of the Property or any part thereof, or of any


 


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interest therein, shall be valid or effective unless agreed to and
accepted in writing by Landlord and no act by Landlord or any representative or
agent of Landlord, other than such a written acceptance by Landlord, shall
constitute an acceptance of any such surrender.


 


20.6                           NO
MERGER OF TITLE.  It is expressly
acknowledged and agreed that it is the intent of the parties that there shall
be no merger of this Agreement or of the leasehold estate created hereby by
reason of the fact that the same Person may acquire, own or hold, directly or
indirectly, this Agreement or the leasehold estate created hereby and the fee
estate or ground landlord’s interest in the Property.


 


20.7                           CONVEYANCE
BY LANDLORD.  If Landlord or any
successor owner of all or any portion of the Property shall convey all or any
portion of the Property in accordance with the terms hereof other than as
security for a debt, and the grantee or transferee of such of the Property
shall expressly assume all obligations of Landlord hereunder arising or
accruing from and after the date of such conveyance or transfer, Landlord or
such successor owner, as the case may be, shall thereupon be released from all
future liabilities and obligations of Landlord under this Agreement with
respect to such of the Property arising or accruing from and after the date of
such conveyance or other transfer and all such future liabilities and
obligations shall thereupon be binding upon the new owner.


 


20.8                           QUIET
ENJOYMENT.  Upon Tenant’s payment of the
Rent reserved herein, Tenant shall peaceably and quietly have, hold and enjoy
the Property for the Term, free of hindrance or molestation by Landlord or
anyone claiming by, through or under Landlord, but subject to (a) any Hotel
Mortgage or otherwise permitted to be created by Landlord hereunder, (b) all
Permitted Encumbrances, (c) liens as to obligations of Landlord that are either
not yet due or which are being contested in good faith and by proper
proceedings, provided the same do not materially interfere with Tenant’s
ability to operate the Hotel and (d) liens that have been consented to in
writing by Tenant. Except as otherwise provided in this Agreement, no failure
by Landlord to comply with the foregoing covenant shall give Tenant any right
to cancel or terminate this Agreement or abate, reduce or make a deduction from
or offset against the Rent or any other sum payable under this Agreement or to
fail to perform any other obligation of Tenant hereunder.


 


20.9                           RECORDATION
OF LEASE.  This Agreement shall be
recorded in the form of a Deed of Lease, a memorandum of lease


 


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or such other abbreviated form as may be recordable at the Puerto Rico
Registry of Property.


 


20.10                     NOTICES.


 


(a)                                  Any
and all notices, demands, consents, approvals, offers, elections and other
communications required or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either in hand,
by telecopier with written acknowledgment of receipt, or by mail or Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice, postpaid and registered or certified with return receipt requested
(if by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).


 


(b)                                 All
notices required or permitted to be sent hereunder shall be deemed to have been
given for all purposes of this Agreement upon the date of acknowledged receipt,
in the case of a notice by telecopier, and, in all other cases, upon the date
of receipt or refusal, except that whenever under this Agreement a notice is
either received on a day which is not a Business Day or is required to be
delivered on or before a specific day which is not a Business Day, the day of
receipt or required delivery shall automatically be extended to the next
Business Day.


 


(c)                                  All
such notices shall be addressed, if to Landlord:


 


c/o Hospitality Properties Trust


400 Centre Street


Newton, Massachusetts 02458


Attn: Mr. John G. Murray


[Telecopier No. (617) 969-5730]


 


with a copy to:


 


Sullivan & Worcester LLP


One Post Office Square


Boston, Massachusetts 02109


Attn: Warren M. Heilbronner, Esq.


[Telecopier No. (617) 338-2880]


 


69





















 


if to Tenant to:


 


c/o InterContinental Hotels Group


Three Ravinia Drive, Suite 100


Atlanta, Georgia  30346


Attn: Robert Chitty


[Facsimile: (770) 604-5321]


 


with a copy
to:                 InterContinental
Hotels Group


Resources, Inc.


c/o Six Continents Hotels, Inc.


Three Ravinia Drive, Suite 100


Atlanta, Georgia 30346


Attn: General Counsel -  Operations


Facsimile: 770-604-5802


 


with a copy
to:                 Alston & Bird
LLP


One Atlantic Center


1201 West Peachtree Street


Atlanta, Georgia 30309


Attn: Timothy Pakenham, Esq.


Facsimile: 404-253-8885


 


(d)                                 By
notice given as herein provided, the parties hereto and their respective
successor and assigns shall have the right from time to time and at any time
during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.


 


20.11                     TRADE AREA
RESTRICTION.  Notwithstanding anything to
the contrary in this Agreement, prior to the fifth (5th) anniversary of the
Commencement Date, neither Tenant nor any Affiliated Person as to Tenant will
acquire, own, manage, operate or open any hotel as an “InterContinental” hotel
nor shall Tenant or any such Affiliated Person authorize a third party to
operate or open any hotel as an “InterContinental” hotel within the restricted
area depicted on EXHIBIT B unless such hotel (i) is owned or leased by Landlord
or its Affiliate, (ii) is owned, operated, managed, franchised or under
development on the Commencement Date and has been specifically approved by
Landlord in writing at or prior to the time of the execution of the Purchase
Agreement or replaces any such hotel, provided such replacement hotel is not
first opened after such time and does not have more than ten percent (10%) more
guest


 


70





















 


rooms than the original hotel which it replaces, or (iii) is part of an
acquisition by Tenant or its Affiliates of an interest (including an interest
as a franchisor) in a chain or group of not less than five (5) comparable full
service hotels (such acquisition to occur in a single transaction or a series
of related transactions). The terms of this SECTION 20.11 shall apply only
to “InterContinental” hotels and shall not in any way restrict the ownership,
management, franchising or operation of other brands or flags of any hotels
owned or operated by Tenant or its Affiliates within the State.


 


20.12                     CONSTRUCTION.
 Anything contained in this Agreement to
the contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Property shall survive such termination or
expiration. In no event shall Landlord be liable for any consequential damages
suffered by Tenant as the result of a breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each term or provision of this Agreement to be
performed by Tenant shall be construed as an independent covenant and
condition. Time is of the essence with respect to the provisions of this
Agreement. Except as otherwise set forth in this Agreement, any obligations of
Tenant (including without limitation, any monetary, repair and indemnification
obligations) and Landlord shall survive the expiration or sooner termination of
this Agreement.


 


20.13                     COUNTERPARTS;
HEADINGS.  This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but
which, when taken together, shall constitute but one instrument and shall
become effective as of the date hereof when copies hereof, which when taken together
bear the signatures of each of the parties hereto, shall have been signed.
Headings in this Agreement are for purposes of reference only and shall not
limit or affect the meaning of the provisions hereof.


 


20.14                     APPLICABLE
LAW, ETC.  This Agreement shall be
interpreted, construed, applied and enforced in accordance with the laws of the
Commonwealth of Puerto Rico applicable to contracts between residents of Puerto
Rico which are to be performed entirely within Puerto Rico, regardless of (i)
where this Agreement is executed or delivered; or (ii) where any


 


71





















 


payment or other performance required by this Agreement is made or
required to be made; or (iii) where any breach of any provision of this Agreement
occurs, or any cause of action otherwise accrues; or (iv) where any action or
other proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principal place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum jurisdiction
otherwise would apply the laws of a jurisdiction other than Puerto Rico; or
(vii) any combination of the foregoing. Notwithstanding the foregoing, the laws
of the State shall apply to the perfection and priority of liens upon and the
disposition of the Property.


 


To the maximum extent permitted by Applicable
Law, any action to enforce, arising out of, or relating in any way to, any of
the provisions of this Agreement may be brought and prosecuted in such court or
courts located in the Commonwealth of Puerto Rico as is provided by law; and
the parties consent to the jurisdiction of said court or courts located in the
Commonwealth of Puerto Rico and to service of process by registered mail,
return receipt requested, or by any other manner provided by law.


 


20.15                     RIGHT TO MAKE
AGREEMENT.  Each party warrants, with
respect to itself, that neither the execution of this Agreement, nor the
consummation of any transaction contemplated hereby, shall violate any
provision of any law, or any judgment, writ, injunction, order or decree of any
court or governmental authority having jurisdiction over it; nor result in or
constitute a breach or default under any indenture, contract, other commitment
or restriction to which it is a party or by which it is bound; nor require any
consent, vote or approval which has not been given or taken, or at the time of
the transaction involved shall not have been given or taken. Each party
covenants that it has and will continue to have, throughout the term of this
Agreement and any extensions thereof, the full right to enter into this
Agreement and perform its obligations hereunder.


 


20.16                     NONRECOURSE.
Nothing contained in this Agreement shall be construed to impose any
liabilities or obligations on Tenant’s or Landlord’s shareholders, officers,
directors, agents or employees (or any shareholders, officers, directors,
agents or employees of any of the foregoing) for the performance of the
obligations of Landlord or Tenant hereunder.


 


20.17                     ATTORNEYS’
FEES.  If any lawsuit or arbitration or
other legal proceeding arises in connection with the


 


72





















 


interpretation or enforcement of this Agreement, the prevailing party
therein shall be entitled to receive from the other party the prevailing party’s
costs and expenses, including reasonable attorneys’ fees incurred in connection
therewith, in preparation therefor and on appeal therefrom, which amounts shall
be included in any judgment therein.


 


20.18                     SECURITIES
FILINGS. Tenant shall cooperate with Landlord in connection with the
preparation of any documents Landlord or a Landlord Affiliated Party files
under the United States Securities Act of 1933 or the United States Securities
Exchange Act of 1934 and shall use commercially reasonable efforts to provide
Landlord with financial statements and other financial information that
Landlord requests relating to periods prior to the Commencement Date and to
obtain consents from Tenant’s independent accountants in connection therewith.


 


20.19                     ARBITRATION.


 


(a)                                  Whenever
in this Agreement it is provided that a dispute is to be resolved by an
Arbitration, such dispute shall be finally resolved pursuant to an arbitration
before a panel of three (3) arbitrators who will conduct the arbitration
proceeding in accordance with the provisions of this Agreement and the rules of
the American Arbitration Association. Unless otherwise mutually agreed by
Tenant and Landlord, the arbitration proceedings will be conducted in New York,
New York. All arbitrators appointed by or on behalf of either party shall be
independent persons with recognized expertise in the operation of hotels of
similar size and class as the Hotel with not less than five (5) years’
experience in the hotel industry. The party desiring arbitration will give
Notice to that effect to the other party, specifying in such Notice the name,
address and professional qualifications of the person designated as arbitrator
on its behalf. Within fifteen (15) days after service of such Notice, the other
party will give Notice to the party desiring such arbitration specifying the
name, address and professional qualifications of the person designated to act
as arbitrator on its behalf. The two arbitrators will, within fifteen (15) days
thereafter, select a third, neutral arbitrator. As soon as possible after the
selection of the third arbitrator, and no later than fifteen (15) days
thereafter, the parties will submit their positions on each disputed item in
writing to the three arbitrators. The decision of the arbitrators so chosen
shall be given within a period of twenty (20) days after the appointment of
such third arbitrator. The


 


73





















 


arbitrators must, by majority vote, agree
upon and approve the substantive position of either Tenant or Landlord with
respect to each disputed item, and are not authorized to agree upon or impose
any other substantive position which has not been presented to the arbitrators
by Tenant or Landlord. It is the intention of the parties that the arbitrators
rule only on the substantive positions submitted to them by the parties and the
arbitrators are not authorized to render rulings which are a compromise as to
any such substantive position. A decision in which any two (2) arbitrators so
appointed and acting hereunder concur in writing with respect to each disputed
item shall in all cases be binding and conclusive upon Tenant or Landlord and a
copy of said decision shall be forwarded to the parties. The parties will
request that the arbitrators assess the costs and expenses of the Arbitration
and their fees against the parties based on a finding as to which parties
substantive positions were not upheld. Otherwise the fees and expenses of the
arbitration will be treated as an Operating Cost and paid by Tenant unless
otherwise determined by the arbitrators.


 


(b)                                 If
the party receiving a request for Arbitration fails to appoint its arbitrator
within the time above specified, or if the two arbitrators so selected cannot
agree on the selection of the third arbitrator within the time above specified,
then either party, on behalf of both parties, may request such appointment of
such second or third arbitrator, as the case may be, by application to any
judge of any court in New York County, New York of competent jurisdiction upon
ten (10) days’ prior Notice to the other party of such intent.


 


(c)                                  If
there shall be a dispute with respect to whether a party has unreasonably
withheld, conditioned or delayed its consent with respect to a matter for which
such party has agreed herein not to unreasonably withhold its consent, such
dispute shall be resolved by Arbitration.


 


20.20                     TAX EXEMPTION
DECREE.  Without limiting Tenant’s
obligations hereunder or at law with respect to the Tax Exemption Decree,
Landlord shall use commercially reasonable efforts not to violate the
requirements of the Tax Exemption Decree imposed on Landlord. Except as
contemplated in the Purchase Agreement, neither Tenant nor Landlord shall amend,
modify or otherwise alter the Tax Exemption Decree without the consent of the
other, which consent shall not be unreasonably withheld. Tenant and Landlord
shall each comply with any


 


74





















 


reasonable request made by the other to execute and deliver any
document which may be necessary or convenient (i) to maintain the Tax Exemption
Decree in full force and effect, (ii) to give effect to the terms of SECTION 3.1.3
(e) and allocate as much as practicable the responsibility for the obligations
described in such Section to Tenant’s portion of the Tax Exemption Decree,
and (iii) so that the Tax Exemption Decree does not impose any obligation or
other term upon Landlord which (after giving effect to the terms of this Agreement)
would adversely affect the qualification of the Rent and other amounts payable
by Tenant hereunder as “rents from real property” within the meaning of Section 856(d)
of the Code. Tenant shall be and remain an “exempt business” as defined in Section 2(m)
of the Puerto Rico Tourism Development Act of 1993.


 


20.21                     COOPERATION.  Landlord and Tenant agree, upon request of the
other, to use commercially reasonable efforts to (a) obtain any certificate or
other document from any Governmental Agency (including, but not limited to, tax
exemptions or concessions under the Tax Exemption Decree) as may be necessary
to mitigate, reduce or eliminate any Imposition or Landlord Tax that could be
imposed and (b) mitigate the effects of the expiration or termination of the
Tax Exemption Decree not due to the fault of the requesting party.


 


20.22                     PRIVATE
LETTER RULING.  As soon as practicable
after the date hereof, Landlord shall apply to the Internal Revenue Service for
a private letter ruling to the effect that the Additional Rent reserved
hereunder qualifies as “rents from real property” within the meaning of Section 856(d)
of the Code. If Landlord does not obtain a favorable letter ruling to such
effect within six (6) months after the date hereof, then Landlord and Tenant
shall renegotiate, in good faith, the provisions hereof relating to Additional
Rent so that the same qualifies as “rents from real property” within the
meaning of Section 856(d) of the Code with the intent that Landlord
receive approximately the same level of overall Additional Rent as would have
obtained if the Additional Rent provisions were not renegotiated.


 


20.23                     AFFILIATED
MANAGER.  For so long as Landlord or any
Affiliated Person as to Landlord shall seek to qualify as a “real estate
investment trust” under the Code, Tenant: (i) shall remain taxable under the
Code as an association taxable as a corporation; (ii) shall not become a direct
or indirect subsidiary of InterContinental Hotels Group Resources, Inc. or of
any Portfolio Manager; (iii) shall not permit either InterContinental Hotels
Groups Resources, Inc. or any Portfolio


 


75










 













 


Manager to become its direct or indirect subsidiary; and (iv) shall not
be reorganized, restructured, combined, merged or amalgamated with any
Affiliated Person (as to Tenant) in such manner that any such Affiliated Person
would, or in Landlord’s judgment could be expected to, adversely affect
(including, e.g., by application of any Person’s actual “disregarded entity”
status under the Code) any status such Affiliated Person (as to Tenant) may
have as a Code Section 856(d)(9)(A) “eligible independent contractor” at a
Code Section 856(d)(9)(D) “qualified lodging facility” owned or leased by
Landlord (or any Affiliated Person as to Landlord).


 


20.24       Enforceability
Not Affected By Leased Real
Property.  In the event that Landlord’s leasehold
interest in any portion of the Property described under the heading “Leased
Real Property” on Exhibit A expires, is determined to be ineffective or
otherwise terminates, Landlord and Tenant agree that the obligations of Tenant
hereunder shall not be affected, including without limitation, the obligation
of Tenant to pay Minimum Rent, Additional Rent, Additional Charges and such
other amounts required hereunder and this Lease shall continue in full force
and effect as if such leasehold interest was still valid and existing, nor
shall any such expiration or termination give rise to any defense, right of
set-off or similar remedies.


 


[Signature page follows]


 


76





















 


IN WITNESS WHEREOF, the parties have executed
this Agreement as a sealed instrument as of the date above first written.


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  HPT IHG PR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G.
  Murray

  	
   

  
	
   

  	
   

  	
  John G.
  Murray

  	
   

  
	
   

  	
   

  	
  President

  	
   

  



 


COMMONWEALTH OF MASSACHUSETTS


COUNTY OF MIDDLESEX


 


On this 17th day of February, 2005, before me,
the undersigned notary public, personally appeared John G. Murray, President of
HPT IHG PR, INC., a Puerto Rico corporation, proved to me through satisfactory
evidence of identification, which was known to me (state form of
identification), to be the person whose name is signed on the preceding or
attached document, and acknowledged to me that he signed it voluntarily for its
stated purpose.


 


	
   

  	
  /s/ Camille Balletto

  	
   

  
	
   

  	
  (affix official signature and seal of

  
	
   

  	
  notary)

  



 





















 


	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  INTERCONTINENTAL HOTELS (PUERTO

  
	
   

  	
  RICO) INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  J. Chitty

  	
   

  
	
   

  	
   

  	
  Robert J.
  Chitty

  	
   

  
	
   

  	
   

  	
  Vice
  President

  	
   

  



 


STATE OF GEORGIA


COUNTY OF DEKALB


 


On this 16th day of February, 2005, before me,
the undersigned notary public, personally appeared Robert J. Chitty, Vice President
of INTERCONTINENTAL HOTELS (PUERTO RICO) INC., a Puerto Rico corporation,
proved to me through satisfactory evidence of identification, which was personally
known to me (state form of identification), to be the person whose name is
signed on the preceding or attached document, and acknowledged to me that he
signed it voluntarily for its stated purpose.


 


 


	
   

  	
  /s/ Laurie W. Travis

  	
   

  
	
   

  	
  (affix official signature and seal of

  
	
   

  	
  notary)

  



 





















 


The following exhibits have been omitted and will be supplementally furnished
to the Securities and Exchange Commission upon request:


 


	
  Exhibits

  	
   

  	
  Document

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  The Land

  
	
  B

  	
   

  	
  Trade Area
  Restriction