EXHIBIT 10.15
MASTER LEASE AGREEMENT,
dated as of April 30, 1999,
by and among
HOSPITALITY PROPERTIES TRUST AND
HPTCY PROPERTIES TRUST,
as Landlord,
and
HMH HPT COURTYARD LLC,
as Tenant
TABLE OF CONTENTS
ARTICLE 1
1.1 "Accounting Period...............................................2
1.2 "Additional Rent.................................................2
1.3 "Additional Charges..............................................2
1.4 "Affiliated Person...............................................2
1.5 "Agreement.......................................................2
1.6 "Applicable Laws.................................................3
1.7 "Award...........................................................3
1.8 "Base Hotel Sales................................................3
1.9 "Base Year.......................................................3
1.10 "Business Day...................................................4
1.11 "Capital Addition...............................................4
1.12 "Capital Expenditure............................................4
1.13 "Cash Management Agreement......................................5
1.14 "Claim..........................................................5
1.15 "Code...........................................................5
1.16 "Collective Leased Properties...................................5
1.17 "Commencement Date..............................................5
1.18 "Condemnation...................................................5
1.19 "Condemnor......................................................5
1.20 "Consolidated Financials........................................6
1.21 "Date of Taking.................................................6
1.22 "Default........................................................6
1.23 "Distribution...................................................6
1.24 "Encumbrance....................................................6
1.25 "Entity.........................................................6
1.26 "Environment....................................................6
1.27 "Environmental Obligation.......................................7
1.28 "Environmental Notice...........................................7
1.29 "Event of Default...............................................7
1.30 "Excess Total Hotel Sales.......................................7
1.31 "Extended Terms.................................................7
1.32 "FF&E Reserve...................................................7
1.33 "Financial Officer's Certificate................................7
1.34 "Financials.....................................................7
1.35 "Fiscal Year....................................................8
1.36 "Fixed Term.....................................................8
1.37 "Fixtures.......................................................8
1.38 "GAAP...........................................................8
1.39 "Government Agencies............................................8
1.40 "Ground Lease...................................................8
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1.41 "Hazardous Substances...........................................8
1.42 "Host...........................................................9
1.43 "Hotel..........................................................9
1.44 "Hotel Mortgage................................................10
1.45 "Hotel Mortgagee...............................................10
1.46 "Immediate Family..............................................10
1.47 "Impositions...................................................10
1.48 "Incidental Documents..........................................11
1.49 "Indebtedness..................................................11
1.50 "Initial Leases................................................11
1.51 "Insurance Requirements........................................12
1.52 "Interest Rate.................................................12
1.53 "Land..........................................................12
1.54 "Landlord......................................................12
1.55 "Landlord Liens................................................12
1.56 "Lease Year....................................................12
1.57 "Leased Improvements...........................................12
1.58 "Leased Intangible Property....................................12
1.59 "Leased Personal Property......................................13
1.60 "Leased Property...............................................13
1.61 "Legal Requirements............................................13
1.62 "Lending Institution...........................................13
1.63 "Lien..........................................................14
1.64 "Management Agreements.........................................14
1.65 "Manager.......................................................14
1.66 "Membership Pledge.............................................14
1.67 "Minimum Rent..................................................14
1.68 "Notice........................................................14
1.69 "Officer's Certificate.........................................14
1.70 "Overdue Rate..................................................15
1.71 "Parent........................................................15
1.72 "Permitted Encumbrances........................................15
1.73 "Permitted Liens...............................................15
1.74 "Permitted Use.................................................15
1.75 "Person........................................................15
1.76 "Pledge and Security Agreement.................................15
1.77 "Purchase Agreement............................................15
1.78 "Records.......................................................15
1.79 "Rent..........................................................16
1.80 "Request Notice................................................16
1.81 "Response Notice...............................................16
1.82 "SEC...........................................................16
1.83 "State.........................................................16
1.84 "Sublease Consent Agreement....................................16
1.85 "Subordination Agreement.......................................16
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1.86 "Subsidiary....................................................16
1.87 "Subtenant Pledge..............................................16
1.88 "Subtenant Note Pledge.........................................16
1.89 "Successor Landlord............................................17
1.90 "Tangible Net Worth............................................17
1.91 "Tenant........................................................17
1.92 "Tenant's Personal Property....................................17
1.93 "Term..........................................................17
1.94 "Total Hotel Sales.............................................18
1.95 "Uniform System of Accounts....................................18
1.96 "Unsuitable for Its Permitted Use..............................18
1.97 "Work..........................................................18
ARTICLE 2
COLLECTIVE LEASED PROPERTIES AND TERM................................18
2.1 Collective Leased Properties....................................18
2.2 Condition of Collective Leased Properties.......................20
2.3 Fixed Term......................................................21
2.4 Extended Term...................................................21
2.5 Ground Lease Extensions.........................................21
ARTICLE 3
RENT.................................................................22
3.1 Rent............................................................22
3.2 Late Payment of Rent, Etc.......................................28
3.3 Net Lease.......................................................29
3.4 No Termination, Abatement, Etc..................................29
3.5 Security for Tenant's Performance...............................30
ARTICLE 4
USE OF THE COLLECTIVE LEASED PROPERTIES, ETC.........................31
4.1 Permitted Use...................................................31
4.2 Compliance with Legal/Insurance Requirements, Etc...............33
4.3 Environmental Matters...........................................33
ARTICLE 5
MAINTENANCE AND REPAIRS..............................................36
5.1 Maintenance and Repair..........................................36
5.2 Tenant's Personal Property......................................39
5.3 Yield Up........................................................39
5.4 Management Agreements...........................................40
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ARTICLE 6
IMPROVEMENTS, ETC....................................................40
6.1 Improvements to the Leased Property.............................40
6.2 Salvage.........................................................41
ARTICLE 7
LIENS................................................................42
7.1 Liens...........................................................42
7.2 Landlord's Lien..................................................42
ARTICLE 8
PERMITTED CONTESTS...................................................43
ARTICLE 9
INSURANCE AND INDEMNIFICATION........................................44
9.1 General Insurance Requirements..................................44
9.2 Replacement Cost................................................46
9.3 Waiver of Subrogation...........................................46
9.4 Form Satisfactory, Etc..........................................46
9.5 Blanket Policy..................................................47
9.6 No Separate Insurance...........................................48
9.7 Indemnification of Landlord.....................................48
ARTICLE 10
CASUALTY.............................................................49
10.1 Insurance Proceeds.............................................49
10.2 Damage or Destruction..........................................49
10.3 Damage Near End of Term........................................52
10.4 Tenant's Property..............................................53
10.5 Restoration of Tenant's Property...............................53
10.6 No Abatement of Rent...........................................54
10.7 Waiver.........................................................54
ARTICLE 11
CONDEMNATION.........................................................54
11.1 Total Condemnation, Etc........................................54
11.2 Partial Condemnation...........................................54
11.3 Abatement of Rent..............................................56
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11.4 Temporary Condemnation.........................................56
11.5 Allocation of Award............................................57
ARTICLE 12
DEFAULTS AND REMEDIES................................................57
12.1 Events of Default..............................................57
12.2 Remedies.......................................................61
12.3 Tenant's Waiver................................................63
12.4 Application of Funds...........................................64
12.5 Landlord's Right to Cure Tenant's Default......................64
ARTICLE 13
HOLDING OVER.........................................................65
ARTICLE 14
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT......................65
14.1 Landlord Notice Obligation.....................................65
14.2 Landlord's Default.............................................65
ARTICLE 15
INTENTIONALLY DELETED................................................66
ARTICLE 16
SUBLETTING AND ASSIGNMENT............................................66
16.1 Subletting and Assignment......................................66
16.2 Required Sublease Provisions...................................68
16.3 Permitted Sublease.............................................70
16.4 Sublease Limitation............................................70
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.......................70
17.1 Estoppel Certificates..........................................70
17.2 Financial Statements...........................................71
17.3 General Operations.............................................72
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT..........................................73
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ARTICLE 19
INTENTIONALLY DELETED................................................73
ARTICLE 20
HOTEL MORTGAGES......................................................73
20.1 Landlord May Grant Liens.......................................73
20.2 Subordination of Lease.........................................74
20.3 Notices........................................................76
20.4 Transfer of Collective Leased Properties.......................76
ARTICLE 21
ADDITIONAL COVENANTS OF TENANT.......................................77
21.1 Prompt Payment of Indebtedness.................................77
21.2 Conduct of Business............................................77
21.3 Maintenance of Accounts and Records............................77
21.4 Notice of Litigation, Etc......................................78
21.5 Indebtedness of Tenant.........................................78
21.6 Financial Condition of Tenant..................................79
21.7 Distributions, Payments to Affiliated Persons, Etc.............79
21.8 Prohibited Transactions........................................80
21.9 Liens and Encumbrances.........................................80
21.10 Merger; Sale of Assets; Etc....................................80
ARTICLE 22
MISCELLANEOUS........................................................81
22.1 Limitation on Payment of Rent..................................81
22.2 No Waiver......................................................81
22.3 Remedies Cumulative............................................81
22.4 Severability...................................................82
22.5 Acceptance of Surrender........................................82
22.6 No Merger of Title.............................................82
22.7 Conveyance by Landlord.........................................82
22.8 Quiet Enjoyment................................................83
22.9 Memorandum of Lease............................................83
22.10 Notices.......................................................83
22.11 Construction; Nonrecourse.....................................85
22.12 Counterparts; Headings........................................86
22.13 Applicable Law, Etc...........................................86
22.14 Right to Make Agreement.......................................87
22.15 Nonliability of Trustees......................................87
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EXHIBITS
A - Allocation of Minimum Rent
B-1-53 - The Land
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT is entered into as of this 30th day of
April, 1999, by and among HOSPITALITY PROPERTIES TRUST ("HPT") and HPTCY
PROPERTIES TRUST ("HPTCY" and, together with HPT, "Landlord"), each a Maryland
real estate investment trust, as landlord, and HMH HPT COURTYARD LLC, a Delaware
limited liability company, as tenant ("Tenant").
W I T N E S S E T H :
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WHEREAS, pursuant to (i) the 21 leases, dated March 24, 1995 (as
amended, the "Original Leases"), between HPT, as successor in interest to
Hospitality Properties, Inc. and Tenant, successor by merger to HMH HPT
Courtyard, Inc., (ii) the 16 leases dated August 22, 1995 (as amended, the
"Second Closing Leases"), between HPT and Tenant, and (iii) the 16 leases some
dated March 22, 1996 and some dated April 4, 1996 (as amended, "Third Closing
Leases" and, together with the Original Leases and the Second Closing Leases,
the "Initial Leases") between HPTCY, successor in interest to HPTCY Corporation.
Landlord leased certain properties to Tenant and Tenant leased certain
properties from Landlord, all subject to and upon the terms and conditions set
forth in the Initial Leases; and
WHEREAS, Landlord and Tenant wish to amend certain terms of the Initial
Leases and consolidate the Initial Leases into a single master lease agreement,
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
consolidate, amend and restate the Initial Leases as follows:
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ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Article shall have the meanings assigned to them in this Article and include the
plural as well as the singular, (ii) all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with GAAP, (iii)
all references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Accounting Period" shall have the meaning given such term in the
Management Agreements.
1.2 "Additional Rent" shall have the meaning given such term in Section
3.1.2(a).
1.3 "Additional Charges" shall have the meaning given such term in
Section 3.1.3.
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,
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).
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1.5 "Agreement" shall mean this Master Lease Agreement, including
Exhibits A and B 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
(except those requirements which, by definition, are solely the responsibility
of employers) 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 "Award" shall mean, with respect to any Leased Property, all
compensation, sums or other value awarded, paid or received by virtue of a total
or partial Condemnation of such 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).
1.8 "Base Hotel Sales" shall mean the aggregate Total Hotel Sales for
the Collective Leased Properties for the Base Year; provided, however, that, in
the event that, with respect to any
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Lease Year, or portion thereof, for any reason (including, without limitation, a
casualty or Condemnation) there shall be a reduction in the number of rooms at
any Hotel or a change in the services provided at any Hotel (including, without
limitation, closing of restaurants) 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 Hotel Sales shall be reduced as follows: (a) in
the event of the termination of this Agreement with respect to any Leased
Property, all Total Hotel Sales attributable to such Leased Property during the
Base Year shall be subtracted from Base Hotel Sales; (b) in the event of a
complete closing of any Hotel at any Leased Property, all Total Hotel Sales
attributable to such Hotel during the Base Year shall be subtracted from Base
Hotel Sales throughout the period of such closing; (c) in the event of a partial
closing of any Hotel affecting any number of 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 Hotel
Sales throughout the period of such closing; (d) in the event of a closing of a
restaurant at any Leased Property, all Total Hotel Sales attributable to such
restaurant during the Base Year shall be subtracted from Base Hotel Sales
throughout the period of such closing; and (e) in the event of any other change
in circumstances affecting any Hotel, Base Hotel Sales shall be equitably
adjusted in such manner as Landlord and Tenant shall reasonably agree.
1.9 "Base Year" shall mean the 1994 Fiscal Year for the Collective
Leased Properties identified as Group A and Group C on Exhibit A, and the 1995
Fiscal Year for the Collective Leased Properties identified as Group D on
Exhibit A.
1.10 "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 Maryland are authorized by law or executive action to close.
1.11 "Capital Addition" shall mean, with respect to any Leased
Property, any renovation, repair or improvement to such
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Leased Property (or portion thereof), the cost of which constitutes a Capital
Expenditure and the making or implementation of which requires "Owner's" consent
under the Management Agreement for such Leased Property.
1.12 "Capital Expenditure" shall mean any expenditure treated as
capital in nature in accordance with GAAP.
1.13 "Cash Management Agreement" shall mean that certain Cash
Management Agreement, dated as of the date hereof, by and among Landlord, Tenant
and CCMH Courtyard I LLC.
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 "Collective Leased Properties" shall have the meaning given such
term in Section 2.1.
1.17 "Commencement Date" shall mean, with respect to any Leased
Property, the date of the Initial Lease with respect to such Leased Property.
1.18 "Condemnation" shall mean, with respect to any Leased Property,
(a) the exercise of any governmental power with respect to such Leased Property,
whether by legal proceedings or otherwise, by a Condemnor of its power of
condemnation, (b) a voluntary sale or transfer of such Leased 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 Leased 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 Leased Property,
whether or not the same shall have actually been commenced.
1.19 "Condemnor" shall mean any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
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1.20 "Consolidated Financials" shall mean, for any Fiscal Year or other
accounting period of Tenant, annual audited and quarterly unaudited financial
statements of Host prepared on a consolidated basis, including Host'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.
1.21 "Date of Taking" shall mean, with respect to any Leased Property,
the date the Condemnor has the right to possession of such Leased Property, or
any portion thereof, in connection with a Condemnation.
1.22 "Default" shall mean any event or condition which with the giving
of notice and/or lapse of time may ripen into an Event of Default.
1.23 "Distribution" shall mean (a) any declaration or payment of any
dividend (except dividends payable in equity interests in Tenant) on or in
respect of any equity interests in Tenant, (b) any purchase, redemption,
retirement or other acquisition of any equity interests in an Entity, (c) any
other distribution on or in respect of any equity interests in an Entity, or (d)
any return of capital to equity interest holders.
1.24 "Encumbrance" shall have the meaning given such term in Section
20.1.
1.25 "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 or political
subdivision thereof or any other entity.
1.26 "Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
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1.27 "Environmental Obligation" shall have the meaning given such term
in Section 4.3.1.
1.28 "Environmental Notice" shall have the meaning given such term in
Section 4.3.1.
1.29 "Event of Default" shall have the meaning given such term in
Section 12.1.
1.30 "Excess Total Hotel Sales" shall mean, with respect to any fiscal
quarter of any Lease Year, or portion thereof, the amount of Total Hotel Sales
for such quarter, or portion thereof, in excess of Base Hotel Sales for the
equivalent period.
1.31 "Extended Terms" shall have the meaning given such term in Section
2.4.
1.32 "FF&E Reserve" shall have the meaning given such term in the
Management Agreements.
1.33 "Financial Officer's Certificate" shall mean, as to any Person, a
certificate of the 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) certify that such officer
has reviewed this Agreement and has no knowledge of any Default or Event of
Default hereunder.
1.34 "Financials" shall mean, for any Fiscal Year or other accounting
period of Tenant, annual audited and quarterly unaudited financial statements of
Tenant prepared on a consolidated basis, including Tenant'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
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preceding Fiscal Year, and prepared in accordance with GAAP throughout the
periods reflected.
1.35 "Fiscal Year" shall have the meaning given such term in the
Management Agreements.
1.36 "Fixed Term" shall have the meaning given such term in Section
2.3.
1.37 "Fixtures" shall have the meaning given such term in Section
2.1(d).
1.38 "GAAP" shall mean generally accepted accounting principles
consistently applied.
1.39 "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 the 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
Collective Leased Properties or any portion thereof or any Hotel operated
thereon.
1.40 "Ground Lease" shall mean, with respect to any Leased Property,
any ground lease affecting such Leased Property.
1.41 "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
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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 any Leased Property causes or
materially threatens to cause an unlawful nuisance upon such Leased
Property or to adjacent properties or poses or materially threatens to
pose a hazard to such Leased Property or to the health or safety of
persons on or about the Leased Property; 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, or any Applicable Laws promulgated by any
Government Agencies.
1.42 "Host" shall mean Host Marriott, L.P., a Delaware limited
partnership.
1.43 "Hotel" shall mean, with respect to any Leased Property, the
Marriott Courtyard Hotel being operated on such Leased Property.
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1.44 "Hotel Mortgage" shall mean, with respect to any Leased Property,
any Encumbrance placed upon such Leased Property in accordance with Article 20.
1.45 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
1.46 "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.
1.47 "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, single
business, gross receipts, transaction privilege, rent or similar taxes as the
same relate to or are imposed upon Landlord, Tenant or the business conducted
upon the Collective Leased Properties), 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 Collective Leased
Properties or the business conducted thereon (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 any Leased
Property, (b) the Collective Leased Properties 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 any Leased Property or the leasing or use of the Collective
Leased Properties or any part thereof by Tenant; provided, however, that nothing
contained herein shall be construed to require Tenant to pay (i) any tax based
on net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii)
any transfer fee or other tax imposed with
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respect to the sale, exchange or other disposition by Landlord of any Leased
Property or the proceeds thereof (other than in connection with the sale,
exchange or other disposition to, or in connection with a transaction involving,
Tenant), (iv) any single business, gross receipts tax (other than a tax on any
rent received by Landlord from Tenant unless such gross receipts tax on such
rent is in lieu of any other tax, assessment, levy or charge otherwise excluded
from this definition of Impositions), transaction privilege, rent or similar
taxes as the same relate to or are imposed upon Landlord, except to the extent
that any tax, assessment, tax levy or charge which is in effect at any time
during the Term hereof is totally or partially repealed, and a tax, assessment,
tax levy or charge set forth in clause (i) or (ii) preceding is levied, assessed
or imposed expressly in lieu thereof, (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 gross negligence or willful misconduct of Landlord.
1.48 "Incidental Documents" shall mean, collectively, the Membership
Pledge, the Subtenant Pledge, the Subtenant Note Pledge, the Pledge and Security
Agreement, the Sublease Consent Agreement and the Cash Management Agreement.
1.49 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
1.50 "Initial Leases" shall have the meaning given such term in the
preambles to this Agreement.
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1.51 "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 any of the Collective Leased
Properties.
1.52 "Interest Rate" shall mean ten percent (10%) per annum.
1.53 "Land" shall have the meaning given such term in Section 2.1(a).
1.54 "Landlord" shall have the meaning given such term in the preambles
to this Agreement.
1.55 "Landlord Liens" shall mean liens on or against the Collective
Leased Properties 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 any
Leased Property (other than any lessor under a Ground Lease), 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 any Leased Property (other than any lessor under a Ground Lease);
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.
1.56 "Lease Year" shall mean any Fiscal Year or portion thereof,
commencing with the 1995 Fiscal Year, during the Term.
1.57 "Leased Improvements" shall have the meaning given such term in
Section 2.1(b).
1.58 "Leased Intangible Property" shall mean, with respect to any
Leased Property, all hotel licensing agreements and other service contracts,
equipment leases, booking agreements and other
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arrangements or agreements affecting the ownership, repair, maintenance,
management, leasing or operation of such Leased Property to which Landlord is a
party; all books, records and files relating to the leasing, maintenance,
management or operation of such 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 such Leased Property, and all other
transferable intangible property, miscellaneous rights, benefits and privileges
of any kind or character belonging to Landlord with respect to such Leased
Property.
1.59 "Leased Personal Property" shall have the meaning given such term
in Section 2.1(e).
1.60 "Leased Property" shall mean any one of the Collective Leased
Properties.
1.61 "Legal Requirements" shall mean, with respect to any Leased
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
affecting such 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 such Leased Property for its Permitted Use, and
(b) all covenants, agreements, restrictions and encumbrances contained in any
instruments at any time in force affecting such Leased Property, including those
which may (i) require material repairs, modifications or alterations in or to
such Leased 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.
1.62 "Lending Institution" shall mean any United States insurance
company, federally insured commercial or savings bank, national banking
association, United States savings and loan association, employees' welfare,
pension or retirement fund or
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system, corporate profit sharing or pension trust, college or university, or
real estate investment trust, including any corporation qualified to be treated
for federal tax purposes as a real estate investment trust, such trust having a
net worth of at least $100,000,000.
1.63 "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.
1.64 "Management Agreements" shall mean collectively, with respect to
the Collective Leased Properties, or individually, with respect to any Leased
Property, the Management Agreement, between HMH HPT Courtyard, Inc. and the
Manager, for such Leased Property, together with all amendments, modifications
and supplements thereto.
1.65 "Manager" shall mean Courtyard Management Corporation, a Delaware
corporation.
1.66 "Membership Pledge" shall mean the Membership Interest Pledge and
Security Agreement, dated the date hereof, made by Host for the benefit of
Landlord.
1.67 "Minimum Rent" shall mean the annual amount of Fifty Million Six
Hundred Forty-Six Thousand Three Hundred Seventy-Nine and no/100 Dollars
($50,646,379) as allocated per Accounting Period, as adjusted from time to time
pursuant to Section 3.1.1, which amount is allocated among the Collective Leased
Properties as set forth on Exhibit A.
1.68 "Notice" shall mean a notice given in accordance with Section
22.10.
1.69 "Officer's Certificate" shall mean a certificate signed by an
officer of the certifying Entity duly authorized by the board of directors of
the certifying Entity.
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1.70 "Overdue Rate" shall mean, on any date, a per annum rate of
interest equal to the lesser of fifteen percent (15%) and the maximum rate then
permitted under applicable law.
1.71 "Parent" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, five percent (5%) 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.
1.72 "Permitted Encumbrances" shall mean, with respect to any Leased
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 Landlord's acquisition of such Leased Property,
plus any other such encumbrances as may have been consented to in writing by
Landlord from time to time.
1.73 "Permitted Liens" shall mean any Liens granted in accordance with
Section 21.9(a).
1.74 "Permitted Use" shall mean, with respect to any Leased Property,
any use of such Leased Property permitted pursuant to Section 4.1.1(a) or (b).
1.75 "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.
1.76 "Pledge and Security Agreement" shall mean, with respect to any
Leased Property, the Security Agreement made by Tenant for the benefit of
Landlord, as amended from time to time.
1.77 "Purchase Agreement" shall mean the Purchase-Sale and Option
Agreement, dated as of February 3, 1995, by and between Hospitality Properties
Trust and HMH Properties, Inc., as amended.
1.78 "Records" shall have the meaning given such term in Section 7.2.
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1.79 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent
and Additional Charges.
1.80 "Request Notice" shall have the meaning given such term in Section
16.1.
1.81 "Response Notice" shall mean the meaning given such term in
Section 16.1.
1.82 "SEC" shall mean the Securities and Exchange Commission.
1.83 "State" shall mean, with respect to any Leased Property, the state
or commonwealth or district in which such Leased Property is located.
1.84 "Sublease Consent Agreement" shall mean the Consent to Sublease
and Agreement, dated as of the date hereof, by and among Landlord, Tenant and
CCMH Courtyard I LLC.
1.85 "Subordination Agreement" shall mean any agreement 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.
1.86 "Subsidiary" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty-one percent (51%) or more of the voting or beneficial
interest or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).
1.87 "Subtenant Pledge" shall mean the Membership Interest Pledge and
Security Agreement, dated the date hereof made by Crestline Capital Corporation
for the benefit of Landlord.
1.88 "Subtenant Note Pledge" shall mean the Pledge and Security
Agreement Demand Note, dated the date hereof, made by CCMH Courtyard I LLC, for
the benefit of Landlord.
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1.89 "Successor Landlord" shall have the meaning given such term in
Section 20.2.
1.90 "Tangible 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, excluding, however, (i) from the determination of total
assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (b) all
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the Commencement Date; and (g) any items not included in clauses
(a) through (f) above that are treated as intangibles in conformity with GAAP,
and (ii) from the determination of total liabilities: deferred gain.
1.91 "Tenant" shall have the meaning given such term in the preambles
to this Agreement.
1.92 "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 personal property of Tenant,
if any, acquired by Tenant on and after the date hereof and located at the
Collective Leased Properties or used in Tenant's business at the Collective
Leased Properties 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.
1.93 "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.
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1.94 "Total Hotel Sales" shall mean, with respect to any Leased
Property, "Gross Revenues" as defined in the Management Agreement for such
Leased Property.
1.95 "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.
1.96 "Unsuitable for Its Permitted Use" shall mean, with respect to any
Hotel, a state or condition of such Hotel such that (a) following any damage or
destruction involving such Hotel, such Hotel cannot be operated in the good
faith judgment of Tenant or the Manager 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 six (6) 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 Leased Property on which such Hotel is located 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 or the
Manager on a commercially practicable basis for its Permitted Use.
1.97 "Work" shall have the meaning given such term in Section 10.2.4.
ARTICLE 2
COLLECTIVE LEASED PROPERTIES AND TERM
2.1 Collective Leased Properties. Upon and subject to the terms and
conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases
from Landlord all of Landlord's right, title and interest in and to all of the
following (collectively, the "Collective Leased Properties"):
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(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit B-1-53, attached hereto and made a
part hereof (collectively, 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");
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(f) all of the Leased Intangible Property; and
(g) any and all leases of space (including any security
deposits held by Tenant or the Manager pursuant thereto) in the Leased
Improvements to tenants thereof.
2.2 Condition of Collective Leased Properties. Tenant acknowledges
receipt and delivery of possession of the Collective Leased Properties and
Tenant accepts the Collective Leased Properties in their "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
Collective Leased Properties, 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 Collective Leased
Properties and the record title thereto or by an accurate survey thereof. TENANT
REPRESENTS THAT IT HAS INSPECTED THE COLLECTIVE LEASED PROPERTIES 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 COLLECTIVE LEASED PROPERTIES. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE COLLECTIVE
LEASED PROPERTIES 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 Collective Leased Properties.
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.
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2.3 Fixed Term. The initial term of this Agreement (the "Fixed Term")
commenced on the Commencement Date and shall expire December 31, 2012.
2.4 Extended Term. Provided that no Event of Default shall have
occurred and be continuing, this Agreement shall be in full force and effect,
the Term shall be automatically extended for three (3) consecutive renewal terms
of twelve (12) years each (collectively, the "Extended Terms"), unless Tenant
shall give Landlord Notice, not later than two (2) years 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
(and time shall be of the essence with respect to the giving of such Notice).
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.
2.5 Ground Lease Extensions. Notwithstanding the foregoing, if Landlord
has the right, under the provisions of any Ground Lease, to elect to renew or
extend the term of such Ground Lease, Tenant shall so notify Landlord at least
one hundred eighty (180) days (but no more than one (1) year) prior to the
expiration of the period within which Landlord is obligated to notify the
landlord under such Ground Lease of its election to renew or extend the term of
such Ground Lease. Such notice from Tenant shall contain all of the relevant
facts about the impending election to renew or extend, including the length of
the period of renewal or extension, and shall state whether
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Tenant approves or disapproves the renewal or extension of the term of such
Ground Lease.
If Tenant fails to disapprove the renewal or extension of the term of
such Ground Lease and Landlord renews or directs Tenant to renew the term of
such Ground Lease, the Term of this Agreement with respect to the applicable
Leased Property shall be deemed to be automatically extended to the later of:
(a) the expiration of the term of such Ground Lease, as renewed or extended; or
(ii) the date on which the Term of this Agreement would otherwise have expired
absent this sentence. If Tenant disapproves the renewal or extension of the term
of such Ground Lease, the Term of this Agreement with respect to the applicable
Leased Property shall be deemed to be automatically reduced to the earlier of:
(i) the expiration of the term of such Ground Lease, as renewed or extended; or
(ii) the date on which the Term of this Agreement would otherwise have expired
absent this sentence.
If Tenant disapproves the renewal of such Ground Lease at any time that
there remain unexercised options to extend the term of this Agreement for any of
the Extended Terms, the same shall constitute an election by Tenant not to
exercise its right to extend the term of this Agreement for such Extended Terms.
In the event of any termination of any Ground Lease, this Agreement
shall automatically terminate with respect to the applicable Leased Property.
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.
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Rent for any partial Accounting Period shall be prorated on a per diem basis. So
long as the Cash Management Agreement remains in effect, Rent payments shall be
made in accordance with the terms thereof.
3.1.1 Minimum Rent.
(a) 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 5.1.2(b), 10.2.4 or 11.2. Effective on the date of each
disbursement to pay for the cost of any repairs, maintenance,
renovations or replacements to any Leased Property pursuant to Sections
5.1.2(b), 10.2.4 or 11.2, the Minimum Rent (and such Leased Property's
allocable share thereof) shall be increased by a per annum amount equal
to ten percent (10%) of the amount so disbursed. If any such
disbursement is made during any Accounting Period on a day other than
the first day of a Accounting Period, Tenant shall pay to Landlord on
the first 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.
3.1.2 Additional Rent.
(a) Amount. For each fiscal quarter of each Lease Year or
portion thereof, Tenant shall pay an aggregate amount of additional
rent ("Additional Rent") with respect to such period, in an amount, not
less than zero, equal to five percent (5%) of Excess Total Hotel Sales
for such period.
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(b) Quarterly Payments. Payments of Additional Rent for each
fiscal quarter of each Lease Year shall be calculated and paid in
arrears, together with an Officer's Certificate setting forth the
calculation of Additional Rent due and payable for such quarter. Copies
of each Accounting Period Statement (as defined in the Management
Agreements) delivered pursuant to Section 5.03 of the Management
Agreements shall be delivered to Landlord upon receipt by Tenant and
each quarterly payment of Additional Rent shall be due and payable and
shall be delivered to Landlord with the payment of the Minimum Rent
next due after receipt of such Accounting Period Statements, together
with an Officer's Certificate setting forth the calculation of
Additional Rent due and payable for such quarter.
(c) Reconciliation of Additional Rent. In addition, on or
before April 30, of each year, Tenant shall deliver to Landlord an
Officer's Certificate setting forth the Total Hotel Sales and the
calculation of Additional Rent for the Collective Leased Properties for
each fiscal quarter of such preceding Lease Year, together with an
audit of Tenant conducted by Xxxxxx Xxxxxxxx LLP, or another firm of
independent certified public accountants proposed by Tenant and
approved by Landlord (which approval shall not be unreasonably withheld
or delayed).
If Additional Rent due as shown in the Officer's Certificate
exceeds the amounts 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
Additional Rent due 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 Additional 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
of
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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 Collective Leased
Properties 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 and the Manager'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 three percent (3%) of the Total
Hotel Sales reported 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
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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 Additional 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 or the Manager 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
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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 Collective Leased Properties 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.
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Landlord shall give prompt Notice to Tenant and the Manager 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 (except that Landlord shall be responsible for
any interest or penalties incurred as a result of Landlord's failure
promptly to forward the same).
(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 Collective Leased Properties.
(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 any Ground Lease
and all amounts payable under or with respect to the Management
Agreements (except as expressly provided in Section 5.1.2(b)) and 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 (unless this Agreement shall have been terminated following
an Event of Default).
3.2 Late Payment of Rent, Etc. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as
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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, except as expressly provided in Section 3.1.3(a), Tenant shall
promptly pay and discharge, as Additional Charges, every fine, penalty, interest
and cost which may be 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
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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 Collective Leased Properties 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 Collective Leased
Properties, 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 gross 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, to (a) modify, surrender or terminate this Agreement
or quit or surrender the Collective Leased Properties or any portion thereof, or
(b) 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 each party 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 Security for Tenant's Performance. Tenant acknowledges that the
Retained Funds (as defined in the Purchase Agreement)
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constitute security for the faithful observance and performance by Tenant of all
the terms, covenants and conditions of this Agreement by Tenant to be observed
and performed. If any 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 amount of the Retained
Funds or so much thereof as may be necessary to compensate Landlord toward the
payment of the Rent or other sums or loss or damage sustained by Landlord due to
such breach by Tenant. It is understood and agreed that the amount of the
Retained Funds is not to be considered as prepaid rent, nor shall damages be
limited to the amount of the amount of the Retained Funds. Provided this
Agreement shall not be terminated as a result of an Event of Default, the
Retained Funds shall be paid as provided in the Purchase Agreement.
ARTICLE 4
USE OF THE COLLECTIVE LEASED PROPERTIES, ETC.
4.1 Permitted Use.
4.1.1 Permitted Use.
(a) Except as otherwise provided in the Management Agreements,
Tenant shall, at all times during the Term and at any other time that
Tenant shall be in possession of the Collective Leased Properties,
continuously use and operate, and cause the Manager to use and operate,
each of the Collective Leased Properties as a Marriott Courtyard hotel
and any uses incidental thereto. Subject to Section 16.3, Tenant shall
not use (and shall direct the Manager not to use) any Leased Property
or any portion thereof for any other use without the prior written
consent of Landlord. No use shall be made or permitted to be made of
any Leased Property and no acts shall be done thereon which will cause
the cancellation of any insurance policy covering such Leased Property
or any part thereof (unless another adequate policy is available) or
which would constitute a default under any Ground Lease affecting such
Leased Property, nor shall Tenant sell or otherwise provide or permit
to be kept, used or sold in or about any Leased Property any article
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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 (except as expressly provided in Section 5.1.2(b)),
comply (or direct the Manager to comply) with all Insurance
Requirements. Except as otherwise provided in the Management
Agreements, Tenant shall not take or omit to take (and Tenant shall
direct the Manager not to take or omit to take) any action, the taking
or omission of which materially impairs the value or the usefulness of
any Leased Property or any part thereof for its Permitted Use.
(b) In the event that, in the reasonable determination of
Tenant, it shall no longer be economically practical to operate any
Leased Property as a Marriott Courtyard 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 such Leased
Property, 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 best efforts to obtain and maintain, and shall direct the
Manager to obtain and maintain, all approvals necessary to use and operate, for
its Permitted Use, each of the Collective Leased Properties and the Hotels
located thereon under applicable law.
4.1.3 Lawful Use, Etc. Tenant shall not, and shall direct the
Manager not to, use or suffer or permit the use of any 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 Leased 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 Collective Leased Properties, or any
portion thereof, to be used in such a manner as (i) might reasonably 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
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such, or of implied dedication of any Leased Property or any portion thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc. Except as
otherwise provided in the Management Agreements, subject to the provisions of
Article 8 and Section 5.1.2(b), Tenant, at its sole expense, shall (or shall
direct the Manager to) (i) comply with Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair, alteration
and restoration of the Collective Leased Properties and with the terms and
conditions of any Ground Lease affecting any Leased Property, (ii) perform all
of Landlord's obligations as tenant under any Ground Lease and (iii) procure,
maintain and comply with all appropriate licenses, and other authorizations and
agreements required for any use of each of the Collective Leased Properties and
Tenant's Personal Property, if any, then being made, and for the proper
erection, installation, operation and maintenance of each of the Collective
Leased Properties 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 any Leased Property, Tenant shall not
(and shall direct the Manager not to) store, spill upon, dispose of or transfer
to or from any 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 any Leased Property, Tenant shall maintain (and shall direct
the Manager to maintain) each 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 any
Leased Property, (b) transmit to Landlord a copy of any Community Right to Know
report which is required to be filed by Tenant or the Manager with respect to
any 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 the Manager or their
respective agents or
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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) observe and comply (and direct the Manager to 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) pay or
otherwise dispose of any fine, charge or Imposition related thereto, unless
Tenant or the Manager shall contest the same in good faith and by appropriate
proceedings and the right to use and the value of the Leased Property is not
materially and adversely affected thereby.
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 any Leased Property, subject to Tenant's and the Manager's right
to contest the same in accordance with Article 8, Tenant shall take (and shall
direct the Manager to take) all actions and incur any and all expenses, as may
be reasonably necessary and as may be required by any Government Agency, (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 such Leased Property and (iii) to use good
faith efforts to eliminate any further release or threat of release of Hazardous
Substances on or about such 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
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during the Term (or any other time Tenant shall be possession of any Leased
Property) in, upon or under the soil or ground water of the Collective Leased
Properties or any properties surrounding the Collective Leased Properties 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, the Manager
or any Person claiming by, through or under Tenant or the Manager to perform or
comply with any of the terms of this Section 4.3, except to the extent the same
arise from the gross negligence or willful misconduct of Landlord or any other
Indemnitee. Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a result of such
presence prior to the expiration or sooner termination of the Term and the
surrender of the Collective Leased Properties to Landlord in accordance with the
terms of this Agreement of Hazardous Substances in, upon or under the soil or
ground water of any of the Collective Leased Properties 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) incurred by Landlord and arising from a failure of Tenant
strictly to observe and perform the requirements of this Section 4.3, which
amounts shall bear interest from the date ten (10) 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.
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ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's Obligations.
(a) Tenant shall, at its sole cost and expense (except as
expressly provided in Section 5.1.2(b)), or shall direct the Manager
to, keep the Collective Leased Properties and all private roadways,
sidewalks and curbs appurtenant thereto (and Tenant's Personal
Property, if any) 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 or the Manager's use, any prior use, the elements or the
age of any Leased Property or Tenant's Personal Property, if any, or
any portion thereof), and shall promptly make (or cause the Manager to
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 the Manager's and industry
standards for like hotels in like locales, in accordance with all
applicable federal, state and local statutes, ordinances, by-laws,
codes, rules and regulations relating to any such work. Tenant shall
not take or omit to take (and shall direct the Manager not to take or
omit to take) any action, the taking or omission of which would
materially and adversely impair the value or the usefulness of any
Leased Property or any part thereof for its Permitted Use. Tenant's
obligations under this Section 5.1.1(a) shall be limited in the event
of any casualty or Condemnation as set forth in Sections 10.2 and 11.2
and Tenant's obligations with respect to Hazardous Substances are as
set forth in Section 4.3.
(b) In addition, notwithstanding anything in this Agreement to
the contrary, Tenant shall, with respect to each Lease Year, or portion
thereof, fund, or cause the
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Manager to fund, into the FF&E Reserve a cash amount equal to not less
than five percent (5%) of Total Hotel Sales from the Collective Leased
Properties for such Lease Year, or portion thereof, which amounts shall
be applied to the cost of repairs, maintenance, renovations and
replacements to and at the Collective Leased Properties in accordance
with this Agreement and the Management Agreements. Provided that Tenant
shall comply with the provisions of this paragraph (b) and any similar
provisions of the Management Agreements, any additional funds required
for repairs, maintenance, renovations and replacements to and at the
Collective Leased Properties in excess of those on deposit in the FF&E
Reserve shall be advanced by Landlord, subject to and in accordance
with Section 5.1.2(b).
5.1.2 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 Collective Leased Properties, or to make
any repairs, replacements, alterations, restorations or renewals of any
nature or description to the Collective Leased Properties, whether
ordinary or extraordinary, structural or nonstructural, foreseen or
unforeseen, or, except as provided in Section 5.1.2(b), to make any
expenditure whatsoever with respect thereto, or to maintain the
Collective Leased Properties 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, any of the Management Agreements require
that funds be disbursed for repairs, maintenance, renovations or
replacements at or to any Leased Property (including, but not limited
to, pursuant to Section 8.01 and 8.03 of the Management Agreements),
or, pursuant to the terms of this Agreement (including, without
limitation, Section 4.3), Tenant is required to make any expenditures
in
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connection with any repair, maintenance renovation with respect to any
Leased Property and the amount of such disbursements or expenditures
exceeds the amount on deposit in the FF&E Reserve, Tenant may, at its
election, give Landlord Notice thereof, which Notice shall set forth,
in reasonable detail, the nature of the required 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 the Manager or 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).
5.1.3 Nonresponsibility of Landlord, Etc. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the Collective Leased Properties, or any part thereof,
are hereby charged with notice that liens on the Collective Leased Properties 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, the Manager 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 Collective Leased Properties
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 Collective
Leased Properties or any part thereof nor to subject Landlord's estate in the
Collective Leased Properties or any part thereof to liability under any
Mechanic's Lien Law of any State in any way,
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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 Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Permitted Use and all of such Personal Property shall, upon the
expiration or earlier termination of this Agreement, shall become the property
of Landlord. If, on or 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 Collective Leased Properties 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 with respect to the
applicable Leased Property and the assumption of management or operation of the
applicable Hotel by Landlord or its designee.
5.3 Yield Up. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender each Leased Property to Landlord in
substantially the same condition in which such 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 total Condemnation in accordance
with Article 10 or Article 11).
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 each of the Hotels as then operated.
Consistent with the terms of the Management Agreements, if requested by
Landlord, Tenant will direct the Manager to continue to manage any Hotel
designated by Landlord after the expiration of the Term and for up to one
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hundred twenty (120) days, on such reasonable terms (which shall include an
agreement to reimburse the Manager for its reasonable out-of-pocket costs and
expenses, and reasonable administrative costs), as Landlord shall reasonably
request.
5.4 Management Agreements. Except as expressly provided in Section
5.1.2(b), Tenant shall, at its sole cost and expense, perform all of the
obligations of "Owner" under the Management Agreements, including, without
limitation, the funding of the FF&E Reserve and, upon the expiration or sooner
termination of this Agreement, the then existing balance of the FF&E Reserve
shall be paid to or as directed by Landlord. Tenant shall, at all times, direct
the Manager to perform all of the Manager's obligations under the Management
Agreements. Tenant shall not amend or modify any of the Management Agreements
without Landlord's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Tenant shall not take any action,
grant any consent or, except as provided in the Management Agreements, permit
any action under any of the Management Agreements, which might have a material
adverse effect on Landlord, without the prior written consent of Landlord.
Except as provided in the Management Agreements, Tenant shall not agree to any
change in the Manager, to any change in the Management Agreements, terminate the
Management Agreements or permit the Manager to assign the Management Agreements
without the prior written approval of Landlord in each instance, which approval
shall not be unreasonably withheld, delayed or conditioned. If Landlord shall
perform any obligations of "Owner" under the Management Agreements (which
Landlord may do subject to Section 12.5), the cost of such performance shall be
payable upon demand by Tenant to Landlord with interest accruing from the demand
date at the Overdue Rate and Landlord shall have the same rights and remedies
for failure to pay such costs on demand as for Tenant's failure to pay Minimum
Rent.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1 Improvements to the Leased Property. Tenant shall not make,
construct or install (and shall direct the Manager not to construct or install)
any Capital Additions at any Leased
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Property 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 Legal Requirement or Insurance Requirement applicable to
such 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 danger to person or
property. Prior to commencing construction of any Capital Addition, Tenant shall
submit, or shall direct the Manager to 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 or the Manager's proposal within thirty (30)
days after receipt of all information and materials requested by Landlord in
connection with the proposed improvement shall be deemed to constitute approval
of the same. 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 at any Leased Property which would tie in or connect any Leased
Improvement with any other improvements on property adjacent to such Leased
Property (and not part of the Land) including, without limitation, tie-ins of
buildings or other structures or utilities. Tenant shall not finance, and shall
direct the Manager not to finance, the cost of any construction of such
improvement by the granting of a lien on or security interest in any 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
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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 Collective Leased Properties 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 17, (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
21 and (h) Landlord Liens.
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 a security interest in and an express contractual lien upon Tenant's
Personal Property (except motor vehicles), and 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 Collective Leased Properties at any time when a Default or an
Event of Default has occurred and is continuing.
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Xxxx Xxxxxxxx'x 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. 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 and the Manager 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 any 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 such Leased Property (Landlord agreeing that any such
mortgage or deed of trust shall permit Tenant and the Manager 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 such Leased Property,
(c) no part of such 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
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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 may be oral and 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 Collective
Leased Properties, keep (or direct the Manager to keep) each Leased Property and
all property located therein or thereon, insured against the risks and in the
amounts as follows and shall maintain the following insurance with respect to
each Leased Property:
(a) "All-risk" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, explosion of
steam boilers, pressure vessels or other similar apparatus, now or
hereafter installed in the Hotel located at such Leased Property, with
equivalent coverage as that provided by the usual extended coverage
endorsements, in an amount equal to one hundred percent (100%) of the
then full Replacement Cost thereof (as defined in Section 9.2) (except
that the foregoing shall not be construed to require Tenant to maintain
earthquake insurance if the same is unavailable on commercially
reasonable terms, provided Tenant gives Landlord prior Notice thereof);
(b) Business interruption and blanket earnings plus extra
expense under a rental value insurance policy or endorsement covering
risk of loss during the lesser of the
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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 (except that the
foregoing shall not be construed to require Tenant to maintain
earthquake insurance if the same is unavailable on commercially
reasonable terms, provided Tenant gives Landlord prior Notice thereof);
(c) Comprehensive general liability insurance, including
bodily injury and property damage (on an occurrence basis and on a 1973
or 1988 ISO CGL form or on a form otherwise maintain by similarly
situated tenants, including, without limitation, broad form contractual
liability, independent contractor's hazard and completed operations
coverage) in an amount not less than Two Million Dollars ($2,000,000)
per occurrence and umbrella coverage of all such claims in an amount
not less than Twenty-Three Million Dollars ($23,000,000);
(d) Flood (if such Leased 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)) and
such other hazards and in such amounts as may be customary for
comparable properties in the area;
(e) Worker's compensation insurance coverage for all persons
employed by Tenant on such Leased 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.
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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,
except for umbrella and flood coverage, be issued by insurance carriers
authorized to do business in the State, having a general policy holder's rating
of no less than B++ in Best's latest rating guide. All such policies described
in Sections 9.1(a) through (d) shall include no deductible in excess of Two
Hundred Fifty Thousand Dollars ($250,000) and, with the exception of the
insurance described in
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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. 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, but not the obligation, subject
to the provisions of Section 12.5, 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 or the Manager, provided, that (a)
the coverage thereby afforded to each Leased Property will not be reduced or
diminished from that which would exist under a separate policy for each Leased
Property 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 products, completed operations and flood.
Notwithstanding any other provisions of Articles 9 or 10, Tenant may permit the
Manager to self insure or otherwise retain such workers' insurance risks or
portions thereof as the Manager does with respect to other similar hotels the
Manager owns, leases or manages under the Marriott name in the United States
pursuant to any established self insurance program of Marriott International,
Inc.
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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 Collective Leased Properties 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
Collective Leased Properties 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 Collective Leased
Properties 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
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consent (which consent may not be unreasonably withheld or delayed). In the
event Landlord shall unreasonably withhold or delay its consent, Tenant shall
not be liable pursuant to this Section 9.7 for any incremental increase in costs
or expenses resulting therefrom. 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 Leased
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; provided, however,
that, so long as no Event of Default shall have occurred and be continuing, all
such proceeds less than or equal to Two Hundred Fifty Thousand Dollars
($250,000) shall be paid directly to Tenant or the Manager and such losses may
be adjusted without Landlord's consent. If Tenant is required to reconstruct or
repair any Leased 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 Leased 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 or the Manager. 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. All salvage resulting from any risk covered
by insurance shall belong to Landlord, provided any rights to the same have been
waived by the insurer.
10.2 Damage or Destruction.
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10.2.1 Damage or Destruction of Leased Property. If, during
the Term, any Leased Property shall be totally or partially destroyed and the
Hotel located thereon is thereby rendered Unsuitable for Its Permitted Use,
either Landlord or Tenant may, by the giving of Notice thereof to the other,
terminate this Agreement with respect to such Leased Property, whereupon, this
Agreement shall terminate with respect to such Leased Property, the Minimum Rent
shall be reduced by the amount thereof allocable to such Leased Property, and
Landlord shall be entitled to retain the insurance proceeds payable on account
of such damage.
10.2.2 Partial Damage or Destruction. If, during the Term, any
Leased Property shall be totally or partially destroyed but the Hotel thereon is
not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section
10.2.3, promptly restore such Hotel as provided in Section 10.2.4.
10.2.3 Insufficient Insurance Proceeds. (a) If the cost of the
repair or restoration of the applicable Leased Property exceeds the amount of
insurance proceeds received by Landlord and Tenant pursuant to Article 9(a),
(c), (d) or, if applicable, (e), 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 applicable Leased Property by Notice to the
other, whereupon, this Agreement shall terminate with respect to such Leased
Property as provided in
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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.
(b) Notwithstanding the provisions of Section 10.2.3(a), if Tenant
repairs damage or destruction of any Leased Property located in California
resulting from an earthquake, whether such damage or destruction be Material
Earthquake Damage (as defined in Section 10.3(b)) or otherwise, and the cost of
the repair or restoration exceeds the amount of insurance proceeds (if any)
received by Landlord and Tenant pursuant to Article 9(a), (c), (d) or, if
applicable, (e), Landlord shall, at the request of Tenant, provide funding for
such repairs or restoration, and the Minimum Rent shall be adjusted as provided
in Section 3.1.1(b).
10.2.4 Disbursement of Proceeds. In the event Tenant is
required to restore any Leased Property pursuant to Section 10.2, Tenant shall
(or shall direct the Manager to) commence promptly and continue diligently to
perform the repair and restoration of such Leased Property (hereinafter called
the "Work"), so as to restore such Leased Property in compliance with all Legal
Requirements and so that such Leased 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 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 said 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 or delayed), (iii) general
contractors' estimates, (iv) architect's
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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 and (vii) such other certificates
as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article
10 shall be subject to the release of such proceeds by any Hotel Mortgagee to
Landlord.
Tenant's obligation to restore any Leased 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 or the Manager
and, in the event such proceeds are insufficient, Landlord electing to make such
deficiency available therefor (and disbursement of such deficiency).
10.3 Damage Near End of Term. (a) Notwithstanding any provisions of
Section 10.1 or 10.2 to the contrary, if damage to or destruction of any Leased
Property occurs during the last twelve (12) months of the Extended Term and if
such damage or destruction cannot reasonably be expected to be fully repaired
and restored prior to the date that is six (6) months prior to the end of such
Extended Term, the provisions of Section 10.2.1 shall apply as if such Leased
Property had been totally or partially destroyed and the Hotel thereon rendered
Unsuitable for its Permitted Use.
(b) Notwithstanding any provisions of Section 10.1 or 10.2 to the
contrary, if (x) Material Earthquake Damage (as defined below) to any Leased
Property located in California occurs and (y) Tenant was not required to
maintain earthquake insurance pursuant to Section 9.1, Tenant shall have the
right, by the giving of Notice thereof to Landlord within sixty (60) days after
the date of earthquake, to terminate this Agreement with respect to such Leased
Property; if Tenant shall so elect to terminate this Agreement with respect to
such Leased Property then, subject to the next sentence of this paragraph, this
Agreement shall terminate with respect to such Leased Property as of the date of
earthquake. Tenant shall, as a condition precedent to the effectiveness of such
termination, pay to Landlord an amount equal to the Minimum Rent allocable to
such Leased Property
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payable for the balance of the Term (without giving effect to such termination),
which payment may be made, at Tenant's election, by application thereto of the
Retained Funds (as defined in the Purchase Agreement); provided, however, that
in no event shall Tenant be required to pay to Landlord pursuant to this Section
10.3(b) with respect to Collective Leased Properties located in California an
aggregate amount in excess of Seventeen Million One Hundred Twenty Thousand
Dollars ($17,120,000).
For purposes of this Section 10.3(b), "Material Earthquake Damage"
shall mean damage or destruction of a Leased Property resulting from earthquake,
the repair or restoration of which will cost in excess of an amount equal to (x)
One Million Five Hundred Thousand Dollars ($1,500,000) plus (y) One Million Five
Hundred Thousand Dollars ($1,500,000) multiplied by a fraction, the denominator
of which shall be the Index for the nearest month prior to March 22, 1996 and
the numerator of which shall be the Index for the nearest month prior to the
date of such earthquake.
For purposes of this Section 10.3(b),"Index" shall mean the Consumer
Price Index for Urban Wage Earners and Clerical Workers, All Cities, All Items,
1982-1984 = 100. The Index is presently published by the Bureau of Labor
Statistics of the United States Department of Labor. In the event that the
publication of the Index ceases, Material Earthquake Damage shall be computed on
the basis of whatever index published at that time is most nearly comparable, as
reasonably determined by Landlord.
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 Leased Property as hereinabove provided, 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 Leased Property.
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10.6 No Abatement of Rent. 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 Collective Leased
Properties (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 Collective Leased Properties 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 any of the Collective
Leased Properties.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc. If either (i) the whole of any Leased
Property shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of any Leased Property renders such Leased Property Unsuitable for Its
Permitted Use, this Agreement shall terminate with respect to such Leased
Property, the Minimum Rent shall be reduced by the amount allocable thereto and
Tenant and Landlord shall seek the Award for their interests in such Leased
Property as provided in Section 11.5.
11.2 Partial Condemnation. In the event of a Condemnation of less than
the whole of any Leased Property such that such Leased Property is still
suitable for its Permitted Use, Tenant shall, or shall direct the Manager to, to
the extent of the Award and any additional amounts disbursed by Landlord as
hereinafter provided, commence promptly and continue diligently to restore the
untaken portion of the Leased Improvements so that such Leased Improvements
shall constitute a complete architectural
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unit of the same general character and condition (as nearly as may be possible
under the circumstances) as the Leased Improvements existing immediately prior
to such Condemnation, in full compliance with all Legal Requirements, subject to
the provisions of this Section 11.2. If the cost of the repair or restoration of
such Leased 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 such Leased Property and
the entire Award shall be retained by Landlord.
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 deficiency Landlord has agreed to disburse, 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 or
delayed), (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 and (vii) such other certificates as Landlord may,
from time to time, reasonably require. Landlord's obligation under
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this Section 11.2 to disburse the Award and such other amounts shall be subject
to (x) the collection thereof by Landlord and (y) the satisfaction of any
applicable requirements of any Hotel Mortgage, and the release of such Award by
the applicable Hotel Mortgagee. Tenant's obligation to restore the applicable
Leased Property shall be subject to the release of the Award by the applicable
Hotel Mortgagee to Landlord.
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 any Leased Property. The provisions
of this Article 11 shall be considered an express agreement governing any
Condemnation involving any 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 Leased 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 applicable Leased Property to the
condition that existed immediately prior to such Condemnation, in full
compliance with all 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. For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twelve (12) months.
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11.5 Allocation of Award. Except as provided in Section 11.4 and the
second sentence of this Section 11.5, 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 any Leased Property, loss of business
during the remainder of the Term, the taking of Tenant's Personal Property, or
Tenant's removal and relocation expenses shall be the sole property of and
payable to Tenant (subject to the provisions of Section 11.2). 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 and such failure shall continue for a period
of ten (10) days after Notice thereof; or
(b) should Tenant or the Manager fail to maintain the
insurance coverages required under Article 9 and such failure shall
continue for ten (10) 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 that no
such Notice shall be required if Landlord shall reasonably determine
immediate action is necessary to protect person or property); provided,
however, that if such default is susceptible of cure but such cure
cannot be
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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 fifteen (15) 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 ninety (90) days in the aggregate) as may
be necessary to cure such default with all due diligence; or
(d) should any obligation of Tenant in respect of any
Indebtedness for money borrowed or for the Retained Funds of 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 or Retained Funds 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 occur and be continuing beyond
the expiration of any applicable cure period under any of the
Incidental Documents or by Host or the Sellers (as defined therein)
under the Purchase Agreement; or
(f) should there occur a final unappealable determination by
applicable State authorities of the revocation or limitation of any
material license, permit, certification or approval required for the
lawful operation of any Hotel in accordance with its Permitted Use or
the loss or material limitation of any material license, permit,
certification or approval under any other circumstances under which
Tenant or the Manager is required to cease its operation of such Hotel
in accordance with its Permitted Use at the time of such loss or
limitation; or
(g) should any material representation or warranty made by
Tenant or the Sellers (as defined in the Purchase Agreement) under or
in connection with this Agreement, any Incidental Document or the
Purchase Agreement, or in any document, certificate or agreement
delivered in connection
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herewith or therewith prove to have been false or misleading in any
material respect on the date when made or deemed made; or
(h) 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
(i) 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 it a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement,
adjustment or composition of it or its 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 ninety (90) days after institution thereof, or
should Tenant take any action to authorize or effect any of the actions
set forth above in this paragraph; or
(j) should Tenant cause or institute any proceeding for its
dissolution or termination; or
(k) should an event of default occur and be continuing under
any mortgage which is secured by Tenant's leasehold interest hereunder
or should the mortgagee under any such mortgage accelerate the
indebtedness secured thereby or commence a foreclosure action in
connection with said mortgage; or
(l) should the estate or interest of Tenant in the Collective
Leased Properties 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) one hundred and twenty (120) days after commencement
thereof, unless the amount in dispute is less than $250,000, in which
case Tenant shall give notice to Landlord of the dispute but Tenant may
defend in any suitable way, and (y) thirty (30) days after receipt by
Tenant of Notice thereof from Landlord
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(unless Tenant shall be contesting such lien or attachment in good
faith in accordance with Article 8); or
(m) should any Event of Default (as defined in the Management
Agreements) by Tenant as "Owner" under any Management Agreement occur
and be continuing beyond the expiration of any applicable cure period
under such Management Agreement; or
(n) should Tenant at any time cease to be a direct or indirect
Subsidiary of Host; or
(o) should Tenant amend any provision of its charter documents
with respect to purposes, management, transfers of interests,
separateness requirements, or any provision which requires or provides
for the consent of the independent member;
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
Collective Leased Properties 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 those of the Collective Leased Properties designated
in such notice 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, including, without limitation, the remedy described in
California Civil Code Section 1951.4, if applicable.
Upon the occurrence of an Event of Default, subject to the rights of
the Manager under the Management Agreements, Landlord may, in addition to any
other remedies provided herein, enter upon the Collective Leased Properties 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
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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 five (5) 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 with
respect to any or all of the Collective Leased Properties pursuant to Section
12.1, (b) the repossession of any of the Collective Leased Properties or any
portion thereof, (c) the failure of Landlord to re-let any Leased Property or
any portion thereof, nor (d) the reletting of all or any of portion of any
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 applicable 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 such 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 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 such 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 Leased Property.
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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, subject to the rights of the
Manager under the Management Agreements, (a) relet any 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 any 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, Landlord shall in no event be liable in any way
whatsoever for any failure to relet all or any portion of any Leased Property,
or, in the event that any Leased Property is relet, for failure to collect the
rent under such reletting.
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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 any 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.
Notwithstanding the foregoing, in the case of any termination of this
Agreement with respect to any Leased Property located in California, Tenant
shall forthwith pay to Landlord:
(i) The worth at the time of award of any unpaid Rent which has
been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss
Tenant proves reasonably could have been avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of
award exceeds the amount of such rental loss that Tenant
proves reasonably could be avoided; and
(iv) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform
its obligations under this Agreement with respect to such
Leased Property or which in the ordinary course would be
likely to result therefrom.
As used in subsections (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest at the maximum rate allowable by law. As
used in subsection (iii) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED WITH RESPECT TO
ANY OR ALL OF THE COLLECTIVE LEASED PROPERTIES
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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. IN
ADDITION, TENANT UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT, IN THE EVENT THIS
AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, NEITHER THE INITIAL
RETAINED FUNDS NOR THE OPTION RETAINED FUNDS (AS SUCH TERMS ARE DEFINED IN THE
PURCHASE AGREEMENT) SHALL BE PAID OR PAYABLE (TENANT WAIVING, ON BEHALF OF
ITSELF AND ITS AFFILIATED PERSONS, ALL CLAIMS AND CAUSES OF ACTION WITH RESPECT
THERETO).
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 any applicable State.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Collective Leased Properties
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.
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ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination
of this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to one and one-half (1.5) times the 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. Landlord shall give prompt Notice to
Tenant and the Manager of any matters affecting the Collective Leased Properties
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. Landlord shall not amend any Ground Lease, the Management Agreements or
any other agreement affecting the Collective Leased Properties without Tenant's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed.
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
Collective Leased Properties, the performance of which is not Tenant's
obligation pursuant to this Agreement, and any such default shall continue for a
period of ten (10) days after Notice thereof with respect to monetary defaults
and thirty (30) 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
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be reasonably required 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 from the date Landlord receives Tenant's
invoice, at the Overdue Rate. 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.
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.
ARTICLE 15
INTENTIONALLY DELETED
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment. Except as provided in Section 16.3
below, 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
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Agreement or sublease (which term shall be deemed to include the granting of
concessions, licenses and the like), all or any part of any of the Collective
Leased Properties 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 any of the Collective Leased Properties by anyone other than
Tenant and the Manager, or any of the Collective Leased Properties to be offered
or advertised for assignment or subletting. For purposes of this Section 16.1,
assignment and/or transfer 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 direct or indirect Subsidiary of Host 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.
Notwithstanding the foregoing, Landlord agrees that Landlord shall not
unreasonably withhold, delay or condition Landlord's consent to an assignment or
other transfer of this Agreement by Tenant provided that (i) the Manager shall
have granted its consent to such transfer and the Management Agreements shall
remain in full force and effect, (ii) such assignee shall, in Landlord's
reasonable determination, have sufficient financial resources and liquidity to
fulfill Tenant's obligations under this Agreement and shall be a, so-called,
"bankruptcy remote" Entity, and (iii) such assignee shall not be under common
control with or controlled by persons who have been convicted of felonies
involving moral turpitude in any state or federal court. If Tenant wishes to
assign or otherwise transfer this Agreement as provided in this paragraph,
Tenant shall give Landlord Notice thereof (the "Request Notice"), which Request
Notice shall identify the proposed transferee and the terms and conditions of
the assignment or other transfer and shall include appropriate information
relating to such assignee demonstrating compliance with the provisions of this
paragraph. Landlord shall, within sixty (60) days after the giving the Request
Notice, give Notice to Tenant (the "Response Notice") as to whether Landlord
consents to such transfer. Landlord shall also have the right, exercisable by
notice given in the Response Notice, to require
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Tenant to assign this Agreement to a Person designated by Landlord on the same
terms and conditions as those described in the Request Notice for transfer to
Tenant's proposed transferee.
If this Agreement is assigned or otherwise transferred or if any of the
Collective Leased Properties or any part thereof are sublet (or occupied by
anybody other than Tenant, the Manager and their respective employees) 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 Collective Leased Properties entered into on or after the date hereof
shall be consistent with any applicable terms and conditions of the Management
Agreements and 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 in whole or in part 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
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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 Collective Leased Properties or any portion thereof, (v) be
required to account for any security deposit of the subtenant other than any
security deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant, or
(viii) be required to remove any Person occupying any portion of the Collective
Leased Properties; 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 any 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.
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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, 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 (unless
otherwise provided in the Management Agreements), sublease space at the
Collective Leased Properties for newsstand, gift shop, parking garage, health
club, restaurant, bar or commissary purposes or similar concessions in
furtherance of the Permitted Use, so long as such subleases do not demise, in
the aggregate, in excess of three thousand (3,000) square feet at any Leased
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 or otherwise enter into any agreement with respect to any
Leased Property on any basis such that the rental or other fees to be paid by
any sublessee thereunder would be based, in whole or in part, on either (a) the
income or profits derived by the business activities of such sublessee, or (b)
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.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates. At any time and from time to time, 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
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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 Collective Leased Properties or
the leasehold estate created hereby.
17.2 Financial Statements. Tenant shall furnish the following
statements to Landlord:
(a) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Consolidated Financials
and Financials, accompanied by the Financial Officer's Certificate;
(b) within ninety (90) days after the end of each Fiscal Year,
the most recent Consolidated Financials and Financials 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 Accounting
Period, an unaudited operating statement prepared on a Hotel by Hotel
basis, including occupancy percentages and average rate, accompanied by
a Financial Officer's Certificate;
(d) promptly after the sending or filing thereof, copies of
all reports which Tenant, Host or Host Marriott Hospitality, Inc. sends
to its security holders generally, and copies of all periodic reports
which Tenant, Host or Host Marriott Hospitality, Inc. files with the
SEC or any stock exchange on which its shares are listed or traded;
(e) promptly after the delivery thereof to Tenant, a copy of
any management letter or written report prepared by the certified
public accountants with respect to the
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financial condition, operations, business or prospects of Tenant;
(f) at any time and from time to time upon not less than
forty-five (45) days Notice from Landlord, any Consolidated Financials
or any other 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, provided that Landlord shall pay for any costs
incurred by Tenant in connection with the preparation of the same; and
(g) promptly, upon Notice from Landlord, such other
information concerning the business, financial condition and affairs of
Tenant 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.
In addition, Landlord shall have the right, from time to time at
Landlord's sole cost and expense, upon reasonable Notice, during Tenant's
customary business hours, to cause Tenant's books and records with respect to
any of the Collective Leased Properties to be audited by auditors selected by
Landlord at the place where such books and records are customarily kept.
17.3 General Operations. Tenant shall furnish to Landlord:
(a) Within thirty (30) days after receipt or modification
thereof, copies of all licenses authorizing Tenant and/or the Manager
to operate each of the Hotels for its Permitted Use;
(b) Not less than thirty (30) days after the commencement of
any Fiscal Year, proposed annual income and ordinary expense and
capital improvement budgets setting forth projected income and costs
and expenses projected to be incurred by Tenant in managing, owning,
maintaining and
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operating the Hotels during the next succeeding Fiscal Year; and
(c) Promptly after receipt or sending thereof, copies of all
notices given or received by Tenant under the Management Agreements.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit, and shall direct the Manager to permit, Landlord
and its authorized representatives to inspect the Collective Leased Properties
during usual business hours upon not less than twenty-four (24) hours' notice
and to make such repairs as Landlord is permitted or required to make pursuant
to the terms of this Agreement, provided that any inspection or repair by
Landlord or its representatives will not unreasonably interfere with Tenant's or
the Manager's use and operation of the Collective Leased Properties 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
INTENTIONALLY DELETED
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 any Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing, provided that any such
Encumbrance shall be consistent with the requirements of Article 6 of the
applicable Management
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Agreements. 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, 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 any 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. 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". Tenant shall have no obligations
under any Superior Lease or Superior Mortgage other than those expressly set
forth in this Section 20.2.
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
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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 Minimum Rent or Additional 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 Collective Leased
Properties 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 any Leased Property ready
for occupancy by Tenant (subject to Landlord's obligations under Section
5.1.2(b) or with respect to any insurance or Condemnation proceeds), or (g)
required to remove any Person occupying any 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 (other than the lessor under any
Ground Lease) in form and substance reasonably satisfactory to Tenant.
Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to
pay, as and when required by the Purchase Agreement, to Tenant a pro rata
portion of the Retained Funds (as such term is defined in the
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Purchase Agreement) in accordance with the terms of the Purchase Agreement and
this Agreement, including Article 15, if and to the extent that the rights of
the Sellers under the Purchase Agreement with respect to such Retained Funds
shall have been assigned to Tenant, (b) to pay to Tenant any amounts owed under
Section 5.1.2(b), and (c) to pay to Tenant any portions of insurance proceeds or
Awards received by Landlord or the Successor Landlord required to be paid to
Tenant pursuant to the terms of this Agreement, and, as a condition to any
mortgage, lien or lease in respect of the Collective Leased Properties, and the
subordination of this Agreement thereto, the mortgagee, lienholder or lessor, as
applicable, shall expressly agree, for the benefit of Tenant, to make such
payments, which agreement shall be embodied in an instrument in form reasonably
satisfactory to Tenant.
20.3 Notices. Subsequent to the receipt by Tenant of Notice from
Landlord as to the identity of any Hotel Mortgagee or ground lessor under a
lease with Landlord, as ground lessee, which includes any 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 such Leased Property shall be
effective unless and until a copy of the same is given to such Hotel Mortgagee
or ground lessor at the address set forth in the above described Notice, and the
curing of any of Landlord's defaults by such Hotel Mortgagee or ground lessor
shall be treated as performance by Landlord.
20.4 Transfer of Collective Leased Properties. Landlord shall not,
without the consent of Tenant, transfer the Collective Leased Properties, or any
interest therein to any Person which: (i) does not have sufficient financial
resources and liquidity to fulfill "Owner's" obligations under the Management
Agreements; (ii) is in control of or controlled by Persons who have been
convicted of felonies involving moral turpitude in any state or federal court;
or (iii) is engaged in the business of operating or franchising (as
distinguished from owning) a branded hotel chain having fifteen hundred (1,500)
or more guest rooms in competition with the Manager. An individual or entity
shall not be deemed to be in the business of operating hotels in competition
with the Manager solely by virtue of (x) the ownership of such hotels, either
directly or indirectly through
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subsidiaries, affiliates and partnerships, or (y) holding a mortgage or
mortgages secured by one or more hotels. Landlord may transfer the Collective
Leased Properties, or any interest therein, to any other Person without the
consent of Tenant.
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, (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 Collective Leased Properties 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 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, where applicable, 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
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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 Two Hundred Fifty
Thousand Dollars ($250,000) 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, Two Hundred Fifty Thousand Dollars
($250,000), 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
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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 $250,000 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
Tangible 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
sum of the Initial Retained Funds (as defined in the Purchase Agreement) and the
Option Retained Funds (as defined in the Purchase Agreement) may for such
purpose be counted as equity at the full amount thereof if such amounts are
contributed to Tenant.
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 exist.
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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, 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 beneficial interests)
or business to any Person, (ii) merge into or with or consolidate with any other
Entity, 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.
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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.
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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 any of the Collective Leased Properties 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 Collective Leased Properties.
22.7 Conveyance by Landlord. If Landlord or any successor owner of all
or any portion of the Collective Leased Properties shall convey all or any
portion of the Collective Leased Properties in accordance with the terms hereof
other than as security for a debt, and the grantee or transferee of such of the
Collective Leased Properties 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 Collective Leased Properties that were so
conveyed by Landlord or such successor owner, 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.
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22.8 Quiet Enjoyment. Provided that no Event of Default shall have
occurred and be continuing, Tenant shall peaceably and quietly have, hold and
enjoy the Collective Leased Properties 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, (b) all Permitted Encumbrances, (c) liens
as to obligations of Landlord that are either not yet due or which are being
contested in good faith and by proper proceedings, provided the same do not
materially interfere with Tenant's ability to operate the Hotel and (d) liens
that have been consented to in writing by Tenant. Except as otherwise provided
in this Agreement, no failure by Landlord to comply with the foregoing covenant
shall give Tenant any right to cancel or terminate this Agreement or xxxxx,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
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. The parties shall share equally
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).
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(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 to:
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:
c/o HMH HPT Courtyard LLC
Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Chief Operating Officer
[Telecopier No. (000) 000-0000]
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with a copy to:
Host Marriott Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
[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 Construction; Nonrecourse. 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 Collective Leased Properties 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 exercise of
any rights of Tenant under 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. Whenever it is provided in
this Agreement that Tenant shall direct the Manager to take any action, Tenant
shall not be deemed to have satisfied such obligation unless Tenant shall have
exhausted all applicable rights and remedies of Tenant as "Owner" under the
Management Agreements. Except as otherwise expressly provided with respect to
the Retained Funds (as such term is defined in the Purchase Agreement), nothing
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contained in this Agreement (including, without limitation, Section 3.5) shall
be construed to create or impose any liabilities or obligations and no such
liabilities or obligations shall be imposed on any of the shareholders or
beneficial owners, direct or indirect, of Landlord or Tenant (including, but not
limited, Host) for the payment or performance of the obligations or liabilities
of Landlord or Tenant hereunder.
22.12 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.
22.13 Applicable Law, Etc. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of the State of
Maryland applicable to contracts between residents of the State which are to be
performed entirely within the State, 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 the State of Maryland; or (vii) any combination of the foregoing.
Notwithstanding the foregoing, the laws of the State in which any Leased
Property is located shall apply to the perfection and priority of liens upon and
the disposition of such Leased 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 State of Maryland as is provided by law; and the parties consent to the
jurisdiction of
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said court or courts located in the State of Maryland and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
22.14 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.
22.15 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
EACH ENTITY COMPRISING LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO (EACH A "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY
PROPERTIES TRUST" or "HPTCY PROPERTIES TRUST" (AS APPLICABLE) REFERS TO THE
TRUSTEES UNDER THE APPLICABLE 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date above first written.
LANDLORD:
HOSPITALITY PROPERTIES TRUST
By: /s/ Xxxxxx X. X'Xxxxx
Its Treasurer
HPTCY PROPERTIES TRUST
By: /s/ Xxxxxx X. X'Xxxxx
Its (Vice) President
TENANT:
HMH HPT COURTYARD LLC
By: /s/
Its (Vice) President
