Exhibit 10.2
AGREEMENT TO LEASE
THIS AGREEMENT TO LEASE (this "AGREEMENT") is entered into as of
the 24 day of October, 1997, by and between HOSPITALITY PROPERTIES TRUST, a
Maryland real estate investment trust ("HPT"), and SHOLODGE, INC., a
Tennessee corporation ("SHOLODGE").
W I T N E S S E T H:
WHEREAS, pursuant to a Purchase and Sale Agreement, dated as of
the date hereof (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "PURCHASE AGREEMENT"), by and
among HPT and ShoLodge and certain of its wholly owned subsidiaries, HPT,
either directly or through a wholly owned subsidiary (such entity,
"LANDLORD"), is planning to acquire those certain properties, as more
particularly described in the Purchase Agreement; and
WHEREAS, subject to and upon the terms and conditions set forth
in this Agreement, pursuant to a Lease Agreement in the form attached
hereto as EXHIBIT A (the "LEASE"), HPT has agreed to lease or cause
Landlord to lease to a wholly owned subsidiary of ShoLodge, ("TENANT"), and
ShoLodge has agreed to cause Tenant to lease from Landlord, all of the
Properties (this and other capitalized terms used and not otherwise defined
herein having the meanings ascribed to such terms in the Purchase Agreement
and/or the Lease);
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the mutual
receipt and legal sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. AGREEMENT TO LEASE. Subject to and upon the terms and
conditions hereinafter set forth, on the date on which Landlord acquires
fee simple title to each of the Fee Properties and the ground tenant's
interest with respect to the Ground Lease Properties, Landlord and Tenant
shall each execute and deliver the Lease and such date shall be the
Commencement Date under the Lease.
2. REPRESENTATIONS OF TENANT, ETC. As an inducement to
Landlord to enter into the Lease, ShoLodge shall cause Tenant to represent
and warrant to Landlord, as of the Closing Date, that:
(a) STATUS AND AUTHORITY OF TENANT, ETC. Tenant is a
corporation duly organized and validly existing under the laws of its state
of incorporation and has all requisite power and authority (corporate and
other) under the laws of such state and its respective charter documents to
own its property and assets, to enter into and perform its obligations
under the Lease and to transact the business in which it is engaged or
presently proposes to engage. Tenant is duly qualified in each
jurisdiction in which the nature of the business conducted or to be
conducted by it requires such qualification, except where failure to do so
could not reasonably be expected to have a material adverse effect.
(b) CORPORATE ACTION OF TENANT, ETC. Tenant has taken all
necessary action (corporate or other) under its charter documents to
authorize the execution, delivery and performance of the Lease, and the
Lease constitutes the valid and binding obligation and agreement of Tenant
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or similar laws of general application affecting
the rights and remedies of creditors.
(c) NO VIOLATIONS OF OTHER AGREEMENTS, ETC. Neither the
execution and delivery of the Lease by Tenant, nor compliance with the
terms and provisions thereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default
under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of Tenant pursuant to the terms of any indenture,
mortgage, deed of trust, note, evidence of indebtedness, agreement or other
instrument to which Tenant may be a party or by which it or its property is
bound, or violate any provisions of laws, or any applicable order, writ,
injunction, judgment or decree of any court, or any order or other public
regulation of any governmental commission, bureau or administrative agency.
(d) JUDGMENTS; LITIGATION. There are no judgments
presently outstanding and unsatisfied against Tenant or any of its
properties, and none of Tenant or any of its properties are involved in any
material litigation at law or in equity, or any proceeding before any
court, or by or before any governmental or administrative agency, which
litigation or proceeding could materially and adversely affect Tenant, and
no such material litigation or proceeding is, to the knowledge of Tenant,
threatened against Tenant, and no investigation looking toward such a
proceeding has begun or is contemplated.
(e) DISCLOSURE. To the knowledge of Tenant, neither this
Agreement nor any other document, certificate or statement furnished to HPT
by or on behalf of Tenant in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. To the knowledge of Tenant, there is no fact or
condition which materially and adversely affects the business, operations,
affairs, properties or condition of Tenant which has not been set forth in
this Agreement or in the other documents, certificates or statements
furnished to HPT in connection with the transactions contemplated hereby.
Tenant's liability with respect to the representations and
warranties set forth in this Agreement shall survive the Commencement Date.
3. REPRESENTATIONS OF LANDLORD. As an inducement to the Tenant
to enter into the Lease, HPT shall cause Landlord to represent to Tenant,
as of the Closing Date, that:
(a) STATUS AND AUTHORITY OF LANDLORD. Landlord is a
Maryland real estate investment trust duly organized, validly existing and
in trust good standing under the laws of the State of Maryland, and has all
requisite power and authority under the laws of such state and under its
charter documents to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Landlord
has duly qualified and is in good standing as a trust or unincorporated
business association in each jurisdiction in which the nature of the
business conducted by it requires such qualification, except where failure
to do so could not reasonably be expected to have a material adverse
effect.
(b) ACTION OF LANDLORD. Landlord has taken all necessary
action to authorize the execution, delivery and performance of the Lease,
and the Lease constitutes the valid and binding obligation and agreement of
Landlord, enforceable against Landlord in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors.
(c) NO VIOLATIONS OF AGREEMENTS. Neither the execution,
delivery or performance of the Lease by Landlord, nor compliance with the
terms and provisions hereof or thereof, will result in any breach of the
terms, conditions or provisions of, or conflict with or constitute a
default under, or result in the creation of any lien, charge or encumbrance
upon any property or assets of Landlord pursuant to the terms of any
indenture, mortgage, deed of trust, note, evidence of indebtedness or any
other agreement or instrument by which Landlord or its property is bound,
or violate any provisions of laws, or any applicable order, writ,
injunction, judgment or decree of any court, or any order or other public
regulation of any governmental commission, bureau or administrative agency.
(d) JUDGMENTS; LITIGATION. There are no judgments
presently outstanding and unsatisfied against Landlord or any of its
properties, and neither Landlord nor any of its properties are involved in
any material litigation at law or in equity, or any proceeding before any
court, or by or before any governmental or administrative agency, which
litigation or proceeding could materially and adversely affect Landlord,
and no such material litigation or proceeding is, to the knowledge of
Landlord, threatened against Landlord, and no investigation looking toward
such a proceeding has begun or is contemplated.
Landlord's liability with respect to the representations and
warranties set forth in this Agreement shall survive the Commencement Date.
4. ADDITIONAL TENANT OBLIGATIONS. On or before the
Commencement Date, ShoLodge shall cause each of the following to be
delivered to HPT (the obligation of Landlord to enter into the Lease being
subject to such delivery):
(a) A security agreement with respect to all tangible
personal property owned by Tenant and used in connection with the operation
of the Properties, such security agreement to create a first lien and
security interest in such property and to be otherwise in the form attached
hereto as EXHIBIT B;
(b) Such financing statements as Landlord may reasonably
require to perfect the interests and liens granted pursuant to the security
agreement described in paragraph (a) above;
(c) An assignment and security agreement with respect to
the FF&E Reserve, such assignment and security agreement to create a first
lien in the FF&E Reserve and to be otherwise in the form attached hereto as
EXHIBIT C;
(d) A stock pledge agreement with respect to all of the
issued and outstanding stock of Tenant, together with a stock power in
blank, such stock pledge and security agreement to create a first lien and
security interest in such shares and to be in the form attached hereto as
EXHIBIT D; and
(e) A limited guaranty agreement with respect to Tenant's
obligations under the Lease in the form attached hereto as EXHIBIT F.
5. CONDITION PRECEDENT. The obligations of the parties
hereunder shall be subject to the consummation of the transactions
contemplated by the Purchase Agreement.
6. NOTICES. All notices required or desired to be given
hereunder shall be given in the manner provided in Section 11.4 of the
Purchase Agreement.
7. ASSIGNMENT. ShoLodge shall not assign or transfer, directly
or indirectly, its rights under this Agreement without the prior written
consent of HPT, which consent may be given or withheld by HPT in HPT's sole
discretion. HPT shall not assign or transfer, directly or indirectly, its
rights under this Agreement other than to a wholly owned subsidiary of HPT
without the prior written consent of ShoLodge, which consent may be given
or withheld by Tenant in ShoLodge's sole discretion.
8. DEFAULT.
(a) DEFAULT BY SHOLODGE. If ShoLodge shall fail to perform
any of the covenants and agreements contained herein to be performed by
ShoLodge and such failure continues for a period of ten (10) days after
notice thereof from HPT, HPT may terminate this Agreement and/or pursue any
and all remedies available to HPT at law or in equity, including, but not
limited to, a suit for specific performance or other equitable relief. A
default by the ShoLodge Parties under the Purchase Agreement shall be
deemed a default by ShoLodge under this Agreement.
(b) DEFAULT BY HPT. If HPT shall fail to perform any of
the covenants and agreements contained herein to be performed by it and
such failure shall continue for a period of ten (10) days after notice
thereof from ShoLodge, ShoLodge may terminate this Agreement and/or pursue
any and all remedies available to ShoLodge at law or in equity, including,
but not limited to, a suit for specific performance or other equitable
relief. A default by the Purchaser under the Purchase Agreement shall be
deemed a default by HPT under this Agreement.
9. MISCELLANEOUS.
(a) EXPENSES. Tenant shall pay its and HPT's expenses
incident to the negotiation, preparation and carrying out of this
Agreement, including, without limitation, all reasonable fees and expenses
of HPT's counsel. Tenant shall also pay the cost of all recording fees,
transfer fees and other like costs and expenses incident to this Agreement.
(b) PUBLICITY. The parties agree that no party shall, with
respect to this Agreement and the transactions contemplated hereby, contact
or conduct negotiations with public officials, make any public
pronouncements, issue press releases or otherwise furnish information
regarding this Agreement or the transactions contemplated to any third
party without the consent of the other party, which consent shall not be
unreasonably withheld, delayed or conditioned, except as required by law or
unless such action is taken based on advice of counsel given in good faith.
No party or its employees shall trade in the securities of HPT or ShoLodge
until a public announcement of the transactions contemplated by this
Agreement has been made.
(c) PERFORMANCE ON BUSINESS DAYS. In the event the date on
which performance or payment of any obligation of a party required
hereunder is other than a Business Day, the time for payment or performance
shall automatically be extended to the first Business Day following such
date.
10. APPLICABLE LAW, ETC. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of The
Commonwealth of Massachusetts applicable to contracts between residents of
Massachusetts which are to be performed entirely within Massachusetts,
regardless of (i) where this Agreement is executed or delivered; or
(ii) where any payment or other performance required by this Agreement is
made or required to be made; or (iii) where any breach of any provision of
this Agreement occurs, or any cause of action otherwise accrues; or (iv)
where any action or other proceeding is instituted or pending; or (v) the
nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether
the laws of the forum jurisdiction otherwise would apply the laws of a
jurisdiction other than The Commonwealth of Massachusetts; or (vii) any
combination of the foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions
of this Agreement may be brought and prosecuted in such court or courts
located in The Commonwealth of Massachusetts as is provided by law; and
the parties consent to the jurisdiction of said court or courts located in
The Commonwealth of Massachusetts and to service of process by registered
mail, return receipt requested, or by any other manner provided by law.
11. MODIFICATION OF AGREEMENT. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by any party
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the other, and such modification, waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any party in any case shall entitle
such party to any other or further notice or demand in the same, similar or
other circumstances.
12. WAIVER OF RIGHTS. Neither any failure nor any delay on the
part of any party in exercising any right, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of
any right, power or privilege.
13. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby and this Agreement shall thereupon be reformed and
construed and enforced to the maximum extent permitted by laws.
14. ENTIRE CONTRACT. This Agreement, including all annexes and
exhibits hereto, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and thereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the transactions contemplated
hereby, including, without limitation, any letter of intent or commitment
letter.
15. 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.
16. BINDING EFFECT. 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.
17. NONLIABILITY OF TRUSTEES, ETC. THE DECLARATION OF TRUST
ESTABLISHING HPT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY
AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HPT. ALL PERSONS DEALING WITH HPT, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF HPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
IN WITNESS WHEREOF, HPT and ShoLodge have executed this Agreement
under seal as of the date above first written.
HOSPITALITY PROPERTIES TRUST
By:XXXX X. XXXXXX
Its President
SHOLODGE, INC.
By:XXXX XXXXX
Its President
EXHIBIT A
FORM OF LEASE
[See attached copy.]
EXHIBIT B
FORM OF SECURITY AGREEMENT
[See attached copy.]
EXHIBIT C
FORM OF FF&E PLEDGE
[See attached copy.]
EXHIBIT D
FORM OF STOCK PLEDGE AGREEMENT
[See attached copy.]
EXHIBIT E
FORM OF LIMITED GUARANTY AGREEMENT
[See attached copy.]
