Exhibit 10.3
LEASE AGREEMENT
Dated as of ______ __, 1997
By and Between
_____ TRUST,
AS LANDLORD,
AND
______________________________,
AS TENANT
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS...................................1
1.1 Accounting Period................................1
1.2 Additional Charges ..............................2
1.4 Affiliated Person ...............................2
1.5 Agreement .......................................2
1.6 Applicable Laws .................................2
1.7 Applicable Percentage ...........................2
1.8 Award ...........................................3
1.9 Base Total Hotel Sales ..........................3
1.10 Base Year ......................................3
1.11 Business Day ...................................4
1.12 Capital Addition ...............................4
1.13 Capital Expenditure ............................4
1.14 Claim ..........................................4
1.15 Code ...........................................4
1.16 Commencement Date ..............................4
1.17 Condemnation ...................................4
1.18 Condemnor ......................................4
1.19 Consolidated Financials ........................4
1.20 Date of Taking .................................4
1.21 Default ........................................5
1.22 Disbursement Rate ..............................5
1.23 Distribution ...................................5
1.24 Easement Agreement..............................5
1.25 Encumbrance.....................................5
1.26 Entity..........................................5
1.27 Environment ....................................5
1.28 Environmental Obligation .......................5
1.29 Environmental Notice ...........................5
1.30 Event of Default ...............................5
1.31 Excess Total Hotel Sales........................6
1.32 Extended Terms .................................6
1.33 FF&E Estimate...................................6
1.34 FF&E Funded Amount..............................6
1.36 FF&E Reserve....................................6
1.37 Financial Officer's Certificate ................6
1.38 Fiscal Year ....................................6
1.39 Fixed Term .....................................6
1.40 Fixtures .......................................6
1.41 GAAP ...........................................6
1.42 Government Agencies.............................7
1.43 Ground Lease ...................................7
1.45 Hazardous Substances ...........................7
1.46 Hotel ..........................................8
1.47 Hotel Mortgage .................................8
1.48 Hotel Mortgagee ................................8
1.49 Immediate Family................................8
1.50 Impositions ....................................8
1.51 Incidental Documents ...........................9
1.52 Indebtedness ...................................9
1.53 Insurance Requirements .........................9
1.54 Interest Rate...................................9
1.55 Land ..........................................10
1.56 Landlord ......................................10
1.57 Landlord Liens.................................10
1.58 Lease Year ....................................10
1.59 Leased Improvements ...........................10
1.60 Leased Intangible Property ....................10
1.61 Leased Personal Property ......................10
1.62 Leased Property ...............................10
1.63 Legal Requirements ............................10
1.64 Lien ..........................................11
1.65 Management Agreement ..........................11
1.66 Manager .......................................11
1.67 Minimum Rent ..................................11
1.68 Net Worth .....................................11
1.70 Officer's Certificate .........................11
1.71 Overdue Rate ..................................11
1.72 Parent.........................................11
1.73 Permitted Encumbrances ........................12
1.74 Permitted Liens ...............................12
1.75 Permitted Use .................................12
1.76 Person ........................................12
1.77 Property.......................................12
1.78 Purchase Agreement.............................12
1.79 Records .......................................12
1.80 Rent ..........................................12
1.81 Retained Funds.................................12
1.83 Security Agreement.............................12
1.84 ShoLodge.......................................13
1.85 State .........................................13
1.86 Stock Pledge Agreement ........................13
1.87 Subordinated Creditor .........................13
1.88 Subordination Agreement .......................13
1.89 Subsidiary ....................................13
1.90 Successor Landlord ............................13
1.91 Tampa Renovation ..............................13
1.92 Tenant ........................................13
1.93 Tenant's Personal Property ....................13
1.94 Term ..........................................14
1.95 Total Hotel Sales..............................14
1.96 Uniform System of Accounts ....................14
1.97 Unsuitable for Its Permitted Use ..............14
1.98 Work ..........................................15
ARTICLE 2: LEASED PROPERTY AND TERM.....................15
2.1 Leased Property.................................15
2.2 Condition of Leased Property....................16
2.3 Fixed Term......................................17
2.4 Extended Term...................................17
ARTICLE 3: RENT...............................................17
3.1 Rent............................................17
3.1.1 Minimum Rent..............................18
3.1.2 Additional Rent...........................18
3.1.3 Additional Charges........................21
3.2 Late Payment of Rent, Etc.......................22
3.3 Net Lease.......................................23
3.4 No Termination, Abatement, Etc..................23
3.5 Retained Funds..................................24
ARTICLE 4 USE OF THE LEASED PROPERTY....................25
4.1 Permitted Use...................................25
4.1.1 Permitted Use.............................25
4.1.2 Necessary Approvals.......................26
4.1.3 Lawful Use, Etc...........................26
4.2 Compliance with Legal/Insurance Requirements,
Etc..............................................26
4.3 Environmental Matters...........................27
4.3.1 Restriction on Use, Etc...................27
4.3.2 Indemnification of Landlord...............27
4.3.3 Survival..................................28
ARTICLE 5: MAINTENANCE AND REPAIRS......................29
5.1 Maintenance and Repair..........................29
5.1.1 Tenant's General Obligations..............29
5.1.2 FF&E Reserve..............................29
5.1.3 Landlord's Obligations....................31
5.1.4 Nonresponsibility of Landlord, Etc........32
5.2 Tenant's Personal Property......................32
5.3 Yield Up........................................33
5.4 Management Agreement............................33
ARTICLE 6: IMPROVEMENTS, ETC............................34
6.1 Improvements to the Leased Property. ..........34
6.2 Salvage.........................................35
ARTICLE 7: LIENS........................................35
7.1 Liens...........................................35
7.2 Landlord's Lien.................................35
ARTICLE 8: PERMITTED CONTESTS...........................36
ARTICLE 9: INSURANCE AND INDEMNIFICATION................37
9.1 General Insurance Requirements..................37
9.2 Replacement Cost................................38
9.3 Waiver of Subrogation...........................38
9.4 Form Satisfactory, Etc..........................39
9.5 Blanket Policy..................................39
9.6 No Separate Insurance...........................39
9.7 Indemnification of Landlord.....................40
ARTICLE 10: CASUALTY....................................40
10.1 Insurance Proceeds.............................40
10.2 Damage or Destruction..........................41
10.2.1 Damage or Destruction of Leased
Property.........................................41
10.2.2 Partial Damage or Destruction............41
10.2.3 Insufficient Insurance Proceeds..........41
10.2.4 Disbursement of Proceeds.................42
10.3 Damage Near End of Term........................43
10.4 Tenant's Property..............................43
10.5 Restoration of Tenant's Property...............43
10.6 No Abatement of Rent...........................44
10.7 Waiver.........................................44
ARTICLE 11: CONDEMNATION................................44
11.1 Total Condemnation, Etc........................44
11.2 Partial Condemnation...........................44
11.3 Abatement of Rent..............................46
11.4 Temporary Condemnation.........................46
11.5 Condemnation Near End of Term..................46
11.6 Allocation of Award............................46
ARTICLE 12: DEFAULTS AND REMEDIES.......................47
12.1 Events of Default..............................47
12.2 Remedies.......................................49
12.3 Tenant's Waiver................................51
12.4 Application of Funds...........................51
12.5 Landlord's Right to Cure Tenant's Default......51
ARTICLE 13: HOLDING OVER................................52
ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT52
14.1 Landlord Notice Obligation.....................52
14.2 Landlord's Default.............................52
14.3 Indemnification of Tenant......................53
ARTICLE 15: PURCHASE RIGHTS.............................54
ARTICLE 16: SUBLETTING AND ASSIGNMENT...................54
16.1 Subletting and Assignment......................54
16.2 Required Sublease Provisions...................55
16.3 Permitted Sublease.............................56
16.4 Sublease Limitation............................57
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS....57
17.1 Estoppel Certificates..........................57
17.2 Financial Statements...........................57
ARTICLE 18: LANDLORD'S RIGHT TO INSPECT.................58
ARTICLE 19: EASEMENTS...................................59
19.1 Grant of Easements.............................59
19.2 Exercise of Rights by Tenant...................59
19.3 Permitted Encumbrances.........................59
ARTICLE 20: HOTEL MORTGAGES.............................59
20.1 Landlord May Grant Liens.......................59
20.2 Subordination of Lease.........................60
20.3 Notice to Mortgagee and Superior Landlord......61
ARTICLE 21: ADDITIONAL COVENANTS OF TENANT..............62
21.1 Prompt Payment of Indebtedness.................62
21.2 Conduct of Business............................62
21.3 Maintenance of Accounts and Records............62
21.4 Notice of Litigation, Etc......................62
21.5 Indebtedness of Tenant.........................63
21.6 Financial Condition of Tenant..................64
21.7 Distributions, Payments to Affiliated Persons,
Etc.............................................64
21.8 Prohibited Transactions........................64
21.9 Liens and Encumbrances.........................64
21.10 Merger; Sale of Assets; Etc...................64
ARTICLE 22: MISCELLANEOUS...............................65
22.1 Limitation on Payment of Rent..................65
22.2 No Waiver......................................65
22.3 Remedies Cumulative............................65
22.4 Severability...................................66
22.5 Acceptance of Surrender........................66
22.6 No Merger of Title.............................66
22.7 Conveyance by Landlord.........................66
22.8 Quiet Enjoyment................................67
22.9 Memorandum of Lease............................67
22.10 Notices.......................................67
22.11 Trade Area Restriction........................68
22.12 Construction..................................69
22.13 Counterparts; Headings........................69
22.14 Applicable Law, Etc...........................69
22.15 Right to Make Agreement.......................70
22.16 Nonrecourse...................................70
22.17 Attorneys' Fees...............................70
22.18 Nonliability of Trustees......................70
EXHIBITS
A-1 through A-14 - The Land
B - Restricted Trade Area
C - Allocation of Minimum Rent
D - Tampa Renovation Plans and Budget
LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into as of this ___ day of _________,
1997, by and between _____, a Maryland real estate investment trust, as
landlord ("LANDLORD"), and _________________, a ____________ corporation,
as tenant ("TENANT").
W I T N E S S E T H :
WHEREAS, Landlord owns fee simple title to the Leased Property (this
and other capitalized terms used and not otherwise defined herein having
the meanings ascribed to such terms in ARTICLE 1) described in EXHIBIT A-1
THROUGH A-13 and holds the tenant's interest under the Ground Lease with
respect to the Property described in EXHIBIT A-14; and
WHEREAS, Landlord wishes to lease the Leased Property to Tenant and
Tenant wishes to lease the Leased Property from Landlord, all subject to
and upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in
this Article shall have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein shall have the meanings assigned to them in
accordance with GAAP, (iii) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Agreement, and (iv) the
words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
1.3 "ACCOUNTING PERIOD" shall mean each four (4) week accounting
period of Tenant, except that an Accounting Period may, from time to time,
include five (5) weeks in order to conform Tenant's accounting system to
Tenant's Fiscal Year.
1.2 "ADDITIONAL CHARGES" shall have the meaning given such term in
SECTION 3.1.3.
1.3 "ADDITIONAL RENT" shall have the meaning given such term in
SECTION 3.1.2(A).
1.4 "AFFILIATED PERSON" shall mean, with respect to any Person, (a)
in the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited
liability company, any member of such company, (c) any other Person which
is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such
Person or to one or more of the Persons referred to in the preceding
clauses (a) and (b), (d) any other Person who is an officer, director,
trustee or employee of, or partner in or member of, such Person or any
Person referred to in the preceding clauses (a), (b) and (c), and (e) any
other Person who is a member of the Immediate Family of such Person or of
any Person referred to in the preceding clauses (a) through (d).
1.5 "AGREEMENT" shall mean this Lease Agreement, including EXHIBITS
A-1 THROUGH A-14, B AND C hereto, as it and they may be amended from time
to time as herein provided.
1.6 "APPLICABLE LAWS" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders, from
time to time in existence, of all courts of competent jurisdiction and
Government Agencies, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or
personal property or human health or the Environment, including, without
limitation, all valid and lawful requirements of courts and other
Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements
(including, without limitation, treatment or storage tanks, or water, gas
or oil xxxxx), or emissions, discharges, releases or threatened releases of
Hazardous Substances, chemical substances, pesticides, petroleum or
petroleum products, pollutants, contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or gaseous in nature,
into the Environment, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, underground improvements (including, without
limitation, treatment or storage tanks, or water, gas or oil xxxxx), or
pollutants, contaminants or hazardous or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature.
1.7 "APPLICABLE PERCENTAGE" shall mean (a) three percent (3%) with
respect to the 1998 Fiscal Year; (b) four percent (4%) with respect to the
1999 Fiscal Year; and (c) five percent (5%) with respect to each Fiscal
Year thereafter during the Term.
1.8 "AWARD" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of any of the
Leased Property (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert
witness fees, incurred by Landlord, in connection with obtaining any such
award).
1.9 "BASE TOTAL HOTEL SALES" shall mean Total Hotel Sales for the
Base Year; PROVIDED, HOWEVER, that in the event that, with respect to any
Lease Year, or portion thereof, for any reason (including, without
limitation, a casualty or Condemnation) there shall be a reduction of five
percent (5%) or more in the number of rooms at any Hotel or a change in the
services provided at any Hotel (including, without limitation, if
applicable, the closing of restaurants or the discontinuation of food or
beverage services) from the number of rooms or the services provided during
the Base Year, in determining Additional Rent payable with respect to such
Lease Year, Base Total Hotel Sales shall be reduced as follows: (a) in the
event of the termination of this Lease with respect to any Property
pursuant to ARTICLE 10, 11 OR 12, all Total Hotel Sales attributable to
such Property during the Base Year shall be subtracted from Base Total
Hotel Sales, appropriately prorated based on time elapsed if such
termination occurs on a date other than the first day of any Fiscal Year;
(b) in the event of a complete closing of a Hotel, all Total Hotel Sales
attributable to such Hotel during the Base Year shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; (c) in the
event of a partial closing of a Hotel affecting five percent (5%) or more
of the guest rooms in such Hotel, Total Hotel Sales attributable to guest
room occupancy or guest room services at such Hotel during the Base Year
shall be ratably allocated among all guest rooms in service at such Hotel
during the Base Year and all such Total Hotel Sales attributable to rooms
no longer in service shall be subtracted from Base Total Hotel Sales
throughout the period of such closing; (d) in the event of a closing of a
restaurant, all Total Hotel Sales attributable to such restaurant during
the Base Year shall be subtracted from Base Total Hotel Sales throughout
the period of such closing; and (e) in the event of any other change in
circumstances affecting any Hotel, Base Total Hotel Sales shall be
equitably adjusted in such manner as Landlord and Tenant shall reasonably
agree.
1.10 "BASE YEAR" shall mean the 1998 Fiscal Year with respect to all
of the Properties other than those located in Arizona and the thirteen
Accounting Periods commencing July 13, 1998 with respect to the Properties
located in Arizona.
1.11 "BUSINESS DAY" shall mean any day other than Saturday, Sunday,
or any other day on which banking institutions in The Commonwealth of
Massachusetts or the State of New York are authorized by law or executive
action to close.
1.12 "CAPITAL ADDITION" shall mean any renovation, repair or
improvement to the Leased Property (or portion thereof), the cost of which
constitutes a Capital Expenditure.
1.13 "CAPITAL EXPENDITURE" shall mean any expenditure treated as
capital in nature in accordance with GAAP.
1.14 "CLAIM" shall have the meaning given such term in ARTICLE 8.
1.15 "CODE" shall mean the Internal Revenue Code of 1986 and, to the
extent applicable, the Treasury Regulations promulgated thereunder, each as
from time to time amended.
1.16 "COMMENCEMENT DATE" shall mean the date of this Agreement.
1.17 "CONDEMNATION" shall mean, with respect to any Property, (a) the
exercise of any governmental power with respect to such Property, whether
by legal proceedings or otherwise, by a Condemnor of its power of
condemnation, (b) a voluntary sale or transfer of such Property by Landlord
to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending, or (c) a taking or voluntary
conveyance of all or part of such Property, or any interest therein, or
right accruing thereto or use thereof, as the result or in settlement of
any condemnation or other eminent domain proceeding affecting such
Property, whether or not the same shall have actually been commenced.
1.18 "CONDEMNOR" shall mean any public or quasi-public Person, having
the power of Condemnation.
1.19 "CONSOLIDATED FINANCIALS" shall mean, for any Fiscal Year or
other accounting period of ShoLodge, annual audited and quarterly unaudited
financial statements of ShoLodge prepared on a consolidated basis,
including ShoLodge's consolidated balance sheet and the related statements
of income and cash flows, all in reasonable detail, and setting forth in
comparative form the corresponding figures for the corresponding period in
the preceding Fiscal Year, and prepared in accordance with GAAP throughout
the periods reflected.
1.20 "DATE OF TAKING" shall mean, with respect to any Property, the
date the Condemnor has the right to possession of such Property, or any
portion thereof, in connection with a Condemnation.
1.21 "DEFAULT" shall mean any event or condition which with the
giving of notice and/or lapse of time would ripen into an Event of Default.
1.22 "DISBURSEMENT RATE" shall mean an annual rate of interest, as of
the date of determination, equal to the greater of (i) the Interest Rate
and (ii) the per annum rate for fifteen (15) year U.S. Treasury Obligations
as published in THE WALL STREET JOURNAL plus three hundred fifty (350)
basis points.
1.23 "DISTRIBUTION" shall mean (a) any declaration or payment of any
dividend (except dividends payable in common stock of Tenant) on or in
respect of any shares of any class of capital stock of Tenant, (b) any
purchase, redemption, retirement or other acquisition of any shares of any
class of capital stock of a corporation, (c) any other distribution on or
in respect of any shares of any class of capital stock of a corporation or
(d) any return of capital to shareholders.
1.24 "EASEMENT AGREEMENT" shall mean any conditions, covenants and
restrictions, easements, declarations, licenses and other agreements which
are Permitted Encumbrances and such other agreements as may be granted in
accordance with SECTION 19.1.
1.25 "ENCUMBRANCE" shall have the meaning given such term in SECTION
20.1.
1.26 "ENTITY" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust
company, land trust, business trust, cooperative, any government or agency,
authority or political subdivision thereof or any other entity.
1.27 "ENVIRONMENT" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
1.28 "ENVIRONMENTAL OBLIGATION" shall have the meaning given such
term in SECTION 4.3.1.
1.29 "ENVIRONMENTAL NOTICE" shall have the meaning given such term in
SECTION 4.3.1.
1.30 "EVENT OF DEFAULT" shall have the meaning given such term in
SECTION 12.1.
1.31 "EXCESS TOTAL HOTEL SALES" shall mean, with respect to any Lease
Year, or portion thereof, the amount of Total Hotel Sales for such Lease
Year, or portion thereof, in excess of Base Total Hotel Sales for the
equivalent period.
1.32 "EXTENDED TERMS" shall have the meaning given such term in
SECTION 2.4.
1.33 "FF&E ESTIMATE" shall have the meaning given such term in
SECTION 5.1.2(C).
1.34 "FF&E FUNDED AMOUNT" shall mean an amount equal to Five Hundred
Thousand Dollars less any amounts paid prior to the date hereof with
respect to the Tampa Renovation in accordance with EXHIBIT D and approved
by Landlord.
1.35 "FF&E PLEDGE" shall mean the Assignment and Security Agreement,
dated as of the date hereof, made by Tenant for the benefit of Landlord.
1.36 "FF&E RESERVE" shall have the meaning given such term in SECTION
5.1.2(A).
1.37 "FINANCIAL OFFICER'S CERTIFICATE" shall mean, as to any Person,
a certificate of the chief executive officer, chief financial officer or
chief accounting officer (or such officers' authorized designee) of such
Person, duly authorized, accompanying the financial statements required to
be delivered by such Person pursuant to SECTION 17.2, in which such officer
shall certify (a) that such statements have been properly prepared in
accordance with GAAP and are true, correct and complete in all material
respects and fairly present the consolidated financial condition of such
Person at and as of the dates thereof and the results of its and their
operations for the periods covered thereby, and (b), in the event that the
certifying party is an officer of Tenant and the certificate is being given
in such capacity, certify that no Event of Default has occurred and is
continuing hereunder.
1.38 "FISCAL YEAR" shall mean the 52 or 53 week period ending on the
last Sunday of each calendar year.
1.39 "FIXED TERM" shall have the meaning given such term in SECTION
2.3.
1.40 "FIXTURES" shall have the meaning given such term in SECTION
2.1(D).
1.41 "GAAP" shall mean generally accepted accounting principles
consistently applied.
1.42 "GOVERNMENT AGENCIES" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning
and zoning), bureau, commission, department, office or instrumentality of
any nature whatsoever of any governmental or quasi-governmental unit of the
United States or any State or any county or any political subdivision of
any of the foregoing, whether now or hereafter in existence, having
jurisdiction over Tenant or the Leased Property or any portion thereof or
any Hotel operated thereon.
1.43 "GROUND LEASE" shall mean the Ground Lease, dated January 24,
1996, between Christian Chapel CME Church, as landlord, and Southeast Texas
Inns, Inc., as tenant, as amended from time to time.
1.44 "GUARANTY" shall mean the Limited Guaranty Agreement, dated the
date hereof, made by ShoLodge for the benefit of Landlord and Hospitality
Properties Trust.
1.45 "HAZARDOUS SUBSTANCES" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ET SEQ.) and the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 ET SEQ.) and the regulations
promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, any
state of the United States, or any political subdivision thereof; or
(d) the presence of which on the Leased Property, or any portion
thereof, causes or materially threatens to cause an unlawful nuisance upon
the Leased Property, or any portion thereof, or to adjacent properties or
poses or materially threatens to pose a hazard to the Leased Property, or
any portion thereof, or to the health or safety of persons on or about the
Leased Property, or any portion thereof; or
(e) without limitation, which contains gasoline, diesel fuel or
other petroleum hydrocarbons or volatile organic compounds; or
(f) without limitation, which contains polychlorinated biphenyls
(PCBs) or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive
particles, waves or material; or
(h) without limitation, constitutes materials which are now or
may hereafter be subject to regulation pursuant to the Material Waste
Tracking Act of 1988.
1.46 "HOTEL" shall mean, with respect to any Property described on
EXHIBIT A-1 THROUGH A-14, the all suites hotel being operated on such
Property.
1.47 "HOTEL MORTGAGE" shall mean any Encumbrance placed upon the
Leased Property in accordance with ARTICLE 20.
1.48 "HOTEL MORTGAGEE" shall mean the holder of any Hotel Mortgage.
1.49 "IMMEDIATE FAMILY" shall mean, with respect to any individual,
such individual's spouse, parents, brothers, sisters, children (natural or
adopted), stepchildren, grandchildren, grandparents, parents-in-law,
brothers-in-law, sisters-in-law, nephews and nieces.
1.50 "IMPOSITIONS" shall mean collectively, all taxes (including,
without limitation, all taxes imposed under the laws of any State, as such
laws may be amended from time to time, and all ad valorem, sales and use,
or similar taxes as the same relate to or are imposed upon Landlord, Tenant
or the 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),
water, sewer or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen,
of every character in respect of the Leased Property or the business
conducted thereon by Tenant (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to,
during or in respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Landlord's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom
or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, or sales from, or activity conducted on,
or in connection with the Leased Property or the leasing or use of the
Leased Property or any part thereof by Tenant; PROVIDED, HOWEVER, that
nothing contained herein shall be construed to require Tenant to pay and
the term "Impositions" shall not include (i) any tax based on net income
imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any
transfer fee (but excluding any mortgage or similar tax payable in
connection with a Hotel Mortgage) or other tax imposed with respect to the
sale, exchange or other disposition by Landlord of the Leased Property or
the proceeds thereof, (iv) any single business, gross receipts tax,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Landlord, (v) any interest or penalties imposed on Landlord as
a result of the failure of Landlord to file any return or report timely and
in the form prescribed by law or to pay any tax or imposition, except to
the extent such failure is a result of a breach by Tenant of its
obligations pursuant to SECTION 3.1.3, (vi) any impositions imposed on
Landlord that are a result of Landlord not being considered a "United
States person" as defined in Section 7701(a)(30) of the Code, (vii) any
impositions that are enacted or adopted by their express terms as a
substitute for any tax that would not have been payable by Tenant pursuant
to the terms of this Agreement or (viii) any impositions imposed as a
result of a breach of covenant or representation by Landlord in any
agreement governing Landlord's conduct or operation or as a result of the
negligence or willful misconduct of Landlord.
1.51 "INCIDENTAL DOCUMENTS" shall mean the Guaranty, the Security
Agreement, the Stock Pledge Agreement and the FF&E Pledge.
1.52 "INDEBTEDNESS" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the
obligor's balance sheet as liabilities.
1.53 "INSURANCE REQUIREMENTS" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any
such policy and all orders, rules and regulations and any other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) binding upon Landlord, Tenant or the Leased
Property.
1.54 "INTEREST RATE" shall mean ten percent (10%) per annum.
1.55 "LAND" shall have the meaning given such term in SECTION 2.1(A).
1.56 "LANDLORD" shall have the meaning given such term in the
preambles to this Agreement and shall also include its permitted successors
and assigns.
1.57 "LANDLORD LIENS" shall mean liens on or against the Leased
Property or any payment of Rent (a) which result from any act of, or any
claim against, Landlord or any owner of a direct or indirect interest in
the Leased Property, or which result from any violation by Landlord of any
terms of this Agreement or the Purchase Agreement, or (b) which result from
liens in favor of any taxing authority by reason of any tax owed by
Landlord or any fee owner of a direct or indirect interest in the Leased
Property; PROVIDED, HOWEVER, that "LANDLORD LIEN" shall not include any
lien resulting from any tax for which Tenant is obligated to pay or
indemnify Landlord against until such time as Tenant shall have already
paid to or on behalf of Landlord the tax or the required indemnity with
respect to the same.
1.58 "LEASE YEAR" shall mean any Fiscal Year or portion thereof,
commencing with the 1998 Fiscal Year, during the Term.
1.59 "LEASED IMPROVEMENTS" shall have the meaning given such term in
SECTION 2.1(B).
1.60 "LEASED INTANGIBLE PROPERTY" shall mean all hotel licensing
agreements and other service contracts, equipment leases, booking
agreements and other arrangements or agreements affecting the ownership,
repair, maintenance, management, leasing or operation of the Leased
Property to which Landlord is a party; all books, records and files
relating to the leasing, maintenance, management or operation of the Leased
Property belonging to Landlord; all transferable or assignable permits,
certificates of occupancy, operating permits, sign permits, development
rights and approvals, certificates, licenses, warranties and guarantees,
rights to deposits, trade names, service marks, telephone exchange numbers
identified with the Leased Property, and all other transferable intangible
property, miscellaneous rights, benefits and privileges of any kind or
character belonging to Landlord with respect to the Leased Property other
than liquor licenses.
1.61 "LEASED PERSONAL PROPERTY" shall have the meaning given such term
in SECTION 2.1(E).
1.62 "LEASED PROPERTY" shall have the meaning given such term in
SECTION 2.1.
1.63 "LEGAL REQUIREMENTS" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting the
Leased Property or the maintenance, construction, alteration or operation
thereof, whether now or hereafter enacted or in existence, including,
without limitation, (a) all permits, licenses, authorizations, certificates
and regulations necessary to operate any Property for its Permitted Use,
and (b) all covenants, agreements, restrictions and encumbrances contained
in any instruments at any time in force affecting any Property, including
those which may (i) require material repairs, modifications or alterations
in or to any Property or (ii) in any way materially and adversely affect
the use and enjoyment thereof, but excluding any requirements arising as a
result of Landlord's status as a real estate investment trust.
1.64 "LIEN" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or charge of any kind, or
any transfer of property or assets for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors.
1.65 "MANAGEMENT AGREEMENT" shall mean any management agreement
entered into by Tenant with respect to all or any portion of the Leased
Property, together with all amendments, modifications and supplements
thereto.
1.66 "MANAGER" shall mean any manager under a Management Agreement.
1.67 "MINIMUM RENT" shall mean an amount equal to One Million Seventy-
Six Thousand Nine Hundred Twenty-Three Dollars ($1,076,923) per Accounting
Period.
1.68 "NET WORTH" shall mean the excess of total assets over total
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP.
1.69 "NOTICE" shall mean a notice given in accordance with SECTION
22.10.
1.70 "OFFICER'S CERTIFICATE" shall mean a certificate signed by an
officer or other duly authorized individual of the certifying Entity duly
authorized by the board of directors or other governing body of the
certifying Entity.
1.71 "OVERDUE RATE" shall mean, on any date, a PER ANNUM rate of
interest equal to the lesser of thirteen percent (13%) and the maximum rate
then permitted under applicable law.
1.72 "PARENT" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, fifty percent (50%) or more of the voting or beneficial interest
in, or otherwise has the right or power (whether by contract, through
ownership of securities or otherwise) to control, such Person.
1.73 "PERMITTED ENCUMBRANCES" shall mean, with respect to any
Property, all rights, restrictions, and easements of record set forth on
Schedule B to the applicable owner's or leasehold title insurance policy
issued to Landlord in connection with the transactions contemplated by the
Purchase Agreement with respect to such Property, plus any other
encumbrances as may be "Permitted Encumbrances" under the Purchase
Agreement or as may have been consented to in writing by Landlord and
Tenant from time to time.
1.74 "PERMITTED LIENS" shall mean any Liens granted in accordance with
SECTION 21.9(A).
1.75 "PERMITTED USE" shall mean, with respect to any Property, any use
of such Property permitted pursuant to SECTION 4.1.1.
1.76 "PERSON" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of
such Person where the context so admits.
1.77 "PROPERTY" shall have the meaning given such term in SECTION 2.1.
1.78 "PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement,
dated as of October __, 1997, by and between Hospitality Properties Trust
and ShoLodge and certain of its Subsidiaries, as it may be amended,
restated, supplemented or otherwise modified from time to time.
1.79 "RECORDS" shall have the meaning given such term in SECTION 7.2.
1.80 "RENT" shall mean, collectively, the Minimum Rent, Additional
Rent and Additional Charges.
1.81 "RETAINED FUNDS" shall mean a cash amount equal to Fourteen
Million Dollars ($14,000,000).
1.82 "SEC" shall mean the Securities and Exchange Commission.
1.83 "SECURITY AGREEMENT" shall mean the Security Agreement, dated as
of the date hereof, made by Tenant for the benefit of Landlord, as it may
be amended, restated, supplemented or otherwise modified from time to time.
1.84 "SHOLODGE" shall mean ShoLodge, Inc., a Tennessee corporation,
its successors and assigns.
1.85 "STATE" shall mean, with respect to any Property, the state,
commonwealth or district in which the such Property is located.
1.86 "STOCK PLEDGE AGREEMENT" shall mean the Stock Pledge Agreement,
dated as of the date hereof, made by ShoLodge to Landlord with respect to
the stock of Tenant, as it may be amended, restated, supplemented or
otherwise modified from time to time.
1.87 "SUBORDINATED CREDITOR" shall mean any creditor of Tenant which
is a party to a Subordination Agreement in favor of Landlord.
1.88 "SUBORDINATION AGREEMENT" shall mean any agreement (and any
amendments thereto) executed by a Subordinated Creditor pursuant to which
the payment and performance of Tenant's obligations to such Subordinated
Creditor are subordinated to the payment and performance of Tenant's
obligations to Landlord under this Agreement.
1.89 "SUBSIDIARY" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, twenty percent (20%) or more of the voting or beneficial
interest or (b) which such Person otherwise has the right or power to
control (whether by contract, through ownership of securities or
otherwise).
1.90 "SUCCESSOR LANDLORD" shall have the meaning given such term in
SECTION 20.2.
1.91 "TAMPA RENOVATION" shall mean the renovation of the Hotel located
in Tampa, Florida in accordance with the plans and specifications and
budget therefor attached hereto as EXHIBIT D.
1.92 "TENANT" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and
assigns.
1.93 "TENANT'S PERSONAL PROPERTY" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls
and partitions, equipment and machinery and all other tangible personal
property of Tenant, if any, acquired by Tenant on and after the date hereof
and located at the Leased Property or used in Tenant's business at the
Leased Property and all modifications, replacements, alterations and
additions to such personal property installed at the expense of Tenant,
other than any items included within the definition of Fixtures or Leased
Personal Property.
1.94 "TERM" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of
SECTION 2.4, unless sooner terminated pursuant to the provisions of this
Agreement.
1.95 "TOTAL HOTEL SALES" shall mean, for each Fiscal Year during the
Term, all revenues and receipts of every kind derived by Tenant from
operating the Leased Property and parts thereof, including, but not limited
to: income (from both cash and credit transactions), after deductions for
bad debts, and discounts for prompt or cash payments and refunds, from
rental of rooms, stores, offices, meeting, exhibit or sales space of every
kind; license, lease and concession fees and rentals (not including gross
receipts of licensees, lessees and concessionaires); income from vending
machines; health club membership fees; food and beverage sales; wholesale
and retail sales of merchandise (other than proceeds from the sale of
furnishings, fixture and equipment no longer necessary to the operation of
any Hotel, which shall be deposited in the FF&E Reserve); service charges,
to the extent not distributed to the employees at any Hotel as gratuities;
and proceeds, if any, from business interruption or other loss of income
insurance; PROVIDED, HOWEVER, that Total Hotel Sales shall not include the
following: gratuities to or collected on behalf of Hotel employees;
federal, state or municipal excise, sales, use, occupancy or similar taxes
collected directly from patrons or guests or included as part of the sales
price of any goods or services; insurance proceeds (other than proceeds
from business interruption or other loss of income insurance); Award
proceeds (other than for a temporary Condemnation); any proceeds from any
sale of the Leased Property or from the refinancing of any debt encumbering
the Leased Property; proceeds from the disposition of furnishings, fixture
and equipment no longer necessary for the operation of any Hotel; interest
which accrues on amounts deposited in the FF&E Reserve; and any Retained
Funds and other advance deposits, until and unless the same are forfeited
to Tenant or applied for the purpose for which they were collected; and
interest income from any bank account or investment of Tenant.
1.96 "UNIFORM SYSTEM OF ACCOUNTS" shall mean A UNIFORM SYSTEM OF
ACCOUNTS FOR HOTELS, Eighth Revised Edition, 1986, as published by the
Hotel Association of New York City, as the same may be further revised from
time to time.
1.97 "UNSUITABLE FOR ITS PERMITTED USE" shall mean, with respect to
such Hotel, a state or condition of such Hotel such that (a) following any
damage or destruction involving a Hotel, such Hotel cannot be operated in
the good faith judgment of Tenant on a commercially practicable basis for
its Permitted Use and it cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such damage
or destruction, and as otherwise required by SECTION 10.2.4, within twelve
(12) months following such damage or destruction or such shorter period of
time as to which business interruption insurance is available to cover Rent
and other costs related to the applicable Property following such damage or
destruction, or (b) as the result of a partial taking by Condemnation, such
Hotel cannot be operated, in the good faith judgment of Tenant, on a
commercially practicable basis for its Permitted Use.
1.98 "WORK" shall have the meaning given such term in SECTION 10.2.4.
ARTICLE 2
LEASED PROPERTY AND TERM
2.1 LEASED PROPERTY. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from
Landlord all of Landlord's right, title and interest in and to all of the
following (each of items (a) through (g) below which, as of the
Commencement Date, relates to any single Hotel, a "PROPERTY" and,
collectively, the "LEASED PROPERTY"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in EXHIBIT A-1 THROUGH A-14, attached hereto and
made a part hereof (the "LAND");
(b) all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and structures
presently situated upon the Land (collectively, the "LEASED IMPROVEMENTS");
(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or incorporated into the
Leased Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the category of Tenant's Personal Property (collectively,
the "FIXTURES");
(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other personal property
of any kind or description used or useful in Tenant's business on or in the
Leased Improvements, and located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such personal
property, except items, if any, included within the category of Fixtures,
but specifically excluding all items included within the category of
Tenant's Personal Property (collectively, the "LEASED PERSONAL PROPERTY");
(f) all of the Leased Intangible Property; and
(g) any and all leases of space in the Leased Improvements.
2.2 CONDITION OF LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants,
conditions, restrictions, reservations, mineral leases, easements and other
matters of record or that are visible or apparent on the Leased Property,
all applicable Legal Requirements, the lien of any financing instruments,
mortgages and deeds of trust existing prior to the Commencement Date or
permitted by the terms of this Agreement, and such other matters which
would be disclosed by an inspection of the Leased Property and the record
title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT
HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND
THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION
OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT
THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT
OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD 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 TENANT. To the maximum extent permitted by
law, however, Landlord hereby assigns to Tenant all of Landlord's rights to
proceed against any predecessor in title for breaches of warranties or
representations or for latent defects in the Leased Property. Landlord
shall fully cooperate with Tenant in the prosecution of any such claims, in
Landlord's or Tenant's name, all at Tenant's sole cost and expense. Tenant
shall indemnify, defend, and hold harmless Landlord from and against any
loss, cost, damage or liability (including reasonable attorneys' fees)
incurred by Landlord in connection with such cooperation.
2.3 FIXED TERM. The initial term of this Agreement (the "FIXED
TERM") shall commence on the Commencement Date and shall expire January 31,
2008.
2.4 EXTENDED TERM. Provided that no Event of Default shall have
occurred and be continuing, the Term shall be automatically extended for
five (5) consecutive renewal terms of ten (10) years each (collectively,
the "EXTENDED TERMS"), unless Tenant shall give Landlord Notice, not later
than eighteen (18) months prior to the scheduled expiration of the then
current Term of this Agreement (Fixed or Extended, as the case may be),
that Tenant elects not so to extend the term of this Agreement.
Each Extended Term shall commence on the day succeeding the
expiration of the Fixed Term or the preceding Extended Term, as the case
may be. All of the terms, covenants and provisions of this Agreement shall
apply to each such Extended Term, except that Tenant shall have no right to
extend the Term beyond the expiration of the Extended Terms. If Tenant
shall give Notice that it elects not to extend the Term in accordance with
this SECTION 2.4, this Agreement shall automatically terminate at the end
of the Term then in effect and Tenant shall have no further option to
extend the Term of this Agreement. Otherwise, the extension of this
Agreement shall be automatically effected without the execution of any
additional documents; it being understood and agreed, however, that Tenant
and Landlord shall execute such documents and agreements as either party
shall reasonably require to evidence the same.
ARTICLE 3
RENT
3.1 RENT. Tenant shall pay, in lawful money of the United States of
America which shall be legal tender for the payment of public and private
debts, without offset, abatement, demand or deduction (unless otherwise
expressly provided in this Agreement), Minimum Rent and Additional Rent to
Landlord and Additional Charges to the party to whom such Additional
Charges are payable, during the Term. All payments to Landlord shall be
made by wire transfer of immediately available federal funds or by other
means acceptable to Landlord in its sole discretion. Rent for any partial
Accounting Period shall be prorated on a per diem basis.
3.1.1 MINIMUM RENT.
(a) PAYMENTS. Minimum Rent shall be paid in advance on the
first Business Day of each Accounting Period; PROVIDED, HOWEVER, that the
first payment of Minimum Rent shall be payable on the Commencement Date
(and, if applicable, such payment shall be prorated as provided in the last
sentence of the first paragraph of SECTION 3.1).
(b) ADJUSTMENTS OF MINIMUM RENT FOLLOWING DISBURSEMENTS
UNDER SECTIONS 5.1.3(B), 10.2.3 AND 11.2. Effective on the date of each
disbursement to pay for the cost of any repairs, maintenance, renovations
or replacements pursuant to SECTIONS 5.1.3(B), 10.2.3 OR 11.2, the annual
Minimum Rent shall be increased by a PER ANNUM amount equal to the
Disbursement Rate times the amount so disbursed. If any such disbursement
is made during any month on a day other than the first Business Day of an
Accounting Period, Tenant shall pay to Landlord on the first Business Day
of the immediately following Accounting Period (in addition to the amount
of Minimum Rent payable with respect to such Accounting Period, as adjusted
pursuant to this paragraph (b)) the amount by which Minimum Rent for the
preceding Accounting Period, as adjusted for such disbursement on a per
diem basis, exceeded the amount of Minimum Rent paid by Tenant for such
preceding Accounting Period.
(c) ADJUSTMENTS OF MINIMUM RENT FOLLOWING PARTIAL LEASE
TERMINATION. If this Lease shall terminate with respect to any Property
but less than all of the Leased Property, Minimum Rent shall be reduced by
the affected Property's allocable share of Minimum Rent as set forth in
EXHIBIT C.
3.1.2 ADDITIONAL RENT.
(a) AMOUNT. Tenant shall pay additional rent ("ADDITIONAL
RENT") with respect to each Lease Year beginning with the 1999 Lease Year,
in an amount, not less than zero, equal to eight percent (8%) of Excess
Total Hotel Sales.
(b) ACCOUNTING PERIOD INSTALLMENTS. Installments of
Additional Rent for each Lease Year or portion thereof shall be calculated
and paid with respect to each Accounting Period in arrears on the first
Business Day of each Accounting Period, based on Total Hotel Sales for the
preceding year, together with an Officer's Certificate setting forth the
calculation of Additional Rent due and payable for such Accounting Period.
(c) RECONCILIATION OF ADDITIONAL RENT. On or before April
30, 1999, Tenant shall deliver to Landlord an Officer's Certificate setting
forth Total Hotel Sales for the Base Year (other than with respect to the
Hotels located in Tempe and Tucson), together with an audit thereof by
Deloitte & Touche LLP or another firm of independent certified public
accountants proposed by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld, delayed or conditioned). On or before
November 15, 1999, Tenant shall deliver to Landlord an Officer's
Certificate setting forth Total Hotel Sales for the Base Year for the Tempe
and Tucson Properties, together with an audit thereof by Deloitte & Touche
LLP or another firm of independent certified public accountants proposed by
Tenant and approved by Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned). On or before April 30, of each year,
commencing April 30, 2000, Tenant shall deliver to Landlord an Officer's
Certificate setting forth the Total Hotel Sales for the preceding Lease
Year and the Additional Rent payable with respect to such Lease Year,
together with an audit thereof, by Deloitte & Touche LLP or another firm of
independent certified public accountants proposed by Tenant and approved by
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned).
If the annual Additional Rent for such preceding Lease Year as shown
in the Officer's Certificate exceeds the amount previously paid with
respect thereto by Tenant, Tenant shall pay such excess to Landlord at such
time as the Officer's Certificate is delivered, together with interest at
the Interest Rate, which interest shall accrue from the close of such
preceding Lease Year until the date that such certificate is required to be
delivered and, thereafter, such interest shall accrue at the Overdue Rate,
until the amount of such difference shall be paid or otherwise discharged.
If the annual Additional Rent for such preceding Lease Year as shown in the
Officer's Certificate is less than the amount previously paid with respect
thereto by Tenant, provided that no Event of Default shall have occurred
and be continuing, Landlord shall grant Tenant a credit against the Rent
next coming due in the amount of such difference, together with interest at
the Interest Rate, which interest shall accrue from the date of payment by
Tenant until the date such credit is applied or paid, as the case may be.
If such credit cannot be made because the Term has expired prior to
application in full thereof, provided no Event of Default has occurred and
is continuing, Landlord shall pay the unapplied balance of such credit to
Tenant, together with interest at the Interest Rate, which interest shall
accrue from the date of payment by Tenant until the date of payment by
Landlord.
(d) CONFIRMATION OF ADDITIONAL RENT. Tenant shall utilize,
or cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices and in accordance with
GAAP, which will accurately record all Total Hotel Sales and Tenant shall
retain, for at least three (3) years after the expiration of each Lease
Year, reasonably adequate records conforming to such accounting system
showing all Total Hotel Sales for such Lease Year. Landlord, at its own
expense, except as provided hereinbelow, shall have the right, exercisable
by Notice to Tenant within one (1) year after receipt of the applicable
Officer's Certificate, by its accountants or representatives, to audit the
information set forth in the Officer's Certificate referred to in
subparagraph (c) above and, in connection with such audits, to examine
Tenant's books and records with respect thereto (including supporting data
and sales and excise tax returns). If any such audit discloses a
deficiency in the payment of Additional Rent and, either Tenant agrees with
the result of such audit or the matter is otherwise compromised with
Landlord, Tenant shall forthwith pay to Landlord the amount of the
deficiency, as finally agreed or determined, together with interest at the
Interest Rate, from the date such payment should have been made to the date
of payment thereof. If such deficiency, as agreed upon or compromised as
aforesaid, is more than five percent (5%) of Additional Rent paid by Tenant
for such Lease Year and, as a result, Landlord did not receive at least
ninety-five percent (95%) of the Additional Rent payable with respect to
such Lease Year, Tenant shall pay the reasonable cost of such audit and
examination. If any such audit discloses that Tenant paid more Additional
Rent for any Lease Year than was due hereunder, and either Landlord agrees
with the result of such audit or the matter is otherwise determined,
provided no Event of Default has occurred and is continuing, Landlord shall
grant Tenant a credit equal to the amount of such overpayment against the
Rent next coming due in the amount of such difference, as finally agreed or
determined, together with interest at the Interest Rate, which interest
shall accrue from the time of payment by Tenant until the date such credit
is applied or paid, as the case may be. If such a credit cannot be made
because the Term has expired before the credit can be applied in full,
provided no Event of Default has occurred and is continuing, Landlord shall
pay the unapplied balance of such credit to Tenant, together with interest
at the Interest Rate, which interest shall accrue from the date of payment
by Tenant until the date of payment from Landlord.
Any proprietary information obtained by Landlord with respect to
Tenant pursuant to the provisions of this Agreement shall be treated as
confidential, except that such information may be used, subject to
appropriate confidentiality safeguards, in any litigation between the
parties and except further that Landlord may disclose such information to
its prospective lenders, provided that Landlord shall direct and obtain the
agreement of such lenders to maintain such information as confidential.
The obligations of Tenant and Landlord contained in this SECTION 3.1.2
shall survive the expiration or earlier termination of this Agreement.
3.1.3 ADDITIONAL CHARGES. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay to the appropriate
parties and discharge as and when due and payable the following
(collectively, "ADDITIONAL CHARGES"):
(a) IMPOSITIONS. Subject to ARTICLE 8 relating to
permitted contests, Tenant shall pay, or cause to be paid, all Impositions
before any fine, penalty, interest or cost (other than any opportunity cost
as a result of a failure to take advantage of any discount for early
payment) may be added for non-payment, such payments to be made directly to
the taxing authorities where feasible, and shall promptly, upon request,
furnish to Landlord copies of official receipts or other reasonably
satisfactory proof evidencing such payments. If any such Imposition may,
at the option of the taxpayer, lawfully be paid in installments (whether or
not interest shall accrue on the unpaid balance of such Imposition), Tenant
may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and, in such event,
shall pay such installments during the Term as the same become due and
before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent required or
permitted by Applicable Law, prepare and file all tax returns and pay all
taxes due in respect of Landlord's net income, gross receipts, sales and
use, single business, transaction privilege, rent, ad valorem, franchise
taxes and taxes on its capital stock, and Tenant, at its expense, shall, to
the extent required or permitted by Applicable Laws and regulations,
prepare and file all other tax returns and reports in respect of any
Imposition as may be required by Government Agencies. Provided no Event of
Default shall have occurred and be continuing, if any refund shall be due
from any taxing authority in respect of any Imposition paid by Tenant, the
same shall be paid over to or retained by Tenant. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. In the event
Government Agencies classify any property covered by this Agreement as
personal property, Tenant shall file all personal property tax returns in
such jurisdictions where it may legally so file. Each party shall, to the
extent it possesses the same, provide the other, upon request, with cost
and depreciation records necessary for filing returns for any property so
classified as personal property. Where Landlord is legally required to
file personal property tax returns for property covered by this Agreement,
Landlord shall provide Tenant with copies of assessment notices in
sufficient time for Tenant to file a protest. All Impositions assessed
against such personal property shall be (irrespective of whether Landlord
or Tenant shall file the relevant return) paid by Tenant not later than the
last date on which the same may be made without interest or penalty,
subject to the provisions of ARTICLE 8.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has
knowledge; PROVIDED, HOWEVER, that Landlord's failure to give any
such notice shall in no way diminish Tenant's obligation hereunder to
pay such Impositions, unless such failure continues for more than
ninety (90) days after the date Landlord learned of such Imposition.
(b) UTILITY CHARGES. Tenant shall pay or cause to be paid
all charges for electricity, power, gas, oil, water and other utilities
used in connection with the Leased Property.
(c) INSURANCE PREMIUMS. Tenant shall pay or cause to be
paid all premiums for the insurance coverage required to be maintained
pursuant to ARTICLE 9.
(d) OTHER CHARGES. Tenant shall pay or cause to be paid
all other amounts, liabilities and obligations, including, without
limitation, ground rents and other sums payable under the Ground Lease and
all amounts payable under any equipment leases and all agreements to
indemnify Landlord under SECTIONS 4.3.2 AND 9.7.
(e) REIMBURSEMENT FOR ADDITIONAL CHARGES. If Tenant pays
or causes to be paid property taxes or similar or other Additional Charges
attributable to periods after the end of the Term, whether upon expiration
or sooner termination of this Agreement (other than termination by reason
of an Event of Default), Tenant may, within a reasonable time after the end
of the Term, provide Notice to Landlord of its estimate of such amounts.
Landlord shall promptly reimburse Tenant for all payments of such taxes and
other similar Additional Charges that are attributable to any period after
the Term of this Agreement.
3.2 LATE PAYMENT OF RENT, ETC. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord) shall not be paid within
ten (10) days after its due date, Tenant shall pay Landlord, on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed
at the Overdue Rate on the amount of such installment, from the due date of
such installment to the date of payment thereof. To the extent that Tenant
pays any Additional Charges directly to Landlord or any Hotel Mortgagee
pursuant to any requirement of this Agreement, Tenant shall be relieved of
its obligation to pay such Additional Charges to the Entity to which they
would otherwise be due. If any payments due from Landlord to Tenant shall
not be paid within ten (10) days after its due date, Landlord shall pay to
Tenant, on demand, a late charge (to the extent permitted by law) computed
at the Overdue Rate on the amount of such installment from the due date of
such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges,
every fine, penalty, interest and cost which is added for non-payment or
late payment of such items. Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Agreement
or by statute or otherwise in the case of non-payment of the Additional
Charges as in the case of non-payment of the Minimum Rent and Additional
Rent.
3.3 NET LEASE. The Rent shall be absolutely net to Landlord so that
this Agreement shall yield to Landlord the full amount of the installments
or amounts of the Rent throughout the Term, subject to any other provisions
of this Agreement which expressly provide otherwise, including those
provisions for adjustment or abatement of such Rent.
3.4 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Agreement, each of Landlord and Tenant, to the maximum
extent permitted by law, shall remain bound by this Agreement in accordance
with its terms and shall not take any action without the consent of the
other to modify, surrender or terminate this Agreement. In addition,
except as otherwise expressly provided in this Agreement, Tenant shall not
seek, or be entitled to, any abatement, deduction, deferment or reduction
of the Rent, or set-off against the Rent, nor shall the respective
obligations of Landlord and Tenant be otherwise affected by reason of (a)
any damage to or destruction of the Leased Property or any portion thereof
from whatever cause or any Condemnation, (b) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of the Leased Property,
or any portion thereof, or the interference with such use by any Person or
by reason of eviction by paramount title; (c) any claim which Tenant may
have against Landlord by reason of any default (other than a monetary
default) or breach of any warranty by Landlord under this Agreement or any
other agreement between Landlord and Tenant, or to which Landlord and
Tenant are parties; (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord;
or (e) for any other cause whether similar or dissimilar to any of the
foregoing (other than a monetary default by Landlord); PROVIDED, HOWEVER,
that the foregoing shall not apply or be construed to restrict Tenant's
rights in the event of any act or omission by Landlord constituting
negligence or willful misconduct. Except as otherwise specifically
provided in this Agreement, Tenant hereby waives all rights arising from
any occurrence whatsoever, which may now or hereafter be conferred upon it
by law (a) to modify, surrender or terminate this Agreement or quit or
surrender the Leased Property or any portion thereof, or (b) which would
entitle Tenant to any abatement, reduction, suspension or deferment of the
Rent or other sums payable or other obligations to be performed by Tenant
hereunder. The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, and the Rent and all other sums
payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions of this Agreement. In any instance where, after the
occurrence of an Event of Default, Landlord retains funds which, but for
the occurrence of such Event of Default, would be payable to Tenant,
Landlord shall refund such funds to Tenant to the extent the amount thereof
exceeds the amount necessary to compensate Landlord for any cost, loss or
damage incurred in connection with such Event of Default.
3.5 RETAINED FUNDS. Pursuant to the Purchase Agreement, Landlord is
holding the Retained Funds as security for the faithful observance and
performance by Tenant of all the terms, covenants and conditions of this
Lease by Tenant to be observed and performed. The Retained Funds shall not
be mortgaged, assigned, transferred or otherwise encumbered by Tenant or
any of its Affiliated Persons without the prior written consent of Landlord
and any such act on the part of Tenant or any of its Affiliated Persons
without first having obtained Landlord's consent shall be without force and
effect and shall not be binding upon Landlord.
If an Event of Default shall occur and be continuing, Landlord may,
at its option and without prejudice to any other remedy which Landlord may
have on account thereof, appropriate and apply the entire Retained Funds or
so much thereof as may be necessary to compensate Landlord toward the
payment of Rent or other sums or loss or damage sustained by Landlord due
to such breach on the part of Tenant. It is understood and agreed that the
Retained Funds are not to be considered as prepaid rent, nor shall damages
be limited to the amount of the Retained Funds. Provided no Event of
Default shall have occurred and be continuing, any unapplied balance of the
Retained Funds shall be paid to Tenant or its Affiliated Persons at the end
of the Term or, in the event of any early termination of this Lease with
respect to any Property, such portion thereof as is allocable to such
Property (as reasonably determined by Landlord) upon such termination.
Landlord shall have no obligation to pay interest on the Retained Funds and
shall have the right to commingle the same with Landlord's other funds. If
Landlord conveys Landlord's interest under this Lease, the Retained Funds,
or any part thereof not previously applied, shall be turned over by
Landlord to Landlord's grantee, and, if so turned over, Tenant, subject to
the provisions of SECTION 22.7, shall look solely to such grantee for
proper application of the Retained Funds in accordance with the terms of
this SECTION 3.5 and the return thereof in accordance herewith. The holder
of a mortgage on the Leased Property shall not be responsible to Tenant for
the return or application of the Retained Funds, if it succeeds to the
position of Landlord hereunder, unless the Retained Funds shall have been
received in hand by such holder.
In the event of bankruptcy or other creditor-debtor proceedings
against Tenant, the Retained Funds shall be deemed to be applied first to
the payment of Rent and other charges due Landlord for all periods prior to
the filing of such proceedings.
ARTICLE 4
USE OF THE LEASED PROPERTY
4.1 PERMITTED USE.
4.1.1 PERMITTED USE. (a) Tenant shall, at all times during the
Term, subject to temporary periods for the repair of damage caused by
casualty or Condemnation, continuously use and operate each Property as an
all suites hotel and any uses incidental thereto. Tenant shall not use or
permit to be used any Property or any portion thereof for any other use
without the prior written consent of Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned. Tenant shall not change the
brand of the Hotels without Landlord's prior written consent, which consent
shall not be unreasonably withheld, delayed or conditioned, it being agreed
that, on the Commencement Date, the Hotels shall be operated under the
"Xxxxxx Suites" brand. No use shall be made or permitted to be made of any
Property and no acts shall be done thereon which will cause the
cancellation of any insurance policy covering such Property or any part
thereof (unless another adequate policy is available), nor shall Tenant
sell or otherwise provide or permit to be kept, used or sold in or about
any Property any article which may be prohibited by law or by the standard
form of fire insurance policies, or any other insurance policies required
to be carried hereunder, or fire underwriter's regulations. Tenant shall,
at its sole cost, comply with all Insurance Requirements.
(b) In the event that, in the reasonable determination of Tenant,
it shall no longer be economically practical to operate the Leased Property
as an all suites hotel, Tenant shall give Landlord Notice thereof, which
Notice shall set forth in reasonable detail the reasons therefor.
Thereafter, Landlord and Tenant shall negotiate in good faith to agree on
an alternative use for the Property or a replacement property therefor (in
which event the affected Leased Property shall be transferred to Tenant or
Tenant's designee), appropriate adjustments to the Additional Rent and
other related matters; PROVIDED, HOWEVER, in no such event shall the
Minimum Rent be reduced or abated.
4.1.2 NECESSARY APPROVALS. Tenant shall proceed with all due
diligence and exercise reasonable efforts to obtain and maintain all
approvals necessary to use and operate, for its Permitted Use, each
Property and the Hotel located thereon under applicable law.
4.1.3 LAWFUL USE, ETC. Tenant shall not use or suffer or permit
the use of the Leased Property or Tenant's Personal Property, if any, for
any unlawful purpose. Tenant shall not, and shall direct the Manager not
to, commit or suffer to be committed any waste on any Property, or in any
Hotel, nor shall Tenant cause or permit any unlawful nuisance thereon or
therein. Tenant shall not, and shall direct the Manager not to, suffer nor
permit the Leased Property, or any portion thereof, to be used in such a
manner as (i) may materially and adversely impair Landlord's title thereto
or to any portion thereof, or (ii) may reasonably allow a claim or claims
for adverse usage or adverse possession by the public, as such, or of
implied dedication of the Leased Property or any portion thereof.
4.2 COMPLIANCE WITH LEGAL/INSURANCE REQUIREMENTS, ETC. Subject to
the provisions of ARTICLE 8 AND SECTION 5.1.3(B), Tenant, at its sole
expense, shall (i) comply with all material Legal Requirements and
Insurance Requirements in respect of the use, operation, maintenance,
repair, alteration and restoration of the Leased Property and with the
terms and conditions of the Ground Lease and/or any sublease affecting the
Leased Property, (ii) perform all obligations of the landlord under any
sublease affecting the Leased Property and (iii) procure, maintain and
comply with all material licenses, and other authorizations and agreements
required for any use of the Leased Property and Tenant's Personal Property,
if any, then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof.
4.3 ENVIRONMENTAL MATTERS.
4.3.1 RESTRICTION ON USE, ETC. During the Term and any other time
that Tenant shall be in possession of the Leased Property, Tenant shall not
store, spill upon, dispose of or transfer to or from the Leased Property
any Hazardous Substance, except in compliance with all Applicable Laws.
During the Term and any other time that Tenant shall be in possession of
the Leased Property, Tenant shall maintain (and shall direct the Manager to
maintain) the Leased Property at all times free of any Hazardous Substance
(except in compliance with all Applicable Laws). Tenant shall promptly:
(a) upon receipt of notice or knowledge and shall direct the Manager upon
receipt of notice or knowledge promptly to, notify Landlord in writing of
any material change in the nature or extent of Hazardous Substances at the
Leased Property, (b) transmit to Landlord a copy of any report which is
required to be filed with respect to the Leased Property pursuant to XXXX
Title III or any other Applicable Law, (c) transmit to Landlord copies of
any citations, orders, notices or other governmental communications
received by Tenant or its agents or representatives with respect thereto
(collectively, "ENVIRONMENTAL NOTICE"), which Environmental Notice requires
a written response or any action to be taken and/or if such Environmental
Notice gives notice of and/or presents a material risk of any material
violation of any Applicable Law and/or presents a material risk of any
material cost, expense, loss or damage (an "ENVIRONMENTAL OBLIGATION"),
(d), subject to the provisions of ARTICLE 8, observe and comply with all
Applicable Laws relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or agency
of competent jurisdiction relating to the use or maintenance or requiring
the removal, treatment, containment or other disposition thereof, and (e)
subject to the provisions of ARTICLE 8, pay or otherwise dispose of any
fine, charge or Imposition related thereto.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws)
are discovered on the Leased Property, subject to Tenant's right to contest
the same in accordance with ARTICLE 8, Tenant shall take all actions and
incur any and all expenses, as are required by any Government Agency and by
Applicable Law, (i) to clean up and remove from and about the Leased
Property all Hazardous Substances thereon, (ii) to contain and prevent any
further release or threat of release of Hazardous Substances on or about
the Leased Property and (iii) to use good faith efforts to eliminate any
further release or threat of release of Hazardous Substances on or about
the Leased Property.
4.3.2 INDEMNIFICATION OF LANDLORD. Tenant shall protect, indemnify
and hold harmless Landlord and each Hotel Mortgagee, their trustees,
officers, agents, employees and beneficiaries, and any of their respective
successors or assigns with respect to this Agreement (collectively, the
"INDEMNITEES" and, individually, an "INDEMNITEE") for, from and against any
and all debts, liens, claims, causes of action, administrative orders or
notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorney's fees and expenses) imposed upon, incurred
by or asserted against any Indemnitee resulting from, either directly or
indirectly, the presence during the Term (or any other time Tenant shall be
in possession of the Leased Property) in, upon or under the soil or ground
water of the Leased Property or any properties surrounding the Leased
Property of any Hazardous Substances in violation of any Applicable Law or
otherwise, provided that any of the foregoing arises by reason of any
failure by Tenant or any Person claiming by, through or under Tenant to
perform or comply with any of the terms of this SECTION 4.3, except to the
extent the same arise from the acts or omissions of Landlord or any other
Indemnitee or during any period that Landlord or a Person designated by
Landlord (other than Tenant) is in possession of the Leased Property.
Tenant's duty herein includes, but is not limited to, costs associated with
personal injury or property damage claims as a result of the presence prior
to the expiration or sooner termination of the Term and the surrender of
the Leased Property to Landlord in accordance with the terms of this
Agreement of Hazardous Substances in, upon or under the soil or ground
water of the Leased Property in violation of any Applicable Law. Upon
Notice from Landlord and any other of the Indemnitees, Tenant shall
undertake the defense, at Tenant's sole cost and expense, of any
indemnification duties set forth herein, in which event, Tenant shall not
be liable for payment of any duplicative attorneys' fees incurred by any
Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge,
any cost, expense, loss or damage (including, without limitation,
reasonable attorneys' fees) reasonably incurred by Landlord and arising
from a failure of Tenant to observe and perform the requirements of this
SECTION 4.3, which amounts shall bear interest from the date ten (10)
Business Days after written demand therefor is given to Tenant until paid
by Tenant to Landlord at the Overdue Rate.
4.3.3 SURVIVAL. The provisions of this SECTION 4.3 shall survive
the expiration or sooner termination of this Agreement.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 MAINTENANCE AND REPAIR.
5.5.1 TENANT'S GENERAL OBLIGATIONS. Tenant shall, at its sole cost
and expense (except as expressly provided in SECTION 5.1.3(B)), keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto (and Tenant's Personal Property) in good order and repair,
reasonable wear and tear excepted (whether or not the need for such repairs
occurs as a result of Tenant's use, any prior use, the elements or the age
of the Leased Property or Tenant's Personal Property or any portion
thereof), and shall promptly make all necessary and appropriate repairs and
replacements thereto of every kind and nature, whether interior or
exterior, structural or nonstructural, ordinary or extraordinary, foreseen
or unforeseen or arising by reason of a condition existing prior to the
commencement of the Term (concealed or otherwise). All repairs shall be
made in a good, workmanlike manner, consistent with industry standards for
like hotels in like locales, in accordance with all applicable federal,
state and local statutes, ordinances, codes, rules and regulations relating
to any such work. Tenant shall not take or omit to take any action, the
taking or omission of which would materially and adversely impair the value
or the usefulness of the Leased Property or any material part thereof for
its Permitted Use. Tenant's obligations under this SECTION 5.1.1 shall be
limited in the event of any casualty or Condemnation as set forth in
SECTIONS 10.2 AND 11.2 and also as set forth in SECTION 5.1.3(B) and
Tenant's obligations with respect to Hazardous Substances are as set forth
in SECTION 4.3.
5.1.2 FF&E RESERVE.
(a) Upon execution of this Agreement, Tenant has
established a reserve account (the "FF&E RESERVE") in a bank designated by
Tenant and approved by Landlord. The purpose of the FF&E Reserve is to
cover the cost of:
(i) Replacements and renewals to any Hotel's
furnishings, fixtures and equipment;
(ii) Certain routine repairs and maintenance to any
Hotel building which are normally capitalized under GAAP such as exterior
and interior repainting, resurfacing building walls, floors, roofs and
parking areas, and replacing folding walls and the like; and
(iii)Major repairs, alterations, improvements, renewals
or replacements to any Hotel's buildings' structure, roof, or exterior
facade, or to its mechanical, electrical, heating, ventilating, air
conditioning, plumbing or vertical transportation systems.
Tenant agrees that it will, from time to time, execute such
reasonable documentation as may be requested by Landlord and any Hotel
Mortgagee to assist Landlord and such Hotel Mortgagee in establishing
or perfecting the Hotel Mortgagee's security interest in Landlord's
residual interest in the funds which are in the FF&E Reserve;
PROVIDED, HOWEVER, that no such documentation shall contain any
amendment to or modification of any of the provisions of this
Agreement. It is acknowledged and agreed that, during the Term, funds
in the FF&E Reserve are the property of Tenant.
(b) Throughout the Term, Tenant shall transfer (within ten (10)
Business Days after the end of each Accounting Period during the Term) into
the FF&E Reserve an amount equal to the Applicable Percentage of Total
Hotel Sales for such Accounting Period. Together with the documentation
provided to Landlord pursuant to SECTION 3.1.2(C), Tenant shall deliver to
Landlord an Officer's Certificate setting forth the total amount of
deposits made to and expenditures from the FF&E Reserve for the preceding
Fiscal Year, together with a reconciliation of such expenditures with the
applicable FF&E Estimate.
(c) With respect to each Lease Year, Tenant shall prepare an
estimate (the "FF&E ESTIMATE") of FF&E Reserve expenditures necessary
during the ensuing Fiscal Year, and shall submit such FF&E Estimate to
Landlord, on or before December 1 of the preceding Lease Year, for its
review and approval, which approval shall not be unreasonably withheld,
delayed or conditioned. In the event that Landlord shall fail to respond
within thirty (30) days after receipt of the FF&E Estimate, such FF&E
Estimate shall be deemed approved by Landlord. All expenditures from the
FF&E Reserve shall be (as to both the amount of each such expenditure and
the timing thereof) both reasonable and necessary, given the objective that
the Hotels will be maintained and operated to a standard comparable to
competitive hotels. All amounts from the FF&E Reserve shall be paid to
Persons who are not Affiliated Persons of Tenant without xxxx-up or
allocated internal costs by Tenant or its Affiliated Persons except that
Tenant may use Affiliated Persons to provide goods and services if Landlord
has granted its prior written approval thereof or the cost is the lesser of
(x) the lowest of two competitive bids therefor submitted by non-Affiliated
Persons of Tenant and (y) fair market.
(d) Tenant shall, consistent with the FF&E Estimate approved by
Landlord, from time to time make expenditures from the FF&E Reserve as it
deems necessary provided that Tenant shall not materially deviate from the
FF&E Estimate approved by Landlord without the prior approval of Landlord,
which approval shall not be unreasonably withheld, delayed or conditioned,
except in the case of emergency where immediate action is necessary to
prevent imminent harm to person or property.
(e) Upon the expiration or sooner termination of this Agreement,
funds in the FF&E Reserve and all property purchased with funds from the
FF&E Reserve during the Term shall be paid, granted and assigned to
Landlord as Additional Charges.
(f) Upon execution of this Agreement, Tenant has deposited the
FF&E Funded Amount into the FF&E Reserve. Notwithstanding anything to the
contrary set forth in this SECTION 5.1.2, such funds may be used by Tenant
solely for the purpose of completing the Tampa Renovation in accordance
with EXHIBIT D, unless otherwise agreed by Landlord in writing.
5.1.3 LANDLORD'S OBLIGATIONS.
(a) Except as otherwise expressly provided in this Agreement,
Landlord shall not, under any circumstances, be required to build or
rebuild any improvement on the Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto, or to maintain the Leased
Property in any way. Except as otherwise expressly provided in this
Agreement, Tenant hereby waives, to the maximum extent permitted by law,
the right to make repairs at the expense of Landlord pursuant to any law in
effect on the date hereof or hereafter enacted. Landlord shall have the
right to give, record and post, as appropriate, notices of
nonresponsibility under any mechanic's lien laws now or hereafter existing.
(b) If, at any time, funds in the FF&E Reserve shall be
insufficient for necessary and permitted expenditures thereof or, pursuant
to the terms of this Agreement, Tenant is required to make any expenditures
in connection with any repair, maintenance or renovation with respect to
the Leased Property and the amount of such disbursements or expenditures
exceeds the amount on deposit in the FF&E Reserve or such repair,
maintenance or renovation is not a permitted expenditure from the FF&E
Reserve as described in SECTION 5.1.2(A)(I), (II) AND (III), Tenant may, at
its election, give Landlord Notice thereof, which Notice shall set forth,
in reasonable detail, the nature of the required repair, renovation or
replacement, the estimated cost thereof and such other information with
respect thereto as Landlord may reasonably require. Provided that no Event
of Default shall have occurred and be continuing and Tenant shall otherwise
comply with the applicable provisions of ARTICLE 6, Landlord shall, within
ten (10) Business Days after such Notice, subject to and in accordance with
the applicable provisions of ARTICLE 6, disburse such required funds to
Tenant (or, if Tenant shall so elect, directly to any other Person
performing the required work) and, upon such disbursement, the Minimum Rent
shall be adjusted as provided in SECTION 3.1.1(B); PROVIDED, HOWEVER, that,
in the event that Landlord shall elect not to disburse any funds pursuant
to this SECTION 5.1.3(B), Tenant's sole recourse shall be to elect not to
make the applicable repair, maintenance or renovation, and such failure
shall, except with respect to the Tampa Renovation, not be deemed a Default
or Event of Default. Tenant shall include a good faith projection of funds
required pursuant to this SECTION 5.1.3(B) in the FF&E Estimate.
5.1.4 NONRESPONSIBILITY OF LANDLORD, ETC. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting
with Tenant with respect to the Leased Property, or any part thereof, are
hereby charged with notice that liens on the Leased Property or on
Landlord's interest therein are expressly prohibited and that they must
look solely to Tenant to secure payment for any work done or material
furnished by Tenant or for any other purpose during the term of this
Agreement.
Nothing contained in this Agreement shall be deemed or construed in
any way as constituting the consent or request of Landlord, express or
implied, by inference or otherwise, to any contractor, subcontractor,
laborer or materialmen for the performance of any labor or the furnishing
of any materials for any alteration, addition, improvement or repair to the
Leased Property or any part thereof or as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to the filing of any lien
against the Leased Property or any part thereof nor to subject Landlord's
estate in the Leased Property or any part thereof to liability under any
mechanic's lien law of any State in any way, it being expressly understood
Landlord's estate shall not be subject to any such liability.
5.2 TENANT'S PERSONAL PROPERTY. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be
necessary in order to operate in compliance with applicable material Legal
Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Permitted Use, and all of such
Tenant's Personal Property shall, upon the expiration or earlier
termination of this Agreement, become the property of Landlord. If, from
and after the Commencement Date, Tenant acquires an interest in any item of
tangible personal property (other than motor vehicles) on, or in connection
with, the Leased Property which belongs to anyone other than Tenant, Tenant
shall require the agreements permitting such use to provide that Landlord
or its designee may assume Tenant's rights and obligations under such
agreement upon the termination of this Agreement and the assumption of
management or operation of the Hotel by Landlord or its designee.
5.3 YIELD UP. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender the Leased Property to
Landlord in substantially the same condition in which the Leased Property
was in on the Commencement Date, except as repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this
Agreement, reasonable wear and tear excepted (and casualty damage and
Condemnation, in the event that this Agreement is terminated following a
casualty or Condemnation in accordance with ARTICLE 10 or ARTICLE 11
excepted), and except for repairs Tenant elects not to make pursuant to
SECTION 5.1.3(B).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good
faith efforts to transfer to and cooperate with Landlord or Landlord's
nominee in connection with the processing of all applications for licenses,
operating permits and other governmental authorizations and all contracts,
including contracts with governmental or quasi-governmental Entities which
may be necessary for the use and operation of the Hotel as then operated.
If requested by Landlord, Tenant will direct the Manager to continue, or if
there is no Manager, Tenant shall continue to manage one or more of the
Hotels after the expiration of the Term and for up to one (1) year, on such
reasonable terms (which shall include a market rate management fee,
customary royalty for non-exclusive license to use the trademarks then
being used at the Leased Property and an agreement to reimburse the Manager
or Tenant, as the case may be, for its reasonable out-of-pocket costs and
expenses, and reasonable administrative costs), as Landlord shall
reasonably request.
5.4 MANAGEMENT AGREEMENT. Tenant shall not, without Landlord's prior
written consent (which consent shall not be unreasonably withheld, delayed
or conditioned), enter into, or amend or modify the provisions of any
Management Agreement. Any Management Agreement shall be subordinate to
this Agreement and shall provide, INTER ALIA, that all amounts due from
Tenant to the Manager shall be subordinate to all amounts due from Tenant
to Landlord (provided that, as long as no Event of Default has occurred and
is continuing, Tenant may pay all amounts due to a Manager pursuant to a
Management Agreement) and for termination thereof, at Landlord's option,
upon the termination of this Agreement. Tenant shall not take any action,
grant any consent or permit any action under any Management Agreement which
might have a material adverse effect on Landlord, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
delayed or conditioned.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1 IMPROVEMENTS TO THE LEASED PROPERTY. Tenant shall not make,
construct or install any Capital Additions (other than Capital Additions of
the type described in SECTION 5.1.2(A)(II) or 5.1.2(A)(III) and approved
pursuant to SECTION 5.1.2(C)) without, in each instance, obtaining
Landlord's prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned provided that (a) construction or
installation of the same would not adversely affect or violate any material
Legal Requirement or Insurance Requirement applicable to the Leased
Property and (b) Landlord shall have received an Officer's Certificate
certifying as to the satisfaction of the conditions set out in clause (a)
above; PROVIDED, HOWEVER, that no such consent shall be required in the
event immediate action is required to prevent imminent harm to person or
property. Prior to commencing construction of any Capital Addition, Tenant
shall submit to Landlord, in writing, a proposal setting forth, in
reasonable detail, any such proposed improvement and shall provide to
Landlord such plans and specifications, and such permits, licenses,
contracts and such other information concerning the same as Landlord may
reasonably request. Landlord shall have thirty (30) days to review all
materials submitted to Landlord in connection with any such proposal.
Failure of Landlord to respond to Tenant's proposal within such 30-day
period shall be deemed approval thereof. Without limiting the generality
of the foregoing, such proposal shall indicate the approximate projected
cost of constructing such proposed improvement and the use or uses to which
it will be put. No Capital Addition shall be made which would tie in or
connect any Leased Improvements with any other improvements on property
adjacent to the Leased Property (and not part of the Land) including,
without limitation, tie-ins of buildings or other structures or utilities.
Except as permitted herein, Tenant shall not finance the cost of any
construction of such improvement by the granting of a lien on or security
interest in the Leased Property or such improvement, or Tenant's interest
therein, without the prior written consent of Landlord, which consent may
be withheld by Landlord in Landlord's sole discretion. Any such
improvements shall, upon the expiration or sooner termination of this
Agreement, remain or pass to and become the property of Landlord, free and
clear of all encumbrances other than Permitted Encumbrances.
6.2 SALVAGE. All materials which are scrapped or removed in
connection with the making of either Capital Additions or non-Capital
Additions or repairs required by ARTICLE 5 shall be or become the property
of the party that paid for such work.
ARTICLE 7
LIENS
7.1 LIENS. Subject to ARTICLE 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or
claim upon the Leased Property or Tenant's leasehold interest therein or
any attachment, levy, claim or encumbrance in respect of the Rent, other
than (a) Permitted Encumbrances, (b) restrictions, liens and other
encumbrances which are consented to in writing by Landlord, (c) liens for
those taxes of Landlord which Tenant is not required to pay hereunder, (d)
subleases permitted by ARTICLE 16, (e) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (i) the
same are not yet due and payable, or (ii) are being contested in accordance
with ARTICLE 8, (f) liens of mechanics, laborers, materialmen, suppliers or
vendors incurred in the ordinary course of business that are not yet due
and payable or are for sums that are being contested in accordance with
ARTICLE 8, (g) any Hotel Mortgages or other liens which are the
responsibility of Landlord pursuant to the provisions of ARTICLE 20 and (h)
Landlord Liens and any other voluntary liens created by Landlord.
7.2 LANDLORD'S LIEN. In addition to any statutory landlord's lien
and in order to secure payment of the Rent and all other sums payable
hereunder by Tenant, and to secure payment of any loss, cost or damage
which Landlord may suffer by reason of Tenant's breach of this Agreement,
Tenant hereby grants unto Landlord, to the maximum extent permitted by
Applicable Law, a security interest in and an express contractual lien upon
Tenant's Personal Property (except motor vehicles and liquor licenses and
permits), and Tenant's interest in all ledger sheets, files, records,
documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing) relating to the
operation of the Hotels (the "RECORDS") and all proceeds therefrom, subject
to any Permitted Encumbrances; and such Tenant's Personal Property shall
not be removed from the Leased Property at any time when an Event of
Default has occurred and is continuing.
Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in
accordance with the provisions of the applicable laws of the State. During
the continuance of an Event of Default, Tenant hereby grants Landlord an
irrevocable limited power of attorney, coupled with an interest, to execute
all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for
the Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental
Obligation, lien, attachment, levy, encumbrance, charge or claim
(collectively, "CLAIMS") as to the Leased Property, by appropriate legal
proceedings, conducted in good faith and with due diligence, provided that
(a) the foregoing shall in no way be construed as relieving, modifying or
extending Tenant's obligation to pay any Claims as finally determined, (b)
such contest shall not cause Landlord or Tenant to be in default under any
mortgage or deed of trust encumbering the Leased Property (Landlord
agreeing that any such mortgage or deed of trust shall permit Tenant to
exercise the rights granted pursuant to this ARTICLE 8) or any interest
therein or result in or reasonably be expected to result in a lien
attaching to the Leased Property (unless Tenant shall provide Landlord with
a bond or other assurance reasonably acceptable to Landlord with respect to
any such lien), (c) no part of the Leased Property nor any Rent therefrom
shall be in any immediate danger of sale, forfeiture, attachment or loss,
and (d) Tenant shall indemnify and hold harmless Landlord from and against
any cost, claim, damage, penalty or reasonable expense, including
reasonable attorneys' fees, incurred by Landlord in connection therewith or
as a result thereof. Landlord agrees to join in any such proceedings if
required legally to prosecute such contest, provided that Landlord shall
not thereby be subjected to any liability therefor (including, without
limitation, for the payment of any costs or expenses in connection
therewith) unless Tenant agrees by agreement in form and substance
reasonably satisfactory to Landlord, to assume and indemnify Landlord with
respect to the same. Tenant shall be entitled to any refund of any Claims
and such charges and penalties or interest thereon which have been paid by
Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid
any Claims when finally determined, (y) to provide reasonable security
therefor or (z) to prosecute or cause to be prosecuted any such contest
diligently and in good faith, Landlord may, upon reasonable notice to
Tenant (which notice shall not be required if Landlord shall reasonably
determine that the same is not practicable), pay such charges, together
with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as
Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 GENERAL INSURANCE REQUIREMENTS. Tenant shall, at all times
during the Term and at any other time Tenant shall be in possession of the
Leased Property, keep the Leased Property and all property located therein
or thereon, insured against the risks and in the amounts as follows and
shall maintain, with respect to each Property, the following insurance:
(a) "All-risk" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, earthquake,
explosion of steam boilers, pressure vessels or other similar apparatus,
now or hereafter installed in the Hotel located at such Property, with the
usual extended coverage endorsements, in an amount equal to one hundred
percent (100%) of the then full Replacement Cost thereof (as defined in
SECTION 9.2);
(b) Business interruption insurance covering risk of loss during
the lesser of the first twelve (12) months of reconstruction or the actual
reconstruction period necessitated by the occurrence of any of the hazards
described in subparagraph (a) above, in such amounts as may be customary
for comparable properties in the area and in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer;
(c) Comprehensive general liability insurance, including bodily
injury and property damage in a form reasonably satisfactory to Landlord
(and including, without limitation, broad form contractual liability,
independent contractor's hazard and completed operations coverage) in an
amount not less than One Million Dollars ($1,000,000) per occurrence, Two
Million Dollars ($2,000,000) in the aggregate and umbrella coverage of all
such claims in an amount not less than Fifty Million Dollars ($50,000,000);
(d) Flood (if such Property is located in whole or in part
within an area identified as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968, as amended, or the Flood Disaster Protection Act of
1973, as amended (or any successor acts thereto)) in such amounts as may be
customary for comparable properties in the area;
(e) Worker's compensation insurance coverage if required by
applicable law for all persons employed by Tenant on such Property with
statutory limits and otherwise with limits of and provisions in accordance
with the requirements of applicable local, State and federal law, and
employer's liability insurance as is customarily carried by similar
employers; and
(f) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Hotel Mortgagee and which is
customarily carried by comparable lodging properties in the area.
9.2 REPLACEMENT COST. "REPLACEMENT COST" as used herein, shall mean
the actual replacement cost of the property requiring replacement from time
to time, including an increased cost of construction endorsement, less
exclusions provided in the standard form of fire insurance policy. In the
event either party believes that the then full Replacement Cost has
increased or decreased at any time during the Term, such party, at its own
cost, shall have the right to have such full Replacement Cost redetermined
by an independent accredited appraiser approved by the other, which
approval shall not be unreasonably withheld or delayed. The party desiring
to have the full Replacement Cost so redetermined shall forthwith, on
receipt of such determination by such appraiser, give Notice thereof to the
other. The determination of such appraiser shall be final and binding on
the parties hereto until any subsequent determination under this SECTION
9.2, and Tenant shall forthwith conform the amount of the insurance carried
to the amount so determined by the appraiser.
9.3 WAIVER OF SUBROGATION. Landlord and Tenant agree that (insofar
as and to the extent that such agreement may be effective without
invalidating or making it impossible to secure insurance coverage from
responsible insurance companies doing business in any State) with respect
to any property loss which is covered by insurance then being carried by
Landlord or Tenant, respectively, the party carrying such insurance and
suffering said loss releases the other of and from any and all claims with
respect to such loss; and they further agree that their respective
insurance companies shall have no right of subrogation against the other on
account thereof, even though extra premium may result therefrom. In the
event that any extra premium is payable by Tenant as a result of this
provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.
9.4 FORM SATISFACTORY, ETC. All insurance policies and endorsements
required pursuant to this ARTICLE 9 shall be fully paid for, nonassessable
and be issued by insurance carriers authorized to do business in the State,
having a general policy holder's rating of no less than B++ in Best's
latest rating guide. All such policies described in SECTIONS 9.1(A)
THROUGH (D) shall include no deductible in excess of Two Hundred Fifty
Thousand Dollars ($250,000) (with the exception of insurance described in
SECTION 9.1(A) providing coverage for windstorm which may have a deductible
not exceeding five percent (5%) of the policy amount for such insurance or
such lesser amount as may be usual and customary in the insurance industry
for like properties) and, with the exception of the insurance described in
SECTIONS 9.1(E), shall name Landlord and any Hotel Mortgagee as additional
insureds, as their interests may appear. All loss adjustments shall be
payable as provided in ARTICLE 10, except that losses under SECTIONS 9.1(C)
AND (E) shall be payable directly to the party entitled thereto. Tenant
shall cause all insurance premiums to be paid and shall deliver policies or
certificates thereof to Landlord prior to their effective date (and, with
respect to any renewal policy, prior to the expiration of the existing
policy). All such policies shall provide Landlord (and any Hotel Mortgagee
if required by the same) thirty (30) days prior written notice of any
material change or cancellation of such policy. In the event Tenant shall
fail to effect such insurance as herein required, to pay the premiums
therefor or to deliver such policies or certificates to Landlord or any
Hotel Mortgagee at the times required, Landlord shall have the right, upon
Notice to Tenant, but not the obligation, to acquire such insurance and pay
the premiums therefor, which amounts shall be payable to Landlord, upon
demand, as Additional Charges, together with interest accrued thereon at
the Overdue Rate from the date such payment is made until (but excluding)
the date repaid.
9.5 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this ARTICLE 9, Tenant's obligation to maintain the insurance
herein required may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Tenant, provided,
that (a) the coverage thereby afforded will not be reduced or diminished
from that which would exist under a separate policy meeting all other
requirements of this Agreement, and (b) the requirements of this ARTICLE 9
are otherwise satisfied. Without limiting the foregoing, the amounts of
insurance that are required to be maintained pursuant to SECTION 9.1 shall
be on a Hotel by Hotel basis, and shall not be subject to an aggregate
limit, except for flood, earthquake and umbrella coverages.
9.6 NO SEPARATE INSURANCE. Tenant shall not take out separate
insurance, concurrent in form or contributing in the event of loss with
that required by this ARTICLE 9, or increase the amount of any existing
insurance by securing an additional policy or additional policies, unless
all parties having an insurable interest in the subject matter of such
insurance, including Landlord and all Hotel Mortgagees, are included
therein as additional insureds and the loss is payable under such insurance
in the same manner as losses are payable under this Agreement. In the
event Tenant shall take out any such separate insurance or increase any of
the amounts of the then existing insurance, Tenant shall give Landlord
prompt Notice thereof.
9.7 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of
any insurance provided for herein and without regard to the policy limits
of any such insurance, Tenant shall protect, indemnify and hold harmless
Landlord for, from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and reasonable expenses
(including, without limitation, reasonable attorneys' fees), to the maximum
extent permitted by law, imposed upon or incurred by or asserted against
Landlord by reason of: (a) any accident, injury to or death of persons or
loss of or damage to property occurring on or about the Leased Property or
adjoining sidewalks or rights of way, (b) any past, present or future use,
misuse, non-use, condition, management, maintenance or repair by Tenant or
anyone claiming under Tenant of the Leased Property or Tenant's Personal
Property or any litigation, proceeding or claim by governmental entities or
other third parties to which Landlord is made a party or participant
relating to the Leased Property or Tenant's Personal Property or such use,
misuse, non-use, condition, management, maintenance, or repair thereof
including, failure to perform obligations (other than Condemnation
proceedings) to which Landlord is made a party, (c) any Impositions that
are the obligations of Tenant to pay pursuant to the applicable provisions
of this Agreement, and (d) any failure on the part of Tenant or anyone
claiming under Tenant to perform or comply with any of the terms of this
Agreement. Tenant, at its expense, shall contest, resist and defend any
such claim, action or proceeding asserted or instituted against Landlord
(and shall not be responsible for any duplicative attorneys' fees incurred
by Landlord) or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld, delayed or conditioned). The obligations of Tenant under this
SECTION 9.7 are in addition to the obligations set forth in SECTION 4.3 and
shall survive the termination of this Agreement.
ARTICLE 10
CASUALTY
10.1 INSURANCE PROCEEDS. Except as provided in the last clause of
this sentence, all proceeds payable by reason of any loss or damage to any
Property, or any portion thereof, and insured under any policy of insurance
required by ARTICLE 9 (other than the proceeds of any business interruption
insurance) shall be paid directly to Landlord (subject to the provisions of
SECTION 10.2) and all loss adjustments with respect to losses payable to
Landlord shall require the prior written consent of Landlord, which consent
shall not be unreasonably withheld, delayed or conditioned; PROVIDED,
HOWEVER, that, so long as no Event of Default shall have occurred and be
continuing, all such proceeds less than or equal to Five Hundred Thousand
Dollars ($500,000) shall be paid directly to Tenant and such losses may be
adjusted without Landlord's consent. If Tenant is required to reconstruct
or repair any Property as provided herein, such proceeds shall be paid out
by Landlord from time to time for the reasonable costs of reconstruction or
repair of such Property necessitated by such damage or destruction, subject
to and in accordance with the provisions of SECTION 10.2.4. Provided no
Default or Event of Default has occurred and is continuing, any excess
proceeds of insurance remaining after the completion of the restoration
shall be paid to Tenant. In the event that the provisions of SECTION
10.2.1 are applicable, the insurance proceeds shall be retained by the
party entitled thereto pursuant to SECTION 10.2.1.
10.2 DAMAGE OR DESTRUCTION.
10.2.1 DAMAGE OR DESTRUCTION OF LEASED PROPERTY.
If, during the Term, any Property shall be totally or partially destroyed
and the Hotel located thereon is thereby rendered Unsuitable for Its
Permitted Use, Tenant may, by the giving of Notice thereof to Landlord,
within ninety (90) days after the date of casualty, terminate this
Agreement with respect to such Property, in which event, Landlord shall be
entitled to retain the insurance proceeds payable on account of such
damage, except that Landlord shall pay to Tenant any net proceeds in excess
of the replacement cost of such Property reasonably allocable to the value
of Tenant's leasehold, Tenant's Personal Property and Capital Additions
paid for by Tenant.
10.2.2 PARTIAL DAMAGE OR DESTRUCTION. If, during the Term, any
Property shall be totally or partially destroyed but the Hotel is not
rendered Unsuitable for Its Permitted Use, Tenant shall promptly restore
such Hotel as provided in SECTION 10.2.4 unless this Agreement is
terminated as to such Hotel as provided in SECTION 10.2.3.
10.2.3 INSUFFICIENT INSURANCE PROCEEDS. If this Agreement is
not otherwise terminated pursuant to this ARTICLE 10 and the cost of the
repair or restoration of the applicable Property exceeds the amount of
insurance proceeds received by Landlord and Tenant pursuant to SECTION
9(A), (C), (D) OR, IF APPLICABLE, (F), Tenant shall give Landlord Notice
thereof which notice shall set forth in reasonable detail the nature of
such deficiency and whether Tenant shall pay and assume the amount of such
deficiency (Tenant having no obligation to do so, except that, if Tenant
shall elect to make such funds available, the same shall become an
irrevocable obligation of Tenant pursuant to this Agreement). In the event
Tenant shall elect not to pay and assume the amount of such deficiency,
Landlord shall have the right (but not the obligation), exercisable at
Landlord's sole election by Notice to Tenant, given within sixty (60) days
after Tenant's notice of the deficiency, to elect to make available for
application to the cost of repair or restoration the amount of such
deficiency; PROVIDED, HOWEVER, in such event, upon any disbursement by
Landlord thereof, the Minimum Rent shall be adjusted as provided in SECTION
3.1.1(B). In the event that neither Landlord nor Tenant shall elect to
make such deficiency available for restoration, either Landlord or Tenant
may terminate this Agreement with respect to the affected Property by
Notice to the other, whereupon, this Agreement shall terminate and
insurance proceeds shall be distributed as provided in SECTION 10.2.1. It
is expressly understood and agreed, however, that, notwithstanding anything
in this Agreement to the contrary, Tenant shall be strictly liable and
solely responsible for the amount of any deductible and shall, upon any
insurable loss, pay over the amount of such deductible to Landlord at the
time and in the manner herein provided for payment of the applicable
proceeds to Landlord.
10.2.4 DISBURSEMENT OF PROCEEDS. In the event Tenant is
required to restore any Property pursuant to SECTION 10.2 and this
Agreement is not terminated as to such Property pursuant to this ARTICLE
10, Tenant shall commence promptly and continue diligently to perform the
repair and restoration of such Property (hereinafter called the "WORK"), so
as to restore such Property in material compliance with all Legal
Requirements and so that such Property shall be, to the extent practicable,
substantially equivalent in value and general utility to its general
utility and value immediately prior to such damage or destruction. Subject
to the terms hereof, Landlord shall advance the insurance proceeds and any
additional amounts payable by Landlord pursuant to SECTION 10.2.3 or
otherwise deposited with Landlord to Tenant regularly during the repair and
restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than
monthly within ten (10) Business Days after Tenant submits to Landlord a
written requisition and substantiation therefor on AIA Forms G702 and G703
(or on such other form or forms as may be reasonably acceptable to
Landlord). Landlord may, at its option, condition advancement of such
insurance proceeds and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned), (iii) general contractors' estimates,
(iv) architect's certificates, (v) unconditional lien waivers of general
contractors, if available, (vi) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required, (vii),
if Tenant has elected to advance deficiency funds pursuant to SECTION
10.2.3, Tenant depositing the amount thereof with Landlord and (viii) such
other certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this
ARTICLE 10 during the last two (2) years of the Term (including any
automatic renewals thereof) shall be subject to the release of such
proceeds by any Hotel Mortgagee to Landlord. If any Hotel Mortgagee shall
be unwilling to disburse insurance proceeds in accordance with the terms of
this Agreement, Tenant shall have the right, by the giving of Notice
thereof to Landlord within ten (10) Business Days after Tenant learns of
such unwillingness, to treat such Property as rendered Unsuitable for its
Permitted Use for purposes of SECTION 10.2.1. Tenant's obligation to
restore the applicable Property pursuant to this ARTICLE 10 shall be
subject to the release of available insurance proceeds by the applicable
Hotel Mortgagee to Landlord or directly to Tenant.
10.3 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
SECTION 10.1 OR 10.2 to the contrary, if damage to or destruction of any
Property occurs during the last two (2) years of the Term (including any
automatic Extended Terms) and if such damage or destruction cannot
reasonably be expected to be fully repaired and restored prior to the date
that is twelve (12) months prior to the end of the Term, the provisions of
SECTION 10.2.1 shall apply as if such Property had been totally or
partially destroyed and the Hotel thereon rendered Unsuitable for its
Permitted Use.
10.4 TENANT'S PROPERTY. All insurance proceeds payable by reason of
any loss of or damage to any of Tenant's Personal Property shall be paid to
Tenant and, to the extent necessary to repair or replace Tenant's Personal
Property in accordance with SECTION 10.5, Tenant shall hold such proceeds
in trust to pay the cost of repairing or replacing damaged Tenant's
Personal Property.
10.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required to
restore any Property as hereinabove provided and this Agreement is not
terminated as to such Property pursuant to the terms of ARTICLE 10, Tenant
shall either (a) restore all alterations and improvements made by Tenant
and Tenant's Personal Property, or (b) replace such alterations and
improvements and Tenant's Personal Property with improvements or items of
the same or better quality and utility in the operation of such Property.
If Tenant is not required to restore and does not, in fact, restore, Tenant
shall pay over to Landlord the amount, if any, of insurance proceeds
received by Tenant with respect to any of Tenant's Personal Property which
was purchased with funds from the FF&E Reserve.
10.6 NO ABATEMENT OF RENT. Except as expressly provided herein, this
Agreement shall remain in full force and effect and Tenant's obligation to
make all payments of Rent and to pay all other charges as and when required
under this Agreement shall remain unabated during the Term notwithstanding
any damage involving the Leased Property (provided that Landlord shall
credit against such payments any amounts paid to Landlord as a consequence
of such damage under any business interruption insurance obtained by Tenant
hereunder). The provisions of this ARTICLE 10 shall be considered an
express agreement governing any cause of damage or destruction to the
Leased Property and, to the maximum extent permitted by law, no local or
State statute, laws, rules, regulation or ordinance in effect during the
Term which provide for such a contingency shall have any application in
such case.
10.7 WAIVER. Tenant hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of the Leased
Property, or any portion thereof.
ARTICLE 11
CONDEMNATION
11.1 TOTAL CONDEMNATION, ETC. If either (i) the whole of any Property
shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of any Property renders any Property Unsuitable for Its Permitted
Use, this Agreement shall terminate with respect to such Property, Tenant
and Landlord shall seek the Award for their interests in the applicable
Property as provided in SECTION 11.6 and, as the effective date of taking,
the Minimum Rent payable hereunder shall be reduced by such Property's
allocable share thereof as set forth in EXHIBIT C.
11.2 PARTIAL CONDEMNATION. In the event of a Condemnation of less
than the whole of any Property such that such Property is still suitable
for its Permitted Use, Tenant shall commence promptly and continue
diligently to restore the untaken portion of the applicable Leased
Improvements so that such Leased Improvements shall constitute a complete
architectural unit of the same general character and condition (as nearly
as may be possible under the circumstances) as such Leased Improvements
existing immediately prior to such Condemnation, in material compliance
with all Legal Requirements, subject to and unless this Agreement is
terminated pursuant to the provisions of this SECTION 11.2. If the cost of
the repair or restoration of the affected Property exceeds the amount of
the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no
obligation to do so, except that if Tenant shall elect to make such funds
available, the same shall become an irrevocable obligation of Tenant
pursuant to this Agreement). In the event Tenant shall elect not to pay
and assume the amount of such deficiency, Landlord shall have the right
(but not the obligation), exercisable at Landlord's sole election by Notice
to Tenant given within sixty (60) days after Tenant's Notice of the
deficiency, to elect to make available for application to the cost of
repair or restoration the amount of such deficiency; PROVIDED, HOWEVER, in
such event, upon any disbursement by Landlord thereof, the Minimum Rent
shall be adjusted as provided in SECTION 3.1.1(B). In the event that
neither Landlord nor Tenant shall elect to make such deficiency available
for restoration, either Landlord or Tenant may terminate this Agreement
with respect to the affected Property and the entire Award shall be
allocated as set forth in SECTION 11.6.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the
taken Leased Improvements and any other amounts deposited with or payable
by Landlord, to Tenant regularly during the restoration period so as to
permit payment for the cost of such repair or restoration. Landlord may,
at its option, condition advancement of such Award and other amounts on (i)
the absence of any Event of Default, (ii) its approval of plans and
specifications of an architect satisfactory to Landlord (which approval
shall not be unreasonably withheld, delayed or conditioned), (iii) general
contractors' estimates, (iv) architect's certificates, (v) unconditional
lien waivers of general contractors, if available, (vi) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required, (vii), if Tenant has elected to advance deficiency
funds pursuant to the preceding paragraph, Tenant depositing the amount
thereof with Landlord and (viii) such other certificates as Landlord may,
from time to time, reasonably require. Landlord's obligation under this
SECTION 11.2 to disburse the Award and such other amounts shall be subject
to (x) the collection thereof by Landlord and (y) during the last two (2)
years of the Term (including any exercised renewals thereof), the release
of such Award by the applicable Hotel Mortgagee. If any Hotel Mortgagee
shall be unwilling to disburse Award proceeds in accordance with the terms
of this Agreement, Tenant shall have the right, by the giving of Notice
thereof to Landlord within ten (10) Business Days after Tenant learns of
such unwillingness, to treat such Property as rendered Unsuitable for its
Permitted Use for purposes of SECTION 11.1. Tenant's obligation to restore
the Leased Property shall be subject to the release of the Award by the
applicable Hotel Mortgagee to Landlord or directly to Tenant.
11.3 ABATEMENT OF RENT. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and
Tenant's obligation to make all payments of Rent and to pay all other
charges as and when required under this Agreement shall remain unabated
during the Term notwithstanding any Condemnation involving the Leased
Property, or any portion thereof. The provisions of this ARTICLE 11 shall
be considered an express agreement governing any Condemnation involving the
Leased Property and, to the maximum extent permitted by law, no local or
State statute, law, rule, regulation or ordinance in effect during the Term
which provides for such a contingency shall have any application in such
case.
11.4 TEMPORARY CONDEMNATION. In the event of any temporary
Condemnation of any Property or Tenant's interest therein, this Agreement
shall continue in full force and effect and Tenant shall continue to pay,
in the manner and on the terms herein specified, the full amount of the
Rent. Tenant shall continue to perform and observe all of the other terms
and conditions of this Agreement on the part of the Tenant to be performed
and observed. Provided no Event of Default has occurred and is continuing,
the entire amount of any Award made for such temporary Condemnation
allocable to the Term, whether paid by way of damages, rent or otherwise,
shall be paid to Tenant. Tenant shall, promptly upon the termination of
any such period of temporary Condemnation, at its sole cost and expense,
restore the Leased Property to the condition that existed immediately prior
to such Condemnation, in material compliance with all applicable Legal
Requirements, unless such period of temporary Condemnation shall extend
beyond the expiration of the Term, in which event Tenant shall not be
required to make such restoration.
11.5 CONDEMNATION NEAR END OF TERM. Notwithstanding any provisions of
SECTIONS 11.2 OR 11.3 to the contrary, if Condemnation of any Property
occurs during the last two (2) years of the Term (including any automatic
Extended Terms) and if restoration cannot reasonably be expected to be
completed prior to the date that is twelve (12) months prior to the end of
the Term, the provisions of SECTION 11.1 shall apply as if such Property
had been totally or partially taken and the Hotel thereon rendered
Unsuitable for its Permitted Use.
11.6 ALLOCATION OF AWARD. Except as provided in SECTION 11.4 and the
second sentence of this SECTION 11.6, the total Award shall be solely the
property of and payable to Landlord. Any portion of the Award made for the
taking of Tenant's leasehold interest in the Leased Property, loss of
business during the remainder of the Term, the taking of Tenant's Personal
Property (other than any such property purchased with the FF&E Reserve),
the taking of Capital Additions paid for by Tenant and Tenant's removal and
relocation expenses shall be the sole property of and payable to Tenant.
In any Condemnation proceedings, Landlord and Tenant shall each seek its
own Award in conformity herewith, at its own expense.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" hereunder:
(a) should Tenant fail to make any payment of the Rent or any
other sum (including, but not limited to, funding of the FF&E Reserve)
payable hereunder when due; or
(b) should Tenant fail to maintain the insurance coverages
required under ARTICLE 9 and such failure shall continue for ten (10)
Business Days after Notice thereof (except that no Notice shall be required
if any such insurance coverages shall have lapsed); or
(c) should Tenant default in the due observance or performance
of any of the terms, covenants or agreements contained herein to be
performed or observed by it (other than as specified in clauses (a) and (b)
above) and such default shall continue for a period of thirty (30) days
after Notice thereof from Landlord to Tenant; PROVIDED, HOWEVER, that if
such default is susceptible of cure but such cure cannot be accomplished
with due diligence within such period of time and if, in addition, Tenant
commences to cure or cause to be cured such default within thirty (30) days
after Notice thereof from Landlord and thereafter prosecutes the curing of
such default with all due diligence, such period of time shall be extended
to such period of time (not to exceed an additional one (1) year in the
aggregate) as may be necessary to cure such default with all due diligence;
or
(d) should any obligation of Tenant in excess of One Million
Dollars ($1,000,000) in respect of any Indebtedness for money borrowed or
for any material property or services, or any guaranty relating thereto, be
declared to be or become due and payable prior to the stated maturity
thereof, or should there occur and be continuing with respect to any such
Indebtedness any event of default under any instrument or agreement
evidencing or securing the same, the effect of which is to permit the
holder or holders of such instrument or agreement or a trustee, agent or
other representative on behalf of such holder or holders, to cause such any
such obligations to become due prior to its stated maturity; or
(e) should an event of default by ShoLodge or Tenant or any
Affiliated Person as to ShoLodge or Tenant occur and be continuing beyond
the expiration of any applicable cure period under any of the Incidental
Documents or by the ShoLodge Parties (as defined therein) under the
Purchase Agreement; or
(f) should any material representation or warranty made by
Tenant or the ShoLodge Parties (as defined in the Purchase Agreement) under
or in connection with this Agreement or any Incidental Document or, for the
period expiring on the first anniversary of the Commencement Date, the
Purchase Agreement, or in any document, certificate or agreement delivered
in connection herewith or therewith, prove to have been false or misleading
in any material respect on the date when made or deemed made and the same
shall continue for five (5) Business Days after Notice thereof from
Landlord; or
(g) should Tenant generally not be paying its debts as they
become due or should Tenant make a general assignment for the benefit of
creditors; or
(h) should any petition be filed by or against Tenant under the
Federal bankruptcy laws, or should any other proceeding be instituted by or
against Tenant seeking to adjudicate Tenant a bankrupt or insolvent, or
seeking liquidation, reorganization, arrangement, adjustment or composition
of Tenant's debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for Tenant or for any substantial part of the property of
Tenant and such proceeding is not dismissed within one hundred eighty (180)
days after institution thereof; or
(i) should Tenant cause or institute any proceeding for its
dissolution or termination; or
(j) should the estate or interest of Tenant in the Leased
Property or any part thereof be levied upon or attached in any proceeding
and the same shall not be vacated or discharged within the later of (x) two
hundred seventy (270) days after commencement thereof, unless the amount in
dispute is less than $1,000,000, in which case Tenant shall give notice to
Landlord of the dispute but Tenant may defend in any suitable way, and (y)
two hundred seventy (270) days after receipt by Tenant of Notice thereof
from Landlord (unless Tenant shall be contesting such lien or attachment in
good faith in accordance with ARTICLE 8); or
(k) should Tenant at any time cease to be a wholly owned, direct
or indirect, Subsidiary of ShoLodge;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to any or all of
the Leased Property by giving Notice thereof to Tenant and upon the
expiration of the time, if any, fixed in such Notice, this Agreement shall
terminate with respect to all or the designated portion of the Leased
Property and all rights of Tenant under this Agreement with respect thereto
shall cease. Landlord shall have and may exercise all rights and remedies
available at law and in equity to Landlord as a result of Tenant's breach
of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition
to any other remedies provided herein, enter upon the Leased Property or
any portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the Records, without liability for trespass or
conversion (Tenant hereby waiving any right to notice or hearing prior to
such taking of possession by Landlord) and sell the same at public or
private sale, after giving Tenant reasonable Notice of the time and place
of any public or private sale, at which sale Landlord or its assigns may
purchase all or any portion of Tenant's Personal Property, if any, unless
otherwise prohibited by law. Unless otherwise provided by law and without
intending to exclude any other manner of giving Tenant reasonable notice,
the requirement of reasonable Notice shall be met if such Notice is given
at least ten (10) days before the date of sale. The proceeds from any such
disposition, less all expenses incurred in connection with the taking of
possession, holding and selling of such property (including, reasonable
attorneys' fees) shall be applied as a credit against the indebtedness
which is secured by the security interest granted in SECTION 7.2. Any
surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.
12.2 REMEDIES. None of (a) the termination of this Agreement pursuant
to SECTION 12.1, (b) the repossession of the Leased Property or any portion
thereof, (c) the failure of Landlord to re-let the Leased Property or any
portion thereof, nor (d) the reletting of all or any of portion of the
Leased Property, shall relieve Tenant of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
re-letting. In the event of any such termination, Tenant shall forthwith
pay to Landlord all Rent due and payable with respect to the Leased
Property through and including the date of such termination. Thereafter,
Tenant, until the end of what would have been the Term of this Agreement in
the absence of such termination, and whether or not the Leased Property or
any portion thereof shall have been re-let, shall be liable to Landlord
for, and shall pay to Landlord, as current damages, the Rent (Additional
Rent to be reasonably calculated by Landlord based on historical Total
Hotel Sales) and other charges which would be payable hereunder for the
remainder of the Term had such termination not occurred, less the net
proceeds, if any, of any re-letting of the Leased Property, after deducting
all reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees, alteration
costs and expenses of preparation for such reletting. Tenant shall pay
such current damages to Landlord monthly on the days on which the Minimum
Rent would have been payable hereunder if this Agreement had not been so
terminated with respect to such of the Leased Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the
date of such termination, at Landlord's election, Tenant shall pay to
Landlord an amount equal to the present value (discounted at the Interest
Rate) of the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of
Impositions and Additional Rent would be the same as payments required for
the immediately preceding twelve calendar months, or if less than twelve
calendar months have expired since the Commencement Date, the payments
required for such lesser period projected to an annual amount) for what
would be the then unexpired term of this Agreement if the same remained in
effect, over the fair market rental for the same period. Nothing contained
in this Agreement shall, however, limit or prejudice the right of Landlord
to prove and obtain in proceedings for bankruptcy or insolvency an amount
equal to the maximum allowed by any statute or rule of law in effect at the
time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than
the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may (a) relet
the Leased Property or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms which may at Landlord's option,
be equal to, less than or exceed the period which would otherwise have
constituted the balance of the Term and may grant concessions or free rent
to the extent that Landlord considers advisable and necessary to relet the
same, and (b) may make such reasonable alterations, repairs and decorations
in the Leased Property or any portion thereof as Landlord, in its sole and
absolute discretion, considers advisable and necessary for the purpose of
reletting the Leased Property; and the making of such alterations, repairs
and decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Subject to the last sentence of this
paragraph and as long as Landlord uses reasonable efforts to mitigate its
damages as provided in such sentence, Landlord shall in no event be liable
in any way whatsoever for any failure to relet all or any portion of the
Leased Property, or, in the event that the Leased Property is relet, for
failure to collect the rent under such reletting. To the maximum extent
permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant
being evicted or dispossessed, or in the event of Landlord obtaining
possession of the Leased Property, by reason of the occurrence and
continuation of an Event of Default hereunder. Landlord covenants and
agrees, in the event of any termination of this Agreement as a result of an
Event of Default, to use reasonable efforts to mitigate its damages.
12.3 TENANT'S WAIVER. IF THIS AGREEMENT IS TERMINATED PURSUANT TO
SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY
RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE
REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR
HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 APPLICATION OF FUNDS. Any payments received by Landlord under
any of the provisions of this Agreement during the existence or continuance
of any Event of Default (and any payment made to Landlord rather than
Tenant due to the existence of any Event of Default) shall be applied to
Tenant's current and past due obligations under this Agreement in such
order as Landlord may determine or as may be prescribed by the laws of the
State. Any balance shall be paid to Tenant.
12.5 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If an Event of
Default shall have occurred and be continuing, Landlord, after Notice to
Tenant (which Notice shall not be required if Landlord shall reasonably
determine immediate action is necessary to protect person or property),
without waiving or releasing any obligation of Tenant and without waiving
or releasing any Event of Default, may (but shall not be obligated to), at
any time thereafter, make such payment or perform such act for the account
and at the expense of Tenant, and may, to the maximum extent permitted by
law, enter upon the Leased Property or any portion thereof for such purpose
and take all such action thereon as, in Landlord's sole and absolute
discretion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Tenant. All reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred by
Landlord in connection therewith, together with interest thereon (to the
extent permitted by law) at the Overdue Rate from the date such sums are
paid by Landlord until repaid, shall be paid by Tenant to Landlord, on
demand.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination
of this Agreement shall be treated as a daily tenancy at sufferance at a
rate equal to two (2) times the Minimum Rent and other charges herein
provided (prorated on a daily basis). Tenant shall also pay to Landlord
all damages (direct or indirect) sustained by reason of any such holding
over. Otherwise, such holding over shall be on the terms and conditions
set forth in this Agreement, to the extent applicable. Nothing contained
herein shall constitute the consent, express or implied, of Landlord to the
holding over of Tenant after the expiration or earlier termination of this
Agreement.
ARTICLE 14
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
14.1 LANDLORD NOTICE OBLIGATION. Notwithstanding anything to the
contrary contained herein, Landlord shall give prompt Notice to Tenant of
any matters affecting the Leased Property of which Landlord receives
written notice or actual knowledge and, to the extent Tenant otherwise has
no notice or actual knowledge thereof, Landlord shall be liable for any
liabilities arising from the failure to deliver such Notice to Tenant.
14.2 LANDLORD'S DEFAULT. If Landlord shall default in the performance
or observance of any of its covenants or obligations set forth in this
Agreement or any obligation of Landlord, if any, under any agreement
affecting the Leased Property, the performance of which is not Tenant's
obligation pursuant to this Agreement, and any such default shall continue
for a period of five (5) Business Days after Notice thereof with respect to
monetary defaults and twenty (20) Business Days after Notice thereof with
respect to non-monetary defaults from Tenant to Landlord and any applicable
Hotel Mortgagee, or such additional period as may be reasonably required to
correct the same, provided Landlord is proceeding with due diligence to
correct the same, Tenant may declare the occurrence of a "LANDLORD DEFAULT"
by a second Notice to Landlord and to such Hotel Mortgagee. Thereafter,
Tenant may forthwith cure the same and, subject to the provisions of the
following paragraph, invoice Landlord for costs and expenses (including
reasonable attorneys' fees and court costs) incurred by Tenant in curing
the same, together with interest thereon (to the extent permitted by law)
from the date Landlord receives Tenant's invoice until paid, at the Overdue
Rate, and/or offset such amounts against Additional Rent due and payable
hereunder. Tenant shall have no right to terminate this Agreement for any
default by Landlord hereunder and no right, for any such default, to offset
or counterclaim against any Rent or other charges due hereunder, except
with respect to Additional Rent as set forth in the preceding sentence.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period,
shall give Notice thereof to Tenant, setting forth, in reasonable detail,
the basis therefor, no Landlord Default shall be deemed to have occurred
and Landlord shall have no obligation with respect thereto until final
adverse determination thereof; PROVIDED, HOWEVER, that in the event of any
such adverse determination, Landlord shall pay to Tenant interest on any
disputed funds at the Interest Rate, from the date demand for such funds
was made by Tenant until the date of final adverse determination and,
thereafter, at the Overdue Rate until paid. If Tenant and Landlord shall
fail, in good faith, to resolve any such dispute within ten (10) days after
Landlord's Notice of dispute, either may submit the matter for resolution
to a court of competent jurisdiction.
14.3 INDEMNIFICATION OF TENANT. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of
any such insurance, Landlord shall protect, indemnify and hold harmless
Tenant for, from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and reasonable expenses (including,
without limitation, reasonable attorneys' fees), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against Tenant by
reason of: (a) any Impositions that are the obligations of Landlord to pay
pursuant to the applicable provisions of this Agreement, and (b) any
failure on the part of Landlord or anyone claiming under Landlord to
perform or comply with any of the terms of this Agreement. Landlord, at
its expense, shall contest, resist and defend any such claim, action or
proceeding asserted or instituted against Tenant (and shall not be
responsible for any duplicative attorneys' fees incurred by Tenant) or may
compromise or otherwise dispose of the same, with Tenant's prior written
consent (which consent may not be unreasonably withheld, delayed or
conditioned). The obligations of Landlord under this SECTION 14.3 shall
survive termination of this Agreement.
ARTICLE 15
PURCHASE RIGHTS
Landlord shall have the option to purchase Tenant's Personal Property,
at the expiration or termination of this Agreement, for an amount equal to
the then net market value thereof (current replacement cost as determined
by agreement of the parties or, in the absence of such agreement,
appraisal, less accumulated depreciation on Tenant's books pertaining
thereto), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, UCC-1 financing statements
and other encumbrances to which such Personal Property is subject (except
that any such property purchased with the FF&E Reserve shall be transferred
to Landlord as provided in SECTION 5.1.2(E)). Upon the expiration or
sooner termination of this Agreement, Tenant shall use its reasonable
efforts to transfer and assign to Landlord or its designee, or assist
Landlord or its designee in obtaining, any contracts, licenses, and
certificates required for the then operation of the Leased Property.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 SUBLETTING AND ASSIGNMENT. Except as provided in SECTION 16.3,
Tenant shall not, without Landlord's prior written consent (which consent
may be given or withheld in Landlord's sole and absolute discretion),
assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this
Agreement or sublease (which term shall be deemed to include the granting
of concessions, licenses and the like but shall not be deemed to include
the lodging of hotel guests consistent with the Permitted Use), all or any
part of the Leased Property or suffer or permit this Agreement or the
leasehold estate created hereby or any other rights arising under this
Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or
encumbered, in whole or in part, whether voluntarily, involuntarily or by
operation of law, or permit the use or operation of the Leased Property by
anyone other than Tenant, or the Leased Property to be offered or
advertised for assignment or subletting; PROVIDED, HOWEVER, that an
assignment to a wholly owned Subsidiary (direct or indirect) of ShoLodge
shall be permitted without the consent of, but upon Notice to, Landlord.
For purposes of this SECTION 16.1, an assignment of this Agreement shall be
deemed to include any direct or indirect transfer of any interest in Tenant
such that Tenant shall cease to be a wholly owned direct or indirect
Subsidiary of ShoLodge or any transaction pursuant to which Tenant is
merged or consolidated with another Entity or pursuant to which all or
substantially all of Tenant's assets are transferred to any other Entity,
as if such change in control or transaction were an assignment of this
Agreement, unless such Entity is a wholly owned Subsidiary (direct or
indirect) of ShoLodge.
If this Agreement is assigned or if the Leased Property or any part
thereof are sublet (or occupied by anybody other than Tenant and their
respective employees or hotel guests) Landlord may collect the rents from
such assignee, subtenant or occupant, as the case may be, and apply the net
amount collected to the Rent herein reserved, but no such collection shall
be deemed a waiver of the provisions set forth in the first paragraph of
this SECTION 16.1, the acceptance by Landlord of such assignee, subtenant
or occupant, as the case may be, as a tenant, or a release of Tenant from
the future performance by Tenant of its covenants, agreements or
obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations
hereunder), and no consent to any subletting or assignment in a particular
instance shall be deemed to be a waiver of the prohibition set forth in
this SECTION 16.1. No assignment, subletting or occupancy shall affect any
Permitted Use. Any subletting, assignment or other transfer of Tenant's
interest under this Agreement in contravention of this SECTION 16.1 shall
be voidable at Landlord's option.
16.2 REQUIRED SUBLEASE PROVISIONS. Any sublease of all or any portion
of the Leased Property entered into on or after the date hereof shall
provide (a) that it is subject and subordinate to this Agreement and to the
matters to which this Agreement is or shall be subject or subordinate; (b)
that in the event of termination of this Agreement or reentry or
dispossession of Tenant by Landlord under this Agreement, Landlord may, at
its option, terminate such sublease or take over all of the right, title
and interest of Tenant, as sublessor under such sublease, and such
subtenant shall, at Landlord's option, attorn to Landlord pursuant to the
then executory provisions of such sublease, except that neither Landlord
nor any Hotel Mortgagee, as holder of a mortgage or as Landlord under this
Agreement, if such mortgagee succeeds to that position, shall (i) be liable
for any act or omission of Tenant under such sublease, (ii) be subject to
any credit, counterclaim, offset or defense which theretofore accrued to
such subtenant against Tenant, (iii) be bound by any previous modification
of such sublease not consented to in writing by Landlord or by any previous
prepayment of more than one (1) month's rent, (iv) be bound by any covenant
of Tenant to undertake or complete any construction of the Leased Property
or any portion thereof, (v) be required to account for any Retained Funds
of the subtenant other than any Retained Funds actually delivered to
Landlord by Tenant, (vi) be bound by any obligation to make any payment to
such subtenant or grant any credits, except for services, repairs,
maintenance and restoration provided for under the sublease that are
performed after the date of such attornment, (vii) be responsible for any
monies owing by Tenant to the credit of such subtenant unless actually
delivered to Landlord by Tenant, or (viii) be required to remove any Person
occupying any portion of the Leased Property; and (c), in the event that
such subtenant receives a written Notice from Landlord or any Hotel
Mortgagee stating that an Event of Default has occurred and is continuing,
such subtenant shall thereafter be obligated to pay all rentals accruing
under such sublease directly to the party giving such Notice or as such
party may direct. All rentals received from such subtenant by Landlord or
the Hotel Mortgagee, as the case may be, shall be credited against the
amounts owing by Tenant under this Agreement and such sublease shall
provide that the subtenant thereunder shall, at the request of Landlord,
execute a suitable instrument in confirmation of such agreement to attorn.
An original counterpart of each such sublease and assignment and
assumption, duly executed by Tenant and such subtenant or assignee, as the
case may be, in form and substance reasonably satisfactory to Landlord,
shall be delivered promptly to Landlord and (a) in the case of an
assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Agreement on the part of Tenant to be kept
and performed and shall be, and become, jointly and severally liable with
Tenant for the performance thereof and (b) in case of either an assignment
or subletting, Tenant shall remain primarily liable, as principal rather
than as surety, for the prompt payment of the Rent and for the performance
and observance of all of the covenants and conditions to be performed by
Tenant hereunder.
The provisions of this SECTION 16.2 shall not be deemed a waiver of
the provisions set forth in the first paragraph of SECTION 16.1.
16.3 PERMITTED SUBLEASE. Notwithstanding the foregoing, including,
without limitation, SECTION 16.2, but subject to the provisions of SECTION
16.4 and any other express conditions or limitations set forth herein,
Tenant may, in each instance after Notice to Landlord, sublease space at
any Property for newsstand, car rental agency, business services office,
gift shop, parking garage, health club, restaurant, bar or commissary
purposes or other concessions in furtherance of the Permitted Use, so long
as such subleases do not demise, in the aggregate, in excess of two
thousand (2,000) square feet per Property or, in the case of a restaurant
or bar, four thousand (4,000) square feet per Property, will not violate or
affect any Legal Requirement or Insurance Requirement, and Tenant shall
provide such additional insurance coverage applicable to the activities to
be conducted in such subleased space as Landlord and any Hotel Mortgagee
may reasonably require.
16.4 SUBLEASE LIMITATION. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a real estate investment
trust, anything contained in this Agreement to the contrary
notwithstanding, Tenant shall not sublet the Leased Property on any basis
such that the rental to be paid by any sublessee thereunder would be based,
in whole or in part, on the income or profits derived by the business
activities of such sublessee, any other formula such that any portion of
such sublease rental would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Code, or any similar or
successor provision thereto or would otherwise disqualify Landlord for
treatment as a real estate investment trust.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 ESTOPPEL CERTIFICATES. At any time and from time to time, but
not more than a reasonable amount of times per year, upon not less than ten
(10) Business Days prior Notice by either party, the party receiving such
Notice shall furnish to the other an Officer's Certificate certifying that
this Agreement is unmodified and in full force and effect (or that this
Agreement is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, that no Default
or an Event of Default has occurred and is continuing or, if a Default or
an Event of Default shall exist, specifying in reasonable detail the nature
thereof, and the steps being taken to remedy the same, and such additional
information as the requesting party may reasonably request. Any such
certificate furnished pursuant to this SECTION 17.1 may be relied upon by
the requesting party, its lenders and any prospective purchaser or
mortgagee of the Leased Property or the leasehold estate created hereby.
17.2 FINANCIAL STATEMENTS. Tenant shall furnish or cause ShoLodge to
furnish, as applicable, the following statements to Landlord:
(a) within fifty (50) days after each of the first three fiscal
quarters of any Fiscal Year, the most recent Consolidated Financials,
accompanied by the Financial Officer's Certificate;
(b) within one hundred (100) days after the end of each Fiscal
Year, the most recent Consolidated Financials and financials of Tenant for
such year, certified by an independent certified public accountant
reasonably satisfactory to Landlord and accompanied by a Financial
Officer's Certificate;
(c) within thirty (30) days after the end of each month, an
unaudited operating statement and statement of capital expenditures
prepared on a Hotel by Hotel basis and a combined basis, including
occupancy percentages and average rate, accompanied by a Financial
Officer's Certificate;
(d) at any time and from time to time upon not less than twenty
(20) days Notice from Landlord or such additional period as may be
reasonable under the circumstances, any Consolidated Financials, Tenant
financials or any other audited or unaudited financial reporting
information required to be filed by Landlord with any securities and
exchange commission, the SEC or any successor agency, or any other
governmental authority, or required pursuant to any order issued by any
court, governmental authority or arbitrator in any litigation to which
Landlord is a party, for purposes of compliance therewith; and
(e) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant and
ShoLodge as Landlord reasonably may request from time to time.
Landlord may at any time, and from time to time, provide any Hotel
Mortgagee with copies of any of the foregoing statements, subject to
Landlord obtaining the agreement of such Hotel Mortgagee to maintain such
statements and the information therein as confidential.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to
inspect the Leased Property during usual business hours upon not less than
forty-eight (48) hours' notice and to make such repairs as Landlord is
permitted or required to make pursuant to the terms of this Agreement,
provided that any inspection or repair by Landlord or its representatives
will not unreasonably interfere with Tenant's use and operation of the
Leased Property and further provided that in the event of an emergency, as
determined by Landlord in its reasonable discretion, prior Notice shall not
be necessary.
ARTICLE 19
EASEMENTS
19.1 GRANT OF EASEMENTS. Provided no Event of Default has occurred
and is continuing, Landlord will join in granting and, if necessary,
modifying or abandoning such rights-of-way, easements and other interests
as may be reasonably requested by Tenant for ingress and egress, and
electric, telephone, gas, water, sewer and other utilities so long as:
(a) the instrument creating, modifying or abandoning any such
easement, right-of-way or other interest is satisfactory to and approved by
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned); and
(b) Landlord receives an Officer's Certificate from Tenant
stating (i) that such grant, modification or abandonment is not detrimental
to the proper conduct of business on such Property, (ii) the consideration,
if any, being paid for such grant, modification or abandonment (which
consideration shall be paid by Tenant), (iii) that such grant, modification
or abandonment does not impair the use or value of such Property for the
Permitted Use, and (iv) that, for as long as this Agreement shall be in
effect, Tenant will perform all obligations, if any, of Landlord under any
such instrument.
19.2 EXERCISE OF RIGHTS BY TENANT. So long as no Event of Default has
occurred and is continuing, Tenant shall have the right to exercise all
rights of Landlord under the Easement Agreements and, in connection
therewith, Landlord shall execute and promptly return to Tenant such
documents as Tenant shall reasonably request. Tenant shall perform all
obligations of Landlord under the Easement Agreements.
19.3 PERMITTED ENCUMBRANCES. Any agreements entered into in
accordance with SECTION 19.1 shall be deemed a Permitted Encumbrance.
ARTICLE 20
HOTEL MORTGAGES
20.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant,
Landlord may, subject to the terms and conditions set forth in this SECTION
20.1, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement ("ENCUMBRANCE")
upon the Leased Property, or any portion thereof or interest therein,
whether to secure any borrowing or other means of financing or refinancing.
Notwithstanding anything to the contrary set forth in SECTION 20.2, any
such Encumbrance shall include the right to prepay (whether or not subject
to a prepayment penalty) and shall provide (subject to SECTION 20.2) that
it is subject to the rights of Tenant under this Agreement.
20.2 SUBORDINATION OF LEASE. Subject to SECTION 20.1 and this SECTION
20.2, this Agreement and any and all rights of Tenant hereunder, are and
shall be subject and subordinate to any ground or master lease, and all
renewals, extensions, modifications and replacements thereof, and to all
mortgages and deeds of trust, which may now or hereafter affect the Leased
Property or any improvements thereon and/or any of such leases, whether or
not such mortgages or deeds of trust shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to be
made under such mortgages and deeds of trust, and to all renewals,
modifications, replacements and extensions of such leases and such
mortgages and deeds of trust and all consolidations of such mortgages and
deeds of trust. This section shall be self-operative and no further
instrument of subordination shall be required provided that Tenant has
received a nondisturbance and attornment agreement from each Superior
Mortgagee (as defined below), consistent with the provisions of this
SECTION 20.2 and otherwise in form and substance reasonably satisfactory to
Tenant. In confirmation of such subordination, Tenant shall promptly
execute, acknowledge and deliver any instrument that Landlord, the lessor
under any such lease or the holder of any such mortgage or the trustee or
beneficiary of any deed of trust or any of their respective successors in
interest may reasonably request to evidence such subordination. Any lease
to which this Agreement is, at the time referred to, subject and
subordinate is herein called "SUPERIOR LEASE" and the lessor of a Superior
Lease or its successor in interest at the time referred to is herein called
"SUPERIOR LANDLORD" and any mortgage or deed of trust to which this
Agreement is, at the time referred to, subject and subordinate is herein
called "SUPERIOR MORTGAGE" and the holder, trustee or beneficiary of a
Superior Mortgage is herein called "SUPERIOR MORTGAGEE".
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to
the rights of Landlord under this Agreement (any such person, "SUCCESSOR
LANDLORD"), whether through possession or foreclosure action or delivery of
a new lease or deed, or otherwise, such Successor Landlord shall recognize
Tenant's rights under this Agreement as herein provided and Tenant shall
attorn to and recognize the Successor Landlord as Tenant's landlord under
this Agreement and Tenant shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such
attornment (provided that such instrument does not alter the terms of this
Agreement), whereupon, this Agreement shall continue in full force and
effect as a direct lease between the Successor Landlord and Tenant upon all
of the terms, conditions and covenants as are set forth in this Agreement,
except that the Successor Landlord (unless formerly the landlord under this
Agreement or its nominee or designee) shall not be (a) liable in any way to
Tenant for any act or omission, neglect or default on the part of any prior
Landlord under this Agreement, (b) responsible for any monies owing by or
on deposit with any prior Landlord to the credit of Tenant (except to the
extent actually paid or delivered to the Successor Landlord), (c) subject
to any counterclaim or setoff which theretofore accrued to Tenant against
any prior Landlord, (d) bound by any modification of this Agreement
subsequent to such Superior Lease or Mortgage, or by any previous
prepayment of Rent for more than one (1) month in advance of the date due
hereunder, which was not approved in writing by the Superior Landlord or
the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor
Landlord's interest in the Leased Property and the rents, income, receipts,
revenues, issues and profits issuing from the Leased Property, (f)
responsible for the performance of any work to be done by the Landlord
under this Agreement to render the Leased Property ready for occupancy by
Tenant, or (g) required to remove any Person occupying the Leased Property
or any part thereof, except if such person claims by, through or under the
Successor Landlord. Tenant agrees at any time and from time to time to
execute a suitable instrument in confirmation of Tenant's agreement to
attorn, as aforesaid and Landlord agrees to provide Tenant with an
instrument of nondisturbance and attornment from each such Superior
Mortgagee and Superior Landlord in form and substance reasonably
satisfactory to Tenant. Nothing contained in this SECTION 20.2 shall
relieve Landlord from any liability to Tenant under this Agreement
following the exercise of remedies by a Superior Mortgagee.
20.3 NOTICE TO MORTGAGEE AND SUPERIOR LANDLORD. Subsequent to the
receipt by Tenant of Notice from Landlord as to the identity of any Hotel
Mortgagee or Superior Landlord under a lease with Landlord, as ground
lessee, which includes the Leased Property as part of the demised premises
and which complies with SECTION 20.1 AND 20.2 (which Notice shall be
accompanied by a copy of the applicable mortgage or lease), no Notice from
Tenant to Landlord as to a default by Landlord under this Agreement shall
be effective with respect to a Hotel Mortgagee or Superior Landlord unless
and until a copy of the same is given to such Hotel Mortgagee or Superior
Landlord at the address set forth in the above described Notice, and the
curing of any of Landlord's defaults within the applicable notice and cure
periods set forth in SECTION 14.2 by such Hotel Mortgagee or Superior
Landlord shall be treated as performance by Landlord.
ARTICLE 21
ADDITIONAL COVENANTS OF TENANT
21.1 PROMPT PAYMENT OF INDEBTEDNESS. Tenant shall (a) pay or cause to
be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any
such Indebtedness to become or remain in default beyond any applicable
grace or cure period, (b) pay or cause to be paid when due all lawful
claims for labor and rents with respect to the Leased Property, (c) pay or
cause to be paid when due all trade payables and (d) pay or cause to be
paid when due all other of Tenant's Indebtedness upon which it is or
becomes obligated, except, in each case, other than that referred to in
clause (a), to the extent payment is being contested in good faith by
appropriate proceedings in accordance with ARTICLE 8 and if Tenant shall
have set aside on its books adequate reserves with respect thereto in
accordance with GAAP, if appropriate, or unless and until foreclosure,
distraint sale or other similar proceedings shall have been commenced.
21.2 CONDUCT OF BUSINESS. Tenant shall not engage in any business
other than the leasing and operation of the Leased Property (including any
incidental or ancillary business relating thereto) and shall do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect and in good standing its corporate existence and its rights and
licenses necessary to conduct such business.
21.3 MAINTENANCE OF ACCOUNTS AND RECORDS. Tenant shall keep true
records and books of account of Tenant in which full, true and correct
entries will be made of dealings and transactions in relation to the
business and affairs of Tenant in accordance with GAAP. Tenant shall apply
accounting principles in the preparation of the financial statements of
Tenant which, in the judgment of and the opinion of its independent public
accountants, are in accordance with GAAP, where applicable, except for
changes approved by such independent public accountants. Tenant shall
provide to Landlord either in a footnote to the financial statements
delivered under SECTION 17.2 which relate to the period in which such
change occurs, or in separate schedules to such financial statements,
information sufficient to show the effect of any such changes on such
financial statements.
21.4 NOTICE OF LITIGATION, ETC. Tenant shall give prompt Notice to
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge
which involves a potential liability equal to or greater than Five Hundred
Thousand Dollars ($500,000) or which may otherwise result in any material
adverse change in the business, operations, property, prospects, results of
operation or condition, financial or other, of Tenant. Forthwith upon
Tenant obtaining knowledge of any Default, Event of Default or any default
or event of default under any agreement relating to Indebtedness for money
borrowed in an aggregate amount exceeding, at any one time, Five Hundred
Thousand Dollars ($500,000), or any event or condition that would be
required to be disclosed in a current report filed by Tenant on Form 8-K or
in Part II of a quarterly report on Form 10-Q if Tenant were required to
file such reports under the Securities Exchange Act of 1934, as amended,
Tenant shall furnish Notice thereof to Landlord specifying the nature and
period of existence thereof and what action Tenant has taken or is taking
or proposes to take with respect thereto.
21.5 INDEBTEDNESS OF TENANT. Tenant shall not create, incur, assume
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in accordance
with the provisions of ARTICLE 8;
(c) Indebtedness of Tenant in respect of judgments or awards (i)
which have been in force for less than the applicable appeal period and in
respect of which execution thereof shall have been stayed pending such
appeal or review, or (ii) which are fully covered by insurance payable to
Tenant, or (iii) which are for an amount not in excess of $500,000 in the
aggregate at any one time outstanding and (x) which have been in force for
not longer than the applicable appeal period, so long as execution is not
levied thereunder or (y) in respect of which an appeal or proceedings for
review shall at the time be prosecuted in good faith in accordance with the
provisions of ARTICLE 8, and in respect of which execution thereof shall
have been stayed pending such appeal or review;
(d) unsecured borrowings of Tenant from its Affiliated Persons
which are by their terms expressly subordinate pursuant to a Subordination
Agreement to the payment and performance of Tenant's obligations under this
Agreement; or
(e) Indebtedness for purchase money financing in accordance with
SECTION 21.9(A) and other operating liabilities incurred in the ordinary
course of Tenant's business.
21.6 FINANCIAL CONDITION OF TENANT. Tenant shall at all times
maintain Net Worth (except as provided in the last clause of this sentence)
in an amount at least equal to the aggregate of one year's Minimum Rent
payable pursuant to this Agreement; it being expressly understood and
agreed that the right to receive the Retained Funds, if assigned to Tenant,
may for such purpose be counted as equity at the full amount thereof.
21.7 DISTRIBUTIONS, PAYMENTS TO AFFILIATED PERSONS, ETC. Tenant shall
not declare, order, pay or make, directly or indirectly, any Distributions
or any payment to any Affiliated Person of Tenant (including payments in
the ordinary course of business and payments pursuant to Management
Agreements with any such Affiliated Person) or set apart any sum or
property therefor, or agree to do so, if, at the time of such proposed
action, or immediately after giving effect thereto, any Event of Default
shall have occurred and be continuing. Otherwise, as long as no Event of
Default shall have occurred and be continuing, Tenant may make
Distributions and payments to Affiliated Persons (other than from the FF&E
Reserve which shall be governed by SECTION 5.1.2) without restriction.
21.8 PROHIBITED TRANSACTIONS. Tenant shall not permit to exist or
enter into any agreement or arrangement whereby it engages in a transaction
of any kind with any Affiliated Person as to Tenant, except on terms and
conditions which are commercially reasonable.
21.9 LIENS AND ENCUMBRANCES. Except as permitted by SECTION 7.1 and
SECTION 21.5, Tenant shall not create or incur or suffer to be created or
incurred or to exist any Lien on this Agreement or any of Tenant's assets,
properties, rights or income, or any of its interest therein, now or at any
time hereafter owned, other than:
(a) Security interests securing the purchase price of equipment
or personal property whether acquired before or after the Commencement
Date; PROVIDED, HOWEVER, that (i) such Lien shall at all times be confined
solely to the asset in question and (ii) the aggregate principal amount of
Indebtedness secured by any such Lien shall not exceed the cost of
acquisition or construction of the property subject thereto;
(b) Permitted Encumbrances; and
(c) As permitted pursuant to SECTION 21.5.
21.10 MERGER; SALE OF ASSETS; ETC. Tenant shall not (i) sell, lease
(as lessor or sublessor), transfer or otherwise dispose of, or abandon, all
or any material portion of its assets (including capital stock) or business
to any Person, unless such Person is a wholly owned Subsidiary, direct or
indirect, of ShoLodge (in which event Tenant shall give Landlord prior
Notice thereof), (ii) merge into or with or consolidate with any other
Entity, unless such Entity is a wholly owned Subsidiary, direct or
indirect, of ShoLodge (in which event Tenant shall give Landlord prior
Notice thereof), or (iii) sell, lease (as lessor or sublessor), transfer or
otherwise dispose of, or abandon, any personal property or fixtures or any
real property; PROVIDED, HOWEVER, that, notwithstanding the provisions of
clause (iii) preceding, Tenant may dispose of equipment or fixtures which
have become inadequate, obsolete, worn-out, unsuitable, undesirable or
unnecessary, provided substitute equipment or fixtures having equal or
greater value and utility (but not necessarily having the same function)
have been provided.
ARTICLE 22
MISCELLANEOUS
22.1 LIMITATION ON PAYMENT OF RENT. All agreements between Landlord
and Tenant herein are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of Rent, or otherwise,
shall the Rent or any other amounts payable to Landlord under this
Agreement exceed the maximum permissible under applicable law, the benefit
of which may be asserted by Tenant as a defense, and if, from any
circumstance whatsoever, fulfillment of any provision of this Agreement, at
the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, or if from any
circumstances Landlord should ever receive as fulfillment of such provision
such an excessive amount, then, IPSO FACTO, the amount which would be
excessive shall be applied to the reduction of the installment(s) of
Minimum Rent next due and not to the payment of such excessive amount.
This provision shall control every other provision of this Agreement and
any other agreements between Landlord and Tenant.
22.2 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or
remedy consequent upon a breach thereof, and no acceptance of full or
partial payment of Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of any such term. To the maximum
extent permitted by law, no waiver of any breach shall affect or alter this
Agreement, which shall continue in full force and effect with respect to
any other then existing or subsequent breach.
22.3 REMEDIES CUMULATIVE. To the maximum extent permitted by law,
each legal, equitable or contractual right, power and remedy of Landlord or
Tenant, now or hereafter provided either in this Agreement or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to
every other right, power and remedy and the exercise or beginning of the
exercise by Landlord or Tenant (as applicable) of any one or more of such
rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Landlord of any or all of such other rights, powers
and remedies.
22.4 SEVERABILITY. Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify
the remainder of this Agreement, but rather the effect thereof shall be
confined to the clause, sentence, paragraph, section or provision so held
to be invalid, illegal or ineffective, and this Agreement shall be
construed as if such invalid, illegal or ineffective provisions had never
been contained therein.
22.5 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this
Agreement 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 Landlord and no act by Landlord or any representative or agent
of Landlord, other than such a written acceptance by Landlord, shall
constitute an acceptance of any such surrender.
22.6 NO MERGER OF TITLE. It is expressly acknowledged and agreed that
it is the intent of the parties that there shall be no merger of this
Agreement or of the leasehold estate created hereby by reason of the fact
that the same Person may acquire, own or hold, directly or indirectly this
Agreement or the leasehold estate created hereby and the fee estate or
ground landlord's interest in the Leased Property.
22.7 CONVEYANCE BY LANDLORD. If Landlord or any successor owner of
all or any portion of the Leased Property shall convey all or any portion
of the Leased Property in accordance with the terms hereof other than as
security for a debt, and the grantee or transferee of such of the Leased
Property shall expressly assume all obligations of Landlord hereunder
arising or accruing from and after the date of such conveyance or transfer,
Landlord or such successor owner, as the case may be, shall thereupon be
released from all future liabilities and obligations of Landlord under this
Agreement with respect to such of the Leased Property arising or accruing
from and after the date of such conveyance or other transfer and all such
future liabilities and obligations shall thereupon be binding upon the new
owner; PROVIDED, HOWEVER, that, Landlord shall not be released from
liability with respect to the Retained Funds unless such successor shall
have a Net Worth equal to or greater than ten (10) times the unapplied
balance of the Retained Funds. If such successor shall not satisfy the
aforesaid Net Worth requirement, Landlord shall, in a guaranty in form and
substance reasonably satisfactory to Tenant, guaranty payment of the
Retained Funds in accordance with this Agreement and the Purchase
Agreement.
22.8 QUIET ENJOYMENT. Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term, free of hindrance or
molestation by Landlord or anyone claiming by, through or under Landlord,
but subject to (a) any Encumbrance permitted under ARTICLE 20 or otherwise
permitted to be created by Landlord hereunder provided that the holder of
such Encumbrance has, to the extent appropriate, executed a nondisturbance
agreement pursuant to SECTION 20.2 or a subordination agreement in form and
substance reasonably acceptable to Tenant, (b) all Permitted Encumbrances,
(c) liens as to obligations of Landlord that are either not yet due or
which are being contested in good faith and by proper proceedings, provided
the same do not materially interfere with Tenant's ability to operate the
Hotels and (d) liens that have been consented to in writing by Tenant.
Except as otherwise provided in this Agreement, no failure by Landlord to
comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Agreement or xxxxx, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Agreement
(except as expressly provided in SECTION 14.2), or to fail to perform any
other obligation of Tenant hereunder.
22.9 MEMORANDUM OF LEASE. Neither Landlord nor Tenant shall record
this Agreement. However, Landlord and Tenant shall promptly, upon the
request of the other, enter into a short form memorandum of this Agreement,
in form suitable for recording under the laws of the State in which
reference to this Agreement, and all options contained herein, shall be
made. Tenant shall pay all costs and expenses of recording such
memorandum.
22.10 NOTICES.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall
be delivered either in hand, by telecopier with written acknowledgment of
receipt, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postpaid and registered
or certified with return receipt requested (if by mail), or with all
freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall
be deemed to have been given for all purposes of this Agreement upon the
date of acknowledged receipt, in the case of a notice by telecopier, and,
in all other cases, upon the date of receipt or refusal, except that
whenever under this Agreement a notice is either received on a day which is
not a Business Day or is required to be delivered on or before a specific
day which is not a Business Day, the day of receipt or required delivery
shall automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord:
c/o Hospitality Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
[Telecopier No. (000) 000-0000]
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
[Telecopier No. (000) 000-0000]
if to Tenant to:
ShoLodge, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxx
[Telecopier No. (000) 000-0000]
with a copy to:
Boult Xxxxxxxx Xxxxxxx & Xxxxx, PLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
[Telecopier No. (000) 000-0000]
(d) By notice given as herein provided, the parties hereto and
their respective successor and assigns shall have the right from time to
time and at any time during the term of this Agreement to change their
respective addresses effective upon receipt by the other parties of such
notice and each shall have the right to specify as its address any other
address within the United States of America.
22.11 TRADE AREA RESTRICTION. Neither Tenant, ShoLodge nor any of
their Affiliated Persons shall own, build, franchise, manage or operate all
suite hotel of the same brand as the Hotels within the designated areas on
EXHIBIT B, at any time during the Term.
22.12 CONSTRUCTION. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such
termination or expiration. In no event shall Landlord be liable for any
consequential damages suffered by Tenant as the result of a breach of this
Agreement by Landlord. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated except by an instrument in
writing signed by the party to be charged. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Each term or
provision of this Agreement to be performed by Tenant shall be construed as
an independent covenant and condition. Time is of the essence with respect
to the provisions of this Agreement. Except as otherwise set forth in this
Agreement, any obligations of Tenant (including without limitation, any
monetary, repair and indemnification obligations) and Landlord shall
survive the expiration or sooner termination of this Agreement.
22.13 COUNTERPARTS; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which,
when taken together, shall constitute but one instrument and shall become
effective as of the date hereof when copies hereof, which, when taken
together, bear the signatures of each of the parties hereto shall have been
signed. Headings in this Agreement are for purposes of reference only and
shall not limit or affect the meaning of the provisions hereof.
22.14 APPLICABLE LAW, ETC. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of The
Commonwealth of Massachusetts applicable to contracts between residents of
Massachusetts which are to be performed entirely within Massachusetts,
regardless of (i) where this Agreement is executed or delivered; or (ii)
where any payment or other performance required by this Agreement is made
or required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where
any action or other proceeding is instituted or pending; or (v) the
nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether
the laws of the forum jurisdiction otherwise would apply the laws of a
jurisdiction other than Massachusetts; or (vii) any combination of the
foregoing. Notwithstanding the foregoing, the laws of the State shall
apply to the perfection and priority of liens upon and the disposition of
any Property.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions
of this Agreement may be brought and prosecuted in such court or courts
located in The Commonwealth of Massachusetts as is provided by law; and the
parties consent to the jurisdiction of said court or courts located in
Massachusetts and to service of process by registered mail, return receipt
requested, or by any other manner provided by law.
22.15 RIGHT TO MAKE AGREEMENT. Each party warrants, with respect to
itself, that neither the execution of this Agreement, nor the consummation
of any transaction contemplated hereby, shall violate any provision of any
law, or any judgment, writ, injunction, order or decree of any court or
governmental authority having jurisdiction over it; nor result in or
constitute a breach or default under any indenture, contract, other
commitment or restriction to which it is a party or by which it is bound;
nor require any consent, vote or approval which has not been given or
taken, or at the time of the transaction involved shall not have been given
or taken. Each party covenants that it has and will continue to have
throughout the term of this Agreement and any extensions thereof, the full
right to enter into this Agreement and perform its obligations hereunder.
22.16 NONRECOURSE. Nothing contained in this Agreement shall be
construed to impose any liabilities or obligations on Tenant's
shareholders, officers, directors, agents or employees (or any
shareholders, officers, directors, agents or employees of any of the
foregoing) for the performance of the obligations of Landlord or Tenant
hereunder.
22.17 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of
this Agreement, the prevailing party therein shall be entitled to receive
from the other party the prevailing party's costs and expenses, including
reasonable attorneys' fees incurred in connection therewith, in preparation
therefor and on appeal therefrom, which amounts shall be included in any
judgment therein.
22.18 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME
"____________________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF LANDLORD SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR
CLAIM AGAINST, LANDLORD. ALL PERSONS DEALING WITH LANDLORD, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date above first written.
LANDLORD:
By:
Its:
TENANT:
By:
Its:
ShoLodge, Inc. hereby acknowledges and agrees to be bound by the provisions
of SECTION 22.11 of the foregoing Lease Agreement.
SHOLODGE, INC.
By:
Its:
Date: _______ __, 1997
EXHIBIT A-1 THROUGH A-14
THE LAND
[See attached copies.]
EXHIBIT B
DESIGNATED AREAS
PROPERTY AREA
Tampa, FL 3 miles
Xxx Xxxxxxx, Xxxxxxxxx, XX0 miles
Fort Xxxxx, IN 10 miles
Albuquerque, NM 3 miles
El Paso, TX 3 miles
Hendersonville, TN 5 miles
Cumberland, GA 3 miles
Gwinett, GA 3 miles
Columbus, OH 3 miles
Xxxxxxx Xxxxxxx, XX 3 miles
Dallas, Galleria, TX 3 xxxxx
Xxxxxx, TX 5 miles
Tempe, AZ 3 miles
Tucson, AZ 3 miles
EXHIBIT C
ALLOCABLE RENTS
PROPERTY ALLOCABLE RENT PER ACCOUNTING PERIOD
Tampa, FL $ 33,168
San Antonio, Riverwalk, TX 108,706
Fort Xxxxx, IN 74,560
Albuquerque, NM 88,600
El Paso, TX 70,376
Tempe, AZ 77,446
Tucson, AZ 65,657
Hendersonville, TN 57,782
Cumberland, Smyrna, GA 73,835
Gwinett, Duluth, GA 87,156
Columbus, OH 103,195
Atlanta Airport, GA 79,360
Dallas, Galleria, TX 86,074
Austin, TX 71,008
EXHIBIT D
TAMPA RENOVATION PLANS AND BUDGET
[See attached copies.]
