Document:

Exhibit
10.43

Chase Park Plaza

St. Louis,
Missouri

LEASE
AGREEMENT

BETWEEN

CHASE
PARK PLAZA HOTEL, LLC, a Delaware limited liability company

AND

KINGSDELL
L.P., a Delaware limited partnership

 

TABLE OF
CONTENTS

	
  

  	
  Page

  
	
   

  
	
  ARTICLE I 
  LEASE

  	
   

  	
  1

  
	
  1.1

  	
  Demise

  	
   

  	
  1

  
	
  1.2

  	
  Leased Property

  	
   

  	
  1

  
	
  1.3

  	
  Assignment and Assumption of Contracts; Initial
  Transaction

  	
   

  	
  2

  
	
  1.4

  	
  Reserved

  	
   

  	
  3

  
	
  1.5

  	
  Expansion of Leased Property

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II 
  DEFINITIONS

  	
   

  	
  3

  
	
  2.1

  	
  Definitions

  	
   

  	
  3

  
	
  2.2

  	
  Additional Definitions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III 
  TERM

  	
   

  	
  11

  
	
  3.1

  	
  Initial Term

  	
   

  	
  11

  
	
  3.2

  	
  Renewal Term

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV 
  RENT

  	
   

  	
  11

  
	
  4.1

  	
  Rent

  	
   

  	
  11

  
	
  4.2

  	
  Confirmation of Percentage Rent

  	
   

  	
  12

  
	
  4.3

  	
  Additional Charges

  	
   

  	
  13

  
	
  4.4

  	
  Net Lease Provisions

  	
   

  	
  14

  
	
  4.5

  	
  Place and Manner of Payment

  	
   

  	
  14

  
	
  4.6

  	
  Late Charge

  	
   

  	
  14

  
	
  4.7

  	
  Annual Budget

  	
   

  	
  14

  
	
  4.8

  	
  Books and Records

  	
   

  	
  16

  
	
  4.9

  	
  Changes in Operations

  	
   

  	
  16

  
	
  4.10

  	
  Allocation of Revenues

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V 
  QUIET ENJOYMENT

  	
   

  	
  16

  
	
  5.1

  	
  Quiet Enjoyment

  	
   

  	
  16

  
	
  5.2

  	
  Lessor Cooperation

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI 
  IMPOSITIONS

  	
   

  	
  17

  
	
  6.1

  	
  Payment of Impositions

  	
   

  	
  17

  
	
  6.2

  	
  Notice of Impositions

  	
   

  	
  18

  
	
  6.3

  	
  Adjustment of Imposition

  	
   

  	
  18

  
	
  6.4

  	
  Utility Charges

  	
   

  	
  18

  
	
  6.5

  	
  Insurance Premiums

  	
   

  	
  18

  
	
  6.6

  	
  Definition of Impositions

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII 
  CONDITION, USE

  	
   

  	
  19

  
	
  7.1

  	
  Condition of the Leased Property

  	
   

  	
  19

  
	
  7.2

  	
  Use of the Leased Property

  	
   

  	
  19

  
	
  7.3

  	
  Lessor to Grant Easements, Etc

  	
   

  	
  20

  
	
  7.4

  	
  Inventory; Supplies; Lessee’s Personal Property

  	
   

  	
  21

  
	
  7.5

  	
  FFE

  	
   

  	
  22

  
	
  7.6

  	
  Lessee’s Obligation to Manage

  	
   

  	
  22

  
					

 

 i
 

 

 

	
  7.7

  	
  Cash Accounts; Working Capital

  	
   

  	
  22

  
	
  7.8

  	
  Reserved

  	
   

  	
  23

  
	
  7.9

  	
  Employees

  	
   

  	
  23

  
	
  7.10

  	
  Net Worth

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII 
  LEGAL REQUIREMENTS

  	
   

  	
  24

  
	
  8.1

  	
  Compliance with Legal and Insurance Requirements,
  Etc

  	
   

  	
  24

  
	
  8.2

  	
  Legal Requirement Covenants

  	
   

  	
  24

  
	
  8.3

  	
  Environmental Matters and Indemnities

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX 
  MAINTENANCE AND REPAIR

  	
   

  	
  28

  
	
  9.1

  	
  Maintenance and Repair

  	
   

  	
  28

  
	
  9.2

  	
  Encroachments, Restrictions, Etc

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X 
  ALTERATIONS

  	
   

  	
  30

  
	
  10.1

  	
  Lessee Alterations

  	
   

  	
  30

  
	
  10.2

  	
  Lessor Alterations

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI 
  LIENS

  	
   

  	
  31

  
	
  11.1

  	
  Liens

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII 
  PERMITTED CONTESTS

  	
   

  	
  32

  
	
  12.1

  	
  Permitted Contests

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII 
  INSURANCE

  	
   

  	
  33

  
	
  13.1

  	
  Lessee Insurance Requirements

  	
   

  	
  33

  
	
  13.2

  	
  Responsibility for Insurance

  	
   

  	
  34

  
	
  13.3

  	
  Replacement Cost

  	
   

  	
  35

  
	
  13.4

  	
  Waiver of Subrogation

  	
   

  	
  35

  
	
  13.5

  	
  Form Satisfactory, Etc

  	
   

  	
  35

  
	
  13.6

  	
  Increase in Limits

  	
   

  	
  36

  
	
  13.7

  	
  Blanket Policy

  	
   

  	
  36

  
	
  13.8

  	
  Separate Insurance

  	
   

  	
  36

  
	
  13.9

  	
  Reports On Insurance Claims

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV 
  DAMAGE AND RECONSTRUCTION

  	
   

  	
  36

  
	
  14.1

  	
  Insurance Proceeds

  	
   

  	
  36

  
	
  14.2

  	
  No Abatement of Rent

  	
   

  	
  37

  
	
  14.3

  	
  Damage During Term

  	
   

  	
  37

  
	
  14.4

  	
  Lessee’s Property and Business Interruption
  Insurance

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV 
  CONDEMNATION

  	
   

  	
  37

  
	
  15.1

  	
  Definitions

  	
   

  	
  37

  
	
  15.2

  	
  Parties’ Rights and Obligations

  	
   

  	
  38

  
	
  15.3

  	
  Total Taking

  	
   

  	
  38

  
	
  15.4

  	
  Allocation of Award

  	
   

  	
  38

  
	
  15.5

  	
  Partial Taking

  	
   

  	
  38

  
	
  15.6

  	
  Temporary Taking

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI 
  DEFAULTS

  	
   

  	
  39

  

 

 ii
 

 

 

	
  16.1

  	
  Events of Default

  	
   

  	
  39

  
	
  16.2

  	
  Remedies

  	
   

  	
  40

  
	
  16.3

  	
  Damages

  	
   

  	
  41

  
	
  16.4

  	
  Application of Funds

  	
   

  	
  42

  
	
  16.5

  	
  Waiver

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII 
  LESSOR’S RIGHT TO CURE

  	
   

  	
  42

  
	
  17.1

  	
  Lessor’s Right to Cure Lessee’s Default

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII 
  HOLDING OVER

  	
   

  	
  43

  
	
  18.1

  	
  Holding Over

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIX 
  RISK OF LOSS

  	
   

  	
  43

  
	
  19.1

  	
  Risk of Loss

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XX 
  INDEMNITIES

  	
   

  	
  43

  
	
  20.1

  	
  Indemnification

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXI 
  SUBLETTING; ASSIGNMENT

  	
   

  	
  45

  
	
  21.1

  	
  Subletting and Assignment

  	
   

  	
  45

  
	
  21.2

  	
  Attornment

  	
   

  	
  47

  
	
  21.3

  	
  Management Agreement

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXII 
  ESTOPPELS; FINANCIAL STATEMENTS

  	
   

  	
  47

  
	
  22.1

  	
  Lessee Estoppel Certificates

  	
   

  	
  47

  
	
  22.2

  	
  Financial Statements and Information

  	
   

  	
  48

  
	
  22.3

  	
  Covenants of Lessee

  	
   

  	
  49

  
	
  22.4

  	
  Certified Financial Statements

  	
   

  	
  49

  
	
  22.5

  	
  Lessor Estoppel Certificates

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXIII 
  INSPECTIONS; MEETINGS

  	
   

  	
  49

  
	
  23.1

  	
  Lessor’s Right to Inspect

  	
   

  	
  49

  
	
  23.2

  	
  Regular Meetings

  	
   

  	
  49

  
	
  23.3

  	
  Accommodations

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXIV 
  NO WAIVER

  	
   

  	
  50

  
	
  24.1

  	
  No Waiver

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXV 
  CUMULATIVE REMEDIES

  	
   

  	
  50

  
	
  25.1

  	
  Remedies Cumulative

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXVI 
  SURRENDER

  	
   

  	
  50

  
	
  26.1

  	
  Acceptance of Surrender

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXVII 
  NO MERGER

  	
   

  	
  50

  
	
  27.1

  	
  No Merger of Title

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXVIII 
  CONVEYANCE BY LESSOR

  	
   

  	
  51

  
	
  28.1

  	
  Conveyance by Lessor

  	
   

  	
  51

  
	
  28.2

  	
  Lessor May Grant Liens

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXIX 
  NOTICES

  	
   

  	
  53

  

 

 iii
 

 

 

	
  29.1

  	
  Notices

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXX 
  APPRAISALS

  	
   

  	
  54

  
	
  30.1

  	
  Appraisers

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXI 
  LESSOR BREACH

  	
   

  	
  55

  
	
  31.1

  	
  Breach by Lessor

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXII  MISCELLANEOUS

  	
   

  	
  55

  
	
  32.1

  	
  Miscellaneous

  	
   

  	
  55

  
	
  32.2

  	
  Waiver of Presentment, Etc

  	
   

  	
  55

  
	
  32.3

  	
  Force Majeure

  	
   

  	
  55

  
	
  32.4

  	
  Development Agreements

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXIII 
  MEMORANDUM OF LEASE

  	
   

  	
  56

  
	
  33.1

  	
  Memorandum of Lease

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXIV 
  COMPLIANCE WITH AGREEMENTS

  	
   

  	
  56

  
	
  34.1

  	
  Management Agreement

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXV 
  LIMITATIONS

  	
   

  	
  57

  
	
  35.1

  	
  REIT Compliance

  	
   

  	
  57

  
	
  35.2

  	
  Personal Property Limitation

  	
   

  	
  57

  
	
  35.3

  	
  Sublease Rent Limitation

  	
   

  	
  57

  
	
  35.4

  	
  Sublease Tenant Limitation

  	
   

  	
  57

  
	
  35.5

  	
  Lessee Ownership Limitation

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXVI 
  TERMINATION RIGHTS

  	
   

  	
  58

  
	
  36.1

  	
  Lessor’s Option to Terminate Lease Upon Sale

  	
   

  	
  58

  
	
  36.2

  	
  Lessor’s and Lessee’s Option to Terminate If Manager
  Becomes Eligible Independent Contractor

  	
   

  	
  58

  
	
  36.3

  	
  Termination by Lessor Under Owner Agreement

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXVII 
  TRANSITION PROCEDURES

  	
   

  	
  59

  
	
  37.1

  	
  Transition Procedures

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXXVIII 
  ARBITRATION

  	
   

  	
  60

  
	
  38.1

  	
  Arbitration

  	
   

  	
  60

  
	
  38.2

  	
  Alternative Arbitration

  	
   

  	
  60

  
	
  38.3

  	
  Arbitration Procedures

  	
   

  	
  60

  

 

 iv
 

 

ADDITIONAL DEFINED TERMS

	
  Defined Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  AAA

  	
   

  	
  38.1

  
	
  Actual Pecuniary Loss

  	
   

  	
  21.1(d)

  
	
  Additional Base Rent

  	
   

  	
  4.1(b)

  
	
  Additional Charges

  	
   

  	
  4.3

  
	
  ADR

  	
   

  	
  4.7(h)

  
	
  Annual Audited Gross Revenues Statement

  	
   

  	
  4.2(a)

  
	
  Annual Budget

  	
   

  	
  4.7

  
	
  Annual Food Sales Break Point

  	
   

  	
  Exhibit B

  
	
  Annual Gross Revenues Report

  	
   

  	
  4.2(a)

  
	
  Annual Hotel Revenues Break Point

  	
   

  	
  Exhibit B

  
	
  Assigned Agreements

  	
   

  	
  1.3

  
	
  Award

  	
   

  	
  15.1(c)

  
	
  Bankruptcy Code

  	
   

  	
  21.1(b)

  
	
  Bankruptcy Event

  	
   

  	
  16.1(d)

  
	
  Base Rent

  	
   

  	
  4.1(a)

  
	
  Capital Budget

  	
   

  	
  4.7

  
	
  Cash

  	
   

  	
  7.7

  
	
  Claims

  	
   

  	
  12.1

  
	
  COBRA

  	
   

  	
  7.9

  
	
  Commencement Date

  	
   

  	
  3.1

  
	
  Condemnation

  	
   

  	
  15.1(a)

  
	
  Condemnor

  	
   

  	
  15.1(d)

  
	
  Cumulative Quarterly Portion

  	
   

  	
  Exhibit B

  
	
  Date of Taking

  	
   

  	
  15.1(b)

  
	
  Dissolution Event

  	
   

  	
  16.1(e)

  
	
  Effective Date

  	
   

  	
  Preamble

  
	
  EIK

  	
   

  	
  36.2

  
	
  Event of Default

  	
   

  	
  16.1

  
	
  Expansion Effective Date

  	
   

  	
  1.5(a)

  
	
  Expansion Space

  	
   

  	
  1.5(a)

  
	
  Expansion Space Improvements

  	
   

  	
  1.5(a)

  
	
  Expansion Working Capital

  	
   

  	
  7.7(b)

  
	
  FFE

  	
   

  	
  7.5

  
	
  FFE Reserve

  	
   

  	
  7.5

  
	
  Final Statement

  	
   

  	
  7.7

  
	
  Food Sales Percentage

  	
   

  	
  Exhibit B

  
	
  Force Majeure Event

  	
   

  	
  32.3

  
	
  Full Replacement Cost

  	
   

  	
  13.3

  
	
  Hazardous Materials Law

  	
   

  	
  8.3(c)

  
	
  Hazardous Materials

  	
   

  	
  8.3(d)

  
	
  Hotel Revenue Percentage

  	
   

  	
  Exhibit B

  

 

 v
 

 

 

	
  Impositions

  	
   

  	
  6.6

  
	
  Initial Inventory

  	
   

  	
  7.4(a)

  
	
  Initial Term

  	
   

  	
  3.1

  
	
  Land

  	
   

  	
  1.2(a)

  
	
  Lease

  	
   

  	
  Preamble

  
	
  Leased Improvements

  	
   

  	
  1.2(b)

  
	
  Leased Property

  	
   

  	
  1.2

  
	
  Lessee

  	
   

  	
  Preamble

  
	
  Lessee’s Personal Property

  	
   

  	
  7.4(a)

  
	
  Lessor

  	
   

  	
  Preamble

  
	
  Lessor’s Gross Revenues Audit

  	
   

  	
  4.2(b)

  
	
  Licenses

  	
   

  	
  37.1(a)

  
	
  Liquor Licenses

  	
   

  	
  8.4

  
	
  Management Agreement

  	
   

  	
  21.3

  
	
  Manager

  	
   

  	
  21.3

  
	
  Mortgage

  	
   

  	
  28.2(a)

  
	
  Operating Budget

  	
   

  	
  4.7

  
	
  Percentage Rent

  	
   

  	
  4.1(c)

  
	
  Preliminary Statement

  	
   

  	
  7.7

  
	
  Primary Intended Use

  	
   

  	
  7.2(b)

  
	
  REIT

  	
   

  	
  35.1

  
	
  Renewal Term

  	
   

  	
  3.2

  
	
  Revenue Computation

  	
   

  	
  Exhibit B

  
	
  REVPAR

  	
   

  	
  4.7(h)

  
	
  SEC

  	
   

  	
  22.1(b)

  
	
  Service Contracts

  	
   

  	
  7.2(a)

  
	
  Smith Group

  	
   

  	
  21.1(a)

  
	
  Tax Code

  	
   

  	
  35.1

  
	
  Term

  	
   

  	
  3.1

  
	
  Termination Payment

  	
   

  	
  36.2

  
	
  Trustee

  	
   

  	
  21.1(b)

  
	
  WC Note

  	
   

  	
  7.7(a)

  
	
  Working Capital

  	
   

  	
  7.7

  

 

 vi

 

LEASE
AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into to be
effective as of the 1st day of December, 2006 (“Effective Date”), by and between CHASE PARK PLAZA HOTEL, LLC, a Delaware limited liability
company (“Lessor”), and KINGSDELL, L.P., a Delaware corporation (“Lessee”).

ARTICLE I

LEASE

1.1                                 Demise.  In consideration of the obligation of Lessee
to pay rent as herein provided and in consideration of the other terms,
covenants, and conditions of this Lease, Lessor does hereby LEASE, DEMISE, and
LET unto Lessee, and Lessee does hereby take and lease from Lessor, the Leased
Property (as hereinafter defined), TO HAVE AND TO HOLD the Leased Property,
together with all rights, privileges, easements and appurtenances belonging to
or in any way appertaining to the Leased Property, for the Term, upon and
subject to the terms, conditions and agreements hereinafter contained.

1.2                                 Leased
Property.  The “Leased
Property” (herein so called) is comprised of the following:

(a)                                  those
certain tracts or parcels of land situated in the City of St. Louis, Missouri,
which are more particularly described in Exhibit A-1
attached hereto and made a part hereof for all purposes, together with all and
singular the rights and appurtenances pertaining to such tracts and parcels,
including any right, title and interest of Lessor in and to any easements
benefiting the Leased Property, adjacent strips or gores, streets, alleys or
rights-of-way and all rights of ingress and egress thereto (the foregoing are
hereinafter referred to collectively as the “Land”);

(b)                                 those
certain condominium units situated in the City of St. Louis, Missouri, which
are more particularly described in Exhibit
A-1 attached hereto and made a part hereof for all purposes,
together with an undivided share of the common elements relating thereto and
all other and singular the rights and appurtenances pertaining to such units,
including any right, title and interest of Lessor in and to any easements
benefiting the units and all rights of ingress and egress thereto (the
foregoing are hereinafter referred to collectively as the “Units”);

(c)                                  all
buildings, fixtures and other improvements of every kind on the Land, including
specifically, without limitation, the automobile parking garage, all swimming
pools, restaurants, hotel rooms, lounges, fitness facilities and various other
guest and spa facilities, and all other buildings and improvements as are
located thereon (the “Leased Improvements”);

(d)                                 all
personal property, tangible or intangible, of any kind whatsoever owned by
Lessor and used in connection with the operation of the Leased Improvements,
together with all replacements, modifications, alterations and additions
thereto;

 1
 

 

(e)                                  all
machinery, apparatus, vehicles, equipment, artwork, furniture, fittings,
fixtures and articles of personal property of every kind and nature whatsoever,
including reserve stock and spare parts therefor, owned by Lessor which are
located in or on the Leased Improvements or stored offsite and are used or
usable in connection with any present or future occupation or operation of the
Leased Improvements, including, by way of illustration and not limitation, all
furnishings, pictures, chinaware, glassware, silverware, ornaments, uniforms,
kitchen appliances and utensils, radios, television sets, mirrors, linens,
towels, sheets, blankets, telephones, and all similar and related articles
owned by Lessor and located in or upon or used in connection with the operation
or maintenance of the Leased Improvements, together with all replacements,
modifications, alterations and additions thereto; and

(f)                                    all
oral or written agreements or leases pursuant to which any portion of the Land
or Facility is used or occupied by anyone other than Lessor.

1.3                                 Assignment
and Assumption of Contracts; Initial Transaction.

(a)                                  Effective
upon the Commencement Date, Lessor hereby transfers and assigns to Lessee, and
Lessee assumes and covenants to perform all of Lessor’s obligations under, the
following agreements and contracts to which the Leased Property remains subject
on the Commencement Date (the “Assigned Agreements”):

(i)                                     All
contracts for the use or occupancy of guest rooms and apartment units and/or
the meeting, dining, banquet, and health facilities of the Facility;

(ii)                                  All
service contracts, maintenance contracts, equipment leases, purchase orders and
other contracts pertaining to the ownership, maintenance, operation,
provisioning or equipping of the Facility, including warranties and guaranties
relating thereto;

(iii)                               All
licenses and permits (to the extent assignable) used in or relating to the
ownership, occupancy or operation of any part of the Facility; and

(iv)                              Any
developer’s, declarant’s, or owner’s interests under any operating agreements
or reciprocal easement agreements or other similar agreements affecting and/or
benefiting the Facility.

This Lease is executed by Lessor and accepted by
Lessee on the understanding that Lessee will and does hereby assume and agree
to perform all of Lessor’s obligations under all the Assigned Agreements.

(b)                                 As
between Lessor and Lessee, Lessor shall be entitled to all income and shall be
responsible for the payment or settlement of all expenses of the Leased
Property accruing prior to the Commencement Date.  Lessee shall act as Lessor’s agent for the
collection of all such income and shall remit the same to Lessor promptly upon
Lessee’s receipt thereof.  Lessee shall
notify Lessor of all such expenses and shall act as Lessor’s payment agent for
such expenses using funds provided by Lessor from time to time.

 2
 

 

1.4                                 Reserved.

1.5                                 Expansion of Leased
Property.

(a)                                  Pursuant to the Development
Agreements, Lessor and Developer are renovating floors 3 through 5 of the Park
Plaza Tower comprising Unit 4 of Park Plaza Master Condominium to include an
additional eighty-nine hotel guest rooms and related amenities (the “Expansion Space Improvements”).  The condominium unit containing the Expansion
Space Improvements is more particularly described on Exhibit A-1
attached hereto and is herein called the “Expansion
Space.”  Provided that
this Lease has not otherwise been terminated, upon completion of the Expansion
Space Improvements and the execution by Lessor and Lessee of an amendment to
this Lease confirming the inclusion of the Expansion Space within the Leased
Property and the date upon which the Expansion Space became subject to the
terms of this Lease (the “Expansion
Effective Date”), the Expansion Space shall become part of the
Leased Property; provided however that either party’s failure to execute
such amendment shall not affect the validity of the inclusion of the Expansion
Space within the Leased Property or Lessee’s obligations with respect to the
Expansion Space upon completion of the Expansion Space Improvements.

(b)                                 The
Base Rent for the Expansion Space will be in the amount set forth in Part B. of
Schedule 4.1(a) and shall be payable beginning on the first day of the first
month following the Expansion Effective Date. 
Additional Base Rent for the Expansion Space will be in the amount set
forth in Part B of Schedule 4.1(b) and shall be payable beginning on the
fifteenth (15th) day
following the first full Quarter following the Expansion Effective Date.  Base Rent and Additional Base Rent for the
Expansion Space for any period during the Term which is less than one (1) month
or one (1) Quarter shall be a pro-rata portion of the applicable monthly or
quarterly installment, as applicable.

(c)                                  It is possible that the
Expansion Space will be added in floor by floor increments rather than all at
one time.  In such event, (i) the parties
will execute an amendment to this Lease confirming the inclusion of such
portion of the Expansion Space within the Leased Property and the date upon
which such portion of the Expansion Space became subject to the terms of this
Lease and (ii) only the Base Rent and Additional Base Rent allocated to such
floor will be payable as provided in subsection (b) above.

ARTICLE II

DEFINITIONS

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

 3
 

 

Affiliate.  As used in this Lease the term “Affiliate” of
a person shall mean (a) any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (b) any other person
that owns, beneficially, directly or indirectly, ten percent (10%) or more of
the outstanding capital stock, shares or equity interests of such person, or
(c) any officer, director, employee, partner or trustee of such person, or (d)
any person controlling, controlled by or under common control with such person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such person). 
The term “person” means and includes individuals, corporations, general
and limited partnerships, limited liability companies, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof. 
For the purposes of this definition, “control” (including the
correlative meanings of the terms “controlled by” and “under common control
with”), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, through the ownership of voting securities,
partnership interests or other equity interests, by contract or otherwise.

Bad Boy Default.
Any default under this Lease by Lessee, or any default by Manager under the
Management Agreement, arising out of any of the following:  (A) any fraud or intentional tort on the part
of Lessee or Manager; (B) any criminal act on the part of Lessee or Manager;
(C) the use or distribution of any insurance proceeds or condemnation awards
contrary to the terms of this Lease; (D) the failure of Lessee to apply
revenues, rents, and income of the Leased Property (“Property Income”)
received by Lessee to the Rent due hereunder under the Lease (except to the
extent the Property Income is insufficient to pay such Rent as and when due);
(E) any failure by Lessee to pay any Impositions or insurance premiums
when the same are due and payable (except to the extent the Property Income is
insufficient to pay such items as and when due); or (F) any other act of Lessee
or Manager that causes Behringer Harvard Opportunity REIT I, Inc.  to incur any liability under that certain
Recourse Guaranty Agreement dated on or about December 1, 2006, executed by
Behringer Harvard Opportunity REIT I, Inc. in favor of Massachusetts Mutual
Life Insurance Company.

Base Rate.  The prime rate (or base rate) reported in the
Money Rates column or comparable Section of The Wall Street Journal
as the rate then in effect for corporate loans at large U.S. money center
commercial banks, whether or not such rate has actually been charged by any
such bank.  If no such rate is reported
in The Wall Street Journal or if such rate is discontinued, then Base
Rate shall mean such other successor or comparable rate as Lessor may
reasonably designate.

Brand Standards.  The operating standards set forth and defined
in the Management Agreement.

Business Days.  Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which national banks in the municipality wherein
the Leased Property is located are closed.

 4
 

 

CERCLA.  The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.

Consolidated Financials.  For Lessee and its consolidated Subsidiaries,
(a) for any fiscal month, consolidating balance sheet and statement of
operations, (b) for any fiscal quarter, consolidating statement of operations,
and (c) for any fiscal year, consolidating balance sheet, consolidating
statement of operations and working capital statement for each such period and
for the period from the beginning of the respective fiscal year to the end of
each such period, together with the notes to any such yearly statement, all in
such detail as may be reasonably required by Lessor, and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with GAAP and audited
annually by a firm of independent certified public accountants approved by
Lessor.  Lessor acknowledges that
RubinBrown LLP is an approved firm. 
Consolidated Financials shall be prepared on the basis of a December 31
fiscal year of Lessee, or on such other basis as Lessor shall designate.  Any cost for such audit shall be borne by
Lessee.

Consumable Supplies.  Office supplies, cleaning supplies, uniforms,
laundry and valet supplies, engineering supplies, fuel, stationery, soap,
matches, toilet and facial tissues, and such other supplies as are consumed
customarily on a recurring basis in the operation of the Facility, together
with food and beverages that are to be offered for sale to guests and to the
public.

Developer.  IFC, Inc., a Missouri corporation.

Development Agreements.  Those certain agreements between Landlord and
Developer regarding the Land, the Leased Improvements and other land and
improvements located adjacent to the Leased Property.

Development Projects.  The projects described in and to be
undertaken pursuant to the Development Agreements.

EIK Agreement.  That certain Agreement Concerning Future
Operations dated as of the Effective Date between Lessor, The Private
Residences, LLC, a Delaware limited liability company, Lessee and Manager
concerning, among other things, Manager’s status as an eligible independent
contractor.

Emergency Situations.  Fire, any other casualty, or any other
events, circumstances or conditions which threaten the safety or physical
well-being of the Facility’s guests or employees or which involve the risk of
material property damage or material loss to the Facility.

Environmental Authority.  Any department, agency or other body or
component of any Government that exercises any form of jurisdiction or
authority under any Hazardous Materials Law.

 5
 

 

Environmental Liabilities: Any and
all actual or potential obligations to pay the amount of any judgment or
settlement, the cost of complying with any settlement, judgment or order for
injunctive or other equitable relief, the cost of compliance or corrective
action in response to any notice, demand or request from an Environmental
Authority, the amount of any civil penalty or criminal fine, and any court
costs and reasonable amounts for attorney’s fees, fees for witnesses and
experts, and costs of investigation and preparation for defense of any claim or
any Proceeding, regardless of whether such Proceeding is threatened, pending or
completed, that may be or have been asserted against or imposed upon Lessor,
Lessee, any Predecessor, the Leased Property or any property used therein and
arising out of:

(a)                                  the
failure to comply at any time with all Hazardous Materials Laws applicable to
the Leased Property;

(b)                                 the
presence of any Hazardous Materials on, in, under, at or in any way affecting
the Leased Property;

(c)                                  a
Release or threatened Release of any Hazardous Materials on, in, at, under or
in any way affecting the Leased Property;

(d)                                 the
identification of Lessee, Lessor or any Predecessor as a potentially
responsible party under CERCLA or under any other Hazardous Materials Law;

(e)                                  the
presence at any time of any above-ground and/or underground storage tanks, as
defined in RCRA or in any applicable Hazardous Materials Law on, in, at or
under the Leased Property or any adjacent site or facility; or

(f)                                    any
and all claims for injury or damage to persons or property arising out of
exposure to Hazardous Materials originating or located at the Leased Property,
or resulting from operation thereof or any adjoining property.

Facility.  The hotel and/or other facilities offering
lodging and other services or amenities being operated or proposed to be
operated on the Leased Property.

First Class Operating Standards.  Operating standards of other facilities
comparable in size to the Leased Property which represent the highest quality
of hotels and/or resorts in the United States, including without limitation,
the operation of the Leased Property (but not necessarily all facilities
thereof) on a seven days a week, twenty-four hour a day basis with adequate staffing
to provide first-class staffing, and health, fitness, food, beverage,
housekeeping, banquet, parking, bellmen and porter services; provided that such
standard of operation shall never be lower than the standard of operation
existing at the date hereof with respect to the Leased Property.

Food Sales.  Shall mean (i) gross revenue from the sale of
food and non-alcoholic beverages that are prepared at the Facility and sold or
delivered on or off the Facility by Lessee, its permitted subtenants, licensees,
or concessionaires whether for cash or for credit, including in respect of
guest rooms, banquet rooms, meeting rooms and other similar rooms, and (ii)
gross

 6
 

 

revenue from the rental
of banquet, meeting and other similar rooms. 
Such gross revenue constituting Food Sales shall include sales by Lessee
and its permitted subtenants, licensees and concessionaires, but gross revenues
from subleases, licenses or similar arrangements for space within the Facility
in which the items described in subparagraphs (i) and (ii) above are sold which
are entered into by Lessor, by any prior owner of the Leased Property, or by
Lessee, in compliance, but only in compliance, with Section
21.1 with parties who are not Affiliates of Lessee, shall be
classified as Hotel Revenues and shall only include rents received by Lessee
under such existing subleases, licenses or similar arrangements.  Such gross revenue shall be determined in a
manner consistent with the Uniform System and shall not include the following:

(a)                                  Vending machine sales;

(b)                                 Any gratuities or service charges added to a
customer’s bill or statement in lieu of a gratuity which is paid directly to an
employee;

(c)                                  Non-alcoholic beverages sold from a bar or
lounge;

(d)                                 Credits, rebates or refunds; and

(e)                                  Sales taxes or taxes of any other kind imposed on
the sale of food or non-alcoholic beverages.

Franchise Agreement.  Any franchise agreement or license agreement
with a franchisor under which the Facility is hereafter operated, if any.

Franchisor.  Any franchisor under a franchise or license
agreement under which the Facility is operated.

GAAP.  Generally accepted accounting principles as
are at the time applicable and otherwise consistently applied by Lessor.

Gross Revenues.  All gross revenues, gross receipts, and gross
income (including rental payments) of any kind derived directly or indirectly
by Lessee from or in connection with the Facility whether on a cash basis or
credit, paid or collected, determined in accordance with GAAP and the Uniform
System, and all proceeds paid under any policy of business or rental
interruption insurance but excluding, however: 
(i) funds furnished by Lessor, (ii) federal, state and
municipal excise, sales, and use taxes collected directly from patrons and
guests or as a part of the sales price of any goods, services or displays, such
as gross receipts, admissions, cabaret or similar or equivalent taxes and paid
over to federal, state or municipal governments, (iii) gratuities,
(iv) proceeds of insurance and condemnation (other than proceeds from any
business or rental interruption insurance), (v) proceeds from sales other
than sales in the ordinary course of business, (vi) all loan proceeds from
financing or refinancings of the Facility or interests therein or components
thereof, (vii) judgments and awards, except any portion thereof arising from
normal business operations of the Facility, (viii) items constituting “allowances”
under the Uniform System, (ix) rent or other amounts payable by 

St. Louis Workout, Inc, a Missouri corporation, and (x) any amount paid
pursuant to a sublease of all or a portion of the

 7
 

 

Leased Property if the
rental to be paid by the sublessee thereunder is based, in whole or in part, on
the income or profits derived by the business activities of the sublessee.

Holder.  Any holder of any indebtedness of Lessor or
any of its Affiliates, any holder of a mortgage, any purchaser of the Leased
Property or any portion thereof at a foreclosure sale or any sale in lieu
thereof, or any designee of any of the foregoing.

Hotel Revenues.  Gross Revenues, minus Food Sales and gross
revenues from the sale of alcoholic beverages at or from the Leased Property.

Indemnified Party.  Either of a Lessee Indemnified Party or a
Lessor Indemnified Party.

Indemnifying Party.  Any party obligated to indemnify an
Indemnified Party pursuant to any provision of this Lease.

Inventory.  All “Inventory” as defined in the Uniform
System, including, but not limited to, linens, china, silver, glassware and
other non-depreciable personal property, and any property of the type described
in Section 1221(l) of the Tax Code.

Lease Year.  Any twelve-month period from January 1 to
December 31 during the Term; provided that the initial Lease Year shall be the
period beginning on the Commencement Date and ending on December 31, 2006, and
the last Lease Year shall be the period beginning on January 1 of the calendar
year in which the Term expires and ending on the expiration of the Term (to the
extent any computation or other provision hereof provides for an action to be
taken on a Lease Year basis, an appropriate proration or other adjustment shall
be made in respect of the initial and final Lease Years to reflect that such
periods are less than full calendar year periods).

Legal Requirements.  All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting either the Leased Property or the
maintenance, construction, use, operation or alteration thereof (whether by
Lessee or otherwise), now existing or hereafter enacted and in force, including
all laws, rules or regulations pertaining to the environment, occupational
health and safety and public health, safety or welfare at the Leased Property;
and all permits, licenses and authorizations necessary or appropriate to
operate the Leased Property for its Primary Intended Use; and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Lessee (other than encumbrances hereafter created by
Lessor without the consent of Lessee), at any time in force affecting the
Leased Property.

Lessee Indemnified Party.  Lessee, any Affiliate of Lessee, Manager, any
other Person against whom any claim for indemnification may be asserted
hereunder as a result of a direct or indirect ownership interest in Lessee, the
officers, directors, stockholders, partners, members, employees, agents and
representatives of any of the foregoing Persons and any corporate stockholder,
agent, or representative of any of the foregoing Persons, and the

 8
 

 

respective heirs,
personal representatives, successors and assigns of any such officer, director,
stockholder, employee, agent or representative.

Lessor Indemnified Party.  Lessor, any Affiliate of Lessor, any other
Person against whom any claim for indemnification may be asserted hereunder as
a result of a direct or indirect ownership interest in Lessor, the officers,
directors, stockholders, partners, members, employees, agents and
representatives of any of the foregoing Persons and of any stockholder,
partner, member, agent, or representative of any of the foregoing Persons, and
the respective heirs, personal representatives, successors and assigns of any
such officer, director, partner, stockholder, employee, agent or
representative.

Lessor’s Audit.  An audit by Lessor’s independent certified
public accountants of the operation of the Leased Property during any Lease
Year, which audit may, at Lessor’s election, be either a complete audit of the
Leased Property’s operations or an
audit of Room Revenues, Food Sales, Beverage Sales and other income realized
from the operation of the Leased Property during such Lease Year.

Liquor Licenses.  Any liquor license held, from time to time,
by Lessee and used for the purchase, sale and service of alcoholic beverages on
the Leased Property, which liquor licenses currently include, but are not
limited to, License Number 127846, Alcohol and Tobacco License issued by the
State of Missouri expiring 6/30/2007, License Number 127845, Alcohol and
Tobacco License issued by the State of Missouri expiring 6/30/2007, License
Number 127847, Alcohol and Tobacco License issued by the State of Missouri
expiring 6/30/2007, License Number LC6395120, Retail Liquor License issued by the
City of St. Louis expiring 4/3/2007, License Number LC6395110, Sunday Retail
Liquor License issued by the City of St. Louis expiring 4/2/2007 and License
Number 3440, 3:00 am closing permit issued by the City of St. Louis expiring
3/4/2007.

Management Agreement.  That certain Hotel Operating Agreement dated
December 1, 2006 between Lessee and Manager.

Manager.  CWE Hospitality Services, LLC.

Overdue Rate.  On any date, a rate equal to the Base Rate
plus 5% per annum, but in no event greater than the maximum rate then permitted
under applicable law.

Owner Agreement.  That certain Owner Agreement dated of even
date herewith by and among Lessor, Lessee and Manager.

Proceeding.  Any judicial action, suit or proceeding
(whether civil or criminal), any administrative proceeding (whether formal or
informal), any investigation by a governmental authority or entity (including a
grand jury), and any arbitration, mediation or other non-judicial process for
dispute resolution.

Quarter.  Each calendar quarter during the Term,
provided that the first Quarter of the Term shall commence on the Commencement
Date and end on March 31, 2007.

 9
 

 

RCRA.  The Resource Conservation and Recovery Act,
as amended.

Release.  A “Release” as defined in CERCLA or in any
Hazardous Materials Law, unless such Release has been properly authorized and
permitted in writing by all applicable Environmental Authorities or is allowed
by such Hazardous Materials Law without authorizations or permits.

Rent.  Collectively, the Base Rent, Percentage Rent and
Additional Charges.

State.  The State or Commonwealth of the United
States in which the Leased Property is located.

Subsidiaries.  Corporations or other entities in which a
party owns, directly or indirectly, 50% or more of the voting rights or control,
as applicable (individually, a “Subsidiary”).

Term.  The Initial Term or the Renewal Term, as
applicable.

Unavoidable Delay.  Delay due to strikes, lock-outs, labor
unrest, inability to procure materials, power failure, acts of God,
governmental restrictions, acts of terrorism, enemy action, civil commotion,
fire, unavoidable casualty, condemnation or other similar causes beyond the
reasonable control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
reasonable control of either party hereto unless such lack of funds is caused
by the breach of the other party’s obligation to perform any obligations of
such other party under this Lease.

Uneconomic for its Primary Intended Use.  A state or condition of the Facility such
that in the judgment of Lessor the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, such that Lessor
intends to, and shall, cease operations from the Facility.

Uniform System  The most current edition of the Uniform
System of Accounts for Hotels, as published by the Hotel Association of New
York City, Inc., as the same may hereafter be revised, and as the same is
interpreted and applied by the Lessor’s independent certified public
accountants in connection with any Lessor’s Audit.

Unsuitable for its Primary Intended Use.  A state or condition of the Facility such
that in the judgment of Lessor the Facility cannot function as an integrated
hotel facility consistent with standards applicable to a well maintained and
operated hotel comparable in quality and function to that of the Facility prior
to the damage or loss.

2.2                                 Additional
Definitions.  Other capitalized terms
are defined in the Sections of this Lease specified in the Table of Contents.

 10
 

 

ARTICLE III

TERM

3.1                                 Initial Term.  The initial term (hereinafter called the “Initial Term”)
of this Lease shall commence on the effective date of execution of this Lease
(the “Commencement Date”) and shall end
on December 31, 2012, unless sooner terminated in accordance with the
provisions hereof.

3.2                                 Renewal
Term.  Notwithstanding anything to
the contrary contained in Section 3.1 above or Sections 4.1 and 4.2
and Exhibit “B” below, (a) provided this Lease has not previously been
terminated in accordance with the provisions hereof, upon the expiration of the
Initial Term of this Lease, this Lease shall automatically renew for the period
commencing on January 1, 2013, and expiring on December 31, 2016 (the “Renewal Term”), unless sooner
terminated in accordance with the provisions hereof, and (b) during the Renewal
Term, the Base Rent, Additional Base Rent and Percentage Rent (each as
hereinafter defined) shall together be an amount equal to the fair market
rental value of the Leased Property, which fair market rental value shall be
determined using the same criteria that was used by Lessor and Lessee to
determine the Base Rent, Additional Base Rent and Percentage Rent with respect
to the Initial Term of this Lease, except to the extent that Lessor and Lessee
determine that such criteria should be modified because they would not result
in a determination of fair market rental value because of a change in economic
conditions between the Commencement Date and the first day of the Renewal Term.  Promptly after the determination of the Base
Rent, Additional Base Rent and Percentage Rent applicable during the Renewal
Term, Lessor and Lessee shall enter into an amendment to this Lease
memorializing the same.

ARTICLE IV

RENT

4.1                                 Rent.  So long as this Lease remains in force and
effect, Lessee promises to pay rents to Lessor, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, in immediately available funds, in the manner, at the time, and
in the amounts specified below:

(a)                                  Base Rent.  Lessee shall pay annual base rent under this
Lease (the “Base Rent”) in
advance in the monthly installments set forth in the Monthly Base Rent Payment
Schedule attached hereto as Schedule 4.1(a), beginning on the Effective
Date and continuing on or before the first (1st) day of each and every month thereafter
during the Term.  Base Rent for any
period during the Term which is less than one (1) month shall be a
pro-rata portion of the applicable monthly installment.  Lessee shall receive a credit against the
monthly installment of Base Rent due on January 1 of each Lease Year in an
amount equal to the amount of interest paid by Lessee on the principal balance
of the WC Note on December 31 of the prior Lease Year (and on February 1, if
necessary, to the extent the interest paid exceeds the Base Rent due on January
1). Notwithstanding that the Base Rent and Additional Base Rent are payable as
set forth in Schedules 4.1(a) and 4.1(b), respectively, such Rent
shall accrue under this Lease beginning on the Effective Date as set forth in
the Monthly Rent Accrual Schedule attached hereto as Schedule 4.1.

 11
 

 

(b)                                 Additional Base
Rent.  In addition to the Base Rent,
Lessee shall pay additional base rent (the “Additional Base Rent”) in the amounts and at the times set
forth in the Additional Base Rent Schedule attached hereto as Schedule
4.1(b).

(c)                                  Percentage Rent.

(i)                                     In
addition to the sums payable pursuant to Subparagraphs (a) and (b) above,
Lessee shall within twenty (20) days after the last day of each Quarter during
the Term, pay to Lessor “Percentage Rent”
(herein so called) for each Lease Year calculated in accordance with the
provisions of this subparagraph (c) and Exhibit B
attached hereto, which obligation will survive the expiration or early
termination of this Lease for a period of one (1) year.

(ii)                                  The
obligation to pay Percentage Rent shall survive the expiration or earlier
termination of the Term, and a final reconciliation, taking into account, among
other relevant adjustments, any adjustments which are accrued after such
expiration or termination date but which related to Percentage Rent accrued
prior to such termination date, shall be made not later than sixty (60) days
after such expiration or termination date.

4.2                                 Confirmation of
Percentage Rent.

(a)                                  Lessee shall submit
to Lessor within twenty (20) days after the last day of each Quarter a written
statement signed and certified by Lessee to be correct, showing Gross Revenues
during the preceding Quarter and specifically
allocating the amounts attributable to Hotel Revenues and Food & Beverage
Revenues and the calculation of Percentage Rent for such period.  Lessee shall submit to Lessor within twenty
(20) days after the end of each Lease Year a written statement signed and
certified by Lessee to be correct, showing Gross Revenues during such preceding
Lease Year and the calculation of Percentage Rent for such Lease Year (the “Annual Gross Revenues Report”).  In addition, within ninety (90) days after
the end of each Lease Year, Lessee will provide to Lessor, at Lessee’s expense,
an audited Statement of Gross Revenues for the preceding Lease Year (the “Annual Audited Gross Revenues Statement”).  Lessee’s monthly and annual written statement
of Gross Revenues shall contain such detail and breakdown as Lessor may
reasonably require.  If, after notice
from Lessor and the expiration of the cure period provided for herein, Lessee
fails to submit the aforesaid report and statement to Lessor when due, Lessor, in
addition to any other remedies Lessor has, shall have the right to retain a
certified public accountant, at Lessee’s sole expense, to prepare such
statements and to perform all inspections and audits related thereto.  In the event that either the Annual Gross
Revenues Report or Annual Audited Gross Revenues Statement discloses that the
actual Percentage Rent exceeds the prior payments of Percentage Rent to Lessor
with respect to such year, Lessee shall within thirty (30) days of notice from
Lessor remit the difference to Lessor, together with interest thereon at the
Base Rate from the date due until paid. 
In the event the advance payments of Percentage Rent paid to Lessor with
respect to a calendar year exceed the actual Percentage Rent based upon the Annual
Gross Revenues Report or Annual Audited Gross Revenues Statement, Lessor shall
apply such overpayment to the next payment of Percentage Rent due hereunder
(or, in the event that the Lease is expired or otherwise terminated, then
Lessor shall remit the overpayment to Lessee within thirty (30) days of notice
from Lessee).

 12
 

 

(b)                                 The acceptance by
Lessor of the estimated payments of Percentage Rent or any additional payment
of Percentage Rent (pursuant to subparagraph (a) above) shall not prejudice
Lessor’s right, at Lessor’s sole cost and expense (except as expressly provided
below), to an examination of Lessee’s records of Gross Revenues for any period
for which Lessee is required to maintain records to verify Gross Revenues.  Lessor shall have the right to examine Lessee’s
records during all regular business hours upon reasonable prior notice.  Lessee, upon reasonable prior notice, shall
make available to Lessor for examination any other records required to be
maintained hereunder.  If the audit of
the books and records by Lessor (the “Lessor’s Gross Revenues
Audit”) discloses that Gross Revenues were underreported by
Lessee for any period covered by such Audit, Lessee shall promptly pay to
Lessor, the cost of the Lessor’s Gross Revenues Audit, as Additional Rent, in
addition to any deficiency in Percentage Rent that may be due, plus interest
thereon at the Base Rate from the date due until paid.  If the Lessor’s Gross Revenues Audit or the
Annual Audited Gross Revenues Statement for two (2) consecutive Lease Years
discloses that Gross Revenues were underreported by Lessee by five percent (5%)
or more for each such Lease Year, Lessor shall have the option, exercisable
within sixty (60) days of its discovery of the discrepancy, to consider such
event as an Event of Default.  The
provisions of this Section shall survive the expiration of the Term or the
earlier termination of this Lease for a period of one (1) year
thereafter.  Any dispute as to the existence or amount of any deficiency in the
payment of Percentage Rent as disclosed by Lessor’s Gross Revenues Audit shall,
if not otherwise settled by the parties, be submitted to arbitration pursuant
to the provisions of Section 38.2.

(c)                                  Lessee shall maintain
in a manner and form satisfactory to Lessor, during the Term, and for a period
of three (3) consecutive years thereafter, complete and accurate general books
of account, which shall reflect Gross Revenues, and which shall include, if
used by Lessee, without limitation, original invoices, sales records, sales slips,
sales checks, sales reports, cash register tapes, records of bank deposits,
inventory records prepared as of the close of the Lessee’s accounting period,
sales and occupation tax returns and all other original records and other
pertinent papers which will enable Lessor to determine the Gross Revenues
derived by Lessee during the Term.  Such
records for the three (3) most recent years shall be maintained at the Leased
Property or Lessee’s corporate headquarters. 
The provisions hereof shall survive the expiration of the Term or the
earlier termination of this Lease.

4.3                                 Additional Charges.  In addition to the Base Rent and the
Percentage Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions (as defined
hereinbelow) that Lessee expressly assumes or agrees to pay under this Lease,
and (b) in the event of any failure on the part of Lessee to pay any of those
items referred to in clause (a) of this Section 4.3, Lessee also
will promptly pay and discharge every fine, penalty, interest and cost that may
be added for non-payment or late payment of such items (the items referred to
in clauses (a) and (b) of this Section 4.3 being additional rent
hereunder and being referred to herein collectively as the “Additional Charges”) and Lessor
shall have all legal, equitable and contractual rights, powers and remedies
provided either in this Lease or by statute or otherwise in the case of
non-payment of the Additional Charges as are available in the case of
non-payment of the Base Rent or the Percentage Rent.  To the extent that Lessee pays any Additional
Charges to Lessor pursuant to any requirement of this Lease, Lessee

 13
 

 

shall be relieved of its obligation to pay such Additional Charges to
the entity to which they would otherwise be due and Lessor shall pay same from
monies received from Lessee.

4.4                                 Net Lease
Provisions.  The rent shall be paid
absolutely net to Lessor so that this Lease shall yield to Lessor the full
amount of the installments of Base Rent, Percentage Rent, and all Additional
Charges throughout the Term, all as more fully set forth herein, but subject to
any other provisions of this Lease that expressly provide for adjustment or
abatement of rent or other charges or expressly provide that certain expenses
or maintenance shall be paid or performed by Lessor.

4.5                                 Place and Manner of
Payment.  Subject to the further
provisions hereof, the rent hereunder shall be payable to Lessor at the
original or changed address of Lessor set forth in Article XXIX hereof or
to such other address or to such other person at such address as Lessor may
designate from time to time in writing.

4.6                                 Late Charge.  If Lessor fails to pay any regular monthly
installment of Base Rent, any quarterly installment of Additional Base Rent,
any quarterly installment of Percentage Rent, or any Additional Charges within
ten (10) days after such installment or charge is due, then in addition to the
past due amount Lessee shall pay to Lessor a late charge of five percent (5%)
of the installment or amount due in order to compensate Lessor for the extra
administrative expenses incurred.

4.7                                 Annual Budget.  Not later than sixty (60) days prior to the
commencement of each Lease Year, Lessee shall prepare and submit to Lessor an
operating budget (the “Operating Budget”)
and a capital budget (the “Capital Budget”)
prepared in accordance with the requirements of this Section 4.7.  The
Operating Budget and the Capital Budget (together, the “Annual
Budget”) shall be prepared in accordance with the Uniform System
and GAAP to the extent applicable and show by month and quarter and for the
year as a whole in the degree of detail specified by the Uniform System and
GAAP for monthly statements, and in accordance with the detail level of monthly
financial statements, the following:

(a)                                  Lessee’s reasonable
estimate of Gross Revenues (including room rates and Hotel Revenues) for the
forthcoming Lease Year itemized on schedules on a monthly and quarterly basis
as approved by Lessor and Lessee, together with the assumptions, in narrative
form, forming the basis of such schedules.

(b)                                 An estimate of any
amounts Lessor will be requested to provide for capital improvements during the
current and the next four (4) Lease Years, subject to the limitations set forth
in Article XXXV.

(c)                                  A cash flow
projection.

(d)                                 A narrative
description of the program for marketing and managing the Facility for the
forthcoming Lease Year, including, among other things, details as to competitor
performance, demand analysis, estimated market penetration by market segment,
target accounts, marketing and advertising budgets, changes in personnel
policies, staffing levels, major events

 14
 

 

plans, franchise issues and other matters affecting the performance and
operation of the Facility, and containing a detailed budget itemization of
proposed expenditures by category and the assumptions, in narrative form,
forming the basis of such budget itemization.

(e)                                  Lessee’s reasonable estimate for each month
of the Lease Year of Percentage Rent, including Hotel Revenues, Food Sales,
Beverage Sales and other income.

(f)                                    A description of
the status of any negotiations relating to a collective bargaining agreement,
if any, affecting Facility employees.

(g)                                 A description of the
current legal status of pending or threatened suits, actions, proceedings,
inquiries or investigations concerning the Facility.

(h)                                 Statistical
information for the Hotel, such as Average Daily Rate (“ADR”),
Revenue Per Available Room (“REVPAR”)
and occupancy.

(i)                                     Capital Budget,
listing amounts by project and estimated expenditure period (i.e. first
quarter, second quarter, third quarter or fourth quarter).

(j)                                     Annual working
capital position.

(k)                                  Upon the written
request of Lessor, any other matter reasonably required by Lessor for inclusion
in the Annual Budget.

Lessor shall have thirty (30) days after the date on
which it receives the Annual Budget to review, approve, disapprove or change
the entries and information appearing in the Annual Budget (other than the
Capital Budget).  If the parties are not
able to reach agreement on the Annual Budget for any Lease Year during Lessor’s
thirty (30) day review period, the parties shall attempt in good faith during
the subsequent thirty (30) day period to resolve any disputes, which attempt
shall include, if requested by either party, at least one (1) meeting of
executive level officers of Lessor and Lessee. 
In the event the parties are still not able to reach agreement on the
Annual Budget for any particular Lease Year after complying with the foregoing
requirements of this Section 4.7,
the parties shall adopt such portions of the Operating Budget and the Capital
Budget as they may have agreed upon,
and any matters not agreed upon shall be submitted to arbitration as provided in
Section 38.2 hereof. 
Pending the agreement of the parties, (i) if the Operating Budget
has not been agreed upon, the Leased Property will be operated in a manner
consistent with the prior Lease Year’s Operating Budget without adjustment
until a new Operating Budget is adopted, and (ii) if the Capital Budget
has not been agreed upon, no capital expenditures shall be made unless the same
are set forth in a previously approved Capital Budget or are specifically
required by Lessor or are otherwise required to comply with Legal Requirements
or to make emergency expenditures.

The Capital Budget shall be subject to the approval of
Lessor in its sole and absolute discretion. 
Notwithstanding Lessor’s approval of the Capital Budget, no capital
expenditures shall be made except upon Lessor’s authorization, other than
emergency expenditures.  Subject to any
required approvals by any Holder or a ground lessor, Lessor agrees that the
Capital

 15
 

 

Budget shall provide for
and Lessor shall authorize and approve, capital expenditures necessary to cause
the Hotel to comply with the Brand Standards so long as the Management
Agreement remains in place.  Any dispute as to same shall be resolved by
arbitration pursuant to Section 38.2.

Lessee shall operate the Leased Property consistent
with the Annual Budget and shall promptly report to Lessor in writing any
actual or anticipated deviation from the Operating Budget or Capital Budget of
any material or long term consequence.

4.8                                 Books and Records.  Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Facility
on an accrual basis, all in accordance with the Uniform System and GAAP and the
obligations of Lessee under this Lease. 
The books of account and all other records relating to or reflecting the
operation of the Facility shall be kept either at the Facility or at Lessee’s
offices in St. Louis, Missouri and shall be available to Lessor and its
representatives and its auditors or accountants, at all reasonable times upon prior
notice for examination, audit, inspection, and transcription.  All of such books and records pertaining to
the Facility including, without limitation, books of account, guest records and
front office records, at all times shall be the property of Lessee but shall
not be removed from the Facility or Lessee’s offices without Lessor’s prior
written approval.  Upon termination or
expiration of this Lease, Lessee shall deliver copies of all such books and
records to Lessor.  Lessor shall be
entitled to make copies during the Term of any or all such books and records
for its own files.  Lessee’s obligations
under this Section 4.8
shall survive termination of this Lease for any reason.

4.9                                 Changes in
Operations.  Without Lessor’s prior
written consent, not to be unreasonably withheld, conditioned or delayed,
Lessee shall not (i) provide food and/or beverage operations at the
Facility if not presently provided, (ii) discontinue any food and/or
beverage operations which are presently provided, or (iii) convert a
subtenant, licensee or concessionaire to an operating department of the
Facility or vice versa.

4.10                           Allocation of Revenues.  In the event that individuals or groups
purchase rooms, food and beverage and/or the use of other hotel facilities or
services together or as part of a package, Lessee agrees that revenues shall be
allocated among Room Revenues, Food Sales, Beverage Sales and/or other revenue
categories, as applicable, in a reasonable manner consistent with the
historical allocation of such revenues.

ARTICLE V

QUIET ENJOYMENT

5.1                                 Quiet Enjoyment.  Lessor has full right to make this Lease and,
subject to the terms and provisions of this Lease and provided Lessee pays all
Rent and complies with the terms of this Lease, Lessee shall have quiet and
peaceable enjoyment of the Leased Property during the Term.  Except as otherwise specifically provided in
this Lease, Lessee, to the maximum extent permitted by law, shall remain bound
by this Lease in accordance with its terms and shall neither take any action
without the written consent of Lessor to modify, surrender or terminate the
same, nor seek nor be entitled to any abatement, deduction, deferment or
reduction

 16
 

 

of the rent, or setoff against the rent, nor shall the obligations of
Lessee be otherwise affected by reason of (a) any damage to or destruction of
the Leased Property or any portion thereof from whatever cause, (b) the lawful
or unlawful prohibition of, or restriction upon Lessee’s use of the Leased
Property, or any portion thereof, or the interference with such use by any
person, corporation, partnership or other entity or by reason of eviction by
paramount title, (c) any claim which Lessee has or might have against Lessor by
reason of any default or breach of any warranty by Lessor under this Lease or
any other agreement between Lessor and Lessee, or to which Lessor and Lessee
are parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee of or transferee of Lessor, or (e) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Lessee from any such obligations as a matter of law.  Lessee hereby specifically waives all rights,
arising from any occurrence whatsoever, which may now or hereafter be conferred
upon it by law to (i) modify, surrender or terminate this Lease or quit or
surrender the Leased Property or any portion thereof, or (ii) entitle
Lessee to any abatement, reduction, suspension or deferment of the rent or
other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease.  The obligations
of Lessee hereunder shall be separate and independent covenants and agreements
and the rent and all other sums payable by Lessee hereunder shall continue to
be payable in all events unless all the obligations to pay the same shall be
terminated pursuant to the express provisions of this Lease or by termination
of this Lease other than by reason of an Event of Default.

5.2                                 Lessor Cooperation.  Lessor shall cooperate with Lessee in the
performance of its obligations under this Lease and shall deliver such
information and execute such agreements or instruments as may be reasonably
necessary for Lessee to perform its obligations under this Lease.

ARTICLE VI

IMPOSITIONS

6.1                                 Payment of
Impositions.  Subject to the
provisions of Article XII
relating to permitted contests, Lessee will pay, or cause to be paid, all
Impositions (as defined hereinbelow) before any fine, penalty, interest or cost
may be added for non-payment, such payments to be made directly to the taxing
or other authorities where feasible, and will promptly furnish to Lessor copies
of official receipts or other satisfactory proof evidencing such payments.  If any such Imposition may, at the option of
the obligor, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Lessee 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 (subject to Lessee’s right of contest pursuant to the
provisions of Article XII)
as the same respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto. 
If any refund shall be due in respect of any Imposition paid by Lessee,
the same shall be paid over to or retained by Lessee if no Event of Default
shall have occurred hereunder and be continuing.  If an Event of Default shall have occurred
and be continuing, any such refund shall be paid over to or retained by
Lessor.  Any such funds retained by
Lessor due to an Event of Default shall be applied as provided in Article XVI.  Lessor and Lessee shall, upon request of the
other, provide

 17
 

 

such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any required
returns and reports.

6.2                                 Notice of
Impositions.  Lessor shall give
prompt notice to Lessee of all Impositions payable by Lessee hereunder of which
Lessor at any time has knowledge, provided that Lessor’s failure to give any
such notice shall in no way diminish Lessee’s obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Lessee receives notice of any Imposition which it is
obligated to pay.

6.3                                 Adjustment of
Imposition.  Impositions imposed in
respect of the tax-fiscal period during which the Term terminates shall be
adjusted and prorated between Lessor and Lessee, whether or not such Imposition
is imposed before or after such termination, and Lessee’s obligation to pay its
prorated share thereof after termination shall survive such termination.

6.4                                 Utility Charges.  Lessee will be solely responsible for
obtaining and maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property during the Term.

6.5                                 Insurance Premiums.  Lessee will pay or cause to be paid all
premiums for the insurance coverages required to be maintained by it under Article XIII.

6.6                                 Definition of
Impositions.  The term “Impositions,” as used herein, means,
collectively, all taxes (including, without limitation, all ad valorem,
personal property, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessor or Lessee or Lessee’s business conducted upon the Leased Property),
assessments (including, without limitation, all assessments for public
improvements or benefit, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term and also any
assessments imposed on the Leased Property by any property owners’ association,
condominium association or other such private association, or otherwise as a
result of private deed restrictions affecting the Leased Property), ground
rents, water, sewer or other rents and charges, excises, tax inspection,
authorization and similar fees and all other such charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Leased Property or the business conducted
thereon by Lessee (including all interest and penalties thereon caused by any
failure in payment by Lessee), which at any time prior to, during or with
respect to the Term may be assessed or imposed on the Leased Property, or any
part thereof or any rent therefrom or any estate, right, title or interests
therein, or any occupancy, operation, use or possession of, or sales from, or
activity conducted on or in connection with the Leased Property, or the leasing
or use of the Leased Property or any part thereof by Lessee.  Nothing contained in this definition of
Impositions shall be construed to require Lessee to pay (1) any tax based
on net income (whether denominated as a franchise or capital stock or other
tax) imposed on Lessor or any other person, or (2) any net revenue tax of
Lessor or any other person, or (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any Leased Property or the proceeds
thereof, or (4) any single business, gross receipts (other than tax on any rent
received by Lessor from Lessee), transaction, privilege or similar taxes as the
same relate to or are imposed upon Lessor, except to the extent that any tax,
assessment, tax levy or charge that Lessee is obligated to pay

 18

 

pursuant to the first sentence of the definition and that is in effect
at any time during the Term is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (1) or (2) is
levied, assessed or imposed expressly in lieu thereof.

ARTICLE VII

CONDITION, USE

7.1                                 Condition of the
Leased Property.  Lessee acknowledges
receipt and delivery of possession of the Leased Property.  Lessee has examined and otherwise has
knowledge of the condition of the Leased Property and has found the same to be
satisfactory for its purposes hereunder. 
Lessee is leasing the Leased Property “as is” in its present
condition.  Lessee waives any claim or
action against Lessor in respect of the condition of or claims against the
Leased Property.  LESSOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
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 LESSEE. 
LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY
LESSEE AND IS SATISFACTORY TO IT; provided, however, to the extent permitted by
law, Lessor hereby assigns to Lessee all of Lessor’s rights to proceed against
any predecessor-in-title, contractor, subcontractor or supplier for breaches of
warranties or representations or for latent defects in the Leased
Property.  Lessor shall fully cooperate with
Lessee in the prosecution of any such claim, in Lessor’s or Lessee’s name, all
at Lessee’s sole cost and expense. 
Lessee hereby agrees to indemnify, defend and hold harmless Lessor from
and against any claims, obligation and liabilities against or incurred by
Lessor in connection with such cooperation.

7.2                                 Use of the Leased
Property.

(a)                                  Subject to the
provisions of Articles XIV, XV,
and XXI and Section 7.2(e), Lessee
covenants and agrees that it will during the Term (i) proceed with all due
diligence and will exercise its best efforts to obtain and to maintain all
licenses, permits, certificates and approvals needed to use and operate the
Leased Property in the manner required under this Lease and under applicable
local, state and federal law, except to the extent the same are the
responsibility of the Developer under the Development Agreement;
(ii) operate continuously the Leased Property in accordance with the
Primary Intended Use; (iii) keep in full force and effect and comply with
all the provisions of all agreements assigned to Lessee pursuant to the terms
hereof, and (iv) not terminate or amend any agreements constituting part
of the Leased Property without the consent of Lessor (the agreements described
in subsections (iii) and (iv) herein called (the “Service Contracts”), such consent to not be unreasonably
withheld, delayed or conditioned.

(b)                                 Lessee shall use or
cause to be used the Leased Property only for its current uses as a hotel
(together with all other existing or incidental uses, including restaurant,
retail, office, movie theater, bar, fitness center, spa, conference center and
other such uses) and for such other uses as may be necessary or incidental to
such use or such other use as otherwise

 19
 

 

approved by Lessor (the “Primary
Intended Use”).  Lessee
shall not use the Leased Property or any portion thereof for any other use, nor
change any names under which the Leased Property is operated, without the prior
written consent of Lessor, which consent may be granted, denied or conditioned
in Lessor’s sole discretion, except as may be expressly permitted under Section
7.2(e).  No use shall be made or
permitted to be made of the Leased Property, and no acts shall be done, which
will cause the cancellation or increase the premium of any insurance policy
covering the Leased Property or any part thereof (unless another adequate
policy satisfactory to Lessor is available and Lessee pays any premium
increase), nor shall Lessee sell or permit to be kept, used or sold in or about
the Leased Property any Article which may be prohibited by law or fire
underwriter’s regulations.  Lessee shall,
at its sole cost, comply with all of the requirements pertaining to the Leased
Property of any insurance board, association, organization or company necessary
for the maintenance of insurance, as herein provided, covering the Leased
Property and Lessee’s Personal Property.

(c)                                  Lessee shall not
commit or suffer to be committed any waste on the Leased Property (normal wear
and tear excepted), nor shall Lessee cause or permit any nuisance thereon.

(d)                                 Lessee shall neither
suffer nor permit the Leased Property or any portion thereof to be used in such
a manner as (1) might reasonably tend to impair Lessor’s (or Lessee’s, as
the case may be) title thereto or to any portion thereof, or (2) may
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of the Leased
Property or any portion thereof, except as necessary in the ordinary and
prudent operation of the Facility on the Leased Property.

(e)                                  Notwithstanding
anything to the contrary in this Lease but subject to Article XXXV,
Lessee shall have the authority, without Lessor’s prior written consent, to do
the following:

(i)                                     enter
into, extend, modify, or terminate leases or subleases of commercial, office,
retail, spa, restaurant or other incidental uses at the Leased Property;
provided that (A) such incidental uses comply with the Primary Intended Use,
(B) such lease does not exceed 7,500 rentable square feet, (C) the term of such
lease is not in excess of five (5) years and (D) such lease is on market terms
and at market rental rates.

(ii)                                  enter
into any Service Contract, license, concession and equipment lease (A) which
has a term of less than two (2) years, including renewals, unless it is
terminable within two (2) years from the date of its execution without cause,
and either without cost or penalty or if with a penalty, such penalty is less
than Twenty-Five Thousand Dollars ($25,000.00) and (B) which binds Tenant to
aggregate payments per year of not more than Fifty Thousand Dollars
($50,000.00), adjusted for CPI.

7.3                                 Lessor to Grant
Easements, Etc.  Lessor will, from
time to time, so long as no Event of Default has occurred and is continuing, at
the request of Lessee and at Lessee’s cost and expense (but subject to the
approval of Lessor, which approval shall not be unreasonably withheld or
delayed), (a) grant easements and other rights in the nature of easements with
respect

 20
 

 

to the Leased Property to third parties, (b) release existing easements
or other rights in the nature of easements which are for the benefit of the
Leased Property, (c) dedicate or transfer unimproved portions of the Leased
Property for road, highway or other public purposes, (d) execute petitions to
have the Leased Property annexed to any municipal corporation or utility
district, (e) execute amendments to any covenants and restrictions affecting
the Leased Property and (f) execute and deliver to any person any instrument
appropriate to confirm or effect such grants, releases, dedications, transfers,
petitions and amendments (to the extent of its interests in the Leased
Property), but only upon delivery to Lessor of a certificate from Lessee
stating that such grant, release, dedication, transfer, petition or amendment
is not detrimental to the proper conduct of the business of Lessee on the
Leased Property and does not materially reduce the value of the Leased
Property.

7.4                                 Inventory;
Supplies; Lessee’s Personal Property.

(a)                                  Upon commencement of
the Term, Lessor shall transfer to Lessee all Nonconsumable Inventory and
Consumable Supplies located at the Facility on the Commencement Date (the “Initial Inventory”).  On the Commencement Date, Lessee shall be
required to ensure that the Leased Property contains (i) a sufficient
amount of Consumable Supplies and Non-Consumable Inventory and (ii) a
reasonably adequate amount of kitchen equipment, bar equipment, refrigeration
equipment, furniture, furnishings, color television sets, carpets, drapes,
rugs, floor coverings, mattresses, pillows, bedspreads and the like, in each
case, to furnish each guest room substantially consistent with First Class
Operating Standards and is otherwise reasonably required to operate the Leased
Property in the manner contemplated by this Lease and in compliance with First
Class Operating Standards and all Legal Requirements (provided that Lessor
shall not be required to provide, at commencement of the Term or otherwise, any
items to be furnished pursuant to the Development Agreements).  Throughout the Term, Lessee shall be required
to maintain Inventory consistent with First Class Operating Standards and as is
otherwise required to operate the Leased Property in the manner contemplated by
this Lease and in compliance with all Legal Requirements.  All Inventory shall be the property of
Lessee, subject to Lessee’s obligations under Section 7.4(b). 
Lessee may (and shall as provided hereinbelow), at its expense, install,
affix or assemble or place on any parcels of the Land or in any of the Leased
Property, any items of personal property (including Inventory) owned by Lessee
(collectively, the “Lessee’s Personal Property”).  Lessee may, subject to the second sentence of
this Section 7.4(a)
and the conditions set forth in Section 7.4(b)
below, remove any of Lessee’s Personal Property at any time during the Term or
upon the expiration or any prior termination of the Term.  All of Lessee’s Personal Property, other than
Inventory, not removed by Lessee within thirty (30) days following the
expiration or earlier termination of the Term shall be considered abandoned by
Lessee and may be appropriated, sold, destroyed or otherwise disposed of by
Lessor without first giving notice thereof to Lessee, without any payment to
Lessee and without any obligation to account therefor.  Lessee will, at its expense, restore the
Leased Property to the condition required by Section 9.1(d), including repair of all damage to the
Leased Property caused by the removal of Lessee’s Personal Property.

(b)                                 Upon the expiration or
earlier termination of the Term for any reason, Lessee shall surrender the
Leased Property to Lessor with a quality of Nonconsumable Inventory

 21
 

 

and Consumable Supplies substantially equal to the Initial Inventory
and in an amount of not less than ninety percent (90%) of the Initial
Inventory.

7.5                                 FFE.  Lessor shall establish and maintain a reserve
account (the “FFE Reserve”) and shall
deposit into the Escrow Account (defined below) during each Lease Year monies
equal to the lesser of (a) the amount required by any Holder, or (b) an amount
equal to the following percent of Gross Revenues (or such other amount as may
be specified in the Annual Budget for such year):  (i) one percent (1%) during the first and
second Lease Years; (ii) two percent (2%) during the third Lease Year; (iii)
three percent (3%) during the fourth Lease Year; and (iv) four percent (4%)
during each Lease Year thereafter.  If at
any time during the Term, any item of FFE (defined below) requires replacement,
(a) if such amounts were not included in the Annual Budget, upon a written
request therefor from Lessee and approval of such expenditures by Lessor (which
approval shall not be unreasonably withheld or delayed), or (b) if such amounts
were not included in the Annual Budget, Lessor shall promptly advance
sufficient funds from the FFE Reserve to enable Lessee to purchase the required
replacements.  Lessee shall make no
expenditure for replacement of FFE in excess of the amounts in the FFE Reserve
without first obtaining the approval of Lessor. 
Any additions to or replacements of furniture, fixtures, and equipment
located at the Leased Property shall become part of the FFE, which is owned by
Lessor.  Throughout the Term of this
Lease, Lessee shall, at its sole cost and expense, cause all of the items of
FFE to be in proper working order and in good condition (ordinary wear and tear
excepted).  The term “FFE” shall have the meaning as set
forth in the Uniform System and shall include, without limitation, all vehicles,
furniture, furnishings and hotel equipment (including office equipment,
exercise equipment, medical and/or health equipment, and property management
equipment as necessary).

7.6                                 Lessee’s Obligation
to Manage.  At all times during the
Term, Lessee shall be responsible for the management and operation of the
Leased Property through the Manager or a successor manager approved by Lessor,
and in no event shall Lessor have any obligation with respect to the management
or operation of the Leased Property.

7.7                                 Cash Accounts;
Working Capital.

(a)                                  On the Commencement
Date, Lessor shall transfer to Lessee cash and funds deposited in banks (“Cash”) and working capital (“Working Capital”) in the amount set
forth in the Preliminary Statement of Cash and Working Capital (the “Preliminary Statement”) to be initialed
by Lessor and Lessee and attached to this Lease as Exhibit C.  Upon the expiration or early termination of
this Lease, Lessee shall (a) pay over to Lessor the same amount of Cash that
existed on the Commencement Date; and (b) restore the amount of Working Capital
to zero (0).  If, notwithstanding the
requirement in the preceding sentence, the Leased Property is returned to
Lessor with positive Working Capital, Lessor shall have the right to audit
Lessee’s and the Leased Property’s books and records and, upon confirmation of
such amount by Lessor, Lessor shall pay to Lessee the amount of positive
Working Capital.  If the Leased Property
is returned to Lessor with negative Working Capital, Lessor shall have the right
to audit Lessee’s and the Leased Property’s books and records and, upon
confirmation of such amount by Lessor, Lessee will pay to Lessor the amount of
negative Working Capital.  In addition,
to the

 22
 

 

extent the Working Capital as of the Commencement Date is a positive
number, Lessee shall execute a note payable to Lessor in the stated amount
equal to the sum of the following:  (i)
such positive Working Capital, (ii) the Cash shown on the Preliminary Statement
and advanced to Lessee on the Commencement Date and (iii) the Expansion Space
Working Capital (the “WC Note”).  The WC Note will be in the form of Exhibit
D attached hereto and made a part hereof and will be secured by the Working
Capital.  Lessee and Lessor acknowledge
that the Preliminary Statement is an estimate of the Working Capital and Lessor
will provide a final reconciliation of such amounts within 90 days after the
Commencement Date (or such longer period as provided in the purchase agreement
pursuant to which Lessor acquired the Leased Property) upon such
reconciliation, Lessor will provide a Final Statement of Cash and Working
Capital (the “Final Statement”)
which will be initialed by Lessee and Lessor and substituted for the
Preliminary Statement.

(b)                                 In addition to the
working capital to be provided pursuant to Section 7.7(a) above, upon
the Expansion Effective Date, Lessor shall provide to Lessee cash and working
capital (the “Expansion Space Working
Capital”) in the amount of $225,000.00.  Upon delivery of the Expansion Space Working
Capital, all references herein to “Working Capital” shall include the Expansion
Space Working Capital.

7.8                                 Reserved.

7.9                                 Employees.  Lessee acknowledges and agrees that all
employees involved in the use and operation of the Leased Property shall be
employees of Lessee, Manager, or one of their Affiliates and not of Lessor or
any of its Affiliates.  Lessee, its
Manager, and their Affiliates shall fully comply with all Legal Requirements
and all collective bargaining and other agreements applicable to such employees.  Upon the expiration or earlier termination of
this Lease, all such employees shall be terminated or retained by Lessee,
Manager or their Affiliate, as applicable, and Lessee, Manager or their
Affiliate, as applicable, shall provide any required notices or other rights to
such employees, all without liability to Lessor or the Hotel, or any other
owner, lessee or manager of the Hotel. 
Payment of all costs and expenses associated with accrued but unpaid
salary, earned but unpaid vacation pay, accrued but unearned vacation pay,
pension and welfare benefits, the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”)
benefits, employee fringe benefits, employee termination payments or any other
employee benefits due to such employees, shall be the sole responsibility and
obligation of and shall be paid when due by Lessee, Manager or their Affiliate,
as applicable.  Upon the expiration or
earlier termination of this Lease and the expiration or earlier termination of
the Management Agreement (to the extent permitted under the Management
Agreement or Owner Agreement), any owner, manager or lessee of the Hotel shall
have the right, but not the obligation, to extend offers of employment to some
or all of such employees on such terms and conditions as are determined solely
in such party’s discretion; and Lessee and Manager shall use reasonable efforts
to assist such party in its efforts to secure satisfactory employment
arrangements with such employees. 
Lessee, Manager or their Affiliate, as applicable, shall provide any
notices, coverages or other rights as shall be required to comply with the
medical coverage continuation requirements of COBRA to any persons who are
entitled to such rights by virtue of the maintenance of any group health plan
by Lessee, Manager or their Affiliate, as applicable, and

 23
 

 

shall maintain, or cause an affiliate company to maintain, a group
health plan that such person shall be entitled to participate in for the
maximum period required by COBRA.  Lessee
shall indemnify, defend and hold harmless Lessor, the Hotel, and any other
owner, lessee or manager of the Hotel, from and against any and all claims,
causes of action, proceedings, judgments, damages, penalties, liabilities,
costs and expenses (including reasonable attorney’s fees and disbursements)
arising out of the employment or termination of employment of or failure to
offer employment to any employee or prospective employee by Lessee, Manager or
their Affiliates, including, without limitation, claims of discrimination,
sexual harassment, breaches of employment or collective bargaining agreements,
or the failure of Lessee, Manager or any of their Affiliates to comply with the
provisions of this section.  The
indemnification rights and obligations provided for in this Section shall
survive the termination of this Lease.

7.10                           Net Worth.  Lessee covenants that it shall at all times
during the term of this Lease maintain a “net worth” which shall be equal to no
less than $500,000.00.  For purposes
hereof, “net worth” shall mean the sum of (i) the aggregate cash and fair
market value of any property (other than cash) contributed to the capital of
Lessee by the members or partners of Lessee after the Effective Date (net of
amounts distributed other than distributions out of earnings of Lessee) and
(ii) the aggregate balances of any line of credit obtained by Lessee and
guaranteed by one or more of the members or partners of Lessee acceptable to
Lessor to the extent such funds may be utilized by Lessee to perform its obligations
under the Lease and to comply with the terms of the Management Agreement, and
(iii) any commitments of the members or partners of Lessee to make additional
capital contributions to Lessee after the Effective Date, which commitments are
legally binding obligations of such members of Lessee to make additional
capital contributions to Lessee.  Lessee
shall, upon Lessor’s written request, provide Lessor with an annual written
certification of its compliance with the foregoing requirement on the
Commencement Date and the first day of each subsequent year of this Lease
hereunder; provided, however, that Lessor may, in addition, request more than
once during any year of this Lease that Lessee provide Lessor with a
certification as of the date of such request of its compliance with the
foregoing requirement.  Such
certifications must be reasonably satisfactory to Lessor as to matters
certified therein and shall be accompanied by such supporting financial
information as Lessor may reasonably request.

ARTICLE VIII

LEGAL REQUIREMENTS

8.1                                 Compliance with
Legal and Insurance Requirements, Etc. 
Subject to the provisions of Article XII
relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all applicable legal requirements and insurance requirements in
respect to the use, operation, maintenance, repair and restoration of the
Leased Property, and (b) procure, maintain and comply with all appropriate
licenses and other authorizations required for any use of the Leased Property
then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.

8.2                                 Legal Requirement
Covenants.  Lessee covenants and
agrees that the Leased Property shall not be used for any unlawful purpose, and
that Lessee shall not permit or suffer to

 24
 

 

exist any unlawful use of the Leased Property by others.  Lessee shall acquire and maintain all
appropriate licenses, certifications, permits and other authorizations and
approvals needed to operate the Leased Property in its customary manner for the
Primary Intended Use, and any other lawful use conducted on the Leased Property
as may be permitted from time to time hereunder.  Lessee further covenants and agrees that
Lessee’s use of the Leased Property and maintenance, alteration, and operation
of the same, and all parts thereof, shall at all times conform to all legal
requirements, unless the same are finally determined by a court of competent
jurisdiction to be unlawful (and Lessee shall cause all sub-tenants, invitees
or others to so comply with all legal requirements).  Lessee may, however, upon prior notice to
Lessor, contest the legality or applicability of any such legal requirement or
any licensure or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor’s rights hereunder, and
at Lessee’s sole expense.  If by the
terms of any such legal requirement compliance therewith pending the
prosecution of any such proceeding may legally be delayed without the incurrence
of any lien, charge or liability of any kind against the Leased Property or
Lessee’s leasehold interest therein and without subjecting Lessee or Lessor to
any liability, civil or criminal, for failure so to comply therewith, Lessee
may delay compliance therewith until the final determination of such
proceeding.  If any lien, charge or civil
or criminal liability would be incurred by reason of any such delay, Lessee, on
the prior written consent of Lessor, which consent shall not be unreasonably withheld,
may nonetheless contest as aforesaid and delay as aforesaid provided that such
delay would not subject Lessor to criminal liability and Lessee both (a)
furnishes to Lessor security reasonably satisfactory to Lessor against any loss
or injury by reason of such contest or delay and (b) prosecutes the contest
with due diligence and in good faith.

8.3                                 Environmental
Matters and Indemnities.

(a)                                  Lessee shall, at its
sole cost and expense, keep and maintain the Leased Property in compliance
with, and shall not cause or permit the Leased Property to be in violation of,
any federal, state, and local laws, regulations, rules, and orders including
without limitation those relating to zoning, health, safety, noise,
environmental protection, water quality, air quality, or the generation,
processing, storage, or disposal of any Hazardous Materials (as hereinafter
defined).  Moreover, Lessee will not
intentionally cause or permit the storage, use, disposal, manufacture, discharge,
leakage, spillage, emission or Release of any Hazardous Materials on, in, or
about the Leased Property.  Lessee must
immediately notify Lessor in writing of its actual knowledge of (a) any
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened in connection with the Leased Property and
any Hazardous Materials; or (b) any claim made or threatened by any third party
against Lessee or the Leased Property relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials
that could cause all or any portion of the Leased Property to be subject to any
restrictions on the ownership, occupancy, transferability or use of the Leased
Property under Hazardous Materials Law (as hereinafter defined).  Notwithstanding the foregoing, Lessee is not
required by Lessor to remove any Hazardous Materials located on, in, under or
about the Leased Premises on or prior to the Commencement Date of this
Lease.  Without Lessor’s prior written
consent, which consent must not be unreasonably withheld or delayed, Lessee
will not take any remedial action in response to the presence of any Hazardous

 25
 

 

Materials on, in, or under or about the Leased Property, nor enter into
any settlement agreement, consent decree or other compromise in respect to any
Hazardous Materials except as may be necessary to comply with all laws, rules,
regulations or orders of any applicable governmental authorities.

(b)                                 LESSEE INDEMNIFIES AND
HOLDS THE LESSOR INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY CLAIM,
ACTION, SUIT, PROCEEDING, LOSS, COST, DAMAGE, LIABILITY, DEFICIENCY, FINE,
PENALTY, PUNITIVE DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’
AND CONSULTANT FEES), DIRECTLY OR INDIRECTLY RESULTING FROM, ARISING OUT OF, OR
BASED UPON (I) THE PRESENCE, RELEASE, USE, MANUFACTURE, GENERATION, DISCHARGE,
STORAGE OR DISPOSAL BY LESSEE (OR ITS SUBLESSEE, CONTRACTORS, LICENSEES,
CONCESSIONAIRES, GUESTS, INVITEES, EMPLOYEES, AGENTS OR REPRESENTATIVES) OF ANY
HAZARDOUS MATERIAL ON, UNDER, IN OR ABOUT, OR THE TRANSPORTATION OF ANY SUCH
MATERIALS TO OR FROM THE LEASED PROPERTY OCCURRING DURING THE TERM, (II) THE
VIOLATION, OR ALLEGED VIOLATION BY LESSEE (OR ITS SUBLESSEE, CONTRACTORS,
LICENSEES, CONCESSIONAIRES, GUESTS, INVITEES, EMPLOYEES, AGENTS OR
REPRESENTATIVES) OF ANY HAZARDOUS MATERIALS LAW AFFECTING THE LEASED PROPERTY,
OR THE TRANSPORTATION BY LESSEE (OR ITS SUBLESSEES, CONTRACTORS, LICENSEES,
CONCESSIONAIRES, GUESTS, INVITEES, EMPLOYEES, AGENTS OR REPRESENTATIVES) OF
HAZARDOUS MATERIALS TO OR FROM THE LEASED PROPERTY OR (III) ANY AND ALL
ENVIRONMENTAL LIABILITIES ARISING UNDER SUBSECTIONS (I) OR (II) ABOVE, SAVE AND
EXCEPT TO THE EXTENT THAT SUCH VIOLATIONS OF SUBSECTIONS (I) OR (II) ABOVE (A)
FIRST OCCURRED PRIOR TO THE COMMENCEMENT DATE OF THIS LEASE OR AFTER THE
EXPIRATION OR EARLIER TERMINATION OF THIS LEASE EXCEPT TO THE EXTENT
EXACERBATED BY LESSEE’S ACT, OR (B) WERE CAUSED BY THE INTENTIONALLY
WRONGFUL ACTS OR GROSSLY NEGLIGENT ACTS OR FAILURES TO ACT OF LESSOR.

(c)                                  LESSOR INDEMNIFIES
AND HOLDS THE LESSEE INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY CLAIM,
ACTION, SUIT, PROCEEDING, LOSS, COST, DAMAGE, LIABILITY, DEFICIENCY, FINE,
PENALTY, PUNITIVE DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’
AND CONSULTANT FEES), DIRECTLY OR INDIRECTLY RESULTING FROM, ARISING OUT OF, OR
BASED UPON (I) THE PRESENCE, RELEASE, USE, MANUFACTURE, GENERATION, DISCHARGE,
STORAGE OR DISPOSAL BY LESSOR (OR ITS LESSEES OR SUBLESSEES (OTHER THAN THE
LESSEE INDEMNIFIED PARTIES), CONTRACTORS, LICENSEES, CONCESSIONAIRES, GUESTS,
INVITEES, EMPLOYEES, AGENTS OR REPRESENTATIVES) OF ANY HAZARDOUS MATERIAL ON,
UNDER, IN OR ABOUT, OR THE TRANSPORTATION OF ANY SUCH MATERIALS TO OR FROM THE
LEASED PROPERTY FIRST OCCURRING AFTER THE EXPIRATION OR EARLIER TERMINATION OF
THIS LEASE, (II) THE VIOLATION, OR ALLEGED VIOLATION BY LESSOR (OR ITS LESSEES
OR SUBLESSEES (OTHER THAN THE

 26
 

 

LESSEE INDEMNIFIED PARTIES), CONTRACTORS, LICENSEES, CONCESSIONAIRES,
GUESTS, INVITEES, EMPLOYEES, AGENT OR REPRESENTATIVES) OF ANY HAZARDOUS
MATERIALS LAW AFFECTING THE LEASED PROPERTY, OR THE TRANSPORTATION BY LESSOR
(OR ITS LESSEES OR SUBLESSEES (OTHER THAN THE LESSEE INDEMNIFIED PARTIES),
CONTRACTORS, LICENSEES, CONCESSIONAIRES, GUESTS, INVITEES, EMPLOYEES, AGENTS OR
REPRESENTATIVES) OF HAZARDOUS MATERIALS TO OR FROM THE LEASED PROPERTY, OR
(III) ANY AND ALL ENVIRONMENTAL LIABILITIES ARISING UNDER SUBSECTIONS (I) OR
(II) ABOVE, SAVE AND EXCEPT TO THE EXTENT THAT SUCH VIOLATIONS OR SUBSECTIONS
(I) OR (II) ABOVE (A) ARISE DURING THE TERM (EXCEPT TO THE EXTENT EXACERBATED
BY LESSOR’S ACT), OR (B) WERE CAUSED BY THE INTENTIONALLY WRONGFUL ACTS OR
GROSSLY NEGLIGENT ACTS OR FAILURES TO ACT OF LESSEE.

(d)                                 “Hazardous Materials Law”, for purposes
of this Lease, means any federal, state, or local law, ordinance or regulation
or any court judgment applicable to Lessee or to the Leased Property relating
to industrial hygiene or to environmental conditions including, but not limited
to, those relating to the release, emission or discharge of Hazardous
Materials, those in connection with the construction, fuel supply, power
generation and transmission, waste disposal or any other operations or
processes relating to the Leased Property. 
“Hazardous Materials Law” includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Hazardous Materials Transportation Act, the Resources Conservation and
Recovery Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air
Act, and any amendments to these laws or enactments of other laws occurring
after the date hereof.

(e)                                  “Hazardous Materials”, for purposes of
this Lease Agreement, includes flammable explosives, radioactive materials,
polychlorinated biphenyls, asbestos in any form which is or could become
friable, hazardous wastes, toxic substances or other related material whether
in the form of a chemical, element, compound, solution, mixture or otherwise
including, but not limited to, those materials defined as “hazardous
substances,” “hazardous materials,” “toxic substances,” “air pollutants,” “toxic
pollutants,” “hazardous wastes,” “extremely hazardous wastes” or “restricted
hazardous wastes” by Hazardous Materials Law, other than common cleaning
compounds, solvents and other materials incidental to the use and operation of
the Leased Property and in compliance with Hazardous Materials Law.

8.4                                 Liquor License
Matters and Indemnities.

(a)                                  Lessee acknowledges
that it will, on an exclusive basis, purchase, serve and sell alcoholic beverages
on the Leased Property.  All alcoholic
beverages to be purchased for service or sale on the Leased Property shall be
purchased from distributors and other suppliers by or in the name of Lessee.  All persons involved in the purchase, sale
and service of alcoholic beverages on the Leased Property shall be employees of
Lessee.

(b)                                 Lessee shall not
relinquish any Liquor License (other than as required by a governmental
authority) or take or fail to take such action which would cause a suspension,

 27
 

 

revocation or termination of such Liquor Licenses and shall renew,
extend, reapply for and otherwise continue any such Liquor Licenses as
necessary to keep such Liquor Licenses in full force and effect until the
expiration of the Term of the Lease and Lessee shall obtain any new Liquor
Licenses as are necessary for the purchase, sale and service of alcoholic
beverages in connection with the operation of the Leased Premises.  Lessee shall cooperate with Lessor to effect
the transition procedures set forth in Article XXXVII upon the expiration or
earlier termination of the Lease in connection with the Liquor Licenses and the
purchase, sale and service of alcoholic beverages.

(c)                                  Lessee represents
that it currently has in place all necessary Liquor Licenses needed for the
operation of the Leased Property and Lessee is not in default under any of the
requirements for the Liquor Licenses.

(d)                                 LESSEE HEREBY RELEASES
LESSOR AND THE LESSOR INDEMNIFIED PARTIES FOR ANY LIABILITY, DAMAGE, LOST, COST
OR EXPENSE INCURRED BY LESSOR OR THE LESSOR INDEMNIFIED PARTIES, EXCEPT TO THE
EXTENT RESULTING FROM GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT BY LESSOR,
ARISING FROM OR RELATED TO THE LIQUOR LICENSES OR THE PURCHASE, SALE AND
SERVICE OF ALCOHOLIC BEVERAGES ON THE LEASED PROPERTY.  LESSEE SHALL INDEMNIFY AND HOLD HARMLESS
LESSOR AND THE LESSOR INDEMNIFIED PARTIES AGAINST ANY LIABILITY, DAMAGE, LOSS,
COST OR EXPENSE, INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS FEES AND
COURT COSTS INCURRED BY LESSOR OR THE LESSOR INDEMNIFIED PARTIES ARISING FROM
OR RELATED TO THE LIQUOR LICENSES OR THE PURCHASE, SALE AND SERVICE OF
ALCOHOLIC BEVERAGES ON THE LEASED PROPERTY, EXCEPT TO THE EXTENT RESULTING FROM
THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF THE LESSOR.

ARTICLE IX

MAINTENANCE AND REPAIR

9.1                                 Maintenance and
Repair.

(a)                                  Lessee, at its sole
expense, will keep the Leased Property in good order and repair, except for
ordinary wear and tear (whether or not the need for such repairs occurred as a
result of Lessee’s use, any prior use, the elements or the age of the Leased
Property, or any portion thereof), and, except as otherwise provided in Article XIV or Article XV, with reasonable
promptness, make all necessary and appropriate repairs, replacements, and
improvements thereto of every kind and nature, whether interior or exterior,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing on or prior to the commencement of the Term (concealed or
otherwise), or required by any governmental agency having jurisdiction over the
Leased Property.  Lessee, however, shall
be permitted to prosecute claims against Lessor’s predecessors-in-title,
contractors, subcontractors and suppliers for breach of any representation or
warranty or for any latent defects in the Leased Property to be maintained by
Lessee unless Lessor is already diligently pursuing such a claim.  All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work.  Lessee

 28
 

 

will not take or omit to take any action, the taking or omission of
which might materially impair the value or the usefulness of the Leased
Property or any part thereof for its Primary Intended Use.  If Lessee fails to make any required repairs
or replacements after fifteen (15) days notice from Lessor, or after such
longer period as may be reasonably required provided that Lessee at all times
diligently proceeds with such repair or replacement, then Lessor shall have the
right, but shall not be obligated, to make such repairs or replacements on
behalf of and for the account of Lessee. 
In such event, such work shall be paid for in full by Lessee as
Additional Charges.

(b)                                 Notwithstanding Lessee’s
obligations under Section 9.1(a) hereinabove and the other provisions of
this Lease, in the event that (i) repairs, replacements and/or
improvements of the Leased Property become necessary in order to maintain the
Facility in the same quality and condition as it currently exists,
(ii) such repairs, replacements and/or improvements are under generally
accepted accounting principles considered to be capital in nature,
(iii) the funds then available to Lessee in the FFE Reserve or at the
Leased Property, either in the form of reserves, insurance proceeds, or other
income generated by the Leased Property and available to Lessee are
insufficient to enable Lessee to pay the costs of making any such repairs,
replacements and/or improvements, and (iv) Lessor consents to the repairs,
replacements, and/or improvements, then Lessor shall be required to bear the
cost of making such repairs, replacements and/or improvements.  Except as set forth in the foregoing
sentence, Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, to make any repairs, replacements,
alterations, restorations or renewals of any nature or description to the
Leased Property, whether ordinary or extraordinary, foreseen or unforeseen, or
to make any expenditure whatsoever with respect thereto, in connection with
this Lease, or to maintain the Leased Property in any way.  Lessee agrees that unless contemplated by the
Annual Budget, or otherwise directed by Lessor, it will not make repairs at the
expense of Lessor pursuant to any law in effect at the time of the execution of
this Lease or hereafter enacted unless ordered to do so by any governmental
authority having jurisdiction over the Leased Property.  Lessor shall have the right to give, record
and post, as appropriate, notices of nonresponsibility under any mechanic’s
lien laws now or hereafter existing.

(c)                                  Nothing contained in
this Lease and no action or inaction by Lessor shall be construed as
(1) constituting the request of Lessor, expressed or implied, to any
contractor, subcontractor, laborer, materialman or vendor to or for the
performance of any labor or services or the furnishing of any materials or
other property for the construction, alteration, addition, repair or demolition
of or to the Leased Property or any part thereof, or (2) giving Lessee any
right, power or permission to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Lessor in respect
thereof or to make any agreement that may create, or in any way be the basis of
any right, title, interest, lien, claim or other encumbrance upon the estate of
Lessor in the Leased Property, or any portion thereof.

(d)                                 Lessee will, upon the
expiration or prior termination of the Term, vacate and surrender the Leased
Property to Lessor in the condition in which the Leased Property was originally
received from Lessor, except as repaired, rebuilt, restored, altered or added
to as permitted or required by the provisions of this Lease and except for (i)
ordinary wear and tear

 29
 

 

(subject to the obligation of Lessee to maintain the Leased Property in
compliance with the First Class Operating Standards, during the entire Term),
or (ii) damage by casualty or condemnation (subject to the obligations of
Lessee to restore or repair to the extent set forth in the Lease; provided if
any obligations under this subsection (ii) are outstanding at the expiration or
earlier termination of this Lease, then Lessee shall assign to Lessor any
remaining proceeds or awards paid in connection with such casualty or
condemnation).

9.2                                 Encroachments,
Restrictions, Etc.  If any of the
improvements on the Leased Property, at any time, materially encroach upon any
property, street or right-of-way adjacent to the Leased Property, or violate the
agreements or conditions contained in any restrictive covenant or other
agreement affecting the Leased Property, or any part thereof, or impair the
rights of others under any easement or right-of-way to which the Leased
Property is subject, then promptly upon the request of Lessor or at the behest
of any person affected by any such encroachment, violation or impairment,
Lessee shall, at its expense, subject to its right to contest the existence of
any encroachment, violation or impairment and in such case, in the event of an
adverse final determination, either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, whether the same shall affect Lessor or Lessee
or (b) make such changes in the improvements on the Leased Property and take
such other actions, as Lessee in the good faith exercise of its judgment deems
reasonably practicable to remove such encroachment, and to end such violation
or impairment, including, if necessary, the alteration of any such
improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased Property for the
Primary Intended Use substantially in the manner and to the extent the Leased
Property was operated prior to the assertion of such violation, impairment and
encroachment.  Any such alteration shall
be made in conformity with the applicable requirements of Article X.  Lessee’s obligations under this Section 9.2 shall be in
addition to and shall in no way discharge or diminish any obligation of any
insurer under any policy of title or other insurance held by Lessor.  Notwithstanding anything to the contrary
contained in this Section 9.2,
(i) so long as any encroachment, violation or impairment described above does
not materially interfere with the operation of the Facility, Lessor shall not
require Lessee to remedy or otherwise address the same and (ii) Lessee shall
have no obligations with respect to any encroachment, violation or impairment
that exists on the Effective Date.

ARTICLE X

ALTERATIONS

10.1                           Lessee Alterations.  Subject to obtaining Lessor’s prior written
approval, not to be unreasonably withheld, conditioned or delayed, Lessee shall
have the right to make additions, modifications or improvements to the Leased
Property from time to time as Lessee, in its discretion, may deem to be
desirable for its permitted uses and purposes, provided that such action will
not significantly alter the character or purposes or significantly detract from
the value or operating efficiency thereof and will not significantly impair the
revenue-producing capability of the Leased Property or adversely affect the
ability of the Lessee to comply with the provisions of this Lease.  Notwithstanding the foregoing, Lessor’s prior
written approval shall not be required for (a) expenses paid from the FFE
Reserve for items included in the Annual Budget, or

 30
 

 

(b) any items approved as part of the Annual Budget.  The cost of such additions, modifications or
improvements to the Leased Property shall be paid by Lessee, and all such
additions, modifications or improvements shall, without payment by Lessor at
any time, be included under the terms of this Lease and upon expiration or
earlier termination of this Lease shall pass to and become the property of
Lessor.  In no event shall any
alterations, additions or other improvements made by Lessee be removed from the
Leased Property unless request is made by Lessor to Lessee to remove such
alterations, additions and other improvements which were made without Lessor’s
approval where such approval was required under this Lease.

10.2                           Lessor Alterations.  Lessor shall have the right, without Lessee’s
consent, to make or cause to be made alterations to the Leased Property
required in connection with (i) Emergency Situations, (ii) Legal
Requirements, (iii) compliance with the Management Agreement,
(iv) compliance with any Franchise Agreement, and (v) the performance
by Lessor of its obligations under this Lease, so long as such alterations do
not materially and adversely impair the operating efficiency or revenue
producing capability of the Leased Property or the ability of Lessee to comply
with the provisions of this Lease during the remainder of the Term.  Without Lessee’s consent, Lessor shall
further have the right, but not the obligation, to make such other additions to
the Leased Property as it may reasonably deem appropriate during the Term, so
long as such alterations do not materially and adversely impair the operating
efficiency or revenue producing capability of the Leased Property or the
ability of Lessee to comply with the provisions of this Lease during the
remainder of the Term.  All such work
unless necessitated by Lessee’s negligent acts or omissions or unless otherwise
required to be performed by Lessee under this Lease (subject to the notice and
cure provisions herein) (in which event work shall be paid for by Lessee) shall
be performed at Lessor’s expense and shall be done after reasonable notice to
and coordination with Lessee, so as to minimize any disruptions or interference
with the operation of the Facility.

ARTICLE XI

LIENS

11.1                           Liens.  Subject to the provision of Article XII relating to
permitted contests, Lessee will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, encumbrance,
attachment, title retention agreement or claim upon the Leased Property or any
attachment, levy, claim or encumbrance in respect of the rent payable hereunder,
not including, however, (a) this Lease, (b) the matters, if any, included as
exceptions in the title policy insuring Lessor’s interest in the Leased
Property to be issued on or about the Commencement Date, (c) restrictions,
liens and other encumbrances which are consented to in writing by Lessor or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for those taxes
upon Lessor which Lessee is not required to pay hereunder, (e) subleases
permitted by Article XXI
hereof, (f) liens for Impositions or for sums resulting from noncompliance with
legal requirements so long as (1) the same are not yet payable or are
payable without the addition of any fine or penalty or (2) such liens are
in the process of being contested as permitted by Article XII hereof, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due
provided that (1) the payment of such sums shall not be postponed under
any related contract for more than 60 days after the completion of the

 31
 

 

action giving rise to such lien and such reserve or other appropriate
provisions as shall be required by law or generally accepted accounting
principles shall have been made therefor or (2) any such liens are in the
process of being contested as permitted by Article XII hereof, and (h)
any liens which are the responsibility of Lessor pursuant to the provisions of Article XXVIII of this
Lease.  Notwithstanding the provisions of
this Section 11.1, Lessee shall have no obligation with respect to any
lien or encumbrance arising out of the Projects and Lessor shall promptly
discharge at its expense any such lien or encumbrance, provided that Lessor
shall have the right to contest the amount or validity of any such lien or
encumbrance by appropriate legal proceedings in good faith and with due
diligence.

ARTICLE XII

PERMITTED CONTESTS

12.1                           Permitted Contests.  Lessee shall have the right to contest the
amount or validity of any Imposition to be paid by Lessee or any legal
requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim (“Claims”)
not otherwise permitted by Article XI, by appropriate legal proceedings in good
faith and with due diligence (but this shall not be deemed or construed
in any way to relieve, modify or extend Lessee’s covenants to pay or its
covenants to cause to be paid any such charges at the time and in the manner as
in this Article provided), on condition, however, that such legal
proceedings shall not operate to relieve Lessee from its obligations hereunder
and shall not cause the sale or risk the loss of the Leased Property, or any
part thereof, or cause Lessor or Lessee to be in default under any mortgage,
deed of trust or security deed encumbering the Leased Property or any interest
therein.  Upon the request of Lessor,
Lessee shall either (a) provide a bond or other assurance reasonably
satisfactory to Lessor that all Claims which may be assessed against the Leased
Property together with interest and penalties, if any, thereon will be paid, or
(b) deposit within the time otherwise required for payment with a bank or trust
company as trustee upon terms reasonably satisfactory to Lessor, as security
for the payment of such Claims, money in an amount sufficient to pay the same,
together with interest and penalties in connection therewith, as to all Claims
which may be assessed against or become a Claim on the Leased Property, or any
part thereof, in said legal proceedings. 
Lessee shall furnish Lessor and any lender of Lessor with reasonable
evidence of such deposit within five days of the same.  Lessor agrees to join in any such proceedings
if the same be required to legally prosecute such contest of the validity of
such Claims; provided, however, that Lessor shall not thereby be subjected to
any liability for the payment of any costs or expenses in connection with any
proceedings brought by Lessee; and Lessee covenants to indemnify and save
harmless Lessor from any such costs or expenses.  Lessee shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Lessee or paid by Lessor and for which Lessor has been fully
reimbursed.  In the event that Lessee
fails to pay any Claims when due or to provide the security therefor as
provided in this paragraph and to diligently prosecute any contest of the same,
Lessor may, upon ten days advance written notice to Lessee, pay such charges
together with any interest and penalties and the same shall be repayable by
Lessee to Lessor at the next rent payment date provided for in this Lease.  Provided, however, that should Lessor
reasonably determine that the giving of such notice would risk loss to the
Leased Property or cause damage to Lessor, then Lessor shall give such notice
as is practical under the circumstances. 
Lessor reserves the right to contest at its

 32
 

 

expense any of the Claims not pursued by Lessee.  Lessor and Lessee agree to cooperate in
coordinating the contest of any Claims.

ARTICLE XIII

INSURANCE

13.1                           Lessee Insurance Requirements.  During the Term, the Leased Property shall at
all times be insured with the kinds and amounts of insurance described
below.  This insurance shall be written
by companies authorized to issue insurance in the State.  The policies must name the party obtaining
the policy as the insured and the other party as an additional named insured,
and the Manager shall also be named as an additional insured under the
coverages described in Section 13.1(d)
through (k).  In addition, Lessor shall be named the loss
payee on the coverages described in Section 13.1(a) and (b) if
such coverage is not obtained by Lessor. 
Losses shall be payable to Lessor or Lessee as provided in this
Lease.  Any loss adjustment shall require
the written consent of Lessor and Lessee, each acting reasonably, promptly and
in good faith.  Evidence of insurance
shall be deposited with Lessor.  The
policies on the Leased Property shall at all times satisfy the terms of any
ground lease, mortgage, Management Agreement, and/or Franchise Agreement and
shall include the following:

(a)                                  Building insurance on
the “Special Form” (formerly “All
Risk” form) (including earthquake and flood in reasonable amounts if and
as determined by Lessor) in an amount not less than 100% of the then full
replacement cost thereof (as defined in Section 13.3) or such other amount which is acceptable
to Lessor, and personal property insurance on an “All Risk” form in the full
amount of the replacement cost thereof, including earthquake coverage in the
amount of $179,600,000, subject to adjustment based on current market
conditions;

(b)                                 Insurance for loss or
damage (direct and indirect) from steam boilers, pressure vessels or similar
apparatus, air conditioning systems, piping and machinery, and sprinklers, if
any, now or hereafter installed in the Facility, in the minimum amount of
$5,000,000 or in such greater amounts as are then customary or as may be
reasonably requested by Lessor from time to time;

(c)                                  Business interruption
insurance on the “Special Form” in the amount of eighteen (18) months,
plus six (6) months extended period of reporting of gross earnings, for the
benefit of Lessee;

(d)                                 Commercial general
liability insurance, with contractual indemnity endorsement, with amounts not
less than $1,000,000 combined single limit for each occurrence and $2,000,000
for the aggregate of all occurrences within each policy year, as well as excess
liability (umbrella) insurance with limits of at least $30,000,000 per
occurrence, covering each of the following: bodily injury, death, or property
damage liability per occurrence, personal injury, general aggregate, products
and completed operations, with respect to Lessee, and “all risk legal liability”
(including liquor law or “dram shop” liability, if liquor or alcoholic beverages
are served on the Leased Property) with respect to Lessor and Lessee, subject
to a $5,000,000 minimum sublimit for Premises Liability covering the Park Plaza
condominium conversion project;

 33
 

 

(e)                                  Terrorism insurance
coverage under its property and primary commercial general liability policies
and, at Lessee’s option, additional terrorism coverage under its
umbrella/excess policies;

(f)                                    Fidelity bonds or
blanket crime policies with limits and deductibles as may be reasonably
determined by Lessee and approved by Lessor (such approval not to be
unreasonably withheld), covering Lessee’s employees in job classifications
normally bonded under prudent hotel management practices in the United States
or otherwise required by law;

(g)                                 Comprehensive form
automobile liability insurance for owned, non-owned and hired vehicles, in the
amount of $1,000,000;

(h)                                 Garagekeeper’s legal
liability insurance covering both comprehensive and collision-type losses with
a limit of liability of $3,000,000 for any one occurrence, of which coverage in
excess of $1,000,000 may be provided by way of an excess liability policy, with
physical damage limits for comprehensive/collision coverage subject to a
minimum limit of $150,000 per car;

(i)                                     Innkeeper’s legal
liability insurance covering property of guests while on the Leased Property
for which Lessor is legally responsible, which may be self-insured;

(j)                                     Safe deposit box
legal liability insurance covering property of guests while in a safe deposit
box on the Leased Property for which Lessor is legally responsible, which may
be self-insured;

(k)                                  Employers liability
insurance with limits of not less than $500,000 per occurrence;

(l)                                     Workers’
compensation insurance to the extent necessary to protect Lessor, Lessee and
the Leased Property against Lessee’s workman’s compensation claims to the
extent required by applicable state laws; and

(m)                               Insurance covering such
other hazards (such as plate glass or other common risks) and in such amounts
as may be (A) required by the Holder, or (B) customary for comparable
properties in the area of the Leased Property and is available from insurance
companies, insurance pools or other appropriate companies authorized to do
business in the State at rates which are economically practicable in relation
to the risks covered as may be reasonably determined by Lessor or Lessee.

13.2                           Responsibility for
Insurance.  Lessee shall obtain the
insurance coverages described in Section 13.1
and the cost thereof shall be included in the Annual Budget and paid by
Lessee.  Insurance required by Section 13.1(m), to the
extent such insurance is required by Lessor, shall be obtained and paid for by
Lessor to the extent that it relates to risks of the type covered by the
insurance obtained pursuant to Section 13.1(a)
through (c), and
obtained and paid for by Lessee if it relates to risks of the type covered by
the insurance obtained pursuant to Section 13.1(d)
through (l).  The party responsible for the premium for any
insurance coverage

 34
 

 

shall also be responsible for any and all deductibles and self-insured
retentions in connection with such coverages. 
In the event that either party can obtain comparable insurance coverage
required to be carried by the other party from comparable insurers and at a
cost significantly less than that at which such other party can obtain such
coverage, the parties shall cooperate in good faith to obtain such coverage at
the lower cost and shall allocate the premiums therefor in accordance with the
provisions of the first sentence of this Section 13.2.  In addition to the rights set forth in Section 17.1, if any party
responsible for obtaining and maintaining the insurance required under this
Lease fails to do so or fails to obtain renewals or substitutions therefor at
least fifteen (15) days before such insurance will lapse, the other party may
obtain such insurance and the defaulting party shall reimburse the party
obtaining such insurance for the cost thereof promptly upon demand, together
with interest thereon at the Overdue Rate until such cost is repaid by the
defaulting party.

13.3                           Replacement Cost.  The term “full
replacement cost” as used herein shall mean the actual
replacement cost of the Leased Property requiring replacement from time to time
including an increased cost of construction endorsement, if available, and the
cost of debris removal.  In the event
either party believes that full replacement cost has increased or decreased at
any time during the Term, it shall have the right to have such full replacement
cost redetermined.

13.4                           Waiver of Subrogation.  All insurance policies carried by Lessor or
Lessee covering the Leased Property including, without limitation, contents,
fire and casualty insurance, shall expressly waive any right of subrogation on
the part of the insurer against the other party.  The parties hereto agree that their policies
will include such waiver clause or endorsement so long as the same are
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to
do so.

13.5                           Form Satisfactory, Etc.  All of the policies of insurance referred to
in this Article XIII
shall be written in a form, with deductibles and by insurance companies rated
not less than a Best’s rating of A VII and otherwise reasonably
satisfactory to Lessor.  Lessee shall pay
all of the premiums therefor, and deliver such policies or certificates thereof
to Lessor prior to their effective date (and, with respect to any renewal
policy, 30 days prior to the expiration of the existing policy), and in the
event of the failure of Lessee either to effect such insurance as herein called
for or to pay the premiums therefor, or to deliver such policies or
certificates thereof to Lessor at the times required, Lessor shall be entitled,
but shall have no obligation, to effect such insurance and pay the premiums
therefor, and Lessee shall reimburse Lessor for any premium or premiums paid by
Lessor for the coverages required under Section 13.1 upon written demand therefor, and Lessee’s
failure to repay the same within 30 days after notice of such failure from
Lessor shall constitute an Event of Default within the meaning of Section 16.1(b).  Each insurer mentioned in this Article XIII shall agree,
by endorsement to the policy or policies issued by it, or by independent
instrument furnished to Lessor, that it will give to Lessor 30 days written
notice before the policy or policies in question shall be materially altered,
allowed to expire or canceled.

 35
 

 

13.6                           Increase in Limits.  If either Lessor or Lessee at any time deems
the limits of the personal injury or property damage under the comprehensive
public liability insurance then carried to be either excessive or insufficient,
Lessor or Lessee shall endeavor in good faith to agree on the proper and
reasonable limits for such insurance to be carried and such insurance shall
thereafter be carried with the limits thus agreed on until further change
pursuant to the provisions of this Article. 
If the parties fail to agree
on such limits, the matter shall be referred to arbitration in accordance with Section 38.1.

13.7                           Blanket Policy.  Notwithstanding anything to the contrary
contained in this Article XIII,
Lessee or Lessor may bring the insurance provided for herein within the
coverage of a so-called blanket policy or policies of insurance carried and
maintained by Lessee or Lessor; provided, however, that the coverage afforded
to Lessor and Lessee will not be reduced or diminished or otherwise be
different from that which would exist under a separate policy meeting all other
requirements of this Lease by reason of the use of such blanket policy of
insurance, and provided further that the requirements of this Article XIII are otherwise
satisfied.

13.8                           Separate Insurance.  Neither Lessor nor Lessee shall on its own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished, or increase the amount
of any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor, are included therein as
additional insureds, and the loss is payable under such additional separate
insurance in the same manner as losses are payable under this Lease.  Each party shall immediately notify the other
party that it has obtained any such separate insurance or of the increasing of
any of the amounts of the then existing insurance.

13.9                           Reports On Insurance
Claims.  Lessee shall promptly
investigate and make a complete and timely written report to the appropriate
insurance company as to all accidents, all claims for damage relating to the
ownership, operation, and maintenance of the Facility, and any damage or
destruction to the Facility and the estimated cost of repair thereof and shall
prepare any and all reports required by any insurance company in connection
therewith.  All such reports shall be
timely filed with the insurance company as required under the terms of the
insurance policy involved, and a copy of all such reports shall be furnished to
Lessor.

ARTICLE XIV

DAMAGE AND RECONSTRUCTION

14.1                           Insurance Proceeds.  If during the Term the Leased Property is
partially destroyed by a risk covered by the insurance described in Article XIII, but the
Facility is not thereby rendered Unsuitable for its Primary Intended Use or
Uneconomic for its Primary Intended Use, Lessor or, at the election of Lessor,
Lessee shall, if insurance proceeds are made available by the Holder, if any,
of the Leased Property, restore the Facility at Lessor’s cost to substantially
the same condition as existed immediately before the damage or destruction and
otherwise in accordance with the terms of the Lease, and this Lease shall not
terminate as a result of such damage or destruction.  If Lessee restores the Facility, the
insurance proceeds shall be paid out by Lessor from time to time for the
reasonable costs of such restoration upon satisfaction of

 36
 

 

terms and conditions specified by Lessor, and any excess proceeds
remaining after such restoration shall be paid to Lessor except for any amount
thereof paid with respect to Lessee’s Personal Property.  If the insurance proceeds are not adequate to
complete such restoration and Lessor rebuilds, Lessor shall fund all such
excess costs.

14.2                           No Abatement of Rent.  Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect, and Lessee’s
obligation to make rental payments and to pay all other charges required by
this Lease shall remain unabated.  Lessor
and Lessee agree to cooperate to make the proceeds of all business or rent
interruption insurance available to Lessee for purposes of making Rent payments
due under this Lease.

14.3                           Damage During Term.  Notwithstanding any provisions of Section 14.1 to the
contrary, if damage to or destruction of the Leased Property occurring during
the Term renders the Leased Property Unsuitable for its Primary Intended Use or
if the Holder does not make the insurance proceeds available for restoration,
then either Lessor or Lessee (but in Lessee’s case only if the Leased Property
is rendered Unsuitable for its Primary Intended Use for a period in excess of
one (1) year), shall have the right to terminate this Lease by giving
written notice to the other party, in Lessor’s case at any time after the
occurrence of such damage or destruction, or in Lessee’s case within thirty
(30) days after the expiration of such period, whereupon all accrued rent shall
be paid immediately, and this Lease shall automatically terminate.

14.4                           Lessee’s Property and
Business Interruption Insurance.  All
insurance proceeds payable by reason of any loss of or damage to any of Lessee’s
Personal Property and the business interruption insurance maintained for the
benefit of Lessee shall be paid to Lessee; provided, however, no such payments
shall diminish or reduce the insurance payments otherwise payable to or for the
benefit of Lessor hereunder.

ARTICLE XV

CONDEMNATION

15.1                           Definitions.

(a)                                  “Condemnation”
means a transfer of and/or compensation for the diminished value of all or
portion of the Leased Property resulting from (1) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (2) a voluntary sale or transfer by Lessor to any Condemnor, either
under threat of condemnation or while legal proceedings for condemnation are
pending.

(b)                                 “Date of
Taking” means the date the Condemnor has the right to possession of
the property being condemned.

(c)                                  “Award”
means all compensation, sums or anything of value awarded, paid or received on
a total or partial Condemnation.

(d)                                 “Condemnor”
means any public or quasi-public authority, or private corporation or
individual, having the power of Condemnation.

 37
 

 

15.2                           Parties’ Rights and
Obligations.  If during the Term
there is any Condemnation of all or any part of the Leased Property or any
interest in this Lease, the rights and obligations of Lessor and Lessee shall
be determined by this Article XV.

15.3                           Total Taking.  If title to the fee of the whole of the
Leased Property is condemned by any Condemnor, this Lease shall cease and
terminate as of the Date of Taking by the Condemnor.  If title to the fee of less than the whole of
or substantially all of the Leased Property is so taken or condemned, which
nevertheless renders the Leased Property Unsuitable for its Primary Intended
Use or Uneconomic for its Primary Intended Use, Lessee and Lessor shall each
have the option, by notice to the other, at any time prior to the Date of
Taking, to terminate this Lease as of the Date of Taking.  Upon such date, if such notice has been
given, this Lease shall thereupon cease and terminate.  All Base Rent, Percentage Rent and Additional
Charges paid or payable by Lessee hereunder shall be apportioned as of the Date
of Taking, and Lessee shall promptly pay Lessor such amounts.

15.4                           Allocation of Award.  The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor’s loss of business beyond
the Term, shall be solely the property of and payable to Lessor.  Any Award made for loss of business during
the remaining Term, if any, or for removal and relocation expenses of Lessee in
any such proceedings shall be the sole property of and payable to Lessee.  In any Condemnation proceedings Lessor and
Lessee shall each seek its Award in conformity herewith, at its respective
expense; provided, however, Lessee shall not initiate, prosecute or acquiesce
in any proceedings that may result in a diminution of any Award payable to
Lessor.

15.5                           Partial Taking.

(a)                                  If title to less than
the whole of or substantially all of the Leased Property is condemned, and the
Leased Property is still Suitable for its Primary Intended Use, and not
Uneconomic for its Primary Intended Use, or if Lessee or Lessor is entitled but
neither elects to terminate this Lease as provided in Section 15.3, the Lessor
or, at Lessor’s election, Lessee shall with all reasonable dispatch and to the
extent the Holder permits the application of the Award thereof and the Award is
sufficient therefore, restore the untaken portion of the Leased Property so
that such Leased Property contains the same architectural units of the same
general character and condition (as nearly as may be possible under the
circumstances) as the Leased Property existing immediately prior to the
Condemnation and this Lease shall remain in full force and effect.  Lessee and Lessor, if permitted by any
Holder, shall each contribute to the cost of restoration that part of its Award
specifically allocated to such restoration, if any, together with severance and
other damages awarded for the taken Leased Property; provided, however, that
the amount of such contributions shall not exceed such cost.

(b)                                 In the event of a
partial Taking as described in Section 15.5(a) which does not
result in a termination of this Lease by Lessor, the Base Rent shall be
adjusted in the manner and to the extent that is fair, just and equitable to
both Lessee and Lessor, taking into consideration, among other relevant
factors, the number of usable rooms, the amount of square footage, or the
revenues affected by such partial Taking. 
If Lessor and Lessee are unable to

 38

 

agree upon the amount of
such abatement within thirty (30) days after such partial Taking, the matter
shall be submitted to arbitration as provided for in Section 38.2
hereof.

15.6         Temporary Taking.  If the whole or any part of the Leased
Property or of Lessee’s interest under this Lease is condemned by any Condemnor
for its temporary use or occupancy, this Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the terms
herein specified, the full amount of all Base Rent, Percentage Rent, and
Additional Charges.  Except only to the
extent that Lessee may be prevented from so doing pursuant to the terms of the
order of the Condemnor, Lessee shall continue to perform and observe all of the
other terms, covenants, conditions and obligations hereof on the part of the
Lessee to be performed and observed, as though such Condemnation had not
occurred.  In the event of any
Condemnation as is in this Section 15.6 described, the entire amount of any Award
made for such Condemnation allocable to the Term, whether paid by way of
damages, rent or otherwise, shall be paid to Lessee if permitted by any
Holder.  Lessee covenants that upon the
termination of any such period of temporary use or occupancy it will, at its
sole cost and expense (subject to Lessor’s contribution as set forth below),
restore the Leased Property as nearly as may be reasonably possible to the
condition in which the same was immediately prior to such Condemnation, unless
such period of temporary use or occupancy extends beyond the expiration of the
Term, in which case Lessee shall not be required to make such restoration.  If restoration is required hereunder, Lessor
shall contribute to the cost of such restoration that portion of its entire
Award that is specifically allocated to such restoration in the judgment or
order of the court, if any, and Lessee shall fund the balance of such costs in
advance of restoration in a manner reasonably satisfactory to Lessor.

ARTICLE
XVI

DEFAULTS

16.1         Events of Default.  Any one or more of the following events shall
constitute an “Event of Default”
(herein so called) hereunder:

(a)           if Lessee fails to
pay any Base Rent, Percentage Rent, Impositions or Additional Charges, and such
failure  continues for a period of ten
(10) days after written notice specifying such failure has been provided Lessee
by Lessor, provided that Lessor shall not be required to give any such Notice
more than two (2) times in any Lease Year and that any third or subsequent
failure by Lessee during such Lease Year to make any payment of Base Rent,
Percentage Rent or Additional Charges on the date the same becomes due and
payable shall constitute an immediate Event of Default; or

(b)           if Lessee fails to
observe or perform any other term, covenant or condition of this Lease and such
failure is not cured by Lessee within a period of 30 days after receipt by the
Lessee of notice thereof from Lessor, unless such failure cannot with due
diligence be cured within a period of 30 days, in which case it shall not be deemed
an Event of Default if Lessee proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof; or

 39
 

 

(c)                                  if
an event of default by Lessee has occurred under the Management Agreement with
respect to the Facility or the Leased Property and such default has not been
cured by Lessee within a period of fifteen (15) days after receipt by Lessee of
notice of such default from either Manager or Lessor; or

(d)                                 if
Lessee shall (i) be generally not paying its debts as they become due,
(ii) file, or consent by answer or otherwise to the filing against it of,
a petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, (iii) make an assignment for the
benefit of its creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its assets, (v) be adjudicated
insolvent, or (vi) take corporate action for the purpose of any of the
foregoing; or if a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by Lessee, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its assets (the events described in
(i) through (vi) and the immediately preceding clause herein called a “Bankruptcy Event”), or if an order
for relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of Lessee, or if any petition for any such relief shall be filed against Lessee
and such petition shall not be dismissed within ninety (90) days; or

(e)                                  if
Lessee is liquidated or dissolved, or begins proceedings toward such
liquidation or dissolution, or, in any manner, ceases to do business or permits
the sale or divestiture of substantially all of its assets (a “Dissolution Event”); or

(f)                                    if
the estate or interest of Lessee in the Leased Property or any part thereof is
voluntarily or involuntarily transferred, assigned, conveyed, levied upon or
attached in any Proceeding, except to the extent expressly permitted in this
Lease and unless any such levy or attachment is released within ninety (90)
days of the filing of the same; or

Notwithstanding anything to the contrary contained in Section 16.1(c), the cure
periods set forth in Section 16.1(c)
shall not apply to any failure by Lessee to perform any term, covenant or
condition for which a different grace or cure period is expressly set forth in
any other provision of this Lease, and in either of the foregoing events such
failure shall, after the expiration of any other grace or cure period expressly
set forth elsewhere herein, constitute an immediate Event of Default.

If litigation is commenced with respect to any alleged
default under this Lease, the prevailing party in such litigation shall
receive, in addition to its damages incurred, such sum as the court shall
determine as its reasonable attorneys’ fees, and all costs and expenses
incurred in connection therewith.

16.2         Remedies.  If an Event of Default occurs Lessor shall
have the right, at Lessor’s option, to elect to do any one or more of the
following without further notice or demand to Lessee:  (a) terminate this Lease, in which event
Lessee shall immediately surrender the Leased 

 40
 

 

Property to Lessor, and,
if Lessee fails to so surrender, Lessor shall have the right, without notice,
to enter upon and take possession of the Leased Property and to expel or remove
Lessee and its effects without being liable for prosecution or any claim for
damages therefor; and Lessee shall, and hereby agrees to, indemnify Lessor for
all loss and damage which Lessor suffers by reason of such termination,
including without limitation, damages in an amount calculated pursuant to Section 16.3 below; or (b)
enter upon and take possession of the Leased Property without terminating this
Lease and without being liable for prosecution or any claim for damages
therefor, and, if Lessor elects, relet the Leased Property on such terms as
Lessor deems advisable, in which event Lessee shall pay to Lessor on demand the
reasonable costs of repossessing and reletting the Leased Property and any
deficiency between the Rent payable hereunder (including Percentage Rent as
determined below) and the rent paid under such reletting; provided, however,
that Lessee shall not be entitled to any excess payments received by Lessor
from such reletting and Lessor’s failure to relet the Leased Property shall not
release or affect Lessee’s liability for Rent or for damages; or (c) enter the
Leased Property without terminating this Lease and without being liable for
prosecution or any claim for damages therefor and maintain the Leased Property
and repair or replace any damage thereto or do anything for which Lessee is
responsible hereunder.  Lessee shall
reimburse Lessor immediately upon demand for any expense which Lessor incurs in
thus effecting Lessee’s compliance under this Lease, and Lessor shall not be
liable to Lessee for any damages with respect thereto.  Lessee hereby waives any and all requirements
of applicable laws for service of notice to re-enter the Leased Property.  Except as may be required under applicable
law, Lessor shall be under no obligation to, but may if it so chooses, relet
the Leased Property or otherwise mitigate Lessor’s damages.

16.3                          Damages.  Neither (a) the termination of this Lease
(which shall not include the expiration of the Term pursuant to the express
provisions hereof), (b) the repossession of the Leased Property, (c) the
failure of Lessor to relet the Leased Property, nor (d) the reletting of all or
any portion thereof, shall relieve Lessee of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting.  In the event of any such
termination, Lessee shall forthwith pay to Lessor all Rent due and payable with
respect to the Leased Property to and including the date of such
termination.  Lessor shall use
commercially reasonable efforts to relet the Leased Property and Lessee’s
obligations to Lessor under this Lease.

Lessee shall
forthwith pay to Lessor, at Lessor’s option, as and for liquidated and agreed
current damages for Lessee’s default, either:

(1)                                  Without
termination of Lessee’s right to possession of the Leased Property, each
installment of rent and other sums payable by Lessee to Lessor under the Lease
as the same becomes due and payable, which rent and other sums shall bear
interest at the rate of 12% per annum until paid, and Lessor may enforce, by
action or otherwise, any other term or covenant of this Lease; or

 41
 

 

(2)                                 the
sum of:

(A)          the
unpaid rent which had been earned at the time of termination, repossession or
reletting, and

(B)           the worth at the
time of termination, repossession or reletting of the amount by which the
unpaid rent for the balance of the Term after the time of termination,
repossession or reletting, exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided, and

(C)           any other amount
necessary to compensate Lessor for all the detriment proximately caused by
Lessee’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom.  The worth at the time of termination,
repossession or reletting of the amount referred to in subparagraph (B) is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of New York at the time of award plus 1%.

Percentage Rent for the purposes of this Section 16.3 shall be a sum
equal to (i) the average of the annual amounts of Percentage Rent for the
three calendar years immediately preceding the calendar year in which the
termination, re-entry or repossession takes place, or (ii) if three
calendar years shall not have elapsed, the Percentage Rent during the preceding
calendar year during which this Lease was in effect, or (iii) if one
calendar year has not elapsed, the amount derived by annualizing the Percentage
Rent from the effective date of this Lease.

16.4                          Application
of Funds.  Any payments received by
Lessor under any of the provisions of this Lease during the existence or
continuance of any Event of Default shall be applied to Lessee’s obligations in
the order that Lessor may determine or as may be prescribed by the laws of the
State of Missouri.

16.5                          Waiver.  Each party waives, to the extent permitted by
applicable law, any right to a trial by jury in any proceedings brought by
either party to enforce the provisions of this Lease, including, without
limitation, proceedings to enforce the remedies set forth in this Article XVI, and Lessee waives
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.

ARTICLE
XVII

LESSOR’S RIGHT TO CURE

17.1                          Lessor’s
Right to Cure Lessee’s Default.  If
Lessee fails to make any payment or to perform any act required to be made or
performed under this Lease including, without limitation, Lessee’s failure to
comply with the terms of the Management Agreement, and fails to cure the same
within the relevant time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation of Lessee, and without waiving or releasing any obligation or
default, may (but shall be under no obligation to) and subject to the rights of
the Manager under the Management Agreement, at any time thereafter make such
payment or perform such act for the account and at the expense of Lessee, and
may, to the extent permitted by law, enter upon the 

 42
 

 

Leased Property for such
purpose and take all such action thereon as, in Lessor’s opinion, may be
necessary or appropriate therefor.  No
such entry shall be deemed an eviction of Lessee.  All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys’ fees and
expenses, in each case to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. 
The obligations of Lessee and rights of Lessor contained in this
Article shall survive the expiration or earlier termination of this Lease.

ARTICLE XVIII

HOLDING
OVER

18.1                          Holding
Over.  If Lessee for any reason
remains in possession of the Leased Property after the expiration or earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time Lessee shall pay as rental each month 150% of the aggregate
of (a) one-twelfth of the aggregate Base Rent and Percentage Rent payable with
respect to the last year of the Term, (b) all Additional Charges accruing
during the applicable month and (c) all other sums, if any, payable by Lessee
under this Lease with respect to the Leased Property.  During such period, Lessee shall be obligated
to perform and observe all of the terms, covenants and conditions of this
Lease, but shall have no rights hereunder other than the right, to the extent
given by law to tenancies at sufferance, to continue its occupancy and use of
the Leased Property.  Nothing contained
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.

ARTICLE XIX

RISK OF
LOSS

19.1                          Risk
of Loss.  During the Term, the risk
of loss or of decrease in the enjoyment and beneficial use of the Leased
Property in consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, acts of terrorism, wars or otherwise, or
in consequence of foreclosures, attachments, levies or executions (other than
those caused by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee, and, in the absence of gross negligence, willful misconduct
or breach of this Lease by Lessor pursuant to Section 31.1
(including without limitation, any failure by Lessor to maintain insurance
required to be maintained by Lessor pursuant to this Lease, if any),
Lessor shall in no event be answerable or accountable therefor, nor shall any
of the events mentioned in this Section 19.1 entitle Lessee to any
abatement of rent except as specifically provided in this Lease.

ARTICLE XX

INDEMNITIES

20.1                          Indemnification.

(a)           NOTWITHSTANDING THE
EXISTENCE OF ANY INSURANCE, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF-INSURANCE, LESSEE WILL PROTECT, INDEMNIFY, HOLD HARMLESS, AND

 43
 

 

DEFEND LESSOR INDEMNIFIED
PARTIES FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES,
PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES AND EXPENSES), TO THE EXTENT PERMITTED BY LAW,
INCLUDING THOSE RESULTING FROM A LESSOR INDEMNIFIED PARTY’S OWN NEGLIGENCE BUT
EXCLUDING THOSE RESULTING FROM LESSOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY REASON OF (A) ANY
ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF OR DAMAGE TO PROPERTY
OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS DURING THE
TERM, INCLUDING WITHOUT LIMITATION ANY CLAIMS UNDER LIQUOR LIABILITY, “DRAM
SHOP” OR SIMILAR LAWS, (B) ANY PAST, PRESENT OR FUTURE USE, MISUSE, NON-USE,
CONDITION, MANAGEMENT, MAINTENANCE OR REPAIR BY LESSEE OR ANY OF ITS AGENTS,
EMPLOYEES OR INVITEES OF THE LEASED PROPERTY OR ANY LITIGATION, PROCEEDING OR
CLAIM BY GOVERNMENTAL ENTITIES OR OTHER THIRD PARTIES TO WHICH LESSOR IS MADE A
PARTY OR PARTICIPANT RELATED TO SUCH USE, MISUSE, NON-USE, CONDITION,
MANAGEMENT, MAINTENANCE, OR REPAIR THEREOF BY LESSEE OR ANY OF ITS AGENTS,
EMPLOYEES OR INVITEES, INCLUDING ANY FAILURE OF LESSEE OR ANY OF ITS AGENTS,
EMPLOYEES OR INVITEES TO PERFORM ANY OBLIGATIONS UNDER THIS LEASE OR IMPOSED BY
APPLICABLE LAW (OTHER THAN ARISING OUT OF CONDEMNATION PROCEEDINGS), (C) ANY
IMPOSITIONS THAT ARE THE OBLIGATIONS OF LESSEE PURSUANT TO THE APPLICABLE
PROVISIONS OF THIS LEASE, (D) ANY FAILURE ON THE PART OF LESSEE TO PERFORM OR
COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE NON-PERFORMANCE OF ANY
OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND FUTURE SUBLEASES OF THE
LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD THEREUNDER.

(b)           LESSOR WILL PROTECT,
INDEMNIFY, HOLD HARMLESS AND DEFEND LESSEE INDEMNIFIED PARTIES FROM AND AGAINST
ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION,
COSTS AND EXPENSES IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSEE INDEMNIFIED
PARTIES AS A RESULT OF (A) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR
ARISING IN CONNECTION WITH THIS LEASE, (B) ANY FAILURE ON THE PART OF LESSOR TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE OR (C) ANY ACTIONS OF
LESSOR OR DEVELOPER ARISING OUT OF THE DEVELOPMENT AGREEMENTS.

(c)           LESSEE’S OR LESSOR’S
LIABILITY FOR A BREACH OF THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE ANY
TERMINATION OF THIS LEASE.

(d)           Any amounts that
become payable by an Indemnifying Party under this Article XX shall be paid
within thirty (30) days after liability therefor on the part of the
Indemnifying Party is determined by litigation or otherwise, and if not timely
paid, shall bear a 

 44
 

 

late charge (to the
extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. 
Any such amounts shall be reduced by insurance proceeds received and any
other recovery (net of costs) obtained by the Indemnified Party.  An Indemnifying Party, upon request, shall at
its sole expense resist and defend any Proceeding, claim or action, or cause
the same to be resisted and defended by counsel designated by the Indemnified
Party and approved by the Indemnifying Party, which approval shall not be
unreasonably withheld; provided, however, that such approval shall not be
required in the case of defense by counsel designated by any insurance company
undertaking such defense pursuant to any applicable policy of insurance.  Each Indemnified Party shall have the right
to employ separate counsel in any such Proceeding, claim or action and to
participate in the defense thereof, but the fees and expenses of such counsel
will be at the sole expense of such Indemnified Party unless a conflict of
interest prevents representation of such Indemnified Party by the counsel
selected by the Indemnified Party and such separate counsel has been approved
by the Indemnifying Party, which approval shall not be unreasonably
withheld.  The Indemnifying Party shall
not be liable for any settlement of any such Proceeding, claim or action made
without its consent, which consent shall not be unreasonably withheld, but if
settled with the consent of the Indemnifying Party, or if settled without its
consent (if its consent shall be unreasonably withheld), or if there be a final,
non-appealable judgment for an adversary party in any such Proceeding, claim or
action, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Party from and against any liabilities incurred by such Indemnified
Party by reason of such settlement or judgment. 
Nothing herein shall be construed as indemnifying a Lessor Indemnified
Party against its own grossly negligent acts or omissions or willful
misconduct.

ARTICLE XXI

SUBLETTING;
ASSIGNMENT

21.1                          Subletting
and Assignment.

(a)           Lessee shall not
sell, assign or transfer all or any portion of its leasehold estate or sublet
all or any portion of the Leased Property without first obtaining the prior
written consent of Lessor, not to be unreasonably withheld, conditioned or
delayed; provided that Lessor’s consent shall not be required for any
assignment of transfer of all or any part of Lessee’s interest under this Lease
to any entity owned or controlled by either James L. Smith or Marcia
Smith-Niedringhaus (the “Smith Group”)
as long as (i) such entity satisfies the net worth requirement of Section
7.10 hereof and (ii) Lessor confirms in writing to Lessee and the potential
assignee prior to such assignment that such assignment would not cause Lessor
to derive income from an independent contractor, as such term is defined in
Section 856(d), with respect to Lessor. 
As used herein, “controlled by the Smith Group” shall mean the Smith
Group owns not less than fifty-one percent (51%) of the equity in the proposed
transferee.  In the event of an
assignment or subletting by Lessee which is approved by Lessor, Lessee shall
nevertheless remain fully liable for the due performance of all obligations on
Lessee’s part to be performed under this Lease. 
No permitted assignment, sale or transfer shall be effective until there
shall have been delivered to Lessor an undertaking in recordable form, executed
by the proposed assignee or sublessee, wherein such assignee or sublessee
assumes the due performance of all 

 45
 

 

obligations on Lessee’s
part to be performed under this Lease. 
Each sublease must satisfy the requirements of Section 35.3 and Section
35.4.

(b)           Lessee, as the
debtor in possession, or the trustee for Lessee (collectively, the “Trustee”) in any proceeding under
Title 11 of the United States Bankruptcy Code relating to Bankruptcy, as
amended (the “Bankruptcy Code”), shall not
have the right to assign this Lease or sublet the Leased Property to an
assignee or sublessee that (i) is a competitor of Lessor or (ii) is
not a capable, reliable, qualified Person of good reputation and character with
the financial capacity to satisfy Lessee’s obligations under this Lease.  The Trustee shall not have the right to
assign this Lease or sublet the Leased Property to a real estate investment
trust that is, or intends to be, publicly traded.

(c)           The Trustee shall
have the right to assume Lessee’s rights and obligations under this Lease only
if the Trustee:  (a) promptly cures or
provides adequate assurance that the Trustee will promptly cure any default
under this Lease; (b) compensates or provides adequate assurance that the
Trustee will promptly compensate Lessor for any actual pecuniary loss incurred
by Lessor as a result of Lessee’s default under this Lease; and (c) provides
adequate assurance of future performance under this Lease.  Adequate assurance of future performance by
the proposed assignee shall include, as a minimum, that:  (i) any proposed assignee of this Lease
shall provide to Lessor an audited financial statement, dated no later than six
(6) months prior to the effective date of such proposed assignment or sublease
with no material change therein as of the effective date, which financial
statement shall show the proposed assignee has sufficient financial capacity to
fulfill its obligations under this Lease, or, in the alternative, the proposed
assignee shall provide a guarantor of such proposed assignee’s obligations
under this Lease, which guarantor shall provide an audited financial statement
meeting the requirements of (i) above and shall execute and deliver to
Lessor a guaranty agreement in form and substance acceptable to Lessor; and
(ii) any proposed assignee shall grant to Lessor a security interest in
favor of Lessor in all furniture, fixtures, and other personal property to be
used by such proposed assignee in the Leased Property.  All payments required of Lessee under this
Lease, whether or not expressly denominated as such in this Lease, shall
constitute rent for the purposes of Title 11 of the Bankruptcy Code.

(d)           The parties agree
that for the purposes of the Bankruptcy Code relating to (a) the obligation of
the Trustee to provide adequate assurance that the Trustee will “promptly” cure
defaults and compensate Lessor for actual pecuniary loss, the word “promptly”
shall mean that cure of defaults and compensation will occur no later than
sixty (60) days following the filing of any motion or application to assume
this Lease; and (b) the obligation of the Trustee to compensate or to provide
adequate assurance that the Trustee will promptly compensate Lessor for “actual
pecuniary loss”.  The term “actual pecuniary loss” shall mean,
in addition to any other provisions contained herein relating to Lessor’s
damages upon default, the obligations of Lessee to pay money under this Lease
and all attorneys’ fees and related costs of Lessor incurred in connection with
any default of Lessee in connection with Lessee’s bankruptcy proceedings).

(e)           Any person or entity
to which this Lease is assigned pursuant to the provisions of the Bankruptcy
Code shall be deemed, without further act or deed, to have assumed 

 46
 

 

all of the obligations
arising under this Lease and each of the conditions and provisions hereof on
and after the date of such assignment. 
Any such assignee shall, upon the request of Lessor, forthwith execute
and deliver to Lessor an instrument, in form and substance acceptable to
Lessor, confirming such assumption.

21.2                          Attornment.  Lessee shall insert in each future sublease
permitted under Section 21.1
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Lessor
hereunder, (b) if this Lease terminates before the expiration of such sublease,
the sublessee thereunder will, at Lessor’s option, attorn to Lessor and waive
any right the sublessee may have to terminate the sublease or to surrender
possession thereunder as a result of the termination of this Lease, and (c) if
the sublessee receives a written Notice from Lessor or Lessor’s assignees, if
any, stating that an uncured Event of Default exists under this Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such Notice, or as such party may
direct.  All rentals received from the
sublessee by Lessor or Lessor’s assignees, if any, as the case may be, shall be
credited against the amounts owing by Lessee under this Lease.

21.3                           Management
Agreement.

(a)           Lessee
shall not enter into (i) any management or agency agreement relating to the
management or operation of the Facility other than the Management Agreement,
(ii) any material modifications to the Management Agreement, without Lessor’s
prior written approval of the terms and conditions thereof, such approval to
not be unreasonably withheld, conditioned or delayed, or (iii) agree to a
change in the identity of any manager of the Facility other than the
Manager.  Subject to Lessor’s prior
approval, which may be withheld in its sole discretion, Lessee may elect to
manage the Facility itself, in which case where appropriate in this Lease, the
term “Manager” shall mean Lessee.

(b)           All amounts due to
the Manager under the Management Agreement shall be paid prior to any payments
of Rent due under this Lease, which payments of Rent shall be subject and
subordinate to payment of all fees, expenses, or other amounts payable pursuant
to the Management Agreement.  The
disposition of the Management Agreement upon any permitted termination of this
Lease shall be governed by the Owner Agreement.

ARTICLE XXII

ESTOPPELS;
FINANCIAL STATEMENTS

22.1                           Lessee
Estoppel Certificates.  At any time
and from time to time upon not less than fifteen (15) days notice by Lessor,
Lessee will furnish to Lessor a statement certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force
and effect as modified and setting forth the modifications), the date to which
the rent has been paid, whether to the knowledge of Lessee there is any
existing default or Event of Default exists thereunder by Lessor or Lessee, and
such other information as may be reasonably requested by Lessor.  Any such certificate furnished pursuant to
this Section may be relied upon by Lessor, any lender and any prospective
purchaser of the Leased Property.

 47
 

 

22.2                          Financial
Statements and Information.  Lessee
will furnish the following statements and operating information to Lessor:

(a)                                 within
ninety (90) days after the end of each fiscal year of Lessee, audited
Consolidated Financials of the Lessee;

(b)                                with
reasonable promptness, such other information respecting the financial
condition, operations and affairs of Lessee or the Leased Property (A) as
Lessor or the Company may be required or may deem desirable in its reasonable
discretion to file with or provide to the Security and Exchange Commission (“SEC”) or any other governmental
agency or any other Person, all in the form, and either audited or unaudited,
as Lessor may request in Lessor’s reasonable discretion, (B) as may be
reasonably necessary to confirm compliance by Lessee and its Affiliates with
the requirements of this Lease, and (C) as may be required or requested by any
existing, potential or future Holder;

(c)                                 on
or before the twentieth (20th)
day of each month, a balance sheet, and detailed profit and loss and cash flow
statements showing the financial position of the Facility as at the end of the
preceding month and the results of operation of the Facility for such preceding
month and the Lease Year to date (including a comparison to the Operating
Budget as approved);

(d)                                on
or before the twentieth (20th) day of each month, the Facility’s general
manager’s written critique of the financial report submitted pursuant to
subsection (c) immediately above, setting forth in narrative form any
variations during the preceding month from the Annual Budget and including a
preview of the Facility’s financial operations during the current month;

(e)                                 on
or before the twentieth (20th) day of each April, July and October during the
Term, an updated estimate for each calendar quarter remaining in the Lease Year
of the information required by Section 4.7(a)
and (e) hereof;

(f)                                   monthly
STR Reports within five (5) days of Lessee’s receipt thereof;

(g)                                Lessee
will furnish to Lessor a copy of all financial reports and statements received
from the Manager on the twentieth (20th) day of each month for the preceding
month;

(h)                                Lessee
will furnish to Lessor on the tenth (10th) day of each month for the preceding
month and year-to-date the following statistical information:

(i)            Statistical information for the
Hotel for the prior month, such as ADR, REVPAR and occupancy; and

(ii)           Year-to-date annual working capital
positions.

(i)                                    upon
request by Lessor, to the extent not previously provided by Lessee, (i) copies
of all licenses, permits, occupancy agreements, operating agreements, leases,
contracts, inspection reports, studies, appraisals, assessments, default or
other notices and similar materials 

 48
 

 

and information existing
with respect to the Leased Property and (ii) such additional financial
information as required to comply with, and to evidence compliance with, the
Sarbanes-Oxley Act of 2002, as may be amended, as such statute relates to
financial reports in respect of the Leased Property.

22.3         Covenants of
Lessee.  Lessee covenants to cause
its officers and employees, its Manager and its auditors to cooperate fully and
promptly with Lessor and with the auditors for Lessor in connection with the
timely preparation and filing of Lessor’s filings, reports and returns under
applicable federal, state and other governmental securities, blue sky and tax
laws and regulations.  Lessor covenants
to cause its officers and employees and auditors to cooperate fully with Lessee
and Lessee’s auditors in connection with the timely preparation and filing of Lessee’s
filings, reports and returns under applicable federal, state and other
governmental securities, blue sky and tax laws and regulations.

22.4         Certified
Financial Statements.  The financial
statements required under Section 22.2(a)-(c) shall be certified by a member or
an authorized officer (as the case may be) of Lessee.  All financial statements of Lessee delivered
to Lessor shall be true and correct in all respects, shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
and fairly present the financial condition of the subject thereof as of the
dates thereof.  Any materially adverse
change that occurs in the financial condition reflected therein after the date
thereof shall be reported to Lessor promptly. 
None of the aforesaid financial statements, or any certificate or
statement furnished to Lessor by or on behalf of Lessee in connection with the
transactions contemplated hereby, shall contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein or herein not misleading.

22.5         Lessor Estoppel
Certificates.  At any time and from
time to time upon not less than fifteen (15) days notice by Lessee, Lessor will
furnish to Lessee or to any person designated by Lessee an estoppel certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which rent has been paid, whether to the knowledge
of Lessor there is any existing default or Event of Default on Lessee’s part
hereunder, and such other information as may be reasonably requested by Lessee.

ARTICLE
XXIII

INSPECTIONS; MEETINGS

23.1         Lessor’s Right to
Inspect.  Lessee shall permit Lessor
and its authorized representatives as frequently as reasonably requested by
Lessor to inspect the Leased Property and Lessee’s accounts and records
pertaining thereto and make copies thereof, during usual business hours upon
reasonable advance notice, subject only to any business confidentiality
requirements reasonably requested by Lessee.

23.2         Regular Meetings.  Lessee agrees that a senior level
representative of operations of the Facility (such as the general manager or
controller) and if requested by Lessor, the general manager, will meet with
Lessor and its representatives on a monthly basis throughout each Lease 

 49
 

 

Year in order to discuss
all aspects of the management, maintenance and operation of the Facility.

23.3         Accommodations.  Subject to availability, Lessee will provide
reasonable gratuitous accommodations, food and beverage, and other services and
amenities to Lessor and its representatives in connection with all such
meetings and inspections.

ARTICLE
XXIV

NO WAIVER

24.1         No Waiver.  No failure by Lessor or Lessee 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 extent permitted by law, no waiver of any breach shall affect or
alter this Lease, which shall continue in full force and effect with respect to
any other then existing or subsequent breach.

ARTICLE XXV

CUMULATIVE
REMEDIES

25.1         Remedies
Cumulative.  To the extent permitted
by law, each legal, equitable or contractual right, power and remedy of Lessor
or Lessee now or hereafter provided either in this Lease 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
Lessor or Lessee of any one or more of such rights, powers and remedies shall
not preclude the simultaneous or subsequent exercise by Lessor or Lessee of any
or all of such other rights, powers and remedies.

ARTICLE
XXVI

SURRENDER

26.1         Acceptance of
Surrender.  No surrender to Lessor of
this Lease or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing
by Lessor and no act by Lessor or any representative or agent of Lessor, other
than such a written acceptance by Lessor, shall constitute an acceptance of any
such surrender.

ARTICLE
XXVII

NO MERGER

27.1         No Merger of Title.  There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person
or entity may acquire, own or hold, directly or indirectly:  (a) this Lease or the leasehold estate
created hereby or any interest in this Lease or such leasehold estate and (b)
the fee estate in the Leased Property.

 50
 

 

ARTICLE XXVIII

CONVEYANCE
BY LESSOR

28.1                          Conveyance
by Lessor.  If Lessor or any
successor owner of the Leased Property conveys the Leased Property in
accordance with the terms hereof other than as security for a debt, and the
grantee or transferee of the Leased Property expressly assumes all obligations
of Lessor hereunder arising or accruing from and after the date of such
conveyance or transfer, Lessor or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Lessor under this Lease arising or accruing from and after the date of such
conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owners.

28.2                          Lessor
May Grant Liens.

(a)           Without the consent
of Lessee, Lessor may from time to time, directly or indirectly, create or
otherwise cause to exist any lien, encumbrance or title retention agreement
upon the Leased Property, or any portion thereof or interest therein, or upon
Lessor’s interest in this Lease, whether to secure any borrowing or other means
of financing or refinancing.  This Lease
and Lessee’s interest hereunder shall at all times be subject and subordinate
to the lien and security title of any deeds to secure debt, deeds of trust,
mortgages, or other interests heretofore or hereafter granted by Lessor or
which otherwise encumber or affect the Leased Property and to any and all
advances to be made thereunder and to all renewals, modifications,
consolidations, replacements, substitutions, and extensions thereof (all of
which are herein called the “Mortgage”),
provided that (i) the Mortgage and all security agreements delivered by Lessor
in connection therewith shall be subject to Lessee’s rights under this Lease
prior to the expiration or earlier termination of this Lease pursuant to its
terms, and (ii) the foregoing subordination agreement shall only be effective
in the event that the Holder of the Mortgage agrees not to disturb Lessee’s
rights under this Lease.  In confirmation
of such subordination, Lessee shall, at Lessor’s request, promptly execute,
acknowledge and deliver any instruments which may be reasonably required to
evidence subordination to any Mortgage and to the Holder thereof, subject to
the terms and conditions of this Section 28.2 and in form and substance
acceptable to Lessee, and the assignment of this Lease and Lessor’s rights and
interests thereunder to such Holder.  In
the event of Lessee’s failure to deliver such instruments and if the Mortgage
and such instruments do not change materially and adversely any term of this
Lease, Lessor may, in addition to any other remedies for breach of covenant
hereunder, execute, acknowledge, and deliver the instrument as the agent or
attorney in fact of Lessee, and Lessee hereby irrevocably constitutes Lessor
its attorney in fact for such purpose, Lessee acknowledging that the
appointment is coupled with an interest and is irrevocable.

(b)           Lessee shall, upon
the request of Lessor or any existing, potential or future Holder (but in no
event more than once every twelve months during the Term), (i) provide
Lessor or such Holder with copies of all licenses, permits, occupancy
agreements, operating agreements, leases, contracts, inspection reports,
studies, appraisals, assessments, default or other notices and similar
materials reasonably requested in connection with any existing or proposed
financing of the Leased Property, and (ii) execute and/or cause the
Manager to execute, as 

 51
 

 

applicable, such estoppel
agreements and collateral assignments with respect to the Facility’s liquor
license, the Management Agreement, any Franchise Agreement and any of the other
aforementioned agreements as Holder may reasonably request in connection with
any such financing, provided that no such estoppel agreement or collateral
assignment shall in any way affect the Term or affect adversely in any material
respect any rights of Lessee under this Lease.

(c)           No act or failure to
act on the part of Lessor which would entitle Lessee under the terms of this
Lease, or by law, to be relieved of any of Lessee’s obligations hereunder
(including, without limitation, its obligation to pay Rent) or to terminate
this Lease, shall result in a release or termination of such obligations of
Lessee or a termination of this Lease unless: 
(i) Lessee shall have first given written notice of Lessor’s act or
failure to act to any Holder of whom Lessee has been given written notice of
such Holder’s status as a Holder, specifying the act or failure to act on the
part of Lessor which would give basis to Lessee’s rights; and (ii) the
Holder, after receipt of such notice, shall have failed or refused to correct
or cure the condition complained of within a reasonable time thereafter (in no
event less than sixty (60) days), which shall include a reasonable time for
such Holder to obtain possession of the Leased Property, if possession is
reasonably necessary for the Holder to correct or cure the condition, or to
foreclose such Mortgage, and if the Holder notifies the Lessee of its intention
to take possession of the Leased Property or to foreclose such Mortgage, and
correct or cure such condition.  If such
Holder is prohibited by any process or injunction issued by any court or by
reason of any action by any court having jurisdiction or any bankruptcy, debtor
rehabilitation or insolvency proceedings involving Lessor from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof,
provided, however, that this Lease shall continue to be in full force and
effect, the times for commencing or prosecuting such foreclosure or other
proceedings shall be extended for the period of such prohibition.

(d)           Lessee shall deliver
by notice delivered in the manner provided in Article XXIX to any Holder
who gives Lessee written notice of its status as a Holder, at such Holder’s
address stated in the Holder’s written notice or at such other address as the
Holder may designate by later written notice to Lessee, a duplicate copy of any
and all notices regarding any default which Lessee may from time to time give
or serve upon Lessor pursuant to the provisions of this Lease.  Copies of such notices given by Lessee to
Lessor shall be delivered to such Holder simultaneously with delivery to
Lessor.  No such notice by Lessee to
Lessor hereunder shall be deemed to have been given unless and until a copy
thereof has been mailed to such Holder as provided above.

(e)           At any time, and
from time to time, upon not less than twenty (20) days’ notice by a Holder to
Lessee, Lessee shall deliver to such Holder an estoppel certificate certifying
as to the information required in Section 22.1(c), and such
other information as may be reasonably requested by such Holder.  Any such certificate may be relied upon by
such Holder.

(f)            Lessee shall
cooperate in all reasonable respects, and as generally described in Section 28.2 of this Lease,
with any transfer of the Leased Property to a Holder that succeeds to the
interest of Lessor in the Leased Property (including, without limitation, in
connection with the transfer of any franchise, license, lease, permit,
contract, agreement, or 

 52
 

 

similar item to such
Holder or such Holder’s designee necessary or appropriate to operate the Leased
Property).  Lessor and Lessee shall
cooperate in (i) including in this Lease by suitable amendment from time
to time any provision which may be requested by any proposed Holder, or may
otherwise be reasonably necessary, to implement the provisions of this
Article and (ii) entering into any further agreement with or at the
request of any Holder which may be reasonably requested or required by such
Holder in furtherance or confirmation of the provisions of this Article ;
provided, however, that any such amendment or agreement shall not in any way
affect the Term nor affect adversely in any material respect any rights of
Lessor or Lessee under this Lease.

ARTICLE
XXIX

NOTICES

29.1         Notices.  All notices, demands, or other communications
of any type given by the Lessor to the Lessee, or by the Lessee to the Lessor,
whether required by this Lease or in any way related to the transaction
contracted for herein, shall be void and of no effect unless given in
accordance with the provisions of this paragraph.  All notices shall be in writing and delivered
to the person to whom the notice is directed, either in person, by facsimile
transmission, by nationally recognized overnight delivery service, or by United
States Mail, as a registered or certified item, return receipt requested.  Notices delivered by mail shall be deemed
given on the third (3rd) business day after being deposited in a post office or
other depository under the care or custody of the United States Postal Service,
enclosed in a wrapper with proper postage affixed, on the first business day
after being deposited with a nationally recognized overnight delivery service,
or when received, if delivered in person or by facsimile, addressed as follows:

	
   

  	
  Lessor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chase Park Plaza
  Hotel, LLC

  	
   

  
	
   

  	
   

  	
  c/o Behringer
  Harvard Opportunity OP I LP

  	
   

  
	
   

  	
   

  	
  15601 Dallas
  Parkway, Suite 600

  	
   

  
	
   

  	
   

  	
  Addison, Texas 75001

  	
   

  
	
   

  	
   

  	
  Attn: Joe
  Jernigan

  	
   

  
	
   

  	
   

  	
  Facsimile: (214)
  655-1610

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Powell Coleman,
  LLP

  	
   

  
	
   

  	
   

  	
  8080 North
  Central Expressway, Suite 1380

  	
   

  
	
   

  	
   

  	
  Dallas, Texas
  75206

  	
   

  
	
   

  	
   

  	
  Attn: Patrick M.
  Arnold

  	
   

  
	
   

  	
   

  	
  Facsimile: (214)
  373-8768

  	
   

  
	
   

  	
  Lessee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kingsdell L.P.

  	
   

  
	
   

  	
  212 N. Kingshighway,
  Suite 1023

  	
   

  
	
   

  	
  St. Louis,
  Missouri 63108

  	
   

  
	
   

  	
  Attn: James L.
  Smith

  	
   

  
	
   

  	
  Facsimile: (314)
  633-3034

  	
   

  

 

 53
 

 

 

	
  

  	
  with a copy to:

  	
  Sonnenschein Nath & Rosenthal LLP

  	
   

  
	
   

  	
   

  	
  One Metropolitan
  Square, Suite 3000

  	
   

  
	
   

  	
   

  	
  St. Louis,
  Missouri 63102

  	
   

  
	
   

  	
   

  	
  Attn: Jennifer
  A. Marler, Esq.

  	
   

  
	
   

  	
   

  	
  Facsimile: (314)
  259-5959

  	
   

  

 

ARTICLE XXX

APPRAISALS

30.1         Appraisers.  If it becomes necessary to determine the fair
market value of the Leased Property for any purpose of this Lease, the party
required or permitted to give notice of such required determination shall
include in the notice the name of a person selected to act as appraiser on its
behalf.  Within ten (10) days after
notice, Lessor (or Lessee, as the case may be) shall by notice to Lessee (or
Lessor, as the case may be) appoint a second person as appraiser on its
behalf.  The appraisers thus appointed,
each of whom must be a member of the American Institute of Real Estate
Appraisers (or any successor organization thereto) with at least five years
experience in the State appraising property similar to the Leased Property,
shall, within forty-five (45) days after the date of the notice appointing the
first appraiser, proceed to appraise the Leased Property to determine the fair
market value thereof as of the relevant date (giving effect to the impact, if
any, of inflation from the date of their decision to the relevant date);
provided, however, that if only one appraiser shall have been so appointed,
then the determination of such appraiser shall be final and binding upon the
parties.  If two appraisers are appointed
and if the difference between the amounts so determined does not exceed five
percent (5%) of the lesser of such amounts, then the fair market value shall be
an amount equal to fifty percent (50%) of the sum of the amounts so
determined.  If the difference between
the amounts so determined exceeds five percent (5%) of the lesser of such
amounts, then such two appraisers shall have twenty (20) days to appoint a
third appraiser.  If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of fair market value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have such appointment made by such court.  Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the fair market
value or fair market rental within forty-five (45) days after appointment of such
appraiser.  The determination of the
appraiser which differs most in the terms of dollar amount from the
determinations of the other two appraisers shall be excluded, and fifty percent
(50%) of the sum of the remaining two determinations shall be final and binding
upon Lessor and Lessee as the fair market value or fair market rental of the
Leased Property, as the case may be. 
This provision for determining by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and
any determination hereunder shall be final and binding upon the parties except
as otherwise provided by applicable law. 
Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.

 54
 

 

ARTICLE XXXI

LESSOR
BREACH

31.1         Breach
by Lessor.  It shall be a breach of
this Lease if Lessor fails to observe or perform any term, covenant or
condition of this Lease on its part to be performed and such failure continues
for a period of thirty (30) days after notice thereof from Lessee, unless such
failure cannot with due diligence be cured within a period of thirty (30) days,
in which case such failure shall not be deemed to continue if Lessor, within
such 30-day period, proceeds promptly and with due diligence to cure the
failure and diligently completes the curing thereof.  In the event that Lessor fails to cure such
breach as provided above, then Lessee shall have the right to perform Lessor’s
uncured obligation and all costs and expenses incurred by Lessee in connection
therewith shall be paid by Lessor to Lessee within thirty (30) days after
Lessee gives Lessor written demand for payment; any amounts not paid by Lessor
as required in this Section 31.1 shall be subject to arbitration
pursuant to Section 38.2.

ARTICLE XXXII

MISCELLANEOUS

32.1         Miscellaneous.  Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of, Lessee or
Lessor arising prior to any date of termination of this Lease shall survive
such termination.  If any term or
provision of this Lease or any application thereof is invalid or unenforceable,
the remainder of this Lease and any other application of such term or
provisions shall not be affected thereby. 
If any late charges or any interest rate provided for in any provision
of this Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate.  Neither this
Lease nor any provision hereof may be changed, waived, discharged or terminated
except by a written instrument in recordable form signed by Lessor and
Lessee.  All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
The headings in this Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.  This Lease shall be governed by and construed
in accordance with the laws of the State of Texas, but not including its
conflicts of laws rules.  If any payment
required to be made pursuant to this Lease shall become due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day.

32.2         Waiver of
Presentment, Etc.  Lessee waives all
presentments, demands for payment and for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring
of new or additional obligations, except as expressly granted herein.

32.3         Force Majeure.  Neither Lessor nor Lessee, nor any successor
in interest of Lessor or Lessee, shall be considered in breach or default of
their respective obligations under this Lease, and times for performance of
obligations hereunder shall be extended, except with respect to the payment of
Rent, which shall not be subject to the terms of this Section 32.3, in
the event of any delay caused by any event of force majeure occurring at or
affecting the Leased Property (a “Force
Majeure Event”), which Force Majeure Events shall include,
without limitation,

 55
 

 

damage or destruction by
fire or other casualty; general strike; lockout; labor disputes; labor
shortages; civil disorder; riots; war; acts of God; epidemics; earthquakes;
acts of terrorism; failure of utilities; shortage or delay in shipment of
material or fuel; or other similar events beyond the party’s reasonable
control.

32.4                          Development
Agreements.

(a)           Lessor has advised
Lessee that it intends to make certain alterations and improvements to the
Leased Property pursuant to the Development Agreements.  Lessor shall comply with its obligations
under the Development Agreements and shall use reasonably commercial efforts to
enforce the obligations of Developer under the Development Agreements.

(b)           All costs of the
Projects shall be borne by Lessor, and Lessee shall have no obligation to
perform any work contemplated by the Development Agreements.  In the course of implementing and completing
the Projects, Lessor shall not unreasonably interfere with the operation of the
Facility by Lessee or the performance of Lessee’s obligations under this Lease.

(c)           In furtherance of
and not in limitation of subsection (b) above. Lessor confirms that (i) neither
Lessee nor Manager shall be responsible for any obligations of the Developer
under the Development Agreements, nor shall Lessee or Manager have any
obligation to pay any costs or expenses incurred or contemplated pursuant to
the Development Agreements, (ii) in no event shall any Annual Budget include
any costs of the Projects described in the Development Agreements, and (iii)
amounts in the FFE Reserve shall not be available to pay any costs described in
any of the Development Agreements.

ARTICLE XXXIII

MEMORANDUM
OF LEASE

33.1                          Memorandum
of Lease.  Lessor and Lessee shall
promptly upon the request of either party enter into a short form memorandum of
this Lease, in form suitable for recording under the laws of the State of
Missouri in which reference to this Lease shall be made.  Lessee shall pay all costs and expenses of
recording such memorandum of this Lease.

ARTICLE XXXIV

COMPLIANCE
WITH AGREEMENTS

34.1                          Management
Agreement.  To the extent any
provisions of the Management Agreement impose a greater obligation on Lessee
than the corresponding provisions of the Lease, then Lessee shall be obligated
to comply with the provisions of the Management Agreement, it being the intent
of the parties hereof that Lessee comply with the provisions of the Management
Agreement so as to avoid any default thereunder.

 56
 

 

ARTICLE
XXXV

LIMITATIONS

35.1         REIT
Compliance.  Lessee acknowledges that
Lessor’s parent, Behringer Harvard Opportunity REIT I, Inc. (the “REIT”), intends to qualify as a
real estate investment trust under the Internal Revenue Code of 1986, as
amended (the “Tax Code”).  Lessee agrees that it will not knowingly or
intentionally take or omit any action, or permit any status to exist at the
Leased Property, which Lessee knows would or could result in the REIT being
disqualified from treatment as a real estate investment trust under the Tax
Code.

35.2         Personal Property
Limitation.  Anything contained in
this Lease to the contrary notwithstanding, the average of the fair market
values of the items of personal property that are leased to the Lessee under
this Lease at the beginning and at the end of any calendar year shall not
exceed fifteen percent (15%) of the average of the aggregate fair market values
of the Leased Property (including both all real property and all personal
property subject to this Lease) at the beginning and at the end of each such
calendar year.  This Section 35.2 is intended to
insure that all of the rent payable hereunder qualifies as “rents from real
property,” within the meaning of Section 856(d) of the Tax Code, or any
similar or successor provisions thereto, and shall be interpreted in a manner
consistent with such intent.

35.3         Sublease Rent
Limitation.  Anything contained in
this Lease to the contrary notwithstanding, Lessee shall not sublet the Leased
Property on any basis such that the rental to be paid by the sublessee
thereunder would be based, in whole or in part, on either (a) the income or profits
derived by the business activities of the sublessee, or (b) any other formula
such that any portion of the rent payable hereunder would fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Tax Code,
or any similar or successor provisions thereto.

35.4         Sublease Tenant
Limitation.  Anything contained in
this Lease to the contrary notwithstanding, Lessee shall not sublease the
Leased Property to any person or entity in which Lessor or the REIT owns,
directly or indirectly, a ten percent (10%) or more interest, within the
meaning of Section 856(d)(2)(B) of the Tax Code, or any similar or
successor provisions thereto.  In the
event that Lessee subleases any portion of the Leased Property in violation of Section 35.3
and this Section 35.4 on a basis such that the rental to be paid by
the sublessee thereunder would be based, in whole or in part, on either (a) the
income or profits derived by the business activities of the sublessee or (b)
any other formula such that any portion of the rent payable hereunder would
fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Tax Code,
or any similar or successor provisions thereto, then notwithstanding any
indication in this Lease to the contrary, the Percentage Rent shall be computed
without treating any amount paid pursuant to such sublease as Gross Revenues.

35.5         Lessee Ownership
Limitation.  Anything contained in
this Lease to the contrary notwithstanding, neither Lessee nor any affiliate of
the Lessee shall acquire, directly or indirectly, a ten percent (10%) or more
interest in the REIT, within the meaning of Section 856(d)(2)(B) of the
Tax Code, or any similar or successor provisions thereto.

 57
 

 

ARTICLE
XXXVI

TERMINATION RIGHTS

36.1                          Lessor’s
Option to Terminate Lease Upon Sale.

(a)           In the event Lessor
consummates a bona fide contract to sell the Leased Property, then Lessor may
terminate the Lease by giving not less than thirty (30) days prior notice to
Lessee of Lessor’s election to terminate the Lease upon the closing under such
contract.  Effective upon such date, this
Lease shall terminate and be of no further force and effect except as to any
obligations of the parties existing as of such date that survive termination of
this Lease and all Base Rent and Percentage Rent shall be adjusted as of the
termination date.

(b)           As compensation for
the early termination of its leasehold estate under this Article XXXVI because of a
sale of the Leased Property prior to the end of the Initial Term, Lessor shall,
within ninety (90) days after the closing of such sale, pay to Lessee the fair
market value of Lessee’s leasehold estate hereunder as of the closing of the
sale of the Leased Property for the remainder of the Initial Term.  In the event Lessor and Lessee are unable to
agree upon the fair market value of an original or replacement leasehold
estate, it shall be determined by appraisal using the appraisal procedure set
forth in Article XXX.

(c)           For the purposes of
this Section, fair market value of the leasehold estate (or portion thereof)
means an amount equal to the present value of the net revenues (net of all
expenses including, without limitation, the management fee payable pursuant to
the Management Agreement) to be derived from this Lease during the remainder of
the Initial Term based on current projections made by Lessee and Manager and
approved by Lessor with respect to future occupancy of, and future revenues to
be generated by, the Leased Property, as the case may be.

36.2                          Lessor’s
and Lessee’s Option to Terminate If Manager Becomes Eligible Independent
Contractor.  In the event that the
Manager becomes an “eligible independent contractor” (an “EIK”), as such term is defined in
Section 856(d)(9) of the Code, after the Commencement Date, the Lessor may
terminate the Lease by paying the Lessee the following amount (“Termination Payment”):

	
  If the Lessor Terminates 

  the Lease In

  	
   

  	
  Amount

  	
   

  	 

	
  2006

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  2013-2016

  	
   

  	
  $

  	
  0

  	
   

  
							

 

 58
 

 

In the event that the
Manager becomes an EIK after the Commencement Date, the Lessee may terminate
the Lease, provided no Termination Fee shall be payable upon such termination
by Lessee.

36.3                          Termination
by Lessor Upon Occurrence of Bad Boy Event. 
Lessor shall have the option to terminate the Lease upon the occurrence
of any Bad Boy Event.  Upon any such
termination, Lessor shall also have the right to terminate the Management
Agreement without payment of any Termination Payment.

ARTICLE
XXXVII

TRANSITION PROCEDURES

37.1                          Transition
Procedures.  Lessee and Manager shall
cooperate in good faith to provide access and information to any prospective
purchaser or lessee of the Leased Property which may acquire the Leased
Property or lease it upon the expiration or termination of the Term.  Upon any expiration or termination of the
Term, Lessor and Lessee shall do the following and, in general, shall cooperate
in good faith to effect an orderly transition of the management or lease of the
Facility.  The provisions of this Article 38 shall survive
the expiration or termination of this Lease until they have been fully
performed.  Nothing contained herein
shall limit Lessor’s rights and remedies under this Lease if such termination
occurs as the result of an Event of Default.

(a)           Upon the expiration
or earlier termination of the Term, Lessee shall use its best efforts
(i) to transfer to Lessor or Lessor’s designee all licenses, operating
permits and other governmental authorizations and all contracts with
governmental or quasi-governmental entities, that may be necessary for the
operation of the Facility (collectively, “Licenses”), or (ii) if such
transfer is prohibited by law or Lessor otherwise elects, to cooperate with
Lessor or Lessor’s designee in connection with the processing by Lessor or
Lessor’s designee of any applications for all Licenses, including Lessee
continuing to operate the liquor operations under its licenses with Lessor or
its designee agreeing to indemnify and hold Lessee harmless as a result thereof
except for the gross negligence or willful misconduct of Lessee; provided, in
either case, that the costs and expenses of any such transfer or the processing
of any such application shall be paid by Lessor or Lessor’s designee and such
arrangement will terminate not later than one hundred eighty (180) days
following its execution.

(b)           Lessee shall assign
or cause to be assigned to Lessor or Lessor’s designee simultaneously with the
termination of this Agreement, and the assignee shall assume all leases,
contracts, concession agreements and agreements in effect with respect to the
Facility then in Lessee’s name; provided, however, Lessor shall not be
obligated to assume and may reject (i) any operating or service agreements
entered into subsequent to the date hereof which have a term in excess of one
year or termination rights that must be exercised more than sixty (60) days
prior to the end of the annual term, and (ii) equipment leases which were
entered into subsequent to the date hereof and were not previously approved by
Lessor, if such approval is required pursuant to this Lease, in which event the
agreement or agreements and/or leases so rejected shall not be assigned or
shall be deemed reassigned and shall remain the property and responsibility of
Lessee.

 59
 

 

(c)           To the extent that
Lessor has not already received copies thereof, copies of all books and records
(including computer records) for the Facility kept by Lessee shall be promptly
delivered to Lessor or Lessor’s designee.

(d)           Lessee shall be
entitled to retain all cash, bank accounts and house banks, and to collect all
Gross Revenues and accounts receivable accrued through the termination
date.  Lessee shall be responsible for
the payment of rent, all operating expenses of the Facility and all other
obligations of Lessee accrued under this Lease prior to the termination date,
and Lessor shall be responsible for all operating expenses of the Facility
accruing on and after the termination date. 
Lessee shall surrender the Leased Property with an amount and quality of
Nonconsumable Inventory and Consumable Supplies as provided in Section 7.4
above.

ARTICLE
XXXVIII

ARBITRATION

38.1                          Arbitration.  Except as set forth in Section 38.2, in each case
specified in this Lease in which it shall become necessary to resort to
arbitration, such arbitration shall be determined as provided in this Section 38.1.  The party desiring such arbitration shall
give Notice to that effect to the other party, and an arbitrator shall be
selected by mutual agreement of the parties, or if they cannot agree within
thirty (30) days of such notice, by appointment made by the American
Arbitration Association (“AAA”)
from among the members of its panels who are qualified and who have experience
in resolving matters of a nature similar to the matter to be resolved by
arbitration.

38.2                          Alternative
Arbitration.  In each case specified
in this Lease for a matter to be submitted to arbitration pursuant to the
provisions of this Section 38.2,
Lessor shall be entitled to designate HVS Valuation Services; or if the
foregoing has ceased to do business, any nationally recognized accounting firm
with a hospitality division of which Lessor or an Affiliate of Lessor and
Lessee and Affiliates of Lessee are not significant clients to serve as
arbitrator of such dispute within fifteen (15) days after written demand for
arbitration is received or sent by Lessor. 
In the event Lessor fails to make such designation within such fifteen
(15) day period, Lessee shall be entitled to designate any nationally
recognized accounting firm with a hospitality division of which Lessee or an
Affiliate of Lessee is not a significant client to serve as arbitrator of such
dispute within fifteen (15) days after Lessor fails to timely make such
designation.  In the event no nationally
recognized accounting firm satisfying such qualifications is available and
willing to serve as arbitrator, the arbitration shall instead be administered as
set forth in Section 38.1.

38.3                          Arbitration
Procedures.  In any arbitration
commenced pursuant to Sections
38.1 or 38.2,
a single arbitrator shall be designated and shall resolve the dispute.  The arbitrator’s decision shall be final and
binding on all parties and shall not be subject to further review or appeal
except as otherwise allowed by applicable law. 
Upon the failure of either party (the “non-complying party”) to comply
with his decision, the arbitrator shall be empowered, at the request of the
other party, to order such compliance by the non-complying party and to
supervise or arrange for the supervision of the non-complying party’s
obligation to comply with the arbitrator’s decision, all at the expense of the
non-complying party.  To the maximum
extent 

 60
 

 

practicable, the
arbitrator and the parties, and the AAA if applicable, shall take any action
necessary to insure that the arbitration shall be concluded within ninety (90)
days of the filing of such dispute.  The
fees and expenses of the arbitrator shall be shared equally by Lessor and
Lessee except as otherwise specified above in this Section 38.3. Unless otherwise agreed in writing by the
parties or required by the arbitrator or AAA, if applicable, arbitration
proceedings hereunder shall be conducted in the State.  Notwithstanding formal rules of evidence,
each party may submit such evidence as each party deems appropriate to support
its position and the arbitrator shall have access to and right to examine all
books and records of Lessee and Lessor regarding the Facility during the arbitration.

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 61

 

IN WITNESS
WHEREOF, the parties have executed this Lease by their duly authorized officers
as of the date first above written.

	
  LESSOR:

  	
   

  	
  CHASE PARK PLAZA HOTEL, LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard Opportunity OP I LP,

  
	
   

  	
   

  	
  a Texas limited partnership

  
	
   

  	
   

  	
  Authorized Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard Opportunity REIT I, Inc.,

  
	
   

  	
   

  	
  a Maryland corporation

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Executive Vice
  President

  
								

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

 

	
  LESSEE:

  	
  KINGSDELL L.P., a Delaware
  limited partnership

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  IFC, Inc., a Missouri corporation,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James L. Smith

  
	
   

  	
   

  	
  Name:

  	
  James L. Smith

  
	
   

  	
   

  	
  Title:

  	
  President

  
							

 

 

EXHIBIT
B

REVENUE
PERCENTAGES AND BREAK POINTS, CALCULATION OF PERCENTAGE RENT

A.  Revenue
Percentages and Breakpoints from January 1, 2007 through the Expansion
Effective Date:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  2

  	
  %

  
	
  ANNUAL HOTEL REVENUES
  BREAK POINT:

  	
   

  	
  $

  	
  9,350,000

  	
   

  
	
  FOOD SALES PERCENTAGE:

  	
   

  	
  2

  	
  %

  
	
  ANNUAL FOOD SALES REVENUE BREAK POINT:

  	
   

  	
  $

  	
  9,850,000

  	
   

  

 

B.  Revenue
Percentages and Breakpoints in 2008 from and after the Expansion Effective Date:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  16

  	
  %

  
	
  ANNUAL HOTEL REVENUES
  BREAK POINT:

  	
   

  	
  $

  	
  9,500,000

  	
   

  
	
  FOOD SALES PERCENTAGE:

  	
   

  	
  15

  	
  %

  
	
  ANNUAL FOOD SALES REVENUE BREAK POINT:

  	
   

  	
  $

  	
  9,850,000

  	
   

  

 

C.  Revenue
Percentages and Breakpoints for 2009:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  20.6

  	
  %

  
	
  ANNUAL HOTEL REVENUES
  BREAK POINT:

  	
   

  	
  $

  	
  9,900,000

  	
   

  
	
  FOOD SALES PERCENTAGE:

  	
   

  	
  19.3

  	
  %

  
	
  ANNUAL FOOD SALES REVENUE BREAK POINT:

  	
   

  	
  $

  	
  9,500,000

  	
   

  

 

D.  Revenue
Percentages and Breakpoints for 2010:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  23.5

  	
  %

  
	
  ANNUAL HOTEL REVENUES
  BREAK POINT:

  	
   

  	
  $

  	
  11,650,000

  	
   

  
	
  FOOD SALES PERCENTAGE:

  	
   

  	
  22.0

  	
  %

  
	
  ANNUAL FOOD SALES REVENUE BREAK POINT:

  	
   

  	
  $

  	
  11,200,000

  	
   

  

 

Chase Park Plaza –
St. Louis, Missouri

LEASE
AGREEMENT – Schedule 4.1(b)

 

 1
 

 

 

E.  Revenue
Percentages and Breakpoints for 2011:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  26.3

  	
  %

  
	
  ANNUAL HOTEL
  REVENUES BREAK POINT:

  	
   

  	
  $

  	
  13,500,000

  	
   

  
	
  FOOD SALES
  PERCENTAGE:

  	
   

  	
  24.7

  	
  %

  
	
  ANNUAL FOOD SALES
  REVENUE BREAK POINT:

  	
   

  	
  $

  	
  13,000,000

  	
   

  

 

F.  Revenue
Percentages and Breakpoints for 2012:

	
  HOTEL REVENUE
  PERCENTAGE:

  	
   

  	
  29.5

  	
  %

  
	
  ANNUAL HOTEL
  REVENUES BREAK POINT:

  	
   

  	
  $

  	
  15,500,000

  	
   

  
	
  FOOD SALES
  PERCENTAGE:

  	
   

  	
  27.7

  	
  %

  
	
  ANNUAL FOOD SALES
  REVENUE BREAK POINT:

  	
   

  	
  $

  	
  15,000,000

  	
   

  

G.  Calculation
of Percentage Rent:

Percentage Rent shall be calculated by the following
formula (the “Revenues Computation”):

(i)                                    For
any calendar quarter, Percentage Rent shall equal:

(1)                                  An
amount equal to the Quarterly Revenues Computation (defined below), for the
Lease Year in question

less

(2)                                  An
amount equal to the Percentage Rent theretofore paid for the Lease Year in
question to date.

(ii)                                 “Quarterly Revenues Computation”
shall be computed utilizing the following definitions:

(1)                                  “Cumulative Quarterly Portion” shall
mean a fraction having as its numerator the total number of calendar quarters
(including partial quarters) in a Lease Year which have elapsed prior to the
month in which a quarterly payment of Percentage Rent is due, and having as its
denominator the total number of calendar quarters (including partial quarters)
in the Lease Year.  For example, the
Cumulative Quarterly Portion in a 12-month Lease Year for the first quarter
Percentage Rent payment due April 20 will be 1/4, and for the second quarter
Percentage Rent payment due July 20 will be 2/4, and such progression shall
continue for each successive calendar quarter so that the Cumulative Quarterly

 2
 

 

Portion for the
Percentage Rent payment due January 20 of the next Lease Year will be 4/4 or
100%.

(2)                                 “Hotel Revenue Percentage” and “Food Sales Percentage” mean
the percentages corresponding to each of such terms as set forth on this Exhibit B.

(3)                                 “Annual Hotel Revenues Break Point”
shall mean the amount of annual Room Revenues corresponding to each of such
terms as set forth on this Exhibit B.

(4)                                 “Annual Food Sales Break Point”
shall mean the amount of annual Food Sales and Beverage Sales corresponding to
such term as set forth on this Exhibit B.

(iii)                              The
Quarterly Revenues Computation shall be the amount obtained by adding, for the
applicable Lease Year the following sums:

(1)                                 an
amount equal to the product of (a) the Hotel Revenue Percentage times (b) all
year to date Hotel Revenues in excess of the Cumulative Quarterly Portion of
the Annual Hotel Revenues Break Point, and

(2)                                 an
amount equal to the product of (a) the Food Sales Percentage times (b) all year
to date Food Sales in excess of the Cumulative Quarterly Portion of the Annual
Food Sales Break Point.

 3

 

SCHEDULE
4.1

MONTHLY
RENT ACCRUAL SCHEDULE

 

	
  Lease Year

  	
   

  	
  Monthly Accrual

  	
   

  
	
  December 2006

  	
   

  	
  $

  	
  225,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  366,667

  	
   

  
	
  2008 (Prior to
  Expansion Effective Date)

  	
   

  	
  $

  	
  366,667

  	
   

  
	
  2008 (After Expansion
  Effective Date)

  	
   

  	
  $

  	
  583,333

  	
   

  
	
  2009

  	
   

  	
  $

  	
  633,333

  	
   

  
	
  2010

  	
   

  	
  $

  	
  708,333

  	
   

  
	
  2011

  	
   

  	
  $

  	
  783,333

  	
   

  
	
  2012

  	
   

  	
  $

  	
  825,000

  	
   

  

 

 1

 

SCHEDULE
4.1(a)

MONTHLY
BASE RENT PAYMENT SCHEDULE

	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008 Before

  Expansion

  Effective

  Date

  	
   

  	
  2008 After

  Expansion

  Effective

  Date

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  	
  2012

  	
   

  
	
  January

  	
   

  	
  N/A

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  560,000

  	
   

  	
  $

  	
  625,000

  	
   

  	
  $

  	
  650,000

  	
   

  
	
  February

  	
   

  	
  N/A

  	
   

  	
  $

  	
  75,000

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  560,000

  	
   

  	
  $

  	
  625,000

  	
   

  	
  $

  	
  650,000

  	
   

  
	
  March

  	
   

  	
  N/A

  	
   

  	
  $

  	
  25,000

  	
   

  	
  $

  	
  250,000

  	
   

  	
  $

  	
  250,000

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  560,000

  	
   

  	
  $

  	
  625,000

  	
   

  	
  $

  	
  650,000

  	
   

  
	
  April

  	
   

  	
  N/A

  	
   

  	
  $

  	
  125,000

  	
   

  	
  $

  	
  300,000

  	
   

  	
  $

  	
  300,000

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  560,000

  	
   

  	
  $

  	
  625,000

  	
   

  	
  $

  	
  650,000

  	
   

  
	
  May

  	
   

  	
  N/A

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  June

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  July

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  August

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  September

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  October

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  November

  	
   

  	
  N/A

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  December

  	
   

  	
  $

  	
  225,000

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  366,667

  	
   

  	
  $

  	
  583,333

  	
   

  	
  $

  	
  633,333

  	
   

  	
  $

  	
  708,333

  	
   

  	
  $

  	
  783,333

  	
   

  	
  $

  	
  825,000

  	
   

  
																										

 

 1

 

SCHEDULE 4.1(b)

ADDITIONAL BASE RENT SCHEDULE

	
  Payment Date

  	
   

  	
  Quarterly Payment Amount

  	
   

  
	
  April 15, 2007

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2007

  	
   

  	
   

  	
  $

  	
  325,000

  	
   

  
	
  October 31, 2007

  	
   

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  January 15, 2008

  	
   

  	
   

  	
  $

  	
  741,668

  	
   

  
	
  April 15, 2008

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2008

  	
   

  	
   

  	
  —

  	
   

  
	
  October 15, 2008

  	
   

  	
   

  	
  $

  	
  600,000

  	
  *

  
	
  January 15, 2009

  	
   

  	
   

  	
  $

  	
  216,668

  	
  *

  
	
  April 15, 2009

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2009

  	
   

  	
   

  	
  $

  	
  266,667

  	
   

  
	
  October 15, 2009

  	
   

  	
   

  	
  $

  	
  266,667

  	
   

  
	
  January 15, 2010

  	
   

  	
   

  	
  —

  	
   

  
	
  April 15, 2010

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2010

  	
   

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  October 15, 2010

  	
   

  	
   

  	
  $

  	
  293,332

  	
   

  
	
  January 15, 2011

  	
   

  	
   

  	
  —

  	
   

  
	
  April 15, 2011

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2011

  	
   

  	
   

  	
  $

  	
  316,667

  	
   

  
	
  October 15, 2011

  	
   

  	
   

  	
  $

  	
  316,667

  	
   

  
	
  January 15, 2012

  	
   

  	
   

  	
  —

  	
   

  
	
  April 15, 2012

  	
   

  	
   

  	
  —

  	
   

  
	
  July 15, 2012

  	
   

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  October 15, 2012

  	
   

  	
   

  	
  $

  	
  350,000

  	
   

  
	
  January 15, 2013

  	
   

  	
   

  	
  —

  	
   

  

 

*                 This calculation
assumes the Expansion Effective Date is June 1, 2008.  These numbers will be appropriately and
equitably adjusted if the Expansion Effective Date is a different date.

 1Exhibit 10.44

HOTEL OPERATING AGREEMENT

BETWEEN

CWE HOSPITALITY SERVICES, LLC

AND

KINGSDELL L.P.

FOR

CHASE PARK PLAZA

ST. LOUIS, MO

December 1, 2006

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 TERM

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 OPERATION OF THE HOTEL

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.1.

  	
  Use and Standard of Operation

  	
  2

  
	
  3.2.

  	
  Leases and Concessions

  	
  4

  
	
  3.3.

  	
  Personnel

  	
  4

  
	
  3.4.

  	
  Limitations on Operator

  	
  6

  
	
  3.5.

  	
  Bank Accounts

  	
  7

  
	
  3.6.

  	
  Working Capital and Funds Requests

  	
  8

  
	
  3.7.

  	
  Excess Funds

  	
  9

  
	
  3.8.

  	
  Operating Expenses

  	
  9

  
	
  3.9.

  	
  Payment of Impositions and Insurance Premiums

  	
  10

  
	
  3.10.

  	
  Additional Rights of Operator

  	
  10

  
	
  3.11.

  	
  Licenses and Permits; Owner’s Covenant

  	
  11

  
	
  3.12.

  	
  No Pledge of Credit by Owner

  	
  12

  
	
  3.13.

  	
  Title; Compliance with Deed of Trust, Lease and
  CC&R’s

  	
  12

  
	
  3.14.

  	
  Deed of Trust Payments

  	
  12

  
	
  3.15.

  	
  Sarbanes-Oxley

  	
  12

  
	
  3.16.

  	
  Operator Not Liable for Recommendations

  	
  13

  
	
  3.17.

  	
  Operator Not Liable for Project Development

  	
  13

  
	
  3.18.

  	
  Non-Compete

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 ANNUAL PLAN AND FINANCIAL REPORTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  4.1.

  	
  Approval of Annual Plan

  	
  14

  
	
  4.2.

  	
  Compliance with Annual Plan

  	
  15

  
	
  4.3.

  	
  Books and Records

  	
  17

  
	
  4.4.

  	
  Inspection of Books and Records

  	
  17

  
	
  4.5.

  	
  Financial Reports

  	
  17

  
	
  4.6.

  	
  Disclosure of Financial Reports

  	
  18

  
	
  4.7.

  	
  Coordination and Planning

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 REPAIRS, ALTERATIONS, AND RESERVES

  	
  19

  
	
   

  	
   

  	
   

  
	
  5.1.

  	
  Repairs and Maintenance

  	
  19

  
	
  5.2.

  	
  Emergency Repairs

  	
  19

  
	
  5.3.

  	
  Enforcement of Guaranties and Warranties

  	
  20

  
	
  5.4.

  	
  Replacement Reserve Fund

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 ANNUAL OPERATING FEE AND REIMBURSEMENT
  TO OPERATOR

  	
  21

  
	
   

  	
   

  	
   

  
	
  6.1.

  	
  Annual Operating Fee

  	
  21

  
	
  6.2.

  	
  Reimbursement of Operator

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 INSURANCE

  	
  22

  

 

 i
 

 

 

	
  7.1.

  	
  Insurance to Be Maintained During Term

  	
  22

  
	
  7.2.

  	
  Endorsements

  	
  24

  
	
  7.3.

  	
  Parties Insured

  	
  24

  
	
  7.4.

  	
  Waiver of Liability

  	
  24

  
	
  7.5.

  	
  Blanket Insurance

  	
  25

  
	
  7.6.

  	
  Investigations of Claims and Reports

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 DEFAULT AND REMEDIES

  	
  25

  
	
   

  	
   

  	
   

  
	
  8.1.

  	
  Events of Default

  	
  25

  
	
  8.2.

  	
  Excused Non Performance

  	
  27

  
	
  8.3.

  	
  Remedies

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 TERMINATION

  	
  28

  
	
   

  	
   

  	
   

  
	
  9.1.

  	
  Termination on Transfer

  	
  28

  
	
  9.2.

  	
  Performance Termination

  	
  29

  
	
  9.3.

  	
  Rights and Obligations on Termination

  	
  30

  
	
  9.4.

  	
  WARN Act; 401(k) Compliance

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 DESTRUCTION

  	
  34

  
	
   

  	
   

  	
   

  
	
  10.1.

  	
  Substantial Damage

  	
  34

  
	
  10.2.

  	
  Partial Damage

  	
  35

  
	
  10.3.

  	
  Substantial Condemnation

  	
  35

  
	
  10.4.

  	
  Partial Condemnation

  	
  35

  
	
  10.5.

  	
  Condemnation for Temporary Use

  	
  36

  
	
  10.6.

  	
  Effect of Termination

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 DEEDS OF TRUST AND FINANCING

  	
  36

  
	
   

  	
   

  	
   

  
	
  11.1.

  	
  Permitted Deeds of Trust

  	
  36

  
	
  11.2.

  	
  Financing and Sales Disclosures of Non-Participation
  by Operator

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 ASSIGNMENT

  	
  39

  
	
   

  	
   

  	
   

  
	
  12.1.

  	
  Assignment by Operator

  	
  39

  
	
  12.2.

  	
  Assignment by Owner

  	
  40

  
	
  12.3.

  	
  Permitted Subletting

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 MISCELLANEOUS

  	
  41

  
	
   

  	
   

  	
   

  
	
  13.1.

  	
  Severability

  	
  41

  
	
  13.2.

  	
  Approvals

  	
  41

  
	
  13.3.

  	
  Waivers

  	
  41

  
	
  13.4.

  	
  Successors and Assigns

  	
  42

  
	
  13.5.

  	
  Force Majeure and Operator’s Right to Close Hotel

  	
  42

  
	
  13.6.

  	
  Estoppel Certificate

  	
  42

  
	
  13.7.

  	
  Indemnification

  	
  43

  
	
  13.8.

  	
  Warranties and Covenants

  	
  43

  

 

 ii
 

 

 

	
  13.9.

  	
  Notices

  	
  44

  
	
  13.10.

  	
  Amendments

  	
  45

  
	
  13.11.

  	
  Entire Agreement

  	
  45

  
	
  13.12.

  	
  Further Instruments

  	
  45

  
	
  13.13.

  	
  Applicable Law

  	
  45

  
	
  13.14.

  	
  Brokers, Finders, Etc

  	
  45

  
	
  13.15.

  	
  Time

  	
  45

  
	
  13.16.

  	
  No Party Deemed Drafter

  	
  45

  
	
  13.17.

  	
  Hotel Name

  	
  45

  
	
  13.18.

  	
  Relationship and Limitation on Fiduciary Duties

  	
  46

  
	
  13.19.

  	
  Attorneys’ Fees

  	
  46

  
	
  13.20.

  	
  Interpretation

  	
  47

  
	
  13.21.

  	
  Gender

  	
  47

  
	
  13.22.

  	
  Quiet Enjoyment

  	
  47

  
	
  13.23.

  	
  Exhibits

  	
  47

  
	
  13.24.

  	
  Irrevocability

  	
  47

  
	
  13.25.

  	
  Confidentiality

  	
  48

  
	
  13.26.

  	
  Owner Agreement

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 ARBITRATION

  	
  48

  
	
   

  	
   

  	
   

  
	
  14.1.

  	
  Arbitration

  	
  48

  
	
  14.2.

  	
  Selection of Arbitrator

  	
  48

  
	
  14.3.

  	
  Authority

  	
  49

  
	
  14.4.

  	
  Fees and Expenses

  	
  49

  
	
  14.5.

  	
  Decision

  	
  49

  
	
  14.6.

  	
  Limitation of Authority

  	
  50

  
	
  14.7.

  	
  Legal Proceedings

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 OPERATOR’S RIGHTS WITH RESPECT TO
  OWNER’S SECURITIES LAW OFFERINGS

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16 PROPRIETARY INFORMATION

  	
  51

  
	
   

  	
   

  	
   

  
	
  16.1.

  	
  Use of Proprietary Information

  	
  51

  
	
  16.2.

  	
  Restrictions on Owner

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17 CONDOMINIUM OBLIGATIONS

  	
  52

  
	
   

  	
   

  	
   

  
	
  17.1.

  	
  Condominium Regime

  	
  52

  
	
  17.2.

  	
  Maintenance, Repair and Replacement

  	
  52

  
	
  17.3.

  	
  Condominium Association Management

  	
  52

  

 

 iii

 

CHASE PARK PLAZA HOTEL

HOTEL OPERATING AGREEMENT

THIS HOTEL OPERATING AGREEMENT (“Agreement”) is
entered into as of December 1, 2006, between and among CWE HOSPITALITY
SERVICES, LLC, a Missouri limited liability company (“Operator”), and KINGSDELL
L.P., a Delaware limited partnership (“Owner”).

RECITALS

This Agreement is entered into upon the basis of the
following facts, understandings and intentions of the parties:

A.            Pursuant to a Lease
Agreement dated of even date herewith (as subsequently amended modified,
renewed or restated, the “Lease”), by and between Chase Park Plaza Hotel, LLC,
a Delaware limited liability company (“Landlord”) and Owner, Owner holds a
leasehold interest in the real property located in St. Louis, Missouri, as
legally described on Exhibit A to this Agreement (the “Premises”).

B.            The Premises are
improved with: (i) an eleven (11) story hotel building (the “Chase”) and
appurtenances to such hotel building with approximately two hundred fifty-one
(251) Guest Rooms and related facilities and appurtenances, including five (5)
restaurants/bars, approximately sixty-five thousand (65,000) square feet of
banquet and meeting space, and twenty-five thousand (25,000) square feet of
office space and other retail and amenity features, including a five (5) screen
movie theater, a pool and outdoor patio, a spa, a fitness center, and a five
(5) story parking garage; and (ii) a separate tower (the “Park Plaza”) with
certain commercial condominium units (each a “Commercial Unit”), described as
Units 1-7, 3A, 9 and 16 of the Park Plaza Master Condominium, and approximately
eighty-seven (87) residential units, currently described as Units 8 and 10-15
of the Park Plaza Master Condominium, which are intended to be submitted to
condominium form of ownership (each a “Residential Unit”) pursuant to a
subdeclaration of condominium and which Residential Units are intended to be
sold to third party purchasers.  Units
3-4 of the Park Plaza Master Condominium will be renovated to include an
additional eighty-nine (89) Guest Rooms (the “Additional Rooms”).  The Chase and all Commercial Units within the
Park Plaza, including the Additional Rooms at such time as the same become
subject to this Agreement pursuant to Section 2 but excluding Units 5-7 of the
Park Plaza Master Condominium (which will be renovated to include 48 corporate
apartments (the “Corporate Apartments”)) are collectively referred to herein as
the “Hotel.”  The Chase and the Park
Plaza are collectively referred to herein as the “Project.”  A “Unit” means either a Commercial Unit or a
Residential Unit.  The Hotel shall
include, without limitation, the components and facilities described on
Schedule 1 to Exhibit A and be known as “Chase Park Plaza Hotel.”

C.            Owner desires to
engage Operator to manage, operate and promote the Hotel, and Operator has
agreed to do so, on the terms and conditions set forth in this Agreement.

 1
 

 

D.            Owner and Operator
each acknowledge that, because the Additional Rooms are not yet completed,
Owner shall have no obligations under this Agreement with respect to the
Additional Rooms until the date provided in this Agreement, and for purposes of
this Agreement, the Guest Rooms shall not include the Additional Rooms except
as provided in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the foregoing, the
mutual covenants and promises herein contained and the receipt of other
valuable consideration, receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Any capitalized terms referred to in this Agreement
shall have the meanings assigned to such terms in Exhibit B attached hereto and
by this reference incorporated herein.

ARTICLE 2

TERM

This Agreement shall be effective upon full execution
and delivery as of the date hereof.  The original
operating term of this Agreement (the “Term”) shall commence on the Opening
Date (as defined below) and continue for an aggregate of ten (10) Full
Operating Years, unless this Agreement shall be sooner terminated pursuant to a
right specifically provided for in this Agreement.  For the purposes of this Agreement, the “Opening
Date” shall be the date of this Agreement.

Notwithstanding anything to the contrary in this
Agreement, on the Opening Date, Operator shall have no obligations with respect
to the Additional Rooms.  As the Project
is developed, Owner will keep Operator reasonably informed of the progress of
the Project and the projected date on which the Additional Rooms will be
available for occupancy.  At least thirty
(30) days but not more than sixty (60) days before which Owner anticipates
receiving a certificate of occupancy for any Additional Room that will permit
such room to be rented as a Guest Room, such Additional Room shall become a “Guest
Room” subject to the terms and conditions of this Agreement.  Owner shall cause Landlord to continue to
operate the apartments located on Floors 3, 4 and 5 of the Park Plaza separate
and apart from the Hotel until the renovations thereto are completed and the same
are ready to be operated as fully functioning Guest Rooms for the Hotel.

ARTICLE 3

OPERATION OF THE HOTEL

3.1.          Use and Standard of
Operation

3.1.1.       General.  Owner hereby grants to Operator and Operator
accepts the sole and exclusive right during the Term to supervise, direct and
control the management, operation and promotion of the Hotel, as the agent of
Owner, and as the exclusive operator of the Hotel, subject to and in accordance
with this Agreement.  Operator
acknowledges that it does not have a

 2
 

 

leasehold or other possessory interest in the
Hotel.  Operator shall use commercially
reasonable efforts to procure guests and patrons and otherwise operate and
manage the Hotel during the Term in conformity with the Hotel Standard and in a
manner reasonably expected to (i) protect and preserve the assets that comprise
the Hotel and (ii) optimize over the Term the financial performance of the
Hotel’s operation, which, in doing so, will reasonably take into consideration
the value of the Hotel and the economic return to Owner.  Owner acknowledges and agrees that Operator
is not making any representation, warranty or claim that the operation of the
Hotel will be profitable or that any budgets, forecasts, or projections are
achievable.  Operator shall use commercially
reasonable efforts in the management and operation of the Hotel so that the
Hotel and its services will be operated and maintained in the manner provided
for in this Agreement.  Operator has
represented to Owner that it is skilled and qualified in the supervision,
operation and management of hotels such as the Hotel, and Owner has satisfied
itself with respect to Operator’s qualifications.  Operator shall use the Hotel solely for the
operation of a hotel business (including any designated restaurant, office,
theater, spa, fitness center, retail spaces or other incidental uses)
conforming to the Hotel Standard, and for other activities which are customary
and usual in connection with such an operation, including the provision of
services to the Commercial Units (other than the Corporate Apartments, except
as may be approved in writing by Owner) and the Residential Units (following
sales of the same to third party purchasers and then in accordance with written
agreements between Operator and the residential condominium association and/or
the owners of the Residential Units). 
Operator shall (subject to compliance with the terms and covenants
contained in this Agreement and the Annual Plan) have authority, control and
discretion in the management and operation of the Hotel, without interference,
or disturbance in all operating matters.

3.1.2.       Operations.  Subject to Sections 3.2 and 3.4 and in
compliance with the Annual Plan (subject to the permitted variances set forth
in Section 4.2.1), Operator shall have the right, authority and power as agent
of, in the name of Owner and as an Operating Expense to determine the terms of
admittance, charges for rooms and commercial space, charges for entertainment,
charges for use of facilities (if any), food and beverages (which rights shall
specifically allow Operator to charge varying rates to different customers or
groups of customers and allow Operator, in its reasonable discretion, to permit
Persons to occupy rooms or suites at the Hotel at rates lower than published
rates or free of charge or permit Persons to dine at the restaurants or lounges
located at the Hotel free of charge), credit policies (including arrangements
with credit card organizations and catering operations), all phases of
advertising, promotion and publicity relating to the Hotel, and the receipt,
holding and disbursement of funds, the establishment and maintenance of bank
accounts and appropriate records management and retention, the procurement of
inventories, supplies and services and generally all activities necessary for
the operation and management of the Hotel, in each case, consistent with the
specific terms of this Agreement. 
Complimentary or discount policies for the Hotel shall be in accord with
industry practice and subject to the reasonable approval of the Owner.

3.1.3.       Names and Brands.  Operator shall operate the Hotel as an
independent hotel, using the Hotel name described in Section 14.17, and using
names on the restaurants therein recommended by Operator and approved by Owner.  The ownership of such names is governed by
other provisions of this Agreement.

 3
 

 

3.2.          Leases and
Concessions

3.2.1.       Negotiation.  Subject to Section 3.4, Operator shall have
the right, authority and power to negotiate and enter into such reasonable
contracts, leases, licenses, arrangements, concessions and other agreements for
any hotel operations, parking, restaurant, bar, or food service operations,
retail space, spa facilities, fitness centers, theater space, or any other
commercial operation in or about the Hotel in the name of Owner and as an Operating
Expense, consistent with the Annual Plan (subject to the permitted variances
set forth herein), as Operator deems necessary or advisable in connection with
the operation of the Hotel.  In
furtherance of the foregoing, Operator shall use its good faith efforts to
obtain satisfactory tenants and suitable uses for the Hotel.  Every contract, lease, license, arrangement,
concession or other agreement for the Hotel shall be entered into in Owner’s
name and shall be executed by Owner.

3.2.2.       Operator’s Performance.  Operator shall use commercially reasonable
efforts to perform as Owner’s representative, the obligations of Owner, as
landlord, or concessionaire, under leases, licenses, and contracts made or
granted with respect to the Hotel.

3.2.3.       Collection.  Operator shall use commercially reasonable
efforts to collect rents and other sums collectible under leases, licenses, or
contracts made or granted with respect to the Hotel and shall deposit the same
in the Operating Accounts.

3.3.          Personnel.  In accordance with this Agreement and the
Annual Plan, the following provisions pertain to the Hotel Personnel:

3.3.1.       General.  Operator, directly or through an Affiliate,
shall hire, promote, discharge, supervise, train and determine the terms of
employment for the general manager, director of sales and marketing, the chief
financial officer, the director of food and beverage and the director of
operations (the “Executive
Personnel”) and, through them, all other Hotel Personnel for operating,
service, administrative, restaurant, bar and food service positions.  Such authority or any part thereof may be
delegated by Operator to an Affiliate or one or more Persons in its general
employ.

3.3.2.       Hiring and Compensation.  Operator shall consult with Owner in advance of
the hiring of the general manager, the director of operations, and the chief
financial officer (“Senior Executives”).  
Operator’s selection of the Senior Executives shall be subject to Owner’s
approval, such approval not to be unreasonably withheld or delayed.  Operator shall use reasonable procedures and
standards in the selection of the Senior Executives and through them, in the
selection of each Person employed at the Hotel or to whom the foregoing duties
or any of them shall be delegated.  All
Hotel Personnel shall be employees of Operator or an Affiliate of Operator;
provided, however the Compensation of such Hotel Personnel shall be paid from
the Operating Accounts, subject to the Annual Plan.  If the Operating Accounts are insufficient to
pay such Compensation, Owner shall be obligated to fund the aggregate
Compensation with respect to each payroll period, in accordance with the
procedures set forth in Section 3.6.2. 
Operator shall use commercially reasonable efforts to abide by all Legal
Requirements applicable to Hotel Personnel. 
Owner shall not interfere with or give orders or instructions to

 4
 

 

Hotel Personnel, but Owner may contact
Operator or the general manager directly for purposes of evaluating or
commenting upon Hotel Personnel, Hotel operations and/or financial
performance.  To the extent not otherwise
prohibited by Legal Requirements, upon request of Owner from time to time,
Operator shall make available, for inspection by Owner, (i) copies of all employee
policies and procedures, including, without limitation, copies of employee
manuals and handbooks, in effect at the Hotel; and (ii) Hotel employee job
classifications, number of employees in each job classification, job
descriptions (if applicable), pay scales and benefits provided to each job
classification.  In addition to the
foregoing, Operator shall in good faith consider any reasonable requests by
Owner to replace Executive Personnel and Senior Executives that Owner believes
are not properly fulfilling the applicable job requirements.

3.3.3.       Acts of Hotel Personnel.  Operator shall not be deemed in breach of any
provision of this Agreement, or otherwise (as between Owner and Operator) at
fault, by reason of any act or omission of any of the Hotel Personnel, unless
such act or omission was without Owner’s consent or approval and either was (i)
in compliance with policies and procedures established by the Corporate Office
or (ii) at the express direction of authorized Corporate Personnel and without
Owner’s consent or approval.

3.3.4.       Residence.  None of the Hotel Personnel may reside (other
than on a temporary basis, such as approximately sixty (60) days) at the Hotel
without Owner’s prior written consent.

3.3.5.       Unions.  Operator shall keep Owner reasonably advised
of the progress of union negotiations. 
Operator shall not enter into any collective bargaining agreements with
labor unions in connection with the Hotel without the prior written consent of
Owner, not to be unreasonably withheld or delayed.  Operator or its Affiliate shall have the
responsibility to negotiate and make agreement with any labor unions which are
certified as or otherwise recognized as exclusive bargaining representatives of
the Hotel Personnel.  Operator shall
specify in any agreement it executes with any union that such agreement is not
applicable to or in any way binding on Owner, Owner’s Affiliates, Operator, or
Operator’s Affiliates except with respect to the operations at the Hotel.

3.3.6.       Benefits.  If, in the reasonable opinion of Operator, it
is desirable at any time during the Term to provide for the benefit of the
Hotel Personnel pension, profit sharing or other Hotel Personnel retirement,
disability, health and welfare, or other benefit plans similar to those now or
hereafter applicable to employees of other hotels in the Competitive Set,
Operator shall establish reasonably equivalent plans for the Hotel Personnel
and pay as an Operating Expense of the Hotel, benefit payments to (or as
required under) such plan or plans, as well as their administrative expenses.  All such benefits shall be identified in the
Annual Plan, Monthly Statements and Annual Statements of the Hotel.

3.3.7.       Owner’s Consultants.  The reasonable cost, fees, compensation or
other expenses of any Persons engaged by Owner to perform duties pertaining to
the ownership or leasing but not operation of the Hotel, and perform other
services usual and customary in the ownership or leasing of hotels and
restaurants, such as attorneys, independent asset managers, independent
accountants and the like, shall be an expense of Owner, not the responsibility
of

 5
 

 

Operator and shall not be an Operating
Expense of the Hotel.  Nevertheless,
Operator will cooperate with such Owner’s consultants and representatives, and
also cooperate with Owner (at Owner’s cost and expense) and any actual or
prospective purchaser, underwriter, lender or other Person in connection with
any actual or proposed sale, investment, offering, debt placement or financing
of or related to the Hotel (provided that Operator shall not be required to
release to any such Person any of Operator’s Proprietary Information or by
reason of such cooperation incur any underwriting liability).  Operator agrees to prepare lists and
schedules (such as, for example, inventories) and other information relating to
the Hotel, to the extent regularly maintained or compiled, or if the requested
information is reasonably available to Operator, as may be requested by a
prospective purchaser, underwriter, lender or other Person.

3.3.8.       Bonus.  The Compensation for the general manager and
the chief financial officer may include an incentive performance bonus to be
recommended by Operator and approved by Owner during the approval process for
the Annual Plan.

3.4.          Limitations on
Operator.  Notwithstanding any authority
granted to Operator pursuant to any other provision of this Agreement, Operator
shall not, without the prior consent of Owner:

3.4.1.       Contracts.  Enter into any contract, lease, concession
and other agreement for the Hotel, including any of the agreements described in
Section 3.2.1:

(a)           if this Agreement
specifically requires the prior approval of Owner;

(b)           which contract, license
or concession has a term of greater than two (2) years, including renewals,
unless the contract is terminable within two (2) years from the date of its
execution without cause, and without cost or penalty in excess of Twenty-Five
Thousand Dollars ($25,000), except as specifically provided for in the Annual
Plan;

(c)           which lease is of
greater than 7,500 rentable square feet or for a term of more than five (5)
years, except as specifically provided for in the Annual Plan;

(d)           which binds Owner to
aggregate payments per year exceeding Fifty Thousand Dollars ($50,000.00),
adjusted for CPI, except as specifically provided for in the Annual Plan;

(e)           with an Affiliate of
Operator, except as specifically provided for in the Annual Plan; or

(f)            which provides for the
outside management or lease of the restaurant and food and beverage operations
at the Hotel (except for those leases in place as of the date of this
Agreement).

Notwithstanding the
generality of this Section 3.4, Operator shall have the authority, without
Owner’s prior written consent, to enter into any contract, lease or license
that does not fall within the parameters for Owner’s approval under Section
3.4.1(a)-(f) above.

 6
 

 

3.4.2.       Legal Action.  Institute, prosecute, defend or settle any
pending or threatened legal action or proceeding involving a claim by or
against Owner (except to dispossess guests) in excess of Fifty Thousand Dollars
($50,000.00);

3.4.3.       Attorneys, Auditor and
Professionals.  Engage any attorney
to represent Owner, or engage any accounting firm to audit the financial
statements for the ownership and operation of the Hotel, or engage any other
independent consultant or expert to provide services to the Hotel if the cost
of the engagement of such consultant or expert is, as of the time such
engagement is made, anticipated to exceed Twenty-Five Thousand Dollars
($25,000), unless set forth in the Annual Plan.

3.4.4.       Incurrence of Debt.  Other than trade payables incurred in
accordance with this Agreement consistent with the Annual Plan and other
obligations expressly authorized hereunder, borrow money or otherwise incur or
guarantee any indebtedness on behalf of Owner.

3.4.5.       Extraordinary Action.  Except as specifically provided for in the
Annual Plan or otherwise expressly authorized by this Agreement, engage in any
transaction on Owner’s behalf which is outside the ordinary course of the
operation of the Hotel or make any material changes in the structure, general
appearance or nature of the Hotel, including without limitation the operation
of any gaming activity in, on, about or related to the Hotel.

Operator shall notify Owner in writing of any items
for which approval is requested, setting forth the reasons for such request and
any applicable information.  Such items
shall be deemed approved unless disapproved in writing by Owner within fifteen
(15) days after submission.  Any
disapproval shall be accompanied by a reasonably detailed explanation of Owner’s
reasons for disapproval.  Any dispute, if
not settled within ten (10) days after Owner notifies Operator of its
disapproval, may be submitted by either party for resolution in accordance with
the procedures set forth in Article 16.

3.5.          Bank Accounts.

3.5.1.       Operating Accounts and
Sub-Accounts.  Operator shall
establish, as agent for Owner, a bank account or accounts at Marshall &
Isley Corporation or one of its subsidiary banks such as Southwest Bank, or another
federally insured bank or financial institution designated by Operator and
reasonably approved by Owner (“Operating Accounts”).  The Operating Accounts shall bear the name of
Hotel.  Operator shall deposit into the
Operating Accounts all moneys advanced to the Hotel as Working Capital by
Owner, as provided in Section 3.6 hereof, and all Gross Revenue received by
Operator, its Affiliates or other Persons on behalf of  Operator from the operations of the Hotel.  The Operating Accounts shall serve as the
general accounts for the Hotel, provided Operator may open other accounts, at
such an approved bank and in the name of the Hotel, for specific purposes, such
as restaurant and bar, parking and travel agent commission accounts (all such
accounts opened by Operator for specific purposes shall be referred to as the “Sub-Accounts”)
into which Operator may deposit funds from the Operating Accounts.  Operator, on behalf of Owner, shall have sole
control of the Operating Accounts and Sub-Accounts and shall pay out of the
same, to the extent of the funds from time to time therein, all costs and
Operating Expenses incurred in connection with the operation of the

 7
 

 

Hotel and in accordance with the Annual Plan
(subject to the permitted variances set forth herein) and this Agreement,
including, without limitation, the Compensation, the Annual Operating Fee and
the Out-of-Pocket Costs, any other amounts due and payable to Operator or its
Affiliates under this Agreement; and all other costs and expenditures which
Operator is permitted or required to make pursuant to this Agreement.  If permitted by the operating system of the
depository bank and requested by Owner, Owner shall be provided with “read only”
internet access to the Operating Accounts permitting Owner to examine balances
and activity in the Operating Accounts but not permitting actions affecting or
relating to the deposit or withdrawal of funds in such Operating Accounts.  Operator shall establish reasonable controls
intended to ensure accurate reporting, safety and security of all transactions
involving the Operating Accounts.

3.5.2.       Replacement Reserve Fund.  Owner shall establish an interest-bearing
bank account at Marshall & Isley Corporation or one of its subsidiary banks
such as Southwest Bank, or another federally insured bank designated by
Operator and reasonably approved by Owner in the city where the Hotel is
located, for deposit of the monthly Replacement Reserve Amount, as described in
Section 5.4.1 (the “Replacement Reserve Fund”). 
The Replacement Reserve Fund shall bear the name of the Hotel.  The moneys in the Replacement Reserve Fund
shall be the property of Owner.  Interest
or other income earned during any period on the amounts in such Replacement
Reserve Fund shall be excluded from Gross Revenues for such period and shall
remain part of such Replacement Reserve Fund. 
All proceeds from the sale of Equipment no longer needed for the
operation of the Hotel shall be paid to Landlord for deposit into the Replacement
Reserve Fund.

3.5.3.       General.  Checks or other documents of withdrawal drawn
upon the Operating Accounts or Sub-Accounts shall be signed by representatives
of Operator or Hotel Personnel designated by Operator, as agent for Owner.  All Hotel Personnel drawing on such accounts
shall be bonded or otherwise insured consistent with practices reasonably
satisfactory to Owner.  In addition to
such Operating Accounts and Sub-Accounts, Operator shall be entitled to
maintain funds as it reasonably deems proper in house banks or in petty cash
funds at the Hotel (collectively, the “Accounts”).  All of the funds in the separate Accounts
shall belong to Owner and Operator shall not commingle its own, or any third
party’s funds, in any of the Accounts. 
The Accounts shall be subject to the reasonable requirements of Owner’s
or Landlord’s lender so long as such requirements are not inconsistent with the
terms of this Agreement.

3.6.          Working Capital and
Funds Requests.

3.6.1.       Minimum Working Capital
Amount.  Owner shall commit the
financial and other resources necessary to permit the Hotel to be operated and
maintained in accordance with the Hotel Standard and to enable Operator to take
the actions necessary to comply with all Legal Requirements.  In furtherance of the foregoing, Owner shall
make available to Operator immediately after the Opening Date, for the
operation of the Hotel, initial working capital in an amount determined by
Operator, anticipated to be, prior to the addition of any of the Additional
Rooms as Guest Rooms subject to this Agreement, an amount equal to Nine Hundred
Thousand Dollars ($900,000.00), and after the addition of any part of the
Additional Rooms as Guest Rooms subject to this Agreement, an amount equal to
One Million One Hundred Twenty-Five

 8
 

 

Thousand Dollars ($1,125,000.00).  Owner shall thereafter throughout the Term
maintain Working Capital of not less than the greater of (i) the foregoing
amount, or (ii) such amount reasonably determined to be necessary by Operator
from time to time, as approved by Owner in the Annual Plan.

3.6.2.       Funds Request.  If at any time Operator reasonably determines
that (i) the available funds in the Operating Accounts are insufficient to
allow for the uninterrupted and efficient operation of the Hotel in accordance
with the terms of this Agreement, (ii) the Working Capital is less than the
amount required to be maintained under Section 3.6.1, (iii) the available funds
in the Replacement Reserve Fund are insufficient to allow for the payment of
all purchases of Equipment, or (iv) Operator requires funds for any Capital
Improvements approved by Owner in the Capital Budget, Operator shall notify
Owner of the existence and amount of the shortfall (a “Funds Request”) and,
within the later of (i) ten (10) days following the delivery of the Funds
Request, if such funds are required by Operator immediately, or (ii) five (5)
business days prior to the date upon which amounts in the Funds Request are due
and owing, Owner shall deposit into the Operating Accounts, Sub-Accounts or
Replacement Reserve Fund, as applicable, the funds requested by Operator in the
Funds Request (in no event shall Owner have any personal liability to make any
such deposit).

3.6.3.       Alternative Sources of
Working Capital.  In the event the
Owner fails to deposit the amount requested by Operator in a Funds Request for
amounts described in Section 3.6.2(i) or (ii) above, and if Operator deems such
action to be reasonably necessary, Operator may use all or part of the funds
located in the Replacement Reserve Fund to supplement the Operating Accounts or
Sub-Accounts in order to defray or pay the Hotel’s Operating Expenses.  Owner shall deposit into the Replacement
Reserve Fund all sums so used or transferred within thirty (30) days after
Operator notifies Owner of such withdrawal (in no event shall Owner have any
personal liability for such deposits).

3.7.          Excess Funds.  Any excess funds in the Operating Accounts or
the Sub-Accounts, after: (i) payment of all Compensation, Out-of Pocket
Expenses, the Annual Operating Fee, all Operating Expenses, and any other
amounts Operator is permitted or required to make pursuant to this Agreement
and consistent with the Annual Plan; and (ii) retention by Operator of the
Working Capital amount required pursuant to Section 3.6.1 and any other
reasonable reserves consistent with the Annual Plan, shall be paid to Owner
promptly (but not more frequently than monthly).

3.8.          Operating Expenses.  Except as otherwise specifically set forth in
this Agreement and consistent with the Annual Plan (subject to the permitted variances
set forth herein), all costs and expenses incurred by Operator in connection
with the operation of the Hotel or Owner’s ownership of the Hotel shall be
borne by the Hotel as Operating Expenses. 
Out-of-Pocket Costs incurred by Operator in performing its duties
pursuant to this Agreement shall be an Operating Expense of the Hotel unless
otherwise specifically provided herein, including the reasonable Compensation
of those employees of Operator or its Affiliates assigned to the Hotel for
actual services rendered directly to the Hotel to the extent of their
employment for the Hotel on a part-time or temporary basis and substantiated by
time.  To the extent that the funds
necessary therefor are not generated by the operation of the Hotel, they shall
be promptly supplied by

 9
 

 

Owner in the manner provided in Section 3.6.2
hereof.  Operator shall in no event be
required or obligated to advance any of its funds for the operation of the
Hotel, nor shall Operator be required to incur any liability in connection therewith
unless Owner shall have furnished Operator with funds necessary for the
discharge thereof.

3.9.          Payment of
Impositions and Insurance Premiums. 
Subject to the terms of this Agreement and consistent with the Annual
Plan (subject to the permitted variances set forth herein), Operator shall,
prior to delinquency, and as long as Operator has been supplied with bills and
invoices, pay from the Operating Accounts or Sub-Accounts, to the extent of
funds available therein (and Owner shall timely provide such funds in
accordance with Section 3.6.2 to the extent they are not available from
Operating Accounts), all Impositions assessed against the Hotel, and all
insurance premiums on all policies of insurance maintained with respect to the
Hotel and its operations.  If Owner fails
to deposit all or any portion of the funds required for payment of the
Impositions or insurance premiums, Owner shall indemnify and defend Operator
against all losses, costs and expenses, including attorneys’ fees and costs,
interest, and any late payment fees, that may be incurred by or asserted
against Operator by reason of Owner’s failure to provide funds to pay such
Impositions or premiums.

3.10.        Additional Rights of
Operator.  Operator shall have the
responsibility to use commercially reasonable efforts to perform the following:

3.10.1.     Certain Actions.  Institute, prosecute, and settle, in its
name, the name of the Hotel or Owner, any and all legal actions or proceedings
required to collect charges, rent or other income for the Hotel, to dispossess
guests, tenants or other Persons in possession therefrom, or to cancel or
terminate any lease, license or concession agreement (provided that no action
shall be taken without Owner’s consent with respect to any agreement having a
then unexpired term in excess of one year or involving more than Fifty Thousand
Dollars ($50,000)), and otherwise required in the normal course of operating
the Hotel, and Owner shall cooperate with Operator in connection therewith.  Operator shall promptly notify Owner of legal
disputes for which a claim, summons, complaint or other pleading or other
correspondence from an attorney has been received, and shall promptly forward
notice of any such claims to the appropriate insurer.  Notwithstanding anything to the contrary
contained in this Agreement, (i) Operator shall have the right to appoint
counsel reasonably approved by Owner, defend, and control any and all legal
actions or proceedings which relate to policies, procedures or business
practices of Operator or its Affiliates; and (ii) Owner shall be notified
promptly and have the right to participate in any proceedings involving union
disputes or collective bargaining, or to the extent the same involves an
uninsured amount in excess of Twenty-Five Thousand Dollars ($25,000).  The costs of all such legal actions or
proceedings under this Section 3.10.1 shall be an Operating Expense of the
Hotel, subject to any indemnification obligations of Operator and Owner as
provided in Section 14.7.

3.10.2.     Legal and Insurance
Requirements.  Perform all such acts
in and about the Hotel, in the name of Owner, as shall be reasonably necessary
to comply with Legal Requirements or Insurance Requirements.  If Owner shall adequately secure, defend and
indemnify and hold Operator harmless against any claim, loss, cost, damage or
expense arising out of or in connection therewith, Owner, at Owner’s cost and
expense, shall have the right to

 10
 

 

contest the validity of any Legal
Requirements if such contest shall not result in suspension of operation of the
Hotel.  Furthermore, subject to the
foregoing indemnity, Owner may postpone compliance with any such Legal
Requirements to the extent and in the manner provided by law until final
determination of such Legal Requirements. 
Notwithstanding the foregoing, if failure to promptly comply with any
such Legal Requirements shall result in the immediate suspension of operations
of the Hotel or expose Owner or Operator, or any of their employees to the
threat of criminal liability, then Owner shall cause the Legal Requirements to
be complied with or the violation removed. 
If Owner fails to do so, Operator may, but shall not be obligated to
cause the same to be complied with at Owner’s expense.

3.10.3.     Marketing and Public
Relations Services.  Provide the
Hotel with such advertising, public relations, and promotional services as are
judged by it to be reasonably necessary and appropriate in order to promote the
name facilities and other features of the Hotel.  Such services shall include, but not be limited
to, assistance in the following areas:

(a)           developing and
implementing the Hotel’s marketing plan following Operator’s guidelines with
Owner’s input and consultation.  This
task includes planning, publicity and internal communications, and organizing
and budgeting the Hotel’s advertising and public relations programs;

(b)           selecting and providing
guidance as required for the public relations personnel;

(c)           preparing and
disseminating news releases for trade and consumer publications, both national
and international.  In furtherance of the
foregoing, Owner and Operator shall coordinate with one another on all public
statements, whether written or oral and no matter how disseminated, regarding
their contractual relationship as set forth in this Agreement and/or the
performance by either of them of their respective obligations hereunder; and

(d)           selecting an
advertising agency, if any.

Operator will prepare on an annual basis and present
to Owner, as a part of the Annual Plan, a marketing plan that shall include,
but not be limited to, projected occupied room nights and average daily rate by
market segment, a detailed program for advertising and promotion, a detailed
program for sales strategies, and a competitive hotel analysis.

3.11.        Licenses and Permits;
Owner’s Covenant.  Owner, as an
Operating Expense, shall be obligated to obtain and maintain all requisite
government licenses, permits and approvals required for the operation of the
Hotel.  In furtherance of the foregoing,
Owner shall make, execute and deliver any and all applications and other
documents in applying for, obtaining and maintaining all required licenses and
permits.  During the Term, Operator shall
use good faith and reasonable efforts to notify Owner so Owner can obtain and
maintain all such licenses and permits, provided, nothing contained herein
shall be construed to limit or diminish such obligation of Owner.  If requested by Owner, Operator shall apply
for and obtain and maintain licenses on behalf of Owner; provided, however,
unless otherwise so directed by Owner, all

 11
 

 

liquor licenses, and all other licenses that
are not readily transferable or re-issuable upon termination of this Agreement,
shall be obtained and held in Owner’s or its Affiliate’s name, to the extent
permitted under applicable law.  Owner
shall also make, execute and deliver such agreements, contracts, leases,
applications, verifications, instruments and other documents as are permitted
hereunder, and shall otherwise cooperate fully with Operator, in connection
with Operator’s exercise of the rights and performance of the obligations set
forth in this Section.

3.12.        No Pledge of Credit by
Owner.  Owner shall not pledge
Operator’s credit nor shall Owner, in the name of or on behalf of Operator,
borrow any money or issue any promissory notes or bills of exchange or any
other financial obligation.  Operator
shall not be required to pledge its own credit for any reason.

3.13.        Title; Compliance with
Deed of Trust, Lease and CC&R’s. 
Owner represents that Owner leases the Premises as set forth Exhibit
A.  Owner shall comply in all material
respects with those terms, covenants and conditions of any Deed of Trust, Lease
or any CC&R’s for the Property, and Operator, to the extent it has been
provided true and accurate copies of such Deed of Trust, Lease or CC&R’s,
shall use reasonable efforts not to commit, knowingly and voluntarily, any
violation of the covenants and conditions thereof.  Subject to Article 11 of this Agreement,
Owner shall not hereafter make or modify any Deed of Trust, Lease or CC&R’s
so as to abridge any rights of Operator under this Agreement.  Copies of each Deed of Trust, Lease and
declaration of CC&R’s as the same may be entered into or modified from time
to time, shall be promptly furnished to Operator.

3.14.        Deed of Trust Payments.  Owner, and not Operator, shall be liable for
payment of any amounts due under any Deed of Trust.

3.15.        Sarbanes-Oxley.  Operator shall use commercially reasonable
efforts to assist Owner or Landlord in establishing procedures and controls
(not to be inconsistent with the rights and obligations of Operator under this
Agreement) to comply with, and to evidence compliance with, the Sarbenes-Oxley
Act of 2002, as now or hereafter amended, as such statue relates to financial
reporting in respect of the Hotel. 
Within fifteen (15) days after written notice from Owner or Landlord,
Operator will provide Owner or Landlord with such customary and reasonable
certifications as Owner or Landlord may reasonably request to enable Owner or
Landlord to meet its financial certification obligations under such statute as
such statute relates to financial reporting in respect of the Hotel; provided,
however, that such certifications may be given by Operator to its actual
knowledge without any duty of investigation if such a qualification would not
unduly interfere with Owner or Landlord meeting such financial certification
obligations.  Any and all costs and
expenses incurred by Operator related to this Section 3.15 shall be reimbursed
by Owner or Landlord to Operator and shall not constitute Operating Expenses or
be included in the calculation of Gross Operating Profit (i.e., such costs
shall be borne by Owner or Landlord as ownership costs); provided, however,
that to the extent Operator incurs Sarbanes-Oxley compliance costs to satisfy
the requirements of other companies for which Operator performs services,
Operator shall reasonably allocate such costs among such companies and Owner.

 12
 

 

3.16.        Operator Not Liable for
Recommendations.  Owner acknowledges
and agrees that Operator is not an architect, contractor, engineer, insurance,
loan or real estate broker, attorney, CPA, or other licensed professional and
that all matters to be submitted by Owner or by the applicable professional to
Operator for review, consent, advice, recommendations, assistance or approval
hereunder will be presumed to have been competently prepared by such
professionals.  Although Operator will
offer such assistance and make such recommendations hereunder as it deems
appropriate, Operator shall not be responsible to Owner or any third party with
respect to construction means, supplies, methods, techniques, sequences, and
procedures employed by Owner or its consultants or contractors, nor shall
Operator be responsible or liable for the adequacy or quality of the plans and
specifications (or any samples or shop drawings), contracts, or other matters
prepared by Owner, its consultants, or any contractors, or with respect to the
adequacy or quality of the Hotel or its construction or operation or the
ultimate cost of the Hotel; nor shall Operator be responsible or liable for
advising Owner or its consultants of any Legal Requirements, including but not
limited to permit or licensing requirements, or Insurance Requirements.  No recommendations, advice or approvals
given, or inspections made, by Operator hereunder shall be construed to create
any such responsibility or liability. 
Any recommendations, advice and consultation in connection with such
matters given by Operator hereunder are for the sole purpose of indicating that
if the Hotel is, from time to time, furnished and equipped in compliance with
the plans and specifications and other matters approved by or recommendations
given by Operator, it will comply with the Hotel Standard.

3.17.        Operator Not Liable for
Project Development.  Owner has
advised Operator that, pursuant to one of more development agreements (“Development
Agreements,” and Development Agreement” means any one of them) dated of even
date herewith, Owner has engaged IFC, Inc. (“Developer”) to perform certain
renovation work on the Hotel and to develop the Residential Units in the Park
Plaza.  Owner acknowledges and agrees
that Operator is not responsible for any obligations of Developer under any of the
Development Agreements, nor shall Operator be obligated to fund any costs or
expenses incurred pursuant to the Development Agreements.  Owner shall indemnify, hold harmless and
defend Operator and its Affiliates from and against any liabilities in
connection with any Development Agreements.

3.18.        Non-Compete.  During the term of this Agreement, Operator
shall not, without the prior written consent of Owner and Landlord, operate
within an eight (8) mile radius of the Hotel another hotel property that is
competitive with the Hotel.  For purposes
of this provision, the Park View Hotel is deemed to not be a competitive hotel.

 13
 

 

ARTICLE 4

ANNUAL PLAN AND FINANCIAL REPORTS

4.1.          Approval of Annual
Plan.

4.1.1.       Preparation of Proposed
Annual Plan.  On or prior to a date
sixty (60) days prior to the end of each Full Operating Year, Operator shall
submit to Owner the proposed Annual Plan for the following Operating Year.  The “Annual Plan” for any Operating Year
shall consist of:  (1) (i) an operating
plan showing, in reasonable detail, the projected or estimated Cash Flow for
such year based on the following items: 
(a) projected occupancy and average room rate by month; (b) projected
Gross Revenue; (c) leasing plan with respect to commercial or retail spaces
that will be vacant; (d) proposed Hotel room rates and charges for other
services; (e) projected Operating Expenses and Out-of-Pocket Costs, including
(but not limited to) Compensation, insurance premiums, Impositions, non-capital
repair and maintenance expenses, advertising, promotional, and marketing
expenses, and projected Annual Operating Fee; (f) proposed staff scheduling;
(g) Affiliate transactions; (h) Working Capital, non-capital Equipment
replacements and other funding requirements and purchasing related fees; and
(ii) comparison of budgeted revenue and expense levels to the previous year’s
estimated actual results (collectively the “Operating Plan”); and (2) a capital
budget showing expenditures required for Capital Improvements during such
Operating Year and the purchases of Equipment to be funded out of the
Replacement Reserve Fund, Working Capital, or other sources of funds, as
applicable (collectively, the “Capital Budget”).  The foregoing shall be prepared in accordance
with the Uniform System.  Operator shall
also provide a description of the proposed advertising and marketing plan for
the ensuing Operating Year as part of the Annual Plan.  Operator shall provide such additional
information and in such detail as Owner shall reasonably request.

4.1.2.       Approval by Owner.  Owner shall have thirty (30) days to review
the Annual Plan and advise Operator in writing of any objections to the Annual
Plan.  Owner’s notice shall include a
reasonably detailed explanation of each objection.  Owner shall be deemed to have approved all
items and portions of Operator’s proposed Annual Plan to which Owner does not
object by written notice to Operator within thirty (30) days after receiving a
complete version of such Operating Plan. 
Notwithstanding the foregoing, Owner shall not be entitled to withhold
its approval based on its objection to: 
(i) costs and expenses that are not within the control of Owner and/or
Operator, such as Impositions and the costs of utilities; or (ii) increases in
projected costs and expenses of operating the Hotel that are caused by
projected increases in occupancy or use of the Hotel resulting in increases in
Gross Revenues.  Operator agrees to meet
with Owner, if requested by Owner, during such 30-day period to review and
explain the proposed Annual Plan.

4.1.3.       Resolution of Owner
Objections.  Within ten (10) days
after receiving Owner’s written objection(s) to the proposed Annual Plan, Owner
and Operator shall meet at the Hotel (or such other location as they may agree)
and endeavor in good faith to resolve such objections and arrive at an approved
Annual Plan.  If they are unable to do so
within fifteen (15) days after Operator receives Owner’s written objection(s),
Owner and Operator shall each have the right to submit the dispute for
resolution in accordance with the procedures set forth Article 16, which
resolution shall be final, and binding upon both parties, and shall become part
of the

 14
 

 

approved Annual Plan.  Pending such resolution, Operator shall
operate the Hotel with respect to those categories that are in dispute based on
the previous Operating Year’s approved Annual Plan, adjusted in accordance with
changes in the CPI over the Operating Year just ended and anticipated changes
in Gross Revenues.

4.1.4.       Interim Period.  If the Annual Plan has not been entirely
approved by the beginning of the Operating Year to which it pertains, then
pending such approval:

(a)           Operating Plan.  With respect to the Operating Plan, Operator
shall operate the Hotel with the items or portions of the Operating Plan which
have not been objected to by Owner and with respect to the items or portions of
the Operating Plan which have been objected to by Owner, Operator shall operate
the Hotel, as closely as possible in accordance with the previous year’s
Operating Plan, with suitable adjustments of rates and expenses as dictated by
increases in the CPI and other quantifiable expenses outside the control of
Operator (e.g. utilities, taxes and insurance).

(b)           Capital Budget.  With respect to the Capital Budget, Operator
shall be entitled to make the capital expenditures in accordance with the
proposed Capital Budget submitted to Owner for such Operating Year, other than
those items which have been objected to by Owner.  Notwithstanding the foregoing, Operator shall
be entitled to make capital expenditures necessary to comply with Legal
Requirements and the Hotel Standard, provided in respect of the Hotel Standard
that a failure to invest the expenditures would materially and adversely impact
the Hotel’s compliance with the Hotel Standard.

4.1.5.       Hotel Standard Revision.  Notwithstanding anything to the contrary
herein, Owner’s obligation to implement or fund a change in the Hotel Standard
after Operator’s approval of the Hotel or any Operating Plan shall be subject
to the following:

(a)           Owner shall not be
required to alter the Hotel until the earlier to occur of when a structural
element comprising the Hotel (i) becomes unserviceable, inoperable, or beyond
acceptable wear and tear or (ii) reaches the end of its useful life as
determined by generally accepted accounting principles.

(b)           With respect to
furniture, fixtures and equipment that constitute part of the Hotel Standard or
is otherwise required under this Agreement, Owner shall not be obligated to
replace any individual item of furniture, fixtures and equipment which at the
time of purchase had a cost of greater than Five Hundred Dollars ($500) until
the earlier to occur of when such item (i) becomes unserviceable, inoperable,
or beyond acceptable wear and tear or (ii) reaches the end of its useful life
as determined by generally accepted accounting principles.

4.2.          Compliance with
Annual Plan.

4.2.1.       Operating Plan.  It is expressly agreed and understood by both
parties that the Operating Plan as approved for any Operating Year is intended as,
and will represent, only a good faith estimate of the results for the Operating
Year in question, based upon assumptions believed by Operator to be reasonable
at the time of the preparation of such Operating Plan.  Although Operator will use commercially
reasonable and diligent efforts to achieve the goals

 15
 

 

reflected in such Operating Plan, the same
cannot be relied upon as a promise, guarantee, representation, warranty or
assurance of actual results which may be experienced during and for such
Operating Year.  Operator shall not make
any expenditure not included in the Operating Plan (i) which, when combined
with all other expenditures not included in the initial Operating Plan, would
cause such expenditures to exceed five percent (5%) of the total budgeted
expenditures in such Operating Plan for such Operating Year, or (ii) which
would cause such expenditures to exceed Twenty-Five Thousand Dollars ($25,000)
for any single line item of the budgeted expenditures in such Operating Plan
for such Operating Year, unless such expenditures are otherwise expressly
authorized in this Agreement. 
Notwithstanding the foregoing, it is expressly understood that during
the course of the then-applicable Operating Year Operator may depart from the
Operating Plan without breaching its obligations hereunder if, in Operator’s
reasonable, good faith judgment, departure from such Operating Plan is
necessary due to the following:

(a)           costs which increase
directly with occupancy and volume of business and use of the Hotel, to the
extent their increase is due to increases in occupancy or volume of other
business;

(b)           third party,
non-Affiliate costs which are beyond Operator’s reasonable ability to control,
such as utility charges, insurance premiums, license and permit fees, real
estate and personal property taxes;

(c)           any expenditures
required on an emergency basis to avoid damage to the Hotel or injury to
Persons or property,

(d)           any expenditures
required to comply with any unbudgeted Legal Requirement or to cure or prevent
any violation thereof, subject to Owner’s right to direct Operator to contest
such Legal Requirements or violation provided in Section 3.10.2; and

(e)           any expenditures
otherwise expressly authorized in this Agreement or in writing by Owner.

Any expenditures under (a)-(e) above shall not be
included in the calculation of aggregate expenditures above for purposes of
determining the five percent (5%) aggregate or Twenty-Five Thousand Dollar
($25,000) line item limitation set forth above in this Section 4.2.1.  Each month in connection with delivering the
monthly financial statements, Operator shall identify any expenses for the
prior month that caused the expenses for any line item of the Operating Plan to
exceed the projected amount of such line item set forth in the Operating Plan
by more than the greater of $5,000 or ten percent (10%) of any line item, along
with an explanation of the expense.

4.2.2.       Capital Budget.  Operator shall keep the Capital Budget under
periodic review and shall use good faith, reasonable efforts to stay within the
Capital Budget.  Operator may, without
Owner’s consent, increase any line item on the Capital Budget by up to five
percent (5%) of the aggregate Capital Budget, so long as the aggregate amount
of all such increases do not exceed Twenty-Five Thousand Dollars ($25,000),
adjusted annually for changes

 16
 

 

in the CPI. 
Subject to the limitations set forth in Section 4.1.2 hereof, if
Operator considers it necessary to revise and increase the Capital Budget by
more than the foregoing limits, Operator shall notify Owner in writing, setting
forth the reasons for the aggregate increase or line item increases and submit
revisions for approval, which shall be deemed rejected unless approval is given
by Owner to Operator within twenty (20) days after submission thereof.  Any disapproval shall be accompanied by a
reasonably detailed explanation of Owner’s reasons for such disapproval.  Any dispute, if not settled within thirty
(30) days, shall be resolved in accordance with the resolution procedure
described in Article 16.  If the proposed
Capital Budget anticipates any project which represents an upgrade in any of
the facilities in the Hotel in the next Operating Year or in the one ensuing
year thereafter, Operator shall so state in connection with the Capital Budget
and explain the purpose of the upgrade.

4.3.          Books and Records.  Operator shall establish and maintain
complete, proper, current and accurate records and books of account reflecting
all material transactions of the Hotel and of Operator with respect to the
Hotel.  Such books of account shall be
kept in all material respects in accordance with the Uniform System, except as
otherwise specified in this Agreement.

4.4.          Inspection of Books
and Records.  Operator shall, on
reasonable notice, afford to Owner, its accountants, attorneys and agents the
right during normal business hours to inspect, at Owner’s sole cost and
expense, the Hotel or examine and make extracts from the books and records of
the Hotel.  Such inspections and
examinations shall be made with as little disruption to the business operations
of the Hotel as reasonably practicable. 
The books and records of the Hotel shall be kept at the Hotel or, if
Operator maintains a centralized computer system serving the Hotel, at the
location of such centralized computer system with copies maintained at the
Hotel.  Upon the termination of this
Agreement, all such books and records shall forthwith be turned over to Owner
so as to insure the orderly continuation of the operation of the Hotel, provided,
however, that all such books and records shall thereafter be available for a
period of five (5) years to Operator at the Hotel for inspection, audit,
examination and copying, at all reasonable times, upon two (2) days’ prior
notice.  If any such audit reveals a
discrepancy of five percent (5%) or more in the stated Cash Flow, Operator
shall reimburse Owner for Owner’s out-of-pocket costs relating to such audit
and pay to Owner any amounts erroneously paid to Operator under this Agreement.

4.5.          Financial Reports.

4.5.1.       Financial Reports.  Operator shall deliver to Owner, within
twenty (20) days after the end of each Accounting Month, unaudited financial
statements (“Monthly Statements”) prepared from the books of account maintained
by Operator and containing:  (i) a
balance sheet as of the end of such Accounting Month; (ii) an income statement
showing the results of operation of the Hotel for such Accounting Month and for
the Cumulative Period in respect of such Accounting Month; (iii) Statement of Gross
Revenue and Cash Flow including the source and application of funds statement
for such Accounting Month and such Cumulative Period; and (iv) a Cash Flow and
Capital Improvements projection for the upcoming ninety (90) day period.  The Monthly Statements shall also show:  (a) the amount of Base Fee earned and accrued
for the fiscal period then ended; and (b) a comparison of the results of
operations for the

 17
 

 

Hotel for the fiscal period then ended with
the Annual Plan and with the comparable period in the prior Full Operating
Year.  The Monthly Statement shall
include, either as part of the report or by supplemental schedule, sufficient
information from which Owner can determine, for the period in question the reimbursements
paid to Operator under Section 6.2. 
Within ninety (90) days after the end of each Full Operating Year,
Operator shall deliver to Owner and Landlord an annual statement for such
Operating Year with an opinion thereon after an audit by a duly licensed
independent certified public accounting firm retained by Owner or Landlord and
approved by Operator (“Annual Statement’). 
Such Annual Statement shall contain (1) a balance sheet as of the end of
that Operating Year; (2) an income statement for the Operating Year; and (3)
the calculation of Gross Revenue, Cash Flow, the Annual Operating Fee for such
Operating Year in accordance with Section 7.1 below and shall be in accordance
with the Uniform System and otherwise with generally accepted accounting
principles, except as specifically modified herein.  The cost of preparing the Monthly Statements
and the Annual Statement for an Operating Year shall be charged as an Operating
Expense of the Hotel for such Operating Year. 
If the opinion of such independent certified public accounting firm with
respect to the matters set forth in such Annual Statement for an Operating Year
shall be an unqualified opinion, then such Annual Statement shall be conclusive
upon the parties hereto with respect to such matters and shall be deemed to be
a final determination of Gross Revenue, Cash Flow and the Annual Operating Fee
for such Operating Year, absent fraud, gross or manifest error, or breach of
this Agreement.  Upon Owner’s or Landlord’s
request, Operator shall also furnish Owner or Landlord with copies of the
applicable Revenue Date Publication, guest satisfaction surveys and any other
Customarily Applicable reports.

4.6.          Disclosure of
Financial Reports.  Each of Owner,
Landlord and Operator shall, with the prior consent of the other party, have
the right to disclose the Monthly Statements, Annual Statement and other
information regarding the operation and performance of the Hotel, and may,
without consent, disclose such statements and information (as needed with
appropriate undertakings of confidentiality by the disclosees, including
execution of a confidentiality agreement) to its lenders, partners,
shareholders, joint venturers, permitted assignees, prospective buyers, lenders
and investors.  Such information may also
be distributed internally by Owner, Landlord and Operator without prior consent
by Owner, Landlord and Operator to their employees, and to their respective
officers, directors, owners, partners, members, and to their accountants,
attorneys, and representatives. 
Furthermore, Owner or Landlord (or its partners) shall be permitted to
disclose, without the consent of Operator, such information as may be
recommended in good faith by its legal counsel in order to comply with
financial reporting, securities laws and other legal requirements applicable to
Owner or Landlord (or its partners), including any required disclosures to the
Securities and Exchange Commission; provided, however, that Owner or Landlord
and their respective partners shall use reasonable efforts to disclose no more
such information than necessary for such compliance.  Any and all costs and expenses incurred by
Operator related to this Section 4.6 shall be reimbursed by Owner or Landlord
to Operator and shall not constitute Operating Expenses or be included in the
calculation of Gross Operating Profit (i.e., such costs shall be borne by Owner
as ownership costs).

4.7.          Coordination and
Planning.  A representative and/or
alternates of Owner shall meet at the Hotel with the general manager of the
Hotel and an executive officer of Operator,

 18
 

 

once each quarter or as may be otherwise
agreed upon to review Hotel operations, the Annual Plan against performance,
projections for the future and any other issues that may arise under this
Agreement.  Such representatives may be
changed upon written notice to the other party. 
The primary objectives of the meeting will be to maintain clear, open
lines of communication between Owner and Operator and to keep both Owner and
Operator informed of the concerns, plans and observations that each may have as
a result of the Hotel’s operations. 
Owner and Operator shall each deal directly with and through the
representative designated by the other, pursuant to this Section 4.7.

ARTICLE 5

REPAIRS, ALTERATIONS, AND RESERVES

5.1.          Repairs and
Maintenance.  Except to the extent
prevented by the events set forth in Section 8.2, Operator shall, pursuant to
the expenditures included in the Annual Plan, use commercially reasonable and
diligent efforts to repair and maintain the Hotel (other than such portions
thereof as are leased to tenants who undertake a duty of repair and
maintenance, in which case Owner shall cause such tenants to comply) in good
order and condition and make all repairs thereto as may be necessary to operate
at the Hotel Standard, subject to the availability of sufficient funds, and
shall coordinate and provide general oversight in respect of the installation
of Equipment in the ordinary course. 
Subject to the applicable Annual Plan (and the availability of sufficient
funds), Operator shall also make all Alterations required in Operator’s
discretion for the proper maintenance and operation of the Hotel at the Hotel
Standard pursuant to the terms and provisions of Operator’s then current form
Renovation Service Agreement, as prepared for the appropriate level of
Alteration then under consideration for the Hotel.

5.2.          Emergency Repairs.  If Operator shall, at any time, reasonably
believe that (i) a dangerous condition exists at the Hotel, (ii) repairs or
Alterations are required to comply with any applicable Legal Requirements or
Insurance Requirements, or (iii) expenditures are required to eliminate a
dangerous condition or to prevent further property damage arising out of fire,
act of God, flood, earthquake or other like or unlike casualty or other emergency,
Operator may take all steps and make, on behalf of Owner, utilizing the funds
as described below in this Section 5.2, all reasonable expenditures necessary
to cure such condition or make such repairs or Alterations, or which are
otherwise so required, whether or not provided for in the applicable Annual
Plan; provided, however, that Operator shall not make any such expenditures in
excess of Fifty Thousand Dollars ($50,000) with respect to any single
condition, occurrence or related series of events without Owner’s prior
approval (which Owner shall not unreasonably withhold or delay), except to the
extent required to avoid an imminent peril to human life or imminent risk of
material property damage or liability, to avoid a criminal violation, or to
avoid cancellation of any required insurance. 
In the event of the circumstances described in clauses (i), (ii) and
(iii) immediately above, Operator shall have the right, power and authority to
use first all or part of the Replacement Reserve Fund, and second the monies in
the Operating Accounts, for the making of such repairs or Alterations.  Owner shall immediately, and in no case later
than ten (10) days after notice from Operator, together with appropriate
documentation evidencing such expenditures, provide Operator with all funds
necessary pursuant to this Section if adequate funds are not otherwise
available if monies were used from the Replacement Reserve Fund or from the
Operating Accounts, to replenish such account within thirty (30) days after
notification.

 19
 

 

Operator agrees to notify Owner in writing as soon as reasonably
possible of any such emergency condition or situation, the cost of which
exceeds Ten Thousand Dollars ($10,000) adjusted annually with the CPI and which
are not included within the Annual Plan, and of the action taken or, if
reasonably possible, the action proposed to be taken by Operator.

 

5.3.          Enforcement of
Guaranties and Warranties.  Owner
shall furnish or cause to be furnished to Operator copies of any guaranties and
warranties relating to the Hotel and a summary of the expiration dates of such
guaranties and warranties.  If any
repairs or Alterations shall be made necessary by any condition against the
occurrence of which the builder of any Renovation or construction or any
supplier of labor or materials for the Hotel or any other party has provided a
guaranty or warranty, then Operator shall use all commercially reasonable
efforts to enforce such guaranty or warranty, and Owner will cooperate fully
with Operator in such efforts.

5.4.          Replacement Reserve
Fund.

5.4.1.       Contributions.  During each Operating Year, Owner shall, for
each Accounting Month included in such Operating Year, pay into the Replacement
Reserve Fund established in accordance with Section 3.5.2, an amount equal to the
following percent of Gross Revenues (or such other amount as may be specified
in the Annual Plan for such year):  (i)
one percent (1%) during the first two Operating Years; (ii) two percent (2%)
during the third Operating Year; (iii) three percent (3%) during the fourth
Operating Year; and (iii) four percent (4%) during each Operating Year
thereafter (the “Reserve Fund Amount”).

5.4.2.       Use.  Withdrawals from the Replacement Reserve Fund
shall only be used for the purposes provided for in this Agreement, including
purchase of Equipment, and shall only be made in accordance with the approved
Capital Budget or as otherwise expressly authorized in this Agreement or by
Owner in writing.  Additionally,
withdrawals from the Replacement Reserve shall only require (or be permitted
upon) the signature of Operator pursuant to the provisions of this
Agreement.  The items of Equipment so
replaced or added and paid for by Owner or from such Replacement Reserve Fund
shall be and become, forthwith upon acquisition and installation, and without
further act or action, the property of Owner and part of the Hotel.  Any amounts remaining in the Replacement
Reserve Fund at the termination or expiration of the Term shall, after all
other payments required under this Agreement have been made, be returned by
Operator to Owner.

5.4.3.       Estimates and Additional
Contributions.  The percentage
contributions for the Replacement Reserve Fund described in Section 5.4.1 above
are estimates.  As the Hotel ages, these
percentages may not be sufficient to keep such Replacement Reserve Fund at the
levels necessary to make the replacements and renewals to the Hotel’s
Equipment, to make Alterations, or to maintain and repair the Hotel in
accordance with the Hotel Standard.  If
the aggregate amount for Equipment for the Hotel in the approved Capital Budget
for an Operating Year exceeds the available funds in the Replacement Reserve
Fund, following notice from Operator in accordance with Section 3.5.2, Owner
shall, in its discretion, agree to either:

 20

 

(a)           Increase
Contribution.  Agree to increase the
annual percentage set forth above to provide the additional funds required; or

(b)           Deposit.  Deposit the additional funds required in the
Replacement Reserve Fund pursuant to Section 3.5.2; or

(c)           Loan.  Arrange to obtain outside financing for the
additional funds required, and deposit such financing proceeds in the
Replacement Reserve Fund.

ARTICLE 6

ANNUAL OPERATING FEE AND REIMBURSEMENT TO OPERATOR

6.1.          Annual Operating Fee.  For each Operating Year, Operator shall be
paid, in respect of its management and operating services hereunder, an annual
fee (the “Annual Operating Fee”) consisting of the Base Fee described below.

6.1.1.       Base Fee.  The “Base Fee” shall be equal to two and one
half percent (2.5%) of Gross Revenues, plus an additional amount (the “Holdback”)
equal to one-quarter percent (0.25%) of Gross Revenues, if the Hotel meets or
exceeds ninety percent (90%) of the Operating Plan, and an additional
one-quarter percent (0.25%) of Gross Revenues if the Hotel meets or exceeds one
hundred percent (100%) of the Operating Plan.

6.1.2.       Time and Manner of
Payment.  The Base Fee shall begin
accruing upon the Opening Date and shall be payable (less the Holdback) in
monthly installments for the prior Accounting Month (pro-rated for any partial
Accounting Month).  The Base Fee (less
the Holdback) shall be paid by Operator by withdrawing the same from the
Operating Accounts contemporaneously with or at any time after delivery to
Owner of the Monthly Statements for the prior Accounting Month.  The Holdback shall be payable on an annual
basis within ninety (90) days after the close of each Operating Year upon
delivery of the annual statement for such Operating Year.

6.1.3.       Annual Reconciliations.  If, for any Operating Year, the amount of the
installments of the Annual Operating Fee paid to Operator shall be less than or
more than the actual Annual Operating Fee payable for such Operating Year,
based upon the final determination of Gross Revenue for such year in the Annual
Statement, then, within fifteen (15) days after the delivery of such Annual
Statement to Owner, Operator shall withdraw from the Operating Accounts the net
amount of any such underpayment or, if overpaid, pay into the Operating
Accounts the net amount of overpayment.

6.2.          Reimbursement of
Operator.  In addition to the Annual
Operating Fee, Operator shall be entitled to pay or reimburse itself from the
Operating Accounts for the following expenses:

(a)           Out-of-Pocket Costs;

(b)           Compensation;

 21
 

 

(c)           any amounts advanced by
Operator in accordance with this Agreement; and

(d)           subject to Owner’s
approval, which will not be unreasonably withheld, reasonable costs (without
markup for premium or profit), fees, and expenses for labor negotiations, legal
counsel, Alterations, Restoration or Condemnation programs and special market
studies which involve a substantial time commitment of Operator’s Corporate
Personnel or the engagement of outside professionals in connection with the
Hotel and its operations and which are outside of the ordinary course, and are
not customarily part of Operator’s general overhead and administrative
expenses.

Unless otherwise provided in this Agreement, the
reimbursements provided for in this Section 6.2 shall include only reasonable
direct Out-of-Pocket Costs that are for the exclusive benefit of the Hotel or,
if not for the exclusive benefit of the Hotel, after deduction for any portions
thereof properly and equitably allocated to any other Participating Hotel.  Whenever any reimbursement due Operator under
this Section or any other provision of this Agreement shall be subject to a
gross receipts or similar tax under applicable law, Owner shall remit
reimbursement to Operator, together with such tax payable thereon, so that
Operator shall receive such reimbursement net of any taxes or similar charges.

ARTICLE 7

INSURANCE

7.1.          Insurance to Be
Maintained During Term.  At all times
during the Term, Owner shall procure and maintain, on behalf of Owner and
Operator, insurance coverage respecting the Hotel as described in this Article
7 and further as required by Beneficiary. 
All premium and other costs of such insurance, and any applicable
deductibles or co-insurance requirements, shall be an Operating Expense of the
Hotel.  If Owner and Operator shall
mutually agree, Operator shall procure such insurance, as an Operating Expense
of the Hotel.

7.1.1.       Liability.  Commercial general liability insurance
including property damage, personal injury or death, including I.S.O. Broad
Form Extensions; liquor law liability; innkeeper’s legal liability; blanket
contractual liability; advertising liability; automobile liability, including
owned and non owned vehicles; and garage keeper’s legal liability, all with
limits equal to Operator’s customary limits on similar properties managed by
Operator, but not less than Ten Million Dollars ($10,000,000) combined single
limit coverage for personal injury or death and for damage to property
resulting from any occurrence; provided however, that the limits under any garage
keeper’s legal liability policy shall be the maximum available limits and, if
reasonably available, shall be on a direct primary basis.  These policies shall be specifically endorsed
to provide that the insurance will be deemed primary to any policy held by
Owner.

7.1.2.       Property.  Insurance covering the perils of direct
physical loss as provided by the causes of loss special form, or its
equivalent, including, specifically, sprinkler leakage damage, vandalism,
malicious mischief, increased cost of construction, and contingent liability
due to operation of building laws as well as delayed opening or extended period
of indemnity insuring all real and personal property, in an amount not less
than the full replacement cost value

 22
 

 

of the Hotel and contents, less reasonable
deductibles as agreed.  If available and
financially practicable in the reasonable judgment of Owner and Operator, or if
and to the extent required by a Beneficiary, earthquake and flood insurance coverage
may also be obtained in amounts as may be determined or required.  Such insurance coverage shall be annually
reviewed by Owner and shall be deemed approved unless Owner requests in writing
a higher amount which is available upon commercially reasonable terms from the
insurance company;

7.1.3.       Equipment.  Insurance on the Hotel on a comprehensive
form against loss or damage from an accident to and/or caused by boilers,
heating apparatus, pressure vessels, pressure pipes, electrical or air
conditioning equipment, in an amount as Operator shall reasonably deem
advisable, but not less than One Million Dollars ($1,000,000);

7.1.4.       Business Interruption.  Business interruption insurance against the
perils enumerated in subsections 8.1.2 and 8.1.3 above, in amounts as
determined by Operator, provided, however, to the extent such insurance is
available on commercially reasonable terms, Operator shall have the right to
require “specific insurance” or endorsements which will pay for up to one (1)
year to Operator, during any covered business interruption, an amount equal to
its Annual Operating Fee for the last Operating Year prior to the occurrence of
such interruption and Owner shall have the right to require “specific insurance”
or endorsements which will pay for up to one (1) year all debt service with
respect to the Hotel;

7.1.5.       Employment Insurance.  Worker’s compensation and other health,
disability and/or other similar insurance as may be required by law or as
Operator shall deem advisable.  Employer’s
Liability Coverage in an amount not less than One Million Dollars
($1,000,000).  Employment Practices
Liability project insurance for this Hotel with a policy limit of One Million
Dollars ($1,000,000) and a deductible of Fifty Thousand Dollars ($50,000) per
claim, including third party coverage;

7.1.6.       Fidelity.  Comprehensive crime insurance, including
fidelity and dishonesty insurance, and money and securities insurance in such
amounts as Operator shall deem advisable but not less than Two Hundred Fifty
Thousand Dollars ($250,000), which policy shall specify that any loss involving
funds of Owner shall be payable to both Operator and Owner; and

7.1.7.       Additional.  Such additional insurance as may be required
by any Beneficiary, together with insurance against such other risks as it is
now, or hereafter may be, customary to insure against in the operation of
similar property, considering the nature of the business and the geographic and
climatic nature of the Hotel’s location.

7.1.8.       General.  All insurance described above shall be with
companies which have a Best rating of AVIII or better and in the form of “occurrence
insurance” to the extent available on a commercially reasonable basis.  Qualified self insured workers’ compensation
groups are also allowed to provide workers’ compensation insurance.  Excess insurance for any self insured group
must comply with the AVIII financial requirement.  Owner shall deliver to Operator certificates
of insurance and certified duplicates of all such policies of insurance,

 23
 

 

including existing, additional and renewal
policies, at least seven (7)) days prior to the Opening Date or the expiration
of the coverage then in effect.

7.1.9.       Claims Made.  To the extent any insurance is effected on a “claims
made” or other than occurrence policy, Owner shall obtain on behalf of Owner
and Operator: (i) coverage for extended reporting of claims occurring in all
previous “claims made” policies.  This is
commonly provided by the declaration of a “retroactive date.”  Such date shall be no later than the
effective date of the first “claims made” policy respecting the Hotel; and (ii)
in the event such “claims made” coverage is terminated at any time, Owner
agrees to purchase prior to and effective as of the termination of such
coverage and retain in effect “extended reporting coverage” for a period of not
less than three years from the termination of such coverage.  The obligations of Owner under this Section
7.1.9 shall survive the expiration or earlier termination of this Agreement.

7.2.          Endorsements.  Each policy of insurance provided for in this
Article 7 shall have attached thereto: (i) if available, an endorsement that
such policy shall not be canceled or coverage reduced materially without at
least thirty (30) days’ prior written notice to Owner, Operator and any
Beneficiary, and (ii) if available, an endorsement to the effect that no action
or omission of a party hereto shall affect the obligation of the insurer to pay
the full amount of any loss sustained to the other party hereto and any other
parties insured under such policy.  The
public liability policy shall have the following endorsements (if
available):  (u) deleting any employee
exclusion on personal injury coverage, (v) including employees as additional
insureds, (w) providing for blanket contractual coverage, (x) deleting any
liquor liability exclusions, and (y) providing for coverage of employers
automobile non-ownership liability. If the endorsement specified in clause (x)
of the preceding sentence is not available, then Owner shall obtain separate “dram
shop” liability insurance in an amount of at least Two Million Dollars
($2,000,000).

7.3.          Parties Insured.  All policies of insurance obtained under this
Article 7 shall be carried in the name of Owner and Operator, and such
additional insured’s, including beneficiaries, losses thereunder shall be
payable to the parties as their respective interests may appear.  All liability insurance shall name Owner,
Operator, and their respective officers, partners, shareholders, directors, agents,
and employees, as insureds.  The public
liability insurance shall provide for severability of interest, provide that an
act or omission of one of the insureds or additional named insureds which would
void or otherwise reduce coverage shall not reduce or void the coverage as to
the insured or other additional insureds, and afford coverage for all Claims
based on acts, omissions, injury and damage which occurred or arose (or the
onset of which occurred or arose) in whole or in part during the policy period.

7.4.          Waiver of Liability.  Neither Operator nor Owner shall assert
against the other, and each does hereby waive with respect to the other to the
extent it is legally possible to do so, any Claims incurred or sustained by it
on account of damage or injury to Persons or property arising out of the
ownership, operation or maintenance of the Hotel, to the extent that the same
are covered by the proceeds received as a result of any insurance, so long as
such waiver does not adversely affect such insurance coverage.  Owner or Operator, as the case may be, shall
cause all policies to contain a waiver of subrogation clause to the extent the
same shall be

 24
 

 

available at no extra cost and shall notify
the other if a waiver of subrogation clause is not available at no extra cost,
to permit Owner and Operator to determine if additional payments should be made
to obtain the waiver of subrogation clause. 
The provisions of this Section are intended to restrict each party (as
permitted by law) to recovery against insurance carriers to the extent of such
coverage and waive fully, and for the benefit of each, any rights and/or Claims
which might give rise to a right of subrogation in any insurance carrier.  Operator does not purport to be an advisor on
insurance matters and as between Owner and Operator; it shall be Owner’s
responsibility to cause itself to be adequately insured.  Operator shall not be liable for defects in
coverage it procures for Owner or the Hotel, provided Operator has relied upon
the informed judgment of licensed insurance brokers experienced in hotel
insurance matters.

7.5.          Blanket Insurance.  Insurance coverage provided by Operator, if
any, as provided under this Article 7, may be effected under policies of
blanket insurance, which may cover other properties owned or managed by
Operator or its Affiliates, and, where applicable, an allocable portion of the
premiums therefor shall be charged to the operation of the Hotel.  Any blanket policies of insurance maintained
by Operator pursuant to the provisions of this Article 7 may contain such deductible
provisions and such other provisions as are customary with respect to other
hotels owned or managed by Operator or its Affiliates.

7.6.          Investigations of
Claims and Reports.  Operator shall
promptly investigate and, as soon as reasonably practicable, report to Owner as
to any accident at or about the Hotel, which, in Operator’s reasonable
judgment, either are uninsured and may involve amounts of Five Thousand Dollars
($5,000) or more, or are insured, but may involve damage of Twenty Thousand
Dollars ($20,000) or more (including the estimated cost of any repairs
required), and shall prepare any and all reports required by any insurance
company in connection therewith.

ARTICLE 8

DEFAULT AND REMEDIES

8.1.          Events of Default.

8.1.1.       Events of Default on the
Part of Either Party.  The following
shall constitute Events of Default hereunder on the part of either party:

(a)           Monetary.  The failure of the defaulting party to pay to
the non-defaulting party when due any sum which may become due hereunder within
fifteen (15) days after receipt by the defaulting party of a notice from the
non-defaulting party specifying such failure;

(b)           Non-Monetary.  The failure by the defaulting party timely to
perform, keep or fulfill any of the material terms, covenants, undertakings,
obligations or conditions set forth in this Agreement, other than those
referred to in Sections 8.1.1(a), 8.1.1(c), 8.1.2 or 8.1.3, and the continuance
of such failure for a period of thirty (30) days after receipt by the
defaulting party of notice thereof from the non defaulting party specifying
such failure, provided that in the event such failure is amenable to cure and
is of a nature that it cannot, with due diligence, all commercially reasonable
efforts, and in good faith, be cured within thirty (30)

 25
 

 

days, it shall not constitute an event of
default unless such defaulting party fails to proceed promptly and with due
diligence, all commercially reasonable efforts, and in good faith to cure the
same, and thereafter to prosecute the curing of such failure with due diligence
and in good faith (it being intended that, in connection with a failure not
susceptible of being cured with diligence and in good faith within thirty (30)
days, the time of such defaulting party within which to cure the same shall be
extended for such period as may be necessary for the curing thereof with due
diligence, all commercially reasonable efforts and in good faith);

(c)           Insolvency.  If the defaulting party shall apply for or
consent to the appointment of a receiver, trustee or liquidator of such party
or of all or a substantial part of its assets, file a voluntary petition in
bankruptcy or admit in writing its inability to pay its debts as they come due,
make a general assignment for the benefit of creditors, file a petition or an
answer seeking reorganization or agreement with creditor or take advantage of
any insolvency law, or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of a creditor, adjudicating such
party a bankrupt or insolvent or approving a petition seeking reorganization of
such party or appointing a receiver, trustee or liquidator of such party or of
all or a substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of ninety (90) consecutive
days.

8.1.2.       Additional Specific
Events of Default on the Part of Owner. 
In addition to Section 8.1.1, the following shall constitute events of
default hereunder on the part of Owner (and upon the occurrence of any such
event, Owner shall be deemed to be the “defaulting party” and Operator the “non-defaulting
party”):

(a)           Licenses.  If without the fault of Operator and despite
Operator’s commercially reasonable efforts, any license required for the
performance of Operator’s obligations under this Agreement or for operation of
the Hotel (including but not limited to, the restaurant and any liquor license)
is not timely issued or is at any time during the Term suspended, terminated or
revoked, unless such non-issuance, suspension, termination or revocation is
rectified within thirty (30) days;

(b)           Transfer.  If Owner shall Transfer or purport to
Transfer the Hotel or any part thereof, or Owner’s interest therein or any part
thereof, without the conditions set forth in Section 12.2 being satisfied; or

(c)           Encumbrances.  If Owner shall encumber or purport to
encumber the Hotel or any part thereof, or Owner’s interest therein or any part
thereof, by a Deed of Trust, except in compliance with the provisions of
Section 11.1 hereof.

8.1.3.       Additional Specific
Events of Default on the Part of Operator. 
In addition to Section 8.1.1, the following shall constitute events of
default hereunder on the part of Operator (and upon the occurrence of any such
event Operator shall be deemed to be the “defaulting party” and Owner shall be
the “non defaulting party”):

 26
 

 

(a)           Suspension of
Operations.  If, due to fault of
Operator, the operation of the Hotel is suspended for more than sixty (60)
days; and

(b)           Assignment.  If Operator shall assign or purport to assign
any part of Operator’s interest in this Agreement, except in compliance with
Section 12.1.

8.2.          Excused Non
Performance.  Notwithstanding
anything elsewhere in this Agreement, Operator shall be excused from the
performance of any obligation hereunder (including the obligation to operate
the Hotel in conformity with the Hotel Standard), and shall not be deemed in
default, to the extent that, and for such period of time as such performance is
prevented by Force Majeure, a breach of this Agreement by Owner or a limitation
on Operator’s ability to expend funds in respect of the Hotel (for example, the
limitations contained in Section 5.4 respecting moneys available for the
replacement of, and additions to, Equipment or Annual Plan limitations on
expenditures) due to Owner’s act or failure to act upon Operator’s request for
funds (provided Operator has provided Owner with reasonably timely notice of
the need for additional funds and that the failure to expend funds by reason of
the operation of such limitation shall reasonably prevent Operator from meeting
such obligation).  Nothing in this
Section 8.2 shall excuse either Owner or Operator from performance of any
obligation of such party to pay or advance money as provided in this Agreement.

8.3.          Remedies.

8.3.1.       Right to Termination.  If an Event of Default shall occur, the non
defaulting party may, at its option, give to the defaulting party notice of
intention to terminate this Agreement after the expiration of a period of
thirty (30) days from the date of such notice if the default has not been cured
prior to expiration of such thirty (30) day period, and, upon expiration of
such period, this Agreement shall terminate on the date specified in the
notice.  Such termination shall be
without prejudice to any right to any and all remedies (including specific
performance and other equitable relief or any and all right to damages) which
the non-defaulting party may have against the defaulting party under applicable
law or equity subject to the terms of this Agreement.

8.3.2.       Injunction and Specific
Performance.  In the event of any
breach of the covenants by Owner or Operator contained in this Agreement, the
other party shall be entitled to relief by injunction or a suit for specific
performance and, if appropriate and otherwise permitted pursuant to this
Agreement, to all other available legal or equitable rights or remedies.

8.3.3.       Effect of Prohibited
Assignment.  Any assignment by either
party of this Agreement in violation of the provisions of Article 12 shall be
null and void at the sole discretion of the party whose rights pursuant to Article
12 were violated upon such assignment.

8.3.4.       Self Help.  If Owner shall fail to make any payment to
any third party or to perform any other act or obligation to be made or
performed by Owner pursuant to this Agreement or any Deed of Trust, and such
failure is not cured within fifteen (15) business days after Operator gives
Owner written notice thereof and of Operator’s intent to exercise its right of
self-help under this Section 8.3, then Operator shall have the right (but not
the obligation) in

 27
 

 

addition to any other rights at law or
equity, or otherwise provided in this Agreement, in its sole discretion without
waiving or releasing any other rights or remedies and without further notice or
demand on Owner:  (i) to advance its
funds in payment of any reasonable expenses of the Hotel, capital expenditures,
or any other expenditures provided for in the Annual Plan that Owner is
obligated to make pursuant to this Agreement, (ii) to take any action on behalf
of Owner that Owner is obligated to take under this Agreement, (iii) utilize
funds in the Operating Accounts, Sub-Accounts, or Replacement Reserve Fund, as
provided in this Agreement, and (iv) to be reimbursed for any such advances and
recover the reasonable cost of such actions from the Operating Accounts,
Sub-Accounts, or Replacement Reserve Fund, in each case with interest thereon
at the Effective Rate from the date of advance or expenditure.  If Operator elects to pay any amount out of
its own funds as a result of actions taken under the foregoing sentence, Owner
shall repay Operator on demand all amounts reasonably so expended and all
reasonably necessary substantiated incidental costs and expenses incurred by
Operator in connection with the performance of such acts or obligations, with
interest thereon at the Effective Rate, from the date of such expenditure by
Operator to the date of repayment by Owner.

ARTICLE 9

TERMINATION

9.1.          Termination on
Transfer.  Upon thirty (30) days advance notice to Operator,
Owner shall have the right to terminate this Agreement in conjunction with a bona fide Transfer of all of the Hotel or a
bona fide Transfer of all of the ownership interests in Owner, whether in an arm’s-length transaction to any
entity which is not an Affiliate of Owner or to an Affiliate of the Owner, or
if the Smith Investor (as such term is defined in the Limited Liability Company
Agreement of Landlord (the “Landlord LLC Agreement”) ceases to be a member of
Landlord and in connection therewith the Smith Investor is paid all amounts due
to the Smith Investor under the Landlord LLC Agreement in connection therewith.

9.1.1.       Termination
Fee.  In the event the termination
date is more than four (4) years following the Opening Date, then Owner shall
pay to Operator, or cause to be paid to Operator, at the time of such
termination pursuant to this Section 9.1, a “Termination Fee” in an amount
equal to the Annual Operating Fee earned by Operator for the Twelve (12) month
period immediately preceding the termination date.  In the event the termination date is less
than four (4) years following the Opening Date, then Owner shall pay to
Operator, or cause to be paid to Operator, at the time of such termination
pursuant to this Section 9.1, a “Termination Fee” in an amount equal to the net
present value of the Annual Operating Fee to be earned by Operator from the
date of termination to the date which is the end of the fifth Full Operating
Year of this Agreement, based upon the projected income and expenses of the
Hotel for the fourth Full Operating Year (with such projected income and
expenses to be divided by twelve (12) and multiplied by the number of months
from the date of termination to the date which is the end of the fifth Full
Operating Year of this Agreement for purposes of calculating the Termination Fee)
as delivered to Owner on or before the Opening Date.  The discount factor to be applied to the
calculation of net present value shall be the prime rate or if not available
the substitute or replacement for the prime rate as then published in the Wall Street Journal on the date of the notice of
termination.

 28
 

 

9.1.2.       Operator Principal.  If neither James L. Smith nor Marcia Smith
Niedringhaus maintains an active role in the management of Operator and the
business of the Hotel, then upon not less than sixty (60) days prior written
notice, Owner may elect to terminate this Agreement with no obligation for
payment of the Termination Fee; provided however, that Owner shall not have the
right to terminate this Agreement pursuant to this Section 9.1.2 and this Agreement
shall continue in effect if (i) both of James L. Smith and Marcia Smith
Niedringhaus are precluded from maintaining an active role as described above
by reason of the death or disability of such individuals, and (ii) within
ninety (90) days after receipt by Operator of notice of termination under this
Section 9.1.2, the holders of the membership interests in Operator (including
heirs of James L. Smith or Marcia Smith Niedringhaus) submit as a replacement
for James L. Smith and Marcia Smith Niedringhaus an experienced hotel manager
(subject to Owner’s approval, not to be unreasonably withheld or delayed).

9.1.3.       Non-Termination.  If Owner does not elect to terminate the
Agreement pursuant to this Section 9.1, then such right of termination with
respect to such Transfer shall be deemed waived, this Agreement shall remain in
full force and effect pursuant to its terms and no Termination Fee shall be
payable.

9.2.          Performance
Termination.  Subject to the
provisions of this Section 9.2, Owner may terminate this Agreement in
accordance with the procedure described in Section 9.2.2 if for any two (2)
consecutive Full (i.e., twenty-four (24) consecutive months) Operating Years
(each a “Measurement Year”), each of the following is applicable for both of
such Measurement Years:  

(a)           The Gross Operating
Profit (excluding utility costs and costs and expenses related to  Sections 3.17 and 4.6) for such Measurement
Year is less than ninety percent (90%) of the budgeted Gross Operating Profit
(excluding utility costs and costs and expenses related to Sections 3.17 and
4.6) set forth in the approved Annual Plan for such Measurement Year; and

(b)           The RevPAR Penetration
Index of the Hotel within the Competitive Set for such Measurement Year is less
than eighty percent (80%) for the calendar year 2007, or ninety percent (90%)
for each calendar year thereafter.

9.2.2.       Termination Notice.  Owner shall exercise its right to terminate
this Agreement pursuant to this Section 9.2 by written notice to Operator given
within sixty (60) days after receipt by Owner of the Annual Statement for the
second of the two Measurement Years along with the applicable Revenue Data
Publication information.  Failure of
Owner to deliver a termination notice to Operator within such sixty (60) day period
shall be deemed a waiver by Owner of its right to terminate this Agreement
pursuant to this Section 9.2 for such Measurement Years.  The right of termination of Owner under this
Section 9.2 shall not be exercisable in the event that the applicable level of
Gross Operating Profit, RevPAR Penetration Index or Cash Flow is not achieved
as a result of: (i) a Force Majeure Event; (ii) a material reduction in
occupancy resulting from a Force Majeure Event; (iii) a material reduction in
available room nights resulting from a Capital Improvement program at the
Hotel; (iv) failure of Owner to provide Working Capital or funds to maintain
the Hotel in accordance with the Hotel Standard

 29
 

 

after applicable notice from Operator as
provided in Section 3.6; (v) a casualty; or (vi) a taking by eminent domain.

9.2.3.       Cure Right.  The provisions of this Section 9.2 to the
contrary notwithstanding, if Owner shall have the right to terminate this
Agreement pursuant to this Section 9.2 and shall send a notice of such termination
in accordance with this Section, within sixty (60) days after receipt by
Operator of such notice Operator shall have the right (the “Cure Right”), but
not the obligation, to pay to Owner the Cure Payment (as defined in Section
9.2.4 below).  In the event Operator
elects to make such payment, Owner’s notice of termination shall be deemed
withdrawn and Owner shall not have the right to send another notice of
termination unless the conditions of this Section 9.2 are met either (i) in the
next Full Operating Year or (ii) for each of two (2) consecutive Full Operating
Years thereafter.  Failure to meet
performance tests for three (3) consecutive Full Operating Years will result in
Owner’s right to terminate Operator regardless of any curing on the part of Operator.  Operator’s right to cure the performance
failure shall be limited to two (2) cures during the Term, but Operator cannot
cure performance failure in consecutive years.

9.2.4.       Cure Payment.  The Cure Payment shall equal the difference
between (y) ninety percent (90%) of the Gross Operating Profit set forth in the
approved Annual Plan for the second of the two applicable Measurement Years
giving rise to Owner’s right to terminate, and (z) the actual Gross Operating
Profit for such Measurement Year.

9.3.          Rights and
Obligations on Termination.  Unless
otherwise specifically provided in this Agreement, the termination of this
Agreement shall not affect the rights of either party with respect to liability
or claims accrued, or arising out of events occurring prior to the date of the
termination or specific rights which the Agreement provides shall survive
termination.  Upon the termination of
this Agreement for any reason under this or any other Article (including expiration
of the Term), the following rights, which shall survive termination of the
Agreement, shall be applicable in addition to, and without limiting the rights
of Owner or Operator pursuant to this Agreement at law or equity:

9.3.1.       Amounts Due; Receivables.  All accrued unpaid fees, charges, reimbursements,
and other payments due Operator as of the date of termination (including but
not limited to any portion of any Annual Operating Fee, Compensation and any
Out-of-Pocket Costs) shall be paid by Owner to Operator within ten (10) days
after the remittance to Owner by Operator of statements therefor.  All other accrued and unpaid amounts,
charges, reimbursements, and other payments due from Owner pursuant to this
Agreement shall be paid by Owner to Operator within thirty (30) days of
termination or expiration, including, without limitation, Owner’s payment of
(i) the Termination Fee, if due pursuant to this Article 9 and (ii) all other
sums due and owing to Operator as set forth in the preceding sentence.  All Operating Accounts and any remaining funds
therein after payment of the foregoing shall be transferred to Owner.  All receivables of the Hotel outstanding as
of the effective date of termination, including, without limitation, guest
ledger receivables, shall continue to be the property of Owner.  Operator will reasonably cooperate with
Owner, at Owner’s sole cost and expense, in the collection of any such
outstanding receivables and will remit to Owner any amounts collected directly
by Operator after the effective date of termination which relate to such
receivables less

 30
 

 

any amount outstanding due Operator.  At termination, Owner shall be responsible
for all liabilities and payment of Operating Expenses.

9.3.2.       Miscellaneous.  Operator shall have the option, to be
exercised at any time prior to the expiration of thirty (30) days after such
termination, to purchase, (i) at a price equal to the Operating Supplies
acquisition cost thereof to Owner or Operating Equipment book value, as
applicable, any of the Operating Equipment and Operating Supplies, if any, that
bear or are marked with any Trademarks, and (ii) any other items bearing the
Trademarks at a reasonable price to be agreed upon between Owner and
Operator.  In the event that Operator
shall not exercise such option, Owner covenants and agrees that any such items
not so purchased shall be used exclusively, if at all, in connection with the
operation of the Hotel until the earlier of (i) seven (7) days after
termination or (ii) they are consumed, but Owner shall not reorder any such
items or otherwise use or permit the use of any items bearing or marked with
the Trademarks.  Within fourteen (14)
days after such termination, Owner shall, at its own cost and expense, cause to
be removed from the Hotel any and all signs which display or include any
Trademarks.  In the event of any breach
of the covenants by Owner contained in this paragraph 9.3.2, Operator shall be
entitled to damages, relief by injunction, and to all other available legal
rights or remedies, and this provision shall survive the expiration or sooner
termination of the Agreement.

9.3.3.       Permits.  To the extent assignable, Operator shall
assign and transfer to Owner all of Operator’s right, title and interest in and
to all liquor, restaurant and other licenses and permits, if any, with respect
to the Hotel. Operator shall provide Owner with a complete listing of all
permits and licenses (whether or not in Operator’s name or in the name of
Owner) as soon as reasonably practicable prior to the effective date of
termination so as to permit Owner or successor operator sufficient time to
apply for new licenses or permits or to effect transfer to Owner’s name or the
name of successor operator.  With respect
to any non-transferable licenses or permits, Operator agrees that it shall
cooperate with Owner and successor operator in obtaining new licenses or
permits and continuing to operate under the existing licenses or permits to the
extent necessary and permitted under applicable law, with the intention that
there be no interruption of business at the Hotel in the ordinary course;
provided, however, if Owner continues to operate under the existing licenses or
permits in Operator’s name, Owner shall provide Operator with an
indemnification agreement reasonably acceptable to Operator, and in no event
shall Operator be required to maintain such licenses or permits for more than
one hundred eighty (180) days after termination of this Agreement.  The foregoing shall be without fee or other
compensation to Operator provided, however, that if Operator has expended any
of its own funds in connection with the foregoing in this Section 9.3.3, or the
acquisition of such licenses or permits, Owner shall reimburse Operator
therefor.

9.3.4.       Termination Fee.  To the extent payable pursuant to Section
9.1, the Termination Fee shall be paid by Owner on the termination date.

9.3.5.       Vacate.  Operator shall peacefully vacate and
surrender the Hotel to Owner, and shall deliver to Owner any and all Equipment
(along with then existing warranties, operating instructions, and service
contracts), Operating Equipment and Operating Supplies (except as otherwise
provided in Section 9.2.2), keys, locks and safe combinations, reservation
lists, ledgers, bank statements for the Hotel Operating Accounts, Sub-Accounts,
budgets,

 31
 

 

accounting books and records, insurance
policies, bonds and other documents, memoranda, schedules, lists, contracts,
agreements, leases, licenses, complete copies of guest lists and guest history
files, correspondence, other files and records generated by Operator in the
course of operating the Hotel and relating primarily to the Hotel, software
used in the accounting, reservation and other systems of the Hotel and any
licenses required for use thereof (excluding any software proprietary to
Operator or its Affiliates), all depository accounts for the Hotel including
the Operating Accounts, Sub-Accounts and the Replacement Reserve Fund, and
other items required for the operation of the Hotel.  Notwithstanding the foregoing, Operator shall
not assign to Owner pursuant to the foregoing sentence any Proprietary
Information of Operator.  Hotel guest
lists compiled for Hotel guests during the Term and maintained at the Hotel
shall be deemed jointly owned by Owner and Operator and may be used after the
Term by each of them as each of them shall determine.  Accounting and other books and records shall
include all electronic as well as paper records, except in the case of any
software that is proprietary to Operator or its Affiliates.

9.3.6.       Management Transition.  Operator shall cooperate in all reasonable
ways in the transition of the operation and management of the Hotel to Owner or
Owner’s new operator and to effect an orderly and expeditious transition of
management functions, with as little hindrance to the operation of the Hotel as
reasonably practicable and, if such termination is an early termination prior
to the expiration of the Term, notwithstanding the effective date of
termination Operator shall cooperate in a good faith professional manner for up
to ninety (90) days thereafter so long as any reasonable out of pocket costs
incurred by Operator in connection therewith shall be reimbursed to Operator
promptly upon request therefor.  The
provisions of this Section 9.3.6 shall govern with respect to specific matters
relating to the transition of management of the Hotel.

9.3.7.       Notification of Vendors;
Assignment or Termination of Service Contracts.  Operator shall notify in writing all then
current suppliers of goods or services to the Hotel of the impending change in
management of the Hotel.  Operator will
assign to Owner all service and supply contracts for the Hotel which Operator
made in its own name in accordance with this Agreement, except for contracts
which may not be assigned, or which are “blanket” contracts covering multiple
Operator-managed hotels, or which are with an Operator Affiliate or which can
be terminated without penalty upon termination and which Owner timely requests
be terminated as of the date of termination of this Agreement.

9.3.8.       Bookings.  Operator shall, no later than the effective
date of termination, provide Owner with a complete list of all bookings, the
terms applicable thereto, and the amount of advance deposits (if any) received
with respect to each such booking.  Owner
will assume and fully indemnify Operator with respect to any advance deposits
theretofore received by Operator, on behalf of the Hotel to the extent the same
have been deposited in the Operating Accounts, or in a separate segregated
account which shall be turned over or credited to Owner.

9.3.9.       Notification of
Customers.  Upon Owner or Owner’s new
operator’s request (which request shall be no earlier than sixty (60) days nor
less than thirty (30) days prior to termination), providing Owner or Owner’s
new operator with sufficient information to enable the notification of each
Person then holding or booking a reservation for guest, banquet,

 32
 

 

conference or meeting rooms or facilities at
the Hotel for periods including or following termination of the impending
change in management.  If Owner or Owner’s
new operator decides not to provide such notification, Operator, for the sole
purpose of providing notice as a courtesy to such Persons and not intended for
the purpose of causing cancellations or for solicitation of the subject
business for the same room nights or booking transaction, shall have the right
to make such notification to each Person then holding or booking a reservation
for guest, banquet, conference or meeting rooms or facilities at the Hotel for
periods including or following termination of the impending change in
management.

9.3.10.     Turn-Over of Guest
Property.  Operator and Owner will
employ customary procedures on the date of termination for the transfer of
custody of and responsibility for guest property checked with the Hotel,
including stored luggage (which will be inventoried and tagged) and safe
deposit boxes (each of which will be sealed until the depositor has been
notified to check the contents, then opened in the presence of a representative
of each of Operator and Owner).

9.3.11.     Financial Statements.  Operator shall prepare and deliver to Owner,
within thirty (30) days following the effective date of expiration or
termination, an accounting as described in Section 4.5, which accounting shall
be in final form to the extent practicable, the cost of which shall be an
Operating Expense.  Operator shall
continue to cooperate with Owner and be available, and make any books and
records available to the extent necessary, in order for Owner and the
accountants to prepare the Annual Statement for the last such Operating Year as
provided in Section 4.5, including specifically the period up to the
termination date together with the calculation of the amount of the Annual
Operating Fee to the termination date.

9.4.          WARN Act; 401(k)
Compliance.

9.4.1.       Warn Act.  Owner acknowledges that Operator or its
Affiliate may have an obligation under federal, state, or local law to give
advance notice to Hotel Personnel of any termination of their employment, and
that failure to comply with any such notification obligation could give rise to
civil liabilities.  Therefore,
notwithstanding anything to the contrary contained in this Agreement, Owner
shall indemnify, hold harmless and defend Operator and its Affiliates from and
against any such liabilities based on Owner’s actions (including terminating
this Agreement) which give rise to such a notification obligation on the part
of Operator or any of its Affiliates, unless Operator (or its Affiliate) is
given or would otherwise have adequate opportunity to comply with such
obligation.

9.4.2.       401(k) Compliance.  On any termination or expiration of this
Agreement, whether by transfer of the Hotel, expiration of the Term, or early
termination through exercise of other rights of the parties hereto, if the
successor employer will, or intends to, offer a 401(k) plan for the Hotel
Personnel, and if the Hotel Personnel participate in a 401(k) plan at such
time, Owner or its successor (or the successor of Operator) shall offer a
401(k) plan to such of the participating employees who will continue to work at
the Hotel thereafter, and the new Owner or successor Operator shall accept a
trust-to-trust transfer of the participants’ 401(k) assets in a manner that
complies with applicable, federal requirements and Operator will make such
transfer and will indemnify Owner against, and will contribute, any theretofore
unfunded matching funds

 33
 

 

contributions required under Operator’s plan
for the Hotel Personnel and any penalties stemming from any such underfunding
or other violations by Operator under the 401(k) plan of the Hotel prior to the
transfer.

ARTICLE
10

DESTRUCTION

10.1.        Substantial Damage.  Subject to reinstatement as provided below,
if a substantial part of the Hotel shall be materially damaged by fire or other
casualty, either party may, within ninety (90) days after the occurrence of
such event, give notice to the other terminating this Agreement.  For purposes of this Section 10.1, the Hotel
shall be deemed to have been substantially damaged if either: (i) the estimated
cost of the Restoration shall exceed fifty percent (50%) of the estimated cost
(excluding foundation, footing and excavation cost) of replacing the Hotel by
constructing, furnishing and equipping, in accordance with the Legal Requirements,
Insurance Requirements and requirements under any lease, or Deed of Trust then
in effect, a new hotel on the Premises which shall be substantially the same or
better than the Hotel, as it was immediately prior to such casualty; or (ii)
the length of time required for Restoration shall be in excess of twenty four
(24) months from the date of such casualty. 
Any insurance proceeds paid under any business interruption or similar
insurance policy for loss of income and profits shall be apportioned between
Owner and Operator taking into account the terms of this Agreement with
Operator’s claim against such proceeds measured by the portion of such proceeds
necessary to recover the Annual Operating Fee and Operator’s reimbursed
expenses for the period of time covered by such insurance.  Notwithstanding the foregoing, if within
three (3) years following such substantial damage Owner shall commence
Restoration and shall proceed therewith, Operator shall have the right (but not
the obligation) at any time to elect, within ninety (90) days of the date upon
which Operator becomes aware that such Restoration has commenced, that this
Agreement shall be deemed reinstated in accordance with all the terms and
conditions hereof; provided, however, that Operator’s duties shall be suspended
until the Hotel is substantially ready to be reopened and the termination date
(and Term) shall be extended to reflect the period during which business
interruption insurance in amounts less than all amounts that would otherwise be
paid to Operator under Section 7.1 above was paid to Operator while the Hotel
is closed.  Within one hundred eighty
(180) days following the event of damage or destruction Owner shall notify
Operator that it either elects to terminate this Agreement or that it elects to
rebuild or commence Restoration.  In the
event Owner elects to rebuild and commence Restoration and it so notifies
Operator, it shall thereafter use its best efforts and shall diligently pursue
Restoration and shall, within three (3) years, commence construction and shall
thereafter diligently proceed therewith, with all reasonable efforts.  In the event Owner so proceeds with
Restoration and Operator has not elected to terminate this Agreement as herein
provided, this Agreement shall continue in accordance with all the terms and
conditions hereof, and in that event or any event, if this Agreement is not
terminated or is reinstated as provided herein, Owner shall retain Operator as
a consultant during such Restoration to provide its customary technical
services for customary compensation. 
Operator shall be paid each month from the date of such damage until the
new opening date the amount projected (in the Annual Operating Plan most
recently approved prior to the date of such casualty) as the monthly amount of
the Annual Operating Fee (the “Projected Monthly Fee”); provided, however, in
lieu of the Projected Monthly Fee, Operator shall be paid no more than the
applicable business interruption insurance

 34
 

 

proceeds designated for payment of the Annual
Operating Fee so long as Owner has obtained appropriate business interruption
insurance in accordance with Section 7.1.4 hereof.  In the event Owner elects to terminate this
Agreement as provided in this Section 10.1, then all remaining insurance proceeds
shall be paid to Owner and Owner shall pay to Operator the Termination Fee it
would have received had the Hotel been sold at the time of such casualty.

10.2.        Partial Damage.  In the event of (i) any damage to the Hotel
by fire or other casualty which does not amount to substantial damage as
described above, or (ii) the destruction or substantial damage to the Hotel and
the failure of either party to terminate this Agreement pursuant to Section
10.1 hereof, then this Agreement shall not terminate, and Owner shall, at its
own expense, after approval of the plans and specifications therefor by
Operator, promptly commence and expeditiously complete the Restoration.  In the event that the insurance proceeds
actually paid out shall be less than eighty percent (80%) of the cost of the
Restoration (“such damage”), Owner shall have the right, within sixty (60) days
after the determination of the deficiency in the insurance proceeds, to give
notice to Operator terminating this Agreement. 
In the event that the insurance proceeds shall exceed the cost of the
Restoration, the excess shall be retained by Owner as its property.  Any proceeds from insurance attributable to
loss of income, revenues, profits or lost occupancy shall be apportioned
between Owner and Operator as provided in Section 10.1, taking into account any
reduction in Operating Expenses due to a fewer number of Guest Rooms.  Notwithstanding the foregoing, if within
three (3) years following such substantial damage Owner shall commence
Restoration and shall proceed therewith, Operator shall have the right at any
time or if written notice is given (but not the obligation) to elect within
ninety (90) days of written notice that such Renovation has commenced that this
Agreement continue in accordance with all the terms and conditions hereof.  If within ninety (90) days following such
event Owner notifies Operator that it elects to rebuild or commence Restoration
and thereafter uses best efforts and diligently pursues Restoration and within
three (3) years commences construction and shall thereafter diligently proceed
therewith, with all reasonable efforts, this Agreement shall continue in
accordance with all the terms and conditions hereof, and in that or any event,
if this Agreement is not terminated as provided herein, Owner shall retain
Operator as a consultant during such Restoration to provide its customary
technical services for customary compensation. 
Operator shall be paid the Projected Monthly Fee each month from the
date of such damage to the new opening date. In the event Owner elects to
terminate this Agreement as provided in this Section 10.2, then all remaining
insurance proceeds shall be paid to Owner and Owner shall pay to Operator the
Termination Fee it would have received had the Hotel been sold at the time of
such casualty.

10.3.        Substantial
Condemnation.  In the event of a
Condemnation of all or substantially all of the Premises and Improvements, this
Agreement shall terminate upon the date the condemning authority takes title to
the Premises and Improvements, and Owner shall pay to Operator an amount equal
to the Termination Fee Operator would have received had the Hotel been sold at
the time of such Condemnation.

10.4.        Partial Condemnation.

10.4.1.     Material Part.  In the event of a Condemnation of a material
portion, but less than all or substantially all, of the Premises and
Improvements, either Owner or Operator

 35
 

 

shall have the right to terminate this
Agreement effective on the date the condemning authority takes title to such
portion of the Premises and Improvements, and, if such termination is effected
by Owner, Owner shall pay to Operator an amount equal to the Termination Fee
Operator would have received had the Hotel been sold at the time of such
Condemnation.  To exercise its right of termination
under this Section 10.4, a party shall give written notice of termination to
the other party within sixty (60) days after the condemning authority gives
written notice of its intent to take such portion of the Hotel (or, if earlier,
by the date of Condemnation).  For
purposes of this Section 10.4, a material portion of the Premises and
Improvements shall mean any portion (i) representing more than twenty-five
percent (25%) of the then-current fair market value of the Premises and
Improvements or (ii) the taking of which as a practical matter prevents the
remainder of the Hotel from being used profitably as a hotel, either at all or
without a material reduction of the Hotel Standard.

10.4.2.     If No Termination.  In the event of a Condemnation of less than a
material portion of the Premises and Improvements, or a Condemnation of a
material portion in which neither party exercises its right of termination
under Section 10.4.1, this Agreement shall remain in force and effect as to the
remaining part of the Hotel and Owner shall use the compensation paid on
account of such Condemnation (the “Award”) for Restoration.  The balance of any Awards shall belong to
Owner.

10.5.        Condemnation for
Temporary Use.  In the event of a
temporary Condemnation of all or any portion of the Premises and Improvements:
(A) if the term of such Condemnation is shorter than the balance of the then
current Term, this Agreement shall, to the extent applicable, remain in force
and effect and the Award shall be treated as part of Gross Revenues; or (B) if
the term of such Condemnation extends beyond the then current Term, such
Condemnation shall be treated as a substantial or partial Condemnation under
Sections 10.3 or 10.4.

10.6.        Effect of Termination.  Except as otherwise expressly stated, this
Agreement shall terminate as of the date fixed in any notice of termination
given pursuant to this Article 10, which date shall be not less than ten (10)
days after the date notice is given. 
Upon such termination, neither party shall have any further liability to
the other hereunder, except as provided in Sections 10.1 and 10.3 and except
with respect to obligations accrued prior to the effective date of such
termination.

ARTICLE
11

DEEDS OF TRUST AND FINANCING

11.1.        Permitted Deeds of
Trust.  Neither Owner nor any
Transferee who acquires the Hotel from Owner subject to this Agreement shall
encumber the Hotel or any part thereof, or its interest therein or any part
thereof by a Deed of Trust, except for a Deed of Trust which satisfies each of
the following conditions:

11.1.1.     Lender.  The lender is an Institutional Lender.

11.1.2.     Amount.  The Hotel shall not be encumbered to secure
any indebtedness (i) not directly related to Owner’s interest in the Hotel or
any of its Equipment or component

 36
 

 

parts (i.e., indebtedness on the Hotel cannot
be cross-collateralized with any indebtedness other than indebtedness directly
related to Owner’s interest), and (ii) in excess (when combined with all other
liens encumbering the Hotel) of eighty percent (80%) of the fair market value
of the Hotel, as determined by an appraiser reasonably acceptable to both Owner
and Operator (the lender’s appraiser and appraisal hereby being deemed
acceptable).

11.1.3.     Copy and Address.  Within fifteen (15) days after execution of
such Deed of Trust, Owner has furnished Operator with true copy thereof, and
the Beneficiary thereunder has designated in writing to Operator a post office
address where notices may be served upon such Beneficiary.

11.1.4.     Terms.  Owner or its Transferee shall use
commercially reasonable efforts to deliver an appropriate instrument acceptable
to Operator, pursuant to which the Beneficiary has covenanted that:  (i) simultaneously with giving to Owner or
its Transferee any notice under such Deed of Trust, including, without
limitation, a notice of default, it will send a copy of such notice by
recognized overnight courier against receipt, or by registered or certified
mail to Operator; and (ii) such Beneficiary will not take any action in
connection with a default by Owner or its Transferee if, within the period of
grace provided for in such Deed of Trust, Operator shall (although not
obligated to do so) cure such default.

11.1.5.     Restoration.  Owner shall use commercially reasonable
efforts to cause such Deed of Trust to provide that the proceeds from any
casualty insurance policy or any Award shall be available for restoration of
the Hotel, so long as there has been no material (in cost or in time)
impairment of the value of the security under such Deed of Trust and the
Beneficiary is satisfied that such insurance proceeds are sufficient to cover
the entire cost of such restoration.

11.1.6.     Bank Accounts.  Such Deed of Trust may grant a security
interest of any type in the Operating Accounts, Sub-Accounts or the Replacement
Reserve Fund so long as the Beneficiary expressly recognizes in writing the
rights of Operator to use the funds in such accounts for the purposes
contemplated by this Agreement, in which event Operator will, upon reasonable
request of Owner, assist the Beneficiary in establishing or perfecting such
security interest.

11.1.7.     Subordination and
Non-Disturbance.  If and to the
extent that this Agreement creates any interest in Operator in the Hotel, this
Agreement is expressly made subject and subordinate to the security instruments
and liens of the Beneficiary.  Nothing
herein contained, however, shall be deemed to imply that any real estate or
other interest in the Hotel has been created or intended, nor shall be deemed a
subordination of the Annual Operating Fees or Operator’s contractual rights
hereunder including Operator’s right to receive reimbursements or other amounts
required to be paid to Operator hereunder. 
Provided the provisions of this Section 11.1.7 are satisfied, Operator
will, upon reasonable request of Owner, assist the Beneficiary in establishing
or perfecting such subordination.  Such
Beneficiary shall execute a recognition and non-disturbance agreement with
Operator in form and substance reasonably acceptable to Operator which shall
provide, among other things, that, so long as Operator is not in material
default under this Agreement, Operator shall have the right to (i) occupy and
operate the Hotel during the Term pursuant to this Agreement without any
interference or ejection by

 37
 

 

Owner, any Beneficiaries, any lessors, or any
Person claiming under, through or by right of any of the foregoing parties, and
(ii) use all funds in the Operating Accounts, Sub-Accounts and Replacement
Reserve Fund for the purposes provided in this Agreement, including without
limitation, payment of all Annual Operating Fees and reimbursements due to
Operator.

(a)           Foreclosure.  Upon foreclosure of such Deed of Trust by
judicial action, private sale or otherwise, or upon a conveyance by a deed in
lieu of foreclosure, or upon any similar proceeding or conveyance pursuant to
which such Beneficiary or any other Person or legal entity shall become the
owner of the Hotel or any part thereof or interest therein, the rights of
Operator under this Agreement shall not be terminated, extinguished or
interfered with, except in accordance with the provisions of this Agreement,
nor shall the Operator be named or made a party to such action by such
Beneficiary (excepting only to the extent required for the maintenance of such
action), and such Beneficiary, other Person or legal entity, as the case may be
(a “Foreclosure Purchaser”), shall be bound by the terms and conditions of this
Agreement to the same extent as if such Beneficiary, other Person or legal
entity had been the original Owner hereunder, and at Operator’s request such
Beneficiary, other Person or entity shall execute an agreement in writing with
Operator agreeing to be so bound; provided, however, that no Foreclosure
Purchaser shall be liable for the prior defaults of Owner, for the payment of
any Annual Operating Fees or other amounts that are accrued and owing, but
unpaid, to Operator (whether under this Agreement or otherwise) as of the date
the Foreclosure Purchaser acquires the Hotel; and

(b)           Sale.  Any sale, order of sale or judgment of
foreclosure or such security instrument shall provide that, as a term and
condition of such sale or judgment, the purchaser at such sale shall agree in
writing with Operator to be bound by the terms and conditions of this Agreement
to the same extent as if such purchaser had been the original Owner hereunder,
except as otherwise provided in Section 11.1.7(a).

11.1.8.     Cooperation.  Upon reasonable advance written notice from
any Beneficiary, Operator will accord to such Beneficiary and its agents the
right to enter upon any part of the Hotel at reasonable times during the Term
for the purpose of examining or inspecting the financial books and records of
the Hotel, or examining and making extracts thereof, or for the purpose of
examining the Hotel and its systems, provided the same shall be done with as
little disruption to the operation of the Hotel as possible.

11.2.        Financing and Sales
Disclosures of Non-Participation by Operator.

11.2.1.     Restrictions.  Owner shall not represent to the Beneficiary
under any proposed Deed of Trust, or to any investor or participant in a
private or public offering of securities of Owner, or to any Transferee of the
Hotel, that Operator or its Affiliates are or shall be in any way responsible
for Owner’s obligations under such Deed of Trust, offering or Transfer.  Owner shall only make use of any forecasts,
annual plans, or projections prepared in Owner’s name, including the
Trademarks, or the name of the Operator or the names of any of their respective
affiliates in connection with any proposed financing arrangement, loan or
public or private offering, and in that in connection with any proposed
financing arrangement, loan or public or private offering, Owner shall
indemnify Operator from claims of reliance by any

 38
 

 

lender, partner or investor on such
forecasts, annual plans, or projections prepared by Operator Owner shall
promptly, upon request by Operator, inform Operator of the identity of the
proposed joint venturer, partner or purchaser of securities having a binding
obligation to Owner, and Operator shall have the right to directly notify such
proposed lender, joint venturer, partner or purchaser of the legal relationship
between Operator and Owner.

11.2.2.     Notice.  Not less than five (5) business days prior to
the signing of any Deed of Trust, Owner shall inform and furnish Operator with
the identity of the proposed Beneficiary, and Operator shall have the right,
but not the obligation, to inform the proposed Beneficiary of the legal relationship
between Owner and Operator and its affiliates and that neither Operator nor its
affiliates make any warranties or representations in connection with any
information provided to such Beneficiary by Owner.

ARTICLE
12

ASSIGNMENT

12.1.        Assignment by Operator.

12.1.1.     General Rights.  Operator shall have the right, without the
consent of Owner, to assign this Agreement (in whole and not in part) and its
rights and obligations hereunder (in whole and not in part) to:  (i) any successor or assignee of Operator
which may result from any merger, sale of all or substantially all ownership
interests in Operator (whether pursuant to a public offering, public markets
transaction or private sale), consolidation, recapitalization or
reorganization; or (ii) any assignee which shall acquire all, or substantially
all, of the hotel business and assets of Operator and shall expressly assume
its obligations with reference thereto, including those hereunder.  With respect to any assignee under the
foregoing clause (ii), duplicate originals of the assignment and assumption
shall be delivered to Owner, and thereupon Operator’s liability hereunder shall
terminate, except as to obligations accrued prior to the effective date of such
assignment and assumption.

12.1.2.     Affiliate.  Operator may also assign this Agreement,
without the consent of Owner, to any majority-owned Affiliate of Operator, but
in the event of such assignment, Operator shall continue to be liable hereunder
to the same extent as though such assignment had not been made.  In the event, however, that Operator shall
assign its rights and obligations under this Agreement to any Affiliate (the “assignee
affiliate”), then the sale by Operator or by an Affiliate of a controlling
interest in such assignee affiliate shall constitute an assignment of Operator’s
interest which requires Owner’s approval hereunder, except for a sale which is
part of a sale of all, or substantially all, of the assets of Operator and
which would not require Owner’s consent under Section 12.1.1 (in which case the
last sentence of Section 12.1.1 shall apply). 
A “controlling interest” in an Affiliate shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of Operator whether through the ownership of voting
securities or by contract or otherwise.

12.1.3.     Approval.  Except as provided above, Operator may not
assign its rights and obligations hereunder without the approval of Owner,
which shall not be unreasonably withheld. 
It shall be reasonable for Owner to refuse to consent to any assignment
of this

 39
 

 

Agreement by Operator to anyone inexperienced
in the operation of Hotels pursuant to the Hotel Standard.

12.2.        Assignment by Owner.

12.2.1.     Permitted Assignments.  Owner shall not assign this Agreement or any
interest therein without the prior approval of Operator.  Operator shall have the right to withhold its
consent in Operator’s sole discretion if the proposed Transferee is a
Prohibited Party.  Notwithstanding the
foregoing, provided there is no existing Event of Default on the part of Owner,
Owner shall have the right to assign all of its rights and interest in this
Agreement to any of the following Transferees, provided that the Transferee is
not a Prohibited Party and all of the requirements of this Section 12.2 are
satisfied:

(a)           to an Affiliate of
Owner in conjunction with a Transfer of the Hotel to such Affiliate,

(b)           to the Beneficiary
under a Deed of Trust in a collateral assignment made in accordance with
Article 12,

(c)           to any party that
acquires all or substantially all of ownership interests in Owner’s business
and assets, consolidation, recapitalization or reorganization, as a result of
any merger or sale, or

(d)           in conjunction with a
Transfer of the Hotel (or a Controlling Interest in Owner) to other than an
Affiliate.

12.2.2.     Assignee’s Assumption.  Concurrently with or prior to any assignment
permitted under Section 12.2.1, the assignor and assignee shall execute and
deliver to Operator a written agreement, in a form reasonably acceptable to
Operator, in which the assignee (A) acknowledges that this Agreement remains in
full force and effect and (B) accepts such assignment and assumes all of Owner’s
obligations and liabilities accruing from and after the effective date of such
assignment, except as otherwise expressly set forth herein.

12.2.3.     Assignor’s Release.  Following any assignment pursuant to clauses
(c)  or (d) of Section 12.2.1, and the
execution and delivery to Operator of the assumption agreement specified in
Section 12.2.2, Owner’s liability hereunder shall terminate, except as to
obligations accrued prior to the effective date of such assignment.

12.2.4.     Transfer of Controlling
Interest in Owner.  For purposes of
this Section 12.2, the transfer of a Controlling Interest in Owner shall be
deemed an assignment of this Agreement. 
As used in this Agreement, a “Controlling Interest in Owner” shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of Owner through the ownership of a
majority of voting interests and “Transfer of a Controlling Interest in Owner”
shall mean any transfer of a majority of such interests (including, without
limitation, by increasing the number of voting interests in Owner or a Transfer
of the manager’s interest in Owner or the general partner interest in Owner),
other than (A) to one or more of the holders of such interests as of the
Effective Date (or an entity controlled by one or

 40

 

more of such current holders), or (B) by will
or intestacy upon death.  Owner  shall from time to time, upon Operator’s
written request, furnish Operator with a list of the names and addresses of
record of the record holder and (to the extent known to Owner) the beneficial
owner of each member interest in Owner.

12.2.5.     Repayment of Working
Capital Advances.  Upon the
assignment of this Agreement in conjunction with a Transfer of the Hotel, any
amounts advanced from the Replacement Reserve Fund as working capital pursuant
to Section 3.6.3 shall, to the extent then outstanding, be repaid.

12.2.6.     No Sale Without Assignment
or Termination.  Owner acknowledges
that Owner has no right to Transfer the Hotel, except as provided in this
Section 12.2.  In order to Transfer the
Hotel (or a Controlling Interest in Owner) during the Term other than as
permitted under clauses (a), (b), (c) or (d) of Section 12.2.1, Owner must
either (i) obtain Operator’s consent to an assignment of this Agreement in
accordance with this Section 12.2 or (ii) exercise its right of termination
under Section 9.1.

12.3.        Permitted Subletting.  Notwithstanding any provisions of Article 12
to the contrary, except as otherwise specifically provided in this Agreement,
neither the rental of rooms in the Hotel to hotel guests, nor entering into
agreements by Operator affecting the Hotel with concessionaires, subtenants or
licensees, shall be deemed to be a Transfer of the Hotel.

ARTICLE
13

MISCELLANEOUS

13.1.        Severability.  If any term or provision of any Article or
Section of this Agreement, or the application thereof to any Persons or
circumstances, shall to any extent or for any reason be invalid or
unenforceable, the remainder of this Agreement and the application of such term
or provision to Persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of any Article or Section of this Agreement shall be valid and
enforced to the fullest extent permitted by law.

13.2.        Approvals.  Unless specifically provided herein to the
contrary, whenever either party hereto is requested hereunder to give its
consent or approval to a matter, such consent or approval shall not be
unreasonably withheld or delayed.  If a
party shall desire the consent or approval of the other party hereto to any
matter, such party may give notice to such other party that it requests such
consent or approval, specifying in such notice the matter as to which such
consent or approval is requested and reasonable detail respecting such
matter.  Except as otherwise herein
provided, if such other party shall not respond negatively in writing to such
notice within thirty (30) days after receipt thereof or such longer period as
is expressly provided herein, such other party shall be deemed to have
consented to or approved the matter referred to in such notice.

13.3.        Waivers.  No failure by Operator or Owner to insist
upon strict performance of any covenant, agreement, term or condition of this
Agreement, or to exercise any right or remedy consequent upon a breach thereof,
shall constitute a waiver of any such breach or any subsequent

 41
 

 

breach of such covenant, agreement, term or
condition of this Agreement, and no breach thereof shall be waived, altered or
modified except by written instrument. 
No waiver of any breach shall affect or alter this Agreement, but each
and every covenant, agreement, term or condition of this Agreement shall
continue in full force and effect with respect to any other existing or subsequent
breach thereof.  Notwithstanding anything
contained herein to the contrary, and anything at law or in equity, in any
action of proceeding between the parties (including, without limitation, any
arbitration proceeding) arising under or with respect to this Agreement or in
any manner pertaining to the Hotel or to the relationship of the parties
hereunder, each party hereby unconditionally and irrevocably waives and
releases any right, power or privilege either may have to claim or receive from
the other party hereto any punitive, consequential, exemplary, statutory or
treble damages, each party acknowledging and agreeing that the remedies herein
provided, and other remedies at law and in equity, will in all circumstances be
adequate.  The foregoing waiver and
release shall apply in all actions or proceedings between the parties and for
all causes of action or theories of liability, whether for breach of this
Agreement or for violation of any other duty owing by either party to the other
which may in any way relate to Operator’s management or operation of the
Hotel.  Both parties further acknowledge
that they are experienced in negotiating agreements of this sort, have had the
advise of counsel in connection herewith, and have been advised as to, and
fully understand, the nature of the waivers contained in this Section 13.3.

13.4.        Successors and Assigns.  This Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the parties hereto and their
respective permitted heirs, successors, assigns, devisees, administrators,
Personal representatives.

13.5.        Force Majeure and
Operator’s Right to Close Hotel.  In
the event of a Force Majeure Event, the obligations of the parties and the time
period for the performance of such obligations (other than the payment of
money) shall be adjusted to the extent such parties are prevented, hindered, or
delayed in such performance during the period of such Force Majeure Event
(except as otherwise expressly provided in this Agreement).  Upon the occurrence of a Force Majeure Event,
the affected party shall give prompt, written notice of such Force Majeure
Event to the other party setting forth a description of the Force Majeure Event
and its cause (to the extent known to such party) and a description of the
condition delaying the performance of such party’s obligations.  If at any time during the Term it becomes
necessary in Operator’s and Owner’s reasonable opinion to cease operation of
the Hotel in order to protect the Hotel and/or the health, safety and welfare
of the guests of the Hotel and/or Hotel Personnel in an emergency situation
caused by a Force Majeure Event, then in such event, Operator may close and
cease operation of all or part of the Hotel, and shall so advise Owner as soon
as is reasonably possible, with reopening and commencing operation when both
Operator and Owner deem that such may be done without jeopardy to the Hotel,
its guests and the Hotel Personnel.  At
all times whenever possible, Operator shall first consult with Owner regarding closure
or interruption of any operations at the Hotel consequent to a Force Majeure
Event.

13.6.        Estoppel Certificate.  Upon the request of either party or a
Beneficiary of either party, the party receiving the request shall execute a
certificate stating whether or not this Agreement is in full force and effect,
whether or not there are any uncured defaults hereunder, whether or not all
sums due and owing hereunder have been paid, whether it is unmodified, and

 42
 

 

whether it constitutes the entire agreement among
the parties.  Failure of the other party
to deliver such certificate to the requesting party within ten (10) business
days after such request shall mean that such other party certifies that this
Agreement is in full force and effect, that there are no uncured defaults of
the requesting party, and that the requesting party has paid to the other party
all sums due and owing by the requesting party. 
The party that requests the estoppel certificates shall pay all reasonable
costs and expenses of the party receiving such request with respect to its
review and execution.

13.7.        Indemnification.

13.7.1.     Operator.  Operator shall defend, indemnify, protect,
and hold Owner, its Affiliates, and all of their respective principals,
members, managers, officers, directors, shareholders, employees, agents and
representatives harmless from and against any and all claims, demands, damages,
judgments, costs, losses, penalties, fines, liens, suits, and expenses and
liabilities, including, without limitation, attorneys’ fees and costs and
expenses incident thereto (collectively, “Claims”), arising by reason of the
gross negligence, intentional fraud or knowingly willful misconduct of Operator
or its Affiliates.  The acts or omissions
(including gross negligence, intentional fraud or knowingly willful misconduct)
of Hotel Personnel shall not be imputed to Operator or its Affiliates, or
deemed to constitute Operator’s or its Affiliates’ intentional fraud or
knowingly willful misconduct, unless such acts or omissions were in compliance
with policies and procedures established by the Corporate Office or resulted
directly from the gross negligence, knowingly willful misconduct or fraudulent
acts of the Corporate Personnel in supervising such Hotel Personnel.  All costs and expenses incurred by Operator
under this Section 14.7.1 shall be at its own expense.

13.7.2.     Owner.  Owner shall defend, indemnify, protect, and
hold Operator, its Affiliates, and all of their respective principals, members,
managers, officers, directors, shareholders, employees and agents and
representatives harmless from and against any and all Claims arising in
connection with (i) the ownership and operation of the Hotel and of any areas
outside of the Hotel located on the Premises owned by Owner or its Affiliates
or related in any manner thereto or (ii) any action taken or omitted to be
taken pursuant to this Agreement, by Owner, Operator or their respective
officers, shareholders, directors, employees, or its agents or representatives
employed pursuant to the terms of this Agreement, except Claims for which
Operator has indemnified Owner pursuant to Section 13.7.1.  All costs and expenses incurred by Owner
under this Section 13.7 shall be at Owner’s expense and not an Operating
Expense.

13.7.3.     Survival.  The provisions of this Section 13.7 shall
survive the termination or the expiration of this Agreement.

13.8.        Warranties and
Covenants.

13.8.1.     Operator.  Operator represents and warrants that
Operator is a limited liability company duly organized and existing under the
laws of the State of Missouri, and has full power and authority to enter into
this Agreement and to carry out the transaction herein contemplated; further,
that the undersigned officers of Operator have all necessary authority to
execute this Agreement on behalf of Operator.

 43
 

 

13.8.2.     Owner.  Owner represents and warrants that Owner is
duly organized and existing under the laws of the State of Delaware and as of
the Opening Date will be qualified to do business in the State of Missouri, and
has full power and authority to enter into this Agreement and to carry out its
obligations hereunder and that upon execution, the Agreement shall be a legal,
valid and binding obligation of Owner; and further, that the undersigned have
all necessary authority to execute this Agreement on behalf of Owner.

13.8.3.     Actions.  There are no actions, suits or proceedings
pending, or, so far as Owner has actual knowledge, threatened against Owner
which might result in any inability of Owner to perform its obligations pursuant
to this Agreement. There are no actions, suits or proceedings pending, or, so
far as Operator has actual knowledge, threatened against Operator which might
result in any inability of Operator to perform its obligations pursuant to this
Agreement.

13.9.        Notices.  All notices, consents, determinations,
requests, approvals, demands, reports, objections, directions and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly delivered and to be effective
(i) upon personal delivery thereof to the other party; (ii) upon electronic
facsimile transmission to the other party (with telephonic confirmation of
receipt); (iii)on the next business day following deposit by the sender via
overnight DHL, Federal Express, or other similar courier service; or (iv) three
(3) business days following deposit by the sender in the United States Postal
Service, or its successor, as Express Mail or as registered or certified
matter, postage prepaid, return receipt requested, addressed to the parties at
the addresses specified in below, or at such other address as the party to whom
the notice is sent has designated in accordance with this Section 13.9.

	
  Owner:

  	
   

  	
  KINGSDELL L.P.

  
	
   

  	
   

  	
  212 N.
  Kingshighway Blvd., Suite 1023

  
	
   

  	
   

  	
  St. Louis, MO
  63108

  
	
   

  	
   

  	
  Attn: James
  Smith

  
	
   

  	
   

  	
  Facsimile:
  314-633-3034

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SONNENSCHEIN
  NATH & ROSENTHAL LLP

  
	
   

  	
   

  	
  One Metropolitan
  Square, Suite 3000

  
	
   

  	
   

  	
  St. Louis,
  Missouri 63102

  
	
   

  	
   

  	
  Attn: Jennifer
  A. Marler, Esq.

  
	
   

  	
   

  	
  Facsimile: (314)
  259-5959

  

 

 44
 

 

 

	
  Operator:

  	
   

  	
  CWE HOSPITALITY
  SERVICES, LLC

  
	
   

  	
   

  	
  212 N.
  Kingshighway Blvd., Suite 1023

  
	
   

  	
   

  	
  St. Louis, MO
  63108

  
	
   

  	
   

  	
  Attn: James
  Smith

  
	
   

  	
   

  	
  Facsimile:
  314-633-3034

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to
  the same address, marked:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SONNENSCHEIN
  NATH & ROSENTHAL LLP

  
	
   

  	
   

  	
  One Metropolitan
  Square, Suite 3000

  
	
   

  	
   

  	
  St. Louis,
  Missouri 63102

  
	
   

  	
   

  	
  Attn: Jennifer
  A. Marler, Esq.

  
	
   

  	
   

  	
  Facsimile: (314)
  259-5959

  

 

13.10.      Amendments.  This Agreement, or any provision thereof, may
not be modified, altered or changed except by another written instrument
executed by the parties hereto.

13.11.      Entire Agreement.  This writing contains the entire agreement of
the parties hereto concerning the direction, supervision, management and operation
of the Hotel, and this Agreement supersedes all other agreements and
understandings (whether oral or written) heretofore or contemporaneously
herewith made by the parties.

13.12.      Further Instruments.  Each party hereto shall further execute and
deliver all such other appropriate supplemental agreements and other
instruments and take such action as may be necessary to make this Agreement
fully and legally effective, binding and enforceable as between the parties
hereto and as against third parties.

13.13.      Applicable Law.  This Agreement shall be governed in all
respects by the laws of the State of Missouri. 
Venue for any action under this Agreement shall be in the State of
Missouri.

13.14.      Brokers, Finders, Etc.  Each party represents to the other that it
has engaged no broker, agency or finder in connection with this transaction.

13.15.      Time.  Time is of the essence of this Agreement and
every portion hereof.

13.16.      No Party Deemed Drafter.  Owner and Operator agree that no party shall
be deemed to be the drafter of this agreement and further agree that in the
event that this Agreement is ever construed by a court of law, such court shall
not deem either party to be the drafter of this Agreement.

13.17.      Hotel Name.  During the Term, the Hotel shall be known as
the “Chase Park Plaza”, or such other name selected by mutual agreement of
Owner and Operator.  Landlord shall own
and hold all right title interest in the and to the Hotel name and to any name
used in any restaurant, café, club or other operation or concession within the
Hotel, and any logo, symbol or design used in connection therewith, and such
names, logos, symbols and designs shall be nonexclusively licensed to Operator
during the Term for use at the Hotel, but may not be

 45
 

 

used by Operator at locations other than the
Hotel.  Except as provided above, no
other letter, word, design, symbol, or other matter of any kind shall be
superimposed on, associated with, or shown in such proximity to the Trademarks
so as to alter or dilute them and Operator shall not combine any of the
Trademarks with any other trademark, service mark or logo.

13.18.      Relationship and
Limitation on Fiduciary Duties. 
Nothing in this Agreement contained shall constitute, or be construed to
constitute or create, a partnership, joint venture or lease between Owner and
Operator with respect to the Hotel.  This
Agreement is for the benefit of Owner and Operator and shall not create third
party beneficiary rights;
provided, however, that Landlord shall have the rights conferred upon Landlord
in this Agreement and such other rights as are set forth in the Owner Agreement
(as hereinafter defined).  Except
as otherwise expressly provided in this Agreement, Owner and Operator are free
to compete with each other in connection with any other business opportunities
or investments and shall have no obligation to account to each other for such
activities.  In operating the Hotel,
entering into contracts, accepting reservations, and conducting financial transactions
for the Hotel, Operator acts on behalf of and as agent for Owner and assumes no
independent contractual liability.  To
the extent any fiduciary duties are inconsistent with, or would have the effect
of modifying, limiting or restricting, the express provisions of this
Agreement: (a) the terms of this Agreement shall prevail, (b) this Agreement
shall be interpreted in accordance with general principles of contract
interpretation without regard to the common law principles of agency (except as
expressly provided for in this Agreement) and (c) any liability between the
parties shall be based solely on principles of contract law and the express
provisions of this Agreement.  For
purposes of assessing Operator’s fiduciary duties and obligations under this
Agreement, the parties acknowledge that the terms and provisions of this
Agreement and the duties and obligations set forth herein are intended to
satisfy the fiduciary duties which may exist as a result of the relationship
between the parties, including, without limitation, all duties of loyalty, good
faith, fair dealing, full disclosure or any other duty deemed to exist under
the common law principles of agency or otherwise.  The parties hereby unconditionally and
irrevocably waive and release any right, power or privilege either may have to
claim or receive from the other party any punitive, exemplary, statutory, or
treble damages or any incidental or consequential damages with respect to any
breach of fiduciary duties.

13.19.      Attorneys’ Fees.  In the event any action or proceeding is
commenced to obtain a declaration of rights hereunder or to enforce any
provision hereof, to seek rescission of this Agreement for default or any other
relief in connection with the transaction contemplated herein, whether legal or
equitable, the prevailing party in such action shall be entitled to recover its
reasonable attorneys’ fees in addition to all other relief to which it may be
entitled therein whether or not such action is prosecuted to judgment.  “Prevailing party” within the meaning of this
paragraph shall include, without limitation, a party who dismisses an action
for recovery hereunder in exchange for payment of the sums allegedly due,
performance of covenants allegedly breached or consideration substantially
equal to the relief sought in the action. 
If either party to this Agreement is required to initiate or defend
litigation with a third party because of the violation by the other party of
any term or provision of this Agreement, then the party so litigating shall be
entitled to reasonable attorneys’ fees from the other party to this
Agreement.  Attorneys’ fees shall include
attorneys’ fees on any appeal, and in addition a party entitled to attorneys’
fees shall be entitled to all other reasonable costs incurred in connection
with such

 46
 

 

action. 
All indemnities provided for herein shall include, but without
limitation, the obligation to pay costs of defense in the form of court costs
and attorneys’ fees.

13.20.      Interpretation.  This Agreement shall be construed reasonably
to carry out its intent without presumption against or in favor of either
party.  If any provision hereof shall be
declared invalid by any court or in any administrative proceeding, then the
provisions of this Agreement shall be construed in such manner so as to
preserve the validity hereof and the substance of the transaction herein
contemplated to the extent possible.  The
captions on paragraphs are provided for purposes of convenience and are not
intended to limit, define the scope of or aid in interpretation of any of the
provisions hereof.

13.21.      Gender.  All pronouns and singular or plural
references as used herein shall be deemed to have interchangeably (where the
sense of the sentence requires) a masculine, feminine or neuter, and/or
singular or plural meaning, as the case may be.

13.22.      Quiet Enjoyment.  Owner covenants that Operator, in fulfilling
its obligations hereunder, shall and may peaceably and quietly possess, manage
and operate the Hotel during the Term, and Owner will at its own expense
(unless the matter creating the impediment to quiet enjoyment would be
characterized as an Operating Expense) undertake and prosecute any appropriate
action, judicial or otherwise, to assure such peaceful and quiet possession by
Operator.  Owner further agrees that
throughout the term of this Agreement it will pay, keep, observe and perform
all payments, terms, covenants, conditions and obligations required under any
government or tax lien or any Deed of Trust, CC&R’s or other agreement
creating a lien on the Hotel or any part thereof or interest therein.

13.23.      Exhibits.  The Exhibits to which reference is made in
this Agreement shall be deemed incorporated herein in full, whether or not
actually attached hereto.

13.24.      Irrevocability.  Owner and Operator each acknowledge that they
are entering into this Agreement in reliance on the long term nature of the
Agreement, and further acknowledge that the rights, duties, powers and
authority of each of the parties hereto, are intended to be non-terminable
throughout the Term, except in accordance with the express provisions of this
Agreement or, where appropriate, as a remedy for the occurrence of any Event of
Default.  It is agreed that neither party
will achieve the benefits intended to be achieved if either party has any
continuing right or power to terminate this Agreement, or the agency hereby
created, except in accordance with the express provisions of this
Agreement.  Accordingly, both Owner and
Operator, as a substantial inducement to the other to enter into this
Agreement, as an inducement to Operator to invest the skill, time, expertise
and customer relationships necessary to achieve the long term benefits herein
contemplated, and as an inducement to Owner to ensure the full and unrestrained
diligent efforts of Operator in the management and operation of the Hotel in
accordance with the provisions of this Agreement, hereby irrevocably waive and
relinquish any right, power or authority existing at law or in equity to
terminate this Agreement, except in accordance with the express provisions of
this Agreement.  The parties further
hereby acknowledge that any breach of the provisions of this Section 14.24, by
either party will cause irreparable and permanent damage to the other party,
not fully or substantially compensable by money damages.

 47
 

 

13.25.      Confidentiality.  Owner and Operator agree that the terms,
conditions and provisions set forth in this Agreement are strictly
confidential.  In addition, Owner and
Operator agree to keep strictly confidential all Proprietary Information of
Operator, Landlord and Owner and any information of a proprietary or
confidential nature about or belonging to a party or to any Affiliate of a
party to which the other party gains or has access by virtue of the
relationship between the parties.  Except
as disclosure may be required to obtain the advice of professionals or
consultants, or financing for the Hotel from an institutional lender, or in
furtherance of a permitted assignment of this Agreement, or as may be required
by law or by the order of any government, regulatory authority, or tribunal or
otherwise to comply with Legal Requirements (including reporting requirements
applicable to publicly registered companies), Owner and Operator shall make
every effort to ensure that such information is not disclosed to the press or
to any other third Person without the prior consent of the other party.  The obligations set forth in this Section
13.25 shall survive any termination or expiration of this Agreement.  Owner and Operator shall cooperate with one
another on all public statements, whether written or oral and no matter how
disseminated, regarding their contractual relationship as set forth in this
Agreement or the performance of their respective obligations under this
Agreement.

13.26.      Owner Agreement.  Owner and Operator agree to execute an owner
agreement (the “Owner Agreement”) in the form attached hereto as Exhibit F.

ARTICLE
14

ARBITRATION

14.1.        Arbitration.  The parties shall resolve any dispute that
may arise in connection with this Agreement through final and binding
arbitration (without appeal or review) in St. Louis, Missouri, administered by
an independent arbitration tribunal pursuant to the Commercial Arbitration
Rules of the American Arbitration Association (the “Arbitration Tribunal”).  Notwithstanding the foregoing, the
Arbitration Tribunal’s decision on any matter submitted for arbitration shall
be based upon what is commonly referred to as the “baseball arbitration”
approach, whereby the Arbitration Tribunal may only decide in favor of the
position presented by either Owner or Operator, and may not make a
ruling/determination other than in favor of one of the two positions
presented.  If more than one issue shall
be submitted to the same Arbitration Tribunal for resolution, each such issue
shall be deemed a separate arbitration for all purposes hereof, such issues to
be identified separately by the parties in their submission to arbitration, and
each such issue shall be subject to a separate decision by the Arbitration
Tribunal.

14.2.        Selection of Arbitrator.  All arbitrators appointed to the Arbitration
Tribunal hereunder shall be Persons having not less than ten (10) years’
experience in the area of expertise on which the dispute is based (e.g. with
respect to operational matters, experience in the management and operation of
hotels of generally the same class and category as the Hotel, or, with respect
to financial matters, experience in the financial or economic evaluation or
appraisal of such first-class hotels). 
Wherever this Agreement specifically provides that a matter in dispute
be determined by arbitration, the party desiring to initiate such proceedings (“requesting
party”) shall give notice thereof to the other party (“responding party”),
stating that the requesting party desires to have such controversy reviewed by
an Arbitration Tribunal and setting forth the name and address of the Person
whom such party has designated to act as an

 48
 

 

arbitrator. 
If the parties can agree upon an arbitrator, the dispute may be
arbitrated by a single arbitrator.  If,
within fifteen (15) days after receipt of such notice, the parties have not
been able to agree upon an arbitrator then the responding party shall designate
a Person to act as arbitrator by a notice to the requesting party setting forth
the name and address of the Person so designated.  The two (2) arbitrators designated as
aforesaid shall meet within ten (10) days after the second arbitrator shall be
appointed and if within such ten (10) day period they shall not have agreed
upon the question in dispute, they shall promptly select a third arbitrator; if
they shall not be able to agree on such third arbitrator within fifteen (15)
days after the second arbitrator shall be appointed, then either arbitrator on
five (5) days’ notice in writing to the other, or both arbitrators, shall apply
to the American Arbitration Association in St. Louis, Missouri or its
successors to designate and appoint such third arbitrator.  In the event of the failure, refusal or inability
of any arbitrator to act, a new arbitrator will be appointed in his stead, such
appointment to be made in the same manner as hereinbefore provided for the
appointment of such arbitrator so failing, refusing or unable to act.

14.3.        Authority.  The authority of the Arbitration Tribunal
shall be limited to deciding the matter submitted to it.  THE ARBITRATION TRIBUNAL SHALL HAVE NO
AUTHORITY TO AWARD ANY PUNITIVE, EXEMPLARY, STATUTORY OR TREBLE DAMAGES OR TO
VARY OR IGNORE THE TERMS OF THIS CONTRACT, AND SHALL BE BOUND BY CONTROLLING
LAW.  ALL PROCEEDINGS, AWARDS AND
DECISIONS UNDER ANY MEDIATION OR ARBITRATION PROCEEDING SHALL BE STRICTLY
PRIVATE AND CONFIDENTIAL.

14.4.        Fees and Expenses.  Subject to the right of the prevailing party
to seek reimbursement from the other party below, the parties agree to share
equally the costs, including fees, of the Arbitration Tribunal selected or
appointed under this Article 14.  As soon
as practicable after selection of the Arbitration Tribunal, the Arbitration
Tribunal or its designated representative shall determine a reasonable estimate
of the anticipated fees and costs, and send a statement to each party setting
forth that party’s equal share of the fees and costs.  Within ten (10) days after receipt of the
statement, each party shall deposit the required sum with the Arbitration
Tribunal, as applicable.  Notwithstanding
the foregoing the prevailing party in any arbitration, suit or other action
arising out of or related to this Agreement shall be entitled to recover from
the other party all reasonable fees, costs and expenses incurred by the
prevailing party in connection with the arbitration, suit or other action,
including reasonable judicial and extra-judicial attorneys’ fees, expenses and
disbursements and fees, costs and expenses relating to any arbitration or
appeal.  If any party secures a judgment
in any proceeding brought to enforce or interpret this Agreement, then any
costs or expenses (including reasonable attorneys’ fees) incurred in enforcing,
or in appealing from, such judgment shall be payable by the party against whom
such judgment or determination on appeal has been rendered and shall be
recoverable separately from and in addition to any other amount included in
such judgment.

14.5.        Decision.  The decision of arbitrator(s) selected in the
manner hereinbefore provided shall be given within a period of thirty (30) days
(i) after the appointment of the third arbitrator or (ii) in the case of sole
arbitrator, within thirty (30) days after the date when it is first established
that it is the sole arbitrator.  Any
arbitrator designated to serve in accordance with the provisions of this
Agreement shall be qualified by training and experience for the matter in

 49
 

 

dispute. 
The decision of such Arbitration Tribunal shall be final and binding
upon the parties and shall be enforceable in any court of competent
jurisdiction.

14.6.        Limitation of Authority.  The Arbitration Tribunal shall have the right
only to interpret and apply the terms of this Agreement and shall not change
any such terms or deprive any party to this Agreement of any rights provided in
this Agreement.

14.7.        Legal Proceedings.  Notwithstanding anything in this Article 15
to the contrary, the parties shall have the right to commence litigation or
other legal proceedings with respect to any claims solely relating to: (i)
preserving or protecting Operator’s Proprietary Information, (ii) emergency or
injunctive relief, or (iii) enforcement of the dispute resolution provisions of
this Agreement and/or any arbitration award.

ARTICLE
15

OPERATOR’S RIGHTS WITH RESPECT TO OWNER’S SECURITIES LAW OFFERINGS

If Owner undertakes an
offering of interests in Owner, so that such offering is subject to any of the
provisions of the applicable federal or state securities laws or regulations,
then Owner shall, upon request of Operator, prior to undertaking any such
transaction, provide to Operator assurances reasonably satisfactory to Operator
that the offering summary, offering memorandum and the supplements and exhibits
thereto and the subscription documents which shall be delivered to offerees in
connection with the transaction, if any, comply on their face with applicable
federal and state laws regarding registration or qualification or an exemption
therefrom.  Such offering documents shall
affirmatively state that Operator has made no representations on which such
materials are based.  Owner, any general
partner of Owner, and any partnership or other entity formed for the purpose of
selling its interests (“Entity”), shall jointly and severally indemnify, protect,
defend and hold Operator and its Affiliates harmless from any and all
liability, claims, damages, causes of action, costs and expenses arising out of
or in connection with, or in any manner caused by, any such securities offering
made by Owner, any general partner of Owner, and any such Entity, or on account
of the acts or omissions of Owner, any general partner of Owner, and any such
Entity, or their agents (other than Operator, its officers, employees and
representatives), underwriters, employees or representatives in connection
therewith, or on account of the violation by Owner, any general partner of
Owner, and any such Entity, or their agents (other than Operator, its officers,
employees and representatives), underwriters, employees or representatives, of
any applicable federal or state securities laws or regulations in connection
therewith, including but not limited to, those acts or omissions which cause
Operator to be deemed an issuer of securities as that term is defined under
applicable federal and state securities laws. 
Notwithstanding anything to the contrary contained in this Agreement,
any limitations on liability specified in this Agreement, shall not pertain to
any damages to which Operator may be entitled on account of the breach of this Article
15, the indemnity obligation hereunder of Owner, any general partner of Owner,
or any such Entity, except that the indemnity obligation and any liability
arising on account of a breach of this Article 15 shall pertain only to the
Person or Persons who at the time of the offering were the Owner hereunder, or
the general partner of such Entity.

 50
 

 

ARTICLE
16

PROPRIETARY INFORMATION

16.1.        Use of Proprietary
Information.  Operator represents
that it has the right to use the Proprietary Information of Operator in
connection with the operation of the Hotel. 
Owner hereby acknowledges that the Proprietary Information of Operator
and the goodwill associated therewith are the sole and exclusive property of
Operator and may be used by Operator and its Affiliates for any lawful
purpose.  As part of the management
services to be provided under the terms of this Agreement, Operator shall use
the Proprietary Information of Operator as it deems appropriate and advisable
in operating the Hotel.  Operator has the
right to determine the form of presentation and use of the Proprietary
Information of Operator and the Proprietary Information of Landlord in
conjunction with the operation of the Hotel including the marketing, promotion,
advertising and management thereof, for the sales or marketing of any goods or
services, or on any Hotel signage; provided that if Landlord reasonably objects
to Operator’s use of any item of the Proprietary Information of Landlord in a
particular circumstance, then Landlord shall have the right to require Operator
to cease use of such item of Proprietary Information of Landlord in such
circumstance.  It is specifically agreed that the Proprietary Information of Operator
shall not include any of the following, which constitute Proprietary Information
owned by Landlord:  (a) any ownership
rights in the names “Chase,” “Chase Hotel,” “Chase Park Plaza,” “Park Plaza” or
any other names used to identify the Hotel, (b) any marks registered with
respect to such names, (c) any ownership rights in the names “Café Eau,” “Eau
Bistro,” or “The Tenderloin Room” or any registered marks relating to such
names, or (d) any other names, trademarks or other intellectual property that
identifies the Hotel or any component part of the Hotel. Operator shall not
contest the rights of Landlord in respect of any such Proprietary Information
of Landlord, including any additions or improvements to such Proprietary
Information of Owner by whomever developed. 
Upon the expiration or sooner termination of this Agreement, Operator
shall relinquish possession of any Proprietary Information of Landlord
(including any Proprietary Information in digital form), and shall not use any
Proprietary Information of Landlord.

16.2.        Restrictions on Owner.  Owner shall not acquire any right, title or
interest of any kind or nature whatsoever in or to the Proprietary Information
of Operator or the goodwill associated therewith, and Owner may not itself use
the Trademarks of Operator or apply for international, United States federal,
or state or territorial registration of any rights in the Trademarks of
Operator.  Owner shall not contest the
rights of Operator or its Affiliates in respect of the Proprietary Information
of Operator, including any additions or improvements to the Proprietary Information
of Operator by whomever developed.  Owner
agrees that no right or remedy of Owner for any default of Operator hereunder,
or the delivery of possession of the Hotel or any provision of this Agreement,
shall confer upon Owner, or any Person claiming by or through Owner, the right
to use the Proprietary Information of Operator in connection with the use or
operation of the Hotel or otherwise. 
Upon the expiration or sooner termination of this Agreement, Owner shall
return to Operator all Proprietary Information of Operator (including any
Proprietary Information in digital form), and shall not use the Proprietary
Information of Operator.  In the event of
any breach of this covenant by Owner, Operator shall be entitled to relief by
injunction, and to all other available legal rights or remedies.  The provisions of this Section 16.2 shall
survive the expiration or sooner termination of this Agreement.

 51
 

 

ARTICLE
17

CONDOMINIUM OBLIGATIONS

17.1.        Condominium Regime.  The declaration of condominium, the map of
the condominium and all other documents relating to the creation and operation
of the condominium regime in the Project, including, without limitation, any
covenants, conditions and restrictions, easements (including reciprocal
easements), declarations, owners’ association documents, rules and regulations,
and purchaser deeds (collectively, the “Governing Documents”) shall not
adversely affect Operator’s rights or obligations under this Agreement in any
material respect.

17.2.        Maintenance, Repair and
Replacement.  The Governing Documents
shall include appropriate provisions to address the responsibility of the Unit
Owners for their allocable shares of maintenance, repair and replacement of
applicable portions of the Hotel, including, without limitation, the methodology
for such allocations and the establishment of any reserves in connection
therewith.  The provisions (and
methodology) for such allocations shall be made by Landlord in its discretion.

17.3.        Condominium Association
Management.  Operator or an Affiliate
of Operator shall have the first right to manage the Condominium Association in
accordance with an agreement to be entered into with the Condominium
Association.

[SIGNATURES ON FOLLOWING PAGE]

 52
 

 

IN WITNESS
WHEREOF, the parties hereto have hereunto executed and delivered this Agreement
as of the date first hereinabove set forth.

 

	
  “OWNER”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  KINGSDELL
  L.P., a Delaware limited partnership

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  IFC, INC., a
  Missouri corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James L.
  Smith

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  James L. Smith,
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “OPERATOR”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CWE
  HOSPITALITY SERVICES, LLC,

  	
   

  	
   

  
	
  a Missouri
  limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L.
  Smith

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James L. Smith,
  President

  	
   

  	
   

  	
   

  

 

 53

 

EXHIBIT B

DEFINITIONS

Accounts:  As defined in Section 3.5.3.

Accounting Month:  A full calendar month (or partial calendar
month if at the beginning or end of the Term).

Additional Rooms:  As defined in Recital B.

Affiliates:  (a) any Person directly or indirectly
controlling, controlled by or under common control with such other Person; and
(b) any member of the immediate family (e.g., grandmother, grandfather, father,
mother, son, daughter, brother, sister, aunt, uncle, niece, nephew, grandson or
granddaughter) of any of the foregoing Persons. 
For purposes hereof, the term “control” shall mean the possession
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, either alone or in combination with any
one or more Persons, whether through the ownership of voting securities, by
contract or otherwise.

Alteration:  Any alteration, change, renovation or
refurbishing, improvement or rebuilding of, or addition to, the Improvements
(as hereinafter defined) or any part thereof, structural or otherwise.

Annual Operating Fee:  As defined in Section 6.1.

Annual Plan:  As defined and determined pursuant to Article
4.

Annual Statement:  As defined in Section 4.5.

Arbitration Tribunal:  As defined in Section 15.1.

Average Annual Fee:  As defined in Section 9.1.1.

Award:  As defined in Section 10.3.

Base Fee:  As defined in Section 6.1.1.

Basic Services:  Those basic hotel-related services provided
to all of the Residential Units, if any, by Operator on its own behalf or by
Operator on behalf of The Private Residences, LLC pursuant to the Governing
Documents.

Beneficiary:  The holders of, or trustees under, any Deed
of Trust.

Cap: 
As defined in Section 6.4.3.

Capital Budget:  As defined in Section 4.1.1.

 B-1
 

 

Capital Improvements:  All Alterations whose costs (excluding taxes
and all freight costs) are not charged to repairs and maintenance in accordance
with the Uniform System.

Cash Flow:  Income After Undistributed Operating Expenses
(pursuant to the Uniform System) during such period less deductions for the
following (to the extent not already deducted by definition):  amounts deposited in the Replacement Reserve
Fund, Annual Operating Fee earned for such period, costs of adding to or
replacement of Equipment, Impositions, ground rents and insurance premiums for
the Hotel; provided, however, notwithstanding anything to the contrary
contained in the Uniform System, the following items attributable to such
period shall not be deducted in determining Cash Flow:

(a)           depreciation or amortization;

(b)           Federal, state and local franchise, income taxes,
penalties, fees, or transfer taxes;

(c)           payment under equipment leases or other leases of personal
property of a capital nature, except for telephones, televisions, refrigerators
and other equipment and Personal property, if any, ordinarily leased in the
operation of hotels as and if mutually agreed on by Operator and Owner;

(d)           cost of Capital Improvements;

(e)           interest or principal payments on debt service related to
or in connection with the Hotel, or any return of capital invested in the
Hotel; and

(f)            costs and expenses related to Section 3.7 and 4.6.

To the extent any dispute arises concerning an item,
cost, expense (including an Operating Expense) or fee which is not expressly or
implicitly addressed in the definition of Cash Flow above, the item, cost,
expense or fee shall be treated in the manner set forth in the Uniform System
for determining Income After Undistributed Operating Expenses.  Notwithstanding anything to the contrary
herein contained, Cash Flow shall not include any monies excluded from the
definition of Gross Revenue.

CC&R’s:  Covenants, conditions and restrictions.

Chase:  As defined in Recital B.

Claims:  As defined in Section 14.7.1.

Commercial Units:  As defined in Recital B.

Compensation:  The salaries or other compensation, including
annual bonuses and Fringe Benefits payable to or in respect of such Hotel
Personnel providing services to or for the benefit of the Hotel, prorated where
applicable to take into account the portion of such individual’s time

 B-2
 

 

devoted or allocated to
providing such services to the Hotel; and in all respects consistent with
industry standards applicable to the Hotel.

Competitive Set:  Those hotel facilities in the St. Louis metropolitan
area that are described on Schedule 2 to this Agreement.

Condemnation:  The permanent or temporary condemnation or
taking of the Hotel by the exercise of the power of eminent domain, by
compulsory acquisition, inverse condemnation, by conveyance or lease in lieu of
or under threat of condemnation, or like procedure.

Condominium Association:  The condominium association comprised of all
of the owners of Residential Units established pursuant to the Governing
Documents.

Controlling Interest in Owner:  As defined in Section 12.2.4.

Corporate Office:  Operator’s home corporate office, presently
located at the Project.

Corporate Personnel:  Any personnel from the Corporate Office who
perform activities at or on behalf of the Hotel in connection with the services
provided by Operator under this Agreement.

CPI: 
That certain index published by the United States Department of Labor,
Bureau of Labor Statistics, known as the Consumer Price Index For All Urban
Consumers, (1982  1984 = 100).  When adjusting an amount for a change in the
CPI, the amount in question shall be determined by multiplying such amount by a
fraction, the numerator of which is the CPI as of the date the adjustment is to
occur, and the denominator of which is the CPI applicable to such amount as of
the date the base period at issue commenced. 
If such index does not exist on any adjustment date in the same format
as referred to in this paragraph, Owner shall substitute in lieu thereof an
index reasonably comparable to such index referred to above which is then
published by the Bureau of Labor Statistics, or successor or similar
governmental agency, or if no governmental agency then publishes an index,
Owner shall substitute therefor any comparable index then published by a
reputable private organization.

Cumulative Period:  The period commencing on the first day of a
given Operating Year and ending on the last day of such Accounting Month in
question in such Operating Year.

Deed of Trust:  Any deed of trust, mortgage, trust deed in
the nature of a mortgage, security agreement, sale/lease back or other
instrument creating a lien or security interest in or upon the Hotel, any
portion thereof or interest therein.

Departmental Expenses:  As defined in the Uniform System.

Effective Date:  As defined in Article 2.

Effective Rate:  A rate of interest per annum of two percent
(2%) above Wells Fargo’s prime rate prevailing from time to time, not to
exceed, however, the highest rate of interest then allowable under the usury
laws of the State of Missouri, as modified by any federal preemption,

 B-3
 

 

such rate of interest to
be adjusted at the end of the month for the following month of each month
included in any period for which interest is charged hereunder, such adjustment
to take effect on the first day of the succeeding month.

Entity:  As defined in Article 18.

Equipment:  A collective term for the Furniture,
Fixtures, Structural Repairs and Equipment and the Operating Equipment.

Event of Default:  As defined in Section 8.1.

Executive Personnel:  As defined in Section 3.3.1.

Extension Term:  As defined in Section 2.2.

Fixed Charges:  As defined in the Uniform System.

Force Majeure Event:  Any one or more of the following events or
circumstances that, alone or in combination, directly or indirectly adversely
affects the operation of the Hotel: fire, earthquake, storm or other casualty;
performance of approved major Capital Improvements adversely affecting a
material portion of the income generating areas of the Hotel or any other area
material to the operation of the Hotel; strikes, lockouts, or other labor
interruptions; war, rebellion, riots, acts of terrorism, or other civil unrest;
acts of God or of any government; disruption to local, national or
international transport services; epidemics, quarantine or any other public
health restrictions or public health advisories; or any other event beyond the
Parties’ reasonable control.

Foreclosure Purchaser:  As defined in Section 11.1.7(a).

Fringe Benefits:  All employee benefits, statutory or
otherwise, including the employer’s contributions of payroll or employment
taxes, workers’ compensation insurance, group life, health and accident
insurance premiums, COBRA benefits, pension and profit sharing plan
contributions, disability benefits, and any other benefits available to such
Hotel Personnel by virtue of their employment by Operator.

Funds Request:  As defined in Section 3.6.2.

Furniture, Fixtures, Structural Repairs and Equipment:  All furniture, furnishings, fixtures and
equipment required for the operation of the Hotel at the Hotel Standard,
including, without limitation: carpeting and other floor coverings, draperies,
fabrics, paintings, works of art, bedspreads, and television sets; office
furniture, fixtures, equipment and machines, including safes, cash registers,
and accounting, duplicating and communication machines and equipment; Guest
Rooms and lobby furniture; specialized hotel and restaurant equipment, such as
equipment required for the operation of kitchens, laundries, the front desk,
dry cleaning facilities, bars and cocktail lounges, and special lighting and
other equipment; vehicles, material handling equipment, and cleaning equipment
and all other fixtures, equipment, apparatus and personal

 B-4
 

 

property needed for such
purpose, other than Operating Equipment, Operating Supplies, and fixtures
attached to and forming part of the Improvements, and Structural Repairs.

Governing Documents: As defined in
Section 17.1.

Gross Operating Profit:  For any period, Gross Revenue for such period
less Departmental Expenses and Undistributed Operating Expenses (including any
franchise fees) for such period.

Gross Revenue:  With respect to any period of time, all
revenues and income (from both cash and credit transactions) of any kind
properly accrued during such period and derived, directly or indirectly, from
the Hotel, its operations, and catering and other operations conducted from the
Hotel, including, without limitation (i) all revenues derived from the
provision of Optional Services and Basic Services and other Hotel services to
the Residential Units during such period, 
and (ii) all revenues derived from the sale during such period of rooms,
meeting rooms, food and beverages (without taking into account any costs
incurred in respect of such sales, other than reserves for bad debts or any
other similar items during such period), items sold from the Guest Rooms, sales
from shops, restaurants, or from parking, or other income generating activities
connected with the Hotel which are operated by Operator for Owner, such as,
income from vending machines, health club memberships, service charges, exhibit
or sales space, all revenues derived during such period from providing
telephone services, and all rents or fees payable during such period by
tenants, licensees and concessionaires, proceeds from use and occupancy or
business interruption or other loss of income, insurance but only to the extent
actually collected during such period (after the deduction of expenses of
adjustment and collection and only to the extent business interruption proceeds
are not otherwise directly paid to Operator), subsidy payments, governmental
allowances and awards, and other forms of incentive payments or awards from any
source whatsoever, properly characterized as operating income and attributable
to such period, excluding, however:

(a)           operating receipts of tenants, licensees and
concessionaires (but not excluding, as above indicated, rents, fees and charges
received from such tenants, licensees and concessionaires, which shall be
included in Gross Revenue);

(b)           Federal, state and municipal excise, sales and use tax
collected directly from patrons or guests as a part of the sales price of any
goods, services or displays, such as transient occupancy tax, room admission,
cabaret or equivalent taxes;

(c)           proceeds from the sale or other disposition (otherwise
than in the ordinary course of business of the Hotel) of the Hotel or any of
the assets used in connection with or forming a part of the Hotel, including
Equipment;

(d)           proceeds from damage recoveries and casualty insurance
proceeds (but not excluding, as indicated above, proceeds from loss of income,
and/or business interruption insurance which shall be included in Gross
Revenue);

(e)           proceeds from any financing, refinancing, capital
contributions or advances from Owner;

 B-5
 

 

(f)            condemnation awards, other than as provided in this
Agreement;

(g)           tips, gratuities to Hotel Personnel, or service charges
levied in lieu of such gratuities;

(h)           credits or refunds to Hotel guests; and

(i)            any payment made in connection with the Cure Right
provided in Section 9.2.3.

Guest Rooms:  A single guest room in the Hotel, that
contains its own entrance from a common area, a bed, a toilet, a sink and a
bathing facility, conforming in size to a typical guest room.

Holdback:  As defined in Section 6.1.1.

Hotel:  As defined in Recital A, including the
Premises and the Improvements.

Hotel Name:  As defined in Section 14.18.

Hotel Personnel:  All individuals performing services in the
name of the Hotel at the Hotel, whether such individuals are employed by
Operator or an Affiliate of Operator.

Hotel Standard:  The standards according to which the Hotel is
to be operated, maintained, furnished, equipped and refurbished, which shall be
(a) at least at a level of service and quality generally considered to be “first
class” and equal to or better than the level of service and quality prevailing
at the Hotel as of the date of this Agreement and (b) in a manner consistent
with the requirements and limitations set forth in this Agreement.

Impositions:  All taxes (including but not limited to all
hotel occupancy, personal property, sales, use and real property taxes),
assessments, water, sewer or other rents, rates and charges, levies, license
fees, permit fees, inspection fees, and any other authorization fees and
charges, which at any time may be assessed, levied, confirmed or imposed on or
with respect to the Hotel (including any portion or department thereof) or the
furnishing, equipping, use or operation thereof.

Improvements:  All improvements which currently exist or in
the future exist on the Premises including, if any, (i) the Chase and the
Commercial Units that are part of the Hotel, (ii) restaurant, laundry and other
commercial space, meeting rooms and public rooms; (iii) back and front offices;
(iv) storage and service areas; and (v) all fixtures and Equipment attached to,
forming a part of and necessary for the operation of such building, structures
or improvements (including, without limitation, ventilating, plumbing, air conditioning,
electrical, refrigeration and acoustical systems).

Institutional Lender:  A bank (including, without limitation, any
commercial bank, mortgage bank, investment bank or merchant bank), savings and
loan institution or association, trust company, insurance company, union,
pension or other retirement fund, “conduit” or

 B-6
 

 

 “securitized” lender or any
other firm which is in the business of making 
real estate or hotel loans.

 

Insurance Requirements:  All terms of each insurance policy and all
orders, rules, regulations and other requirements of the National Board of Fire
Underwriters applicable to the Hotel (including any portion or department
thereof) or the construction, furnishing, equipping or operation thereof,
excluding recommendations of the insurance carriers.

Land:  The land described in Exhibit A, and any
license areas and appurtenant rights, which are incorporated herein by
reference.

Legal Requirements:  All laws, statutes, ordinances, orders,
rules, regulations, permits, licenses, authorizations, directions and
requirements of all government and governmental authorities (including, without
limitation, all appropriate alcoholic beverage control authorities) and public
utilities which now or hereafter may be applicable to the Hotel (including any
portion or department thereof) or the furnishing, equipping or operation
thereof, including any CC&R’s.

Measurement Year:  As defined in Section 9.2.1.

Monthly Statements:  As defined in Section 4.5.

Offer Notice:  As defined in Section 12.4.1.

Offer Terms:  As defined in Section 12.4.1.

Offered Interest:  As defined in Section 12.4.1.

Opening Date:  As defined in Article 2.

Operating Accounts:  As defined in Section 3.4.

Operating Equipment:  All chinaware, glassware, linens, silverware,
flatware and hollowware, uniforms, kitchen utensils, and other items of a
similar nature required for the operations of the Hotel at the Hotel Standard.

Operating Expense:  All ordinary and necessary operating and
maintenance expenses of the Hotel as determined in accordance with the Uniform
System or otherwise provided for in this Agreement.

Operating Plan:  As defined in Section 4.1.

Operating Supplies:  The following items and inventories
thereof:  food and beverage and other
immediately consumable items used in the operation of a Hotel, such as fuel,
soap, light bulbs, mechanical stores, cleaning material, matches, stationary,
paper supplies, and similar items.

Operating Year:  A full calendar year during the Term,
commencing on January 1 and ending on December 31, except that (i) the first
Operating Year (if not commencing on January

 B-7
 

 

1) shall be a partial
year commencing on the Opening Date and ending on December 31 of the year in
which the Opening Date occurs; and (ii) the last Operating Year (if this
Agreement is terminated effective on a date other than December 31) shall be a
partial year commencing on January 1 of the year in which such termination
occurs and ending on the effective date of such termination.  For the purposes of this Agreement, a Full
Operating Year shall mean an Operating Year commencing on January 1 and ending
on December 31.  Notwithstanding the
foregoing, in the event that the first Operating Year does not commence on
January 1, but does commence on or before March 1, such first Operating Year
shall be deemed a Full Operating Year for the purposes of this Agreement..

Operator: The entity described in
the introductory paragraph of this Agreement and its Corporate Personnel, but
specifically excluding all Hotel Personnel.

Optional Services:  Those optional hotel-related services, if
any, (e.g., maid service, repair service, etc.) that may be provided by
Operator to those Units requesting such services for a fee to be established
from time to time by Operator and pursuant to a services agreement between
Operator and the owner of the Unit requesting the services.

Operator Liabilities:  As defined in Section 8.3.4.

Original Term:  As defined in Section 1.2.

Out of Pocket Costs:  All costs, expenses and disbursements paid
during an Operating Year by Operator in fulfilling its obligations hereunder,
including, but not limited to:  (i) out
of pocket costs and travel and entertainment expenses incurred by the general
manager or other personnel, or departments of Operator or its Affiliates in
connection with any services rendered hereunder by Operator (but not any of the
salary, fringe benefits, compensation or other payroll costs for such
personnel); and (ii) expenses such as long distance telephone and facsimile
costs, blueprinting, copying and printing, but excluding any of the regular
expenses of the offices maintained by Operator or its Affiliates outside the
Hotel or which are customarily part of Operator’s general overhead and
administrative expenses.  All such costs,
expenses and disbursements must be substantiated to Owner and are to be
incurred without mark-up, profit or premium.

Owner Liabilities:  As defined in Section 8.3.5.

Park Plaza:  As defined in Recital B.

Person:  Any natural person, or any partnership, joint
venture, limited liability company (under U.S. law or otherwise), limited
partnership, corporation, association, trust or trustee, unincorporated entity
or any other legal entity, including any governmental entity, division, agency
or body or other governmental authority.

Prohibited Party:  Any party that: (i) does not have sufficient
financial resources and liquidity to meet the ongoing financial obligations of
the Hotel and to maintain the Hotel in accordance with the Hotel Standard; (ii)
is generally recognized in the community as being a Person of ill repute or is
in any other manner a Person with whom a prudent business person

 B-8
 

 

would not wish to
associate in a commercial venture or a Person that would be considered by
regulators in the gaming industry to be an unsuitable business associate of
Operator and its Affiliates or would in any way jeopardize the Hotel’s liquor
license; or (iii) is affiliated with the government of any country with which,
or is not itself a company with which, corporate citizens of the United States
of America are prohibited from transacting business by any law, regulation or
decree of the United States of America or its political subdivisions.

Project:  As defined in the Recital A.

Projected Monthly Fee:  As defined in Section 10.1.

Proprietary Information:  With respect to any party, all intellectual
property in a written or tangible form relating to such party or any of its
Affiliates, the business affairs of such party or any of its Affiliates, or any
hotel, resort, restaurant, café, club or other similar operation, spa or
similar facility (or amenity thereto) which such party or any of its Affiliates
owns, leases, operates or franchises, including, without limitation: (i)
Trademarks; (ii) proprietary software; (iii) guest lists and guest history
files, subject to the rights of Owner under Section 9.3.5; (iv) operational
manuals; (v) material relating to the operating and design standards of any
hotel or resort owned, leased, operated or franchised by such party or any of
its Affiliates; and (vi) all trade secrets and copyrightable or patentable
subject matter developed, acquired, or licensed by such party or any of its
Affiliates in the operation of the Hotel or in any other hotel owned, leased,
operated or franchised by such party or any of its Affiliates.

Refinancing:  As defined in Article 7.

Renovation or Rehabilitation:  The renovation or rehabilitation of the
Improvements, as may occur from time to time.

Replacement Reserve Fund:  As defined in Section 3.5.2.

Reserve Fund Amount:  As defined in Section 5.4.1.

Residential Unit:  As defined in Recital B.

Restricted Area:  As defined in Article 19.

Restoration:  The repairing and rebuilding of the Hotel in
case of damage or destruction by a casualty or Condemnation and the restoration
thereof to its condition and character immediately prior to the occurrence of
such casualty or Condemnation, or according to modified plans as provided
herein.

Revenue Data Publication:  Smith’s STAR Report, a monthly publication
distributed by Smith Travel Research, Inc. of Gallatin, Tennessee, or an
alternative source, reasonably satisfactory to Owner and Operator, of data
regarding the Revenue Per Available Room of hotels in the general trade area of
the Hotel.  If such Smith’s STAR Report is discontinued in the future, or
ceases (in the reasonable opinion of either Owner or Operator) to be a
satisfactory source of data regarding the Revenue Per Available Room of various
hotels in the general trade area of the

 B-9
 

 

Hotel, Operator shall
select an alternative source, subject to Owner’s approval.  If the parties
fail to agree on such alternative source within a reasonable period of time,
the matter shall be resolved by arbitration pursuant to Article 14.

Revenue Per Available
Room:  The “revenue per available room” as defined by
the Revenue Data Publication.  If Smith’s STAR Report ceases to be the
Revenue Data Publication, or if the Revenue Data Publication no longer uses
such term, the Revenue Per Available Room shall mean the aggregate gross room
revenues of the hotel in question for a given period of time divided by the
total room nights for such period.  A “room” shall be an available Guest
Room.

RevPAR Penetration Index:  The
fraction that is equal to (i) the Revenue Per Available Room for the Hotel,
divided by (ii) the average Revenue Per Available Room for the hotels in the
Competitive Set, as set forth in the Revenue Data Publication.

Structural Repairs:  Ordinary repairs to and maintenance of the
Improvements.

Sub-Accounts:  As defined in Section 3.5.1.

Term:  As defined in Section 2.1.

Trademarks:  The trademarks, trade name, service marks and
copyrights owned or controlled by Operator or any of its Affiliates and used in
connection with the Hotel, and any related marks, logos or symbols, together
with the right to use any and all slogans, derivations, trade secrets, know-how
and trade dress and all other proprietary rights associated with such names,
marks and slogans, owned or controlled by Operator or its Affiliates.

Transfer:  Any direct or indirect sale, assignment,
transfer, exchange, conveyance, leasing or other disposition or transfer, for
value or otherwise, voluntary or involuntary, by operation of law or otherwise.

Transfer of a Controlling Interest in Owner:  As defined in Section 12.2.4

Transferee:  Any assignee, purchaser, successor, or
transferee of Operator or Owner’s interest, as applicable.

Undistributed Operating Expenses:  As defined in the Uniform System.

Uniform System:  The Uniform System of Accounts for the
Lodging Industry Ninth Revised Edition, as adopted by the Hotel Lodging
Association of New York City, Inc. and the American Hotel & Lodging
Association, without regard to any supplements thereto hereafter adopted.

Unit:  As defined in Recital B.

Unit Owner:  The record owner of a Unit.

 B-10
 

 

Working Capital:  Funds which are reasonably necessary for the
day to day operation of the Hotel’s business, including, without limitation,
amounts sufficient for the operation, maintenance, and repair of the Hotel
(including all fees, reasonable charges and reasonable reimbursements payable
to Operator hereunder and the uninterrupted and efficient operations of the
Hotel and the performance by Operator of its obligations hereunder, the
maintenance of change and petty cash funds, operating bank accounts, “house
banks” (e.g., cash required in cashier’s cages), payrolls, prepaid expenses,
and funds required to maintain inventories and pay accounts payable and accrued
current liabilities or to pay other periodic costs and charges such as property
taxes and insurance premiums).  The
amount of such funds shall be determined pursuant to Section 3.6.

 B-11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]