Lease and development agreement



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ARTICLE 4. RENTAL

[Section 4.1 Commencement Rental.


On the Lease Commencement Date, the Lessee shall pay to the Port Authority a lump sum rental (the “Commencement Rental”) in the amount of Thousand Dollars and No Cents ($ ,000.00). The Lessee hereby acknowledges that the Commencement Rental is paid in consideration of the execution of this Agreement and for other consideration duly received by the Lessee, and agrees that the Commencement Rental shall not be refundable under any circumstances.]1

Section 4.2 Basic Rental.


(a) Obligation to Pay Basic Rental. Beginning on the Rent Commencement Date and continuing throughout the term of the letting under this Agreement, the Lessee shall pay to the Port Authority a basic rental (the “Basic Rental”) for the Premises as follows:

(1) For the period from the Rent Commencement Date through the last day of the calendar month in which the Rent Commencement Date occurs, the Lessee shall pay Basic Rental in an amount equal to the product of (x) Dollars and No Cents ($ .00) and (y) a fraction of which the numerator shall be the number of days from and including the Rent Commencement Date through the last day of such calendar month and the denominator shall be the number of days in such calendar month.

(2) For the period from the first day of the calendar month immediately following the calendar month in which the Rent Commencement Date occurs (such first day, the “Basic Rental Index Date”) through the day preceding the th (_th) anniversary of the Basic Rental Index Date, the Lessee shall pay Basic Rental at the rate of Thousand Dollars and No Cents ($ ,000.00) per annum, payable in equal monthly installments of Dollars ($ .00) each, payable on the Basic Rental Index Date and on the first day of each calendar month thereafter.

(b) Escalations of Basic Rental.

On the th (_th) anniversary of the Basic Rental Index Date, and on each th (_th) anniversary thereafter, the annual rate of Basic Rental shall be increased to an amount equal to One Hundred Percent (1__%) times the annual rate of Basic Rental theretofore payable.

(c) Proration for Final Month.

Notwithstanding the foregoing provisions of this Section, if the Expiration Date occurs on a date that is other than the last day of a calendar month, the Basic Rental payable with respect to the portion of the month in which the Expiration Date occurs shall be an amount equal to the then-applicable monthly installment of Basic Rental multiplied by a fraction of which the numerator shall be the number of days from the first day of such calendar month through the Expiration Date and the denominator shall be the actual number of days in that calendar month.

(d) Partial Certificate of Completion.



Notwithstanding the foregoing provisions of this Section, if the Rent Commencement Date has occurred by reason of the issuance of the first Certificate of Partial Completion for any portion of the Building (pursuant to subdivision (z) of the definition of “Rent Commencement Date”) then, for the period from the Rent Commencement Date through the earlier to occur of (x) the date that is 24 calendar months following the Lease Commencement Date and (y) the date of issuance of the Certificate of Completion, the applicable Basic Rental, as set forth above, shall be pro-rated in the proportion that the area of all portions of the Premises with respect to which a Certificate of Partial Completion has been issued, from time to time, bears to the entire area of the Premises. After the end of the foregoing period, full Basic Rental, as set forth in the foregoing paragraphs, shall be payable.

Section 4.3 Percentage Rental.


(a) Certain Definitions.

Gross Revenues” shall mean all amounts, monies, revenues, receipts and income of every type paid for sales made and for services rendered at or from the Premises, and any other amounts, monies, revenues, receipts and income of any type arising out of or in connection with the operation of the Hotel, including without limitation (but subject to the provisos below) all amounts paid by subtenants, occupants, users, concessionaires, licensees or guests of the Premises for the use and occupancy of all or any portion of the Premises (including without limitation sign and rooftop leases or licenses), or from providers of telecommunications or other services to the Premises or otherwise directly or indirectly arising out of the Premises, any part thereof, any right or interest therein or in respect thereof, or the leasing, use, occupancy or operation of the Premises, or any part thereof, calculated in accordance with Accounting Principles, including without limitation the following: (A) room fees and charges, fixed rental, minimum rental, rental computed on the basis of sales or other criteria, additional rental, escalation rental and security deposits applied in payment of any rental; (B) charges for the providing of goods or services of any kind (including without limitation fees from membership in or usage of any club or recreational facilities located in the Hotel; income from vending machines; income derived from food and beverage sales, catering services, internet and video services, valet services and any other Hotel services; wholesale and retail sales of merchandise; and service charges) paid by any Persons in or on the Premises, or in connection with the use, occupancy or operation of the Premises (even if such goods or services are provided from or to a location off the Premises), and (C) the proceeds of rental or business interruption insurance and any award received in connection with a temporary taking as provided in the Article hereof entitled “Condemnation”, deposits not refunded; and any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Hotel and which would have been included in Gross Revenues if collected without need for such legal action or proceeding; provided, however, that in the event there exists any Sublease, license or other arrangement existing with respect to any portion of the Premises or any goods or services provided therein or in connection with the Hotel, “Gross Revenues” shall include (x) all amounts paid by the consumers or purchasers of such goods or services or (y) the rent, fee or other amounts paid under such Sublease, license or other arrangement, whichever of the foregoing (x) and (y) is greater; provided, further, that in the event that any space in the Premises is subleased to, or any goods or services of the nature described in clause (B) above are provided to, any Affiliate of the Lessee, there shall be included in Gross Revenues the greater of (p) the fair rental or market value of such space or goods and services and (q) the actual rental or amount paid for such space or goods and services. Notwithstanding the foregoing, Gross Revenues shall not include (i) payments of New York City hotel room occupancy taxes and any other excise, sales, use or other taxes or impositions collected directly from guests or other Persons and required to be remitted to any Governmental Authority; (ii) gratuities paid to, or collected for payment to, hotel employees; (iii) the proceeds of any financing or refinancing; (iv) proceeds from the sale of capital assets, including Project property no longer required for the operation of the Premises, (v) any insurance proceeds other than the proceeds of rental or business interruption insurance (as provided above); (vi) any condemnation awards other than awards for use and occupancy in connection with a temporary taking (as provided above); (vii) employee meals, (viii) fees paid to Affiliates of the Lessee for services actually rendered to the extent that the amount of such fees are not in excess of arms-length, fair market amounts,(ix) proceeds from any litigation concerning the construction, structure or maintenance of the Hotel and (x) interest earned on any tax, insurance or similar escrow account.

Payment Period” shall mean (x) each three (3) month period from January 1 through March 31, from April 1 through June 30, from July 1 through September 30 and from October 1 through December 31 each calendar year, (y) a period (if any) of less than three (3) months commencing on the Rent Commencement Date and ending on the immediately following March 31, June 30, September 30 or December 31, as the case may be, and (z) a period (if any) of less than three (3) months commencing on January 1, April 1, July 1 or October 1 and ending on the Expiration Date.

(b) Obligation to Pay Percentage Rental.

Commencing from the Rent Commencement Date, and continuing throughout the term of the letting under this Agreement, the Lessee shall pay to the Port Authority a Percentage Rental (the “Percentage Rental”) in the amount of Percent ( %) of Gross Revenues.

(c) Payments.

Commencing from the Rent Commencement Date, the Lessee shall, at its own cost and expense, furnish to the Port Authority no later than thirty (30) days after the end of each Payment Period during the term of the letting under this Agreement (and thirty (30) days following the expiration or termination of such letting), a statement, in such detail as the Port Authority may reasonably require, of all Gross Revenues during the Payment Period then just ended. Each such statement shall be certified as complete and correct in all material respects by an officer of the Lessee (if a corporation) or, if the Lessee is a partnership or limited liability company, the financial controller. Each statement furnished to the Port Authority pursuant to this Section shall be accompanied by payment of the Percentage Rental, if any, due for the Payment Period for which such statement is prepared.

Section 4.4 Subtenant Impositions.

(a) Obligation to Pay Subtenant Impositions. It is understood and agreed that the Lessee’s obligations hereunder shall include an obligation to pay all applicable Subtenant Impositions. “Subtenant Impositions” shall mean any of the following which are of general application in the City of New York and which at any time during the term of the letting hereunder may be assessed, levied, confirmed, imposed upon or become due and payable in respect of the Premises, or which would be applicable to the Lessee were the Premises owned by a private corporation rather than the Port Authority:

(1) personal property taxes, occupancy and rent taxes, water, water meter and sewer rents, rates and charges, excises, levies and license and permit fees;

(2) any fines, penalties and other similar governmental charges applicable to the foregoing, together with any interest or costs with respect to the foregoing; and

(3) except as otherwise expressly provided in this Agreement, any other governmental levies, fees, rents, assessments or taxes and charges, general and special, ordinary and extraordinary, foreseen or unforeseen, of any kind whatsoever, together with any fines and penalties and any interest or cost with respect thereto.

(b) Right to Pay in Installments. The Lessee shall have the right, without the consent of the Port Authority, to exercise any option granted to a taxpayer by law to pay any special assessments or other Subtenant Impositions in installments, notwithstanding the fact that interest may accrue on the unpaid installments, and if the Lessee exercises any such option it shall pay, as and when they become due, all installments which fall due during the term of the letting hereunder, together with all interest payable thereon.

(c) Right to Contest.

(1) The Lessee shall have the right at its sole cost and expense to challenge, contest or review by appropriate legal proceedings, or in such other manner as may be provided by law, the validity, applicability or amount of any Subtenant Imposition or other tax, assessment, levy, fee or charge which it may be required to pay pursuant to the provisions hereof, and the Lessee shall indemnify the Port Authority against any claims, damages or losses that may arise or result therefrom.

(2) Such challenge, contest or review shall not, unless required by applicable law to prosecute such challenge, contest or review, be in the name of the Port Authority, and in the event such challenge, contest or review would be unavailable to the Lessee without the participation of the lessor of the Premises, the Port Authority will join in such challenge, contest or review to the extent required for the Lessee to maintain such challenge or contest or obtain such review; provided, however, that the Port Authority shall not settle or compromise any such challenge, contest or review on behalf or in the name of the Lessee. The Lessee shall reimburse the Port Authority for all expenses, including the cost of inside or outside legal counsel, incurred by the Port Authority as a result of its participation in such challenge, contest or review.

(3) In connection with any such challenge, contest or review, the Lessee shall in any event raise no defense or claim involving in any way the immunity of the Port Authority, its governmental nature or the provisions of any statutes respecting the Port Authority without first obtaining in each instance the express advance consent of the General Counsel of the Port Authority.

(4) In connection with any such challenge, contest or review, the Lessee shall not defer or suspend compliance with any such Requirement and shall not defer or suspend payment of any such tax, assessment, levy, fee or charge unless by law it is permissible to suspend or defer such compliance or payment and in such event the Lessee shall provide the Port Authority with such security as the Port Authority shall determine is appropriate to protect the Port Authority against losses or penalties which may be imposed as a result of the Lessee’s actions.

(5) Any refunds of Subtenant Impositions previously paid by the Lessee shall be the property of the Lessee, and shall be promptly paid over to the Lessee if received by the Port Authority.



(d) Nature of Obligation to Pay Subtenant Impositions. The Lessee’s obligation to pay all Subtenant Impositions shall be deemed a Rental obligation of the Lessee and from time to time upon the request of the Port Authority, the Lessee shall furnish to the Port Authority evidence of the payment of any Subtenant Imposition for which such evidence is requested.
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