Exhibit 10.1
SECOND AMENDED AND RESTATED LEASE AGREEMENT
Dated as of April 12, 2002
by and between
HPT CW PROPERTIES TRUST,
AS LANDLORD,
AND
CANDLEWOOD LEASING NO. 1, INC.,
AS TENANT
Table of Contents
Page
ARTICLE 1 DEFINITIONS................................................2
1.1 Accounting Period................................................2
1.2 Additional Charges...............................................2
1.3 Additional Leased Property.......................................3
1.4 Additional Rent..................................................3
1.5 Affiliated Person................................................3
1.6 Agreement........................................................3
1.7 Amended Lease....................................................3
1.8 Applicable Laws..................................................3
1.9 Applicable Percentage............................................4
1.10 Award...........................................................4
1.11 Base Total Hotel Sales..........................................4
1.12 Base Year.......................................................5
1.13 Business Day....................................................5
1.14 Candlewood......................................................5
1.15 Capital Addition................................................5
1.16 Capital Expenditure.............................................5
1.17 Change in Control...............................................5
1.18 Claim...........................................................6
1.19 Code............................................................6
1.20 Commencement Date...............................................6
1.21 Condemnation....................................................6
1.22 Condemnor.......................................................7
1.23 Consolidated Financials.........................................7
1.24 Date of Taking..................................................7
1.25 Default.........................................................7
1.26 Designated Areas One............................................7
1.27 Designated Areas Two............................................7
1.28 Disbursement Rate...............................................7
1.29 Distribution....................................................8
1.30 Easement Agreement..............................................8
1.31 Encumbrance.....................................................8
1.32 Entity..........................................................8
1.33 Environment.....................................................8
1.34 Environmental Obligation........................................8
1.35 Environmental Notice............................................8
1.36 Event of Default................................................8
1.37 Excess Total Hotel Sales........................................8
1.38 Extended Terms..................................................9
1.39 FF&E Estimate...................................................9
1.40 FF&E Pledge.....................................................9
1.41 FF&E Reserve....................................................9
1.42 Financial Officer's Certificate.................................9
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Table of Contents
(continued)
Page
1.43 First Lease.....................................................9
1.44 Fiscal Year.....................................................9
1.45 Fixed Term......................................................9
1.46 Fixtures........................................................9
1.47 GAAP............................................................9
1.48 Government Agencies.............................................9
1.49 Guaranty.......................................................10
1.50 Hazardous Substances...........................................10
1.51 Hotel..........................................................11
1.52 Hotel Mortgage.................................................11
1.53 Hotel Mortgagee................................................11
1.54 HPT CW I Leased Property.......................................11
1.55 HPT XX XX Leased Property......................................11
1.56 Immediate Family...............................................11
1.57 Impositions....................................................11
1.58 Incidental Documents...........................................12
1.59 Indebtedness...................................................13
1.60 Insurance Requirements.........................................13
1.61 Interest Rate..................................................13
1.62 Land...........................................................13
1.63 Landlord.......................................................13
1.64 Landlord Default...............................................13
1.65 Landlord Liens.................................................13
1.66 Lease Year.....................................................13
1.67 Leased Improvements............................................13
1.68 Leased Intangible Property.....................................13
1.69 Leased Personal Property.......................................14
1.70 Leased Property................................................14
1.71 Legal Requirements.............................................14
1.72 Lien...........................................................14
1.73 Management Agreement...........................................15
1.74 Manager........................................................15
1.75 Minimum Rent...................................................15
1.76 Net Worth......................................................15
1.77 New Leased Property............................................15
1.78 Notice.........................................................15
1.79 Officer's Certificate..........................................15
1.80 Opening Date...................................................15
1.81 Original Leases................................................15
1.82 Original Leased Property.......................................15
1.83 Overdue Rate...................................................15
1.84 Parent.........................................................16
1.85 Permitted Encumbrances.........................................16
1.86 Permitted Liens................................................16
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Table of Contents
(continued)
Page
1.87 Permitted Use..................................................16
1.88 Person.........................................................16
1.89 Property.......................................................16
1.90 Purchase Documents.............................................16
1.91 Records........................................................17
1.92 Rent...........................................................17
1.93 Retained Funds.................................................17
1.94 SEC............................................................17
1.95 Second Lease...................................................17
1.96 Security Agreement.............................................17
1.97 State..........................................................17
1.98 Stock Pledge Agreement.........................................17
1.99 Subordinated Creditor..........................................17
1.100 Subordination Agreement.......................................18
1.101 Subsidiary....................................................18
1.102 Successor Landlord............................................18
1.103 Tenant........................................................18
1.104 Tenant's Personal Property....................................18
1.105 Term..........................................................18
1.106 Total Hotel Sales.............................................18
1.107 Uniform System of Accounts....................................19
1.108 Unsuitable for Its Permitted Use..............................19
1.109 Work..........................................................20
ARTICLE 2 LEASED PROPERTY AND TERM..................................20
2.1 Leased Property.................................................20
2.2 Condition of Leased Property....................................21
2.3 Fixed Term......................................................22
2.4 Extended Term...................................................22
ARTICLE 3 RENT......................................................23
3.1 Rent............................................................23
3.1.1 Minimum Rent...........................................23
3.1.2 Additional Rent........................................24
3.1.3 Additional Charges.....................................27
3.2 Late Payment of Rent, Etc.......................................29
3.3 Net Lease.......................................................29
3.4 No Termination, Abatement, Etc..................................30
3.5 Retained Funds..................................................31
ARTICLE 4 USE OF THE LEASED PROPERTY................................32
4.1 Permitted Use...................................................32
4.1.1 Permitted Use..........................................32
4.1.2 Necessary Approvals....................................33
4.1.3 Lawful Use, Etc........................................33
4.2 Compliance with Legal/Insurance Requirements, Etc...............33
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Table of Contents
(continued)
Page
4.3 Environmental Matters...........................................34
4.3.1 Restriction on Use, Etc................................34
4.3.2 Indemnification of Landlord............................35
4.3.3 Survival...............................................36
ARTICLE 5 MAINTENANCE AND REPAIRS...................................37
5.1 Maintenance and Repair..........................................37
5.1.1 Tenant's General Obligations...........................37
5.1.2 FF&E Reserve...........................................37
5.1.3 Landlord's Obligations.................................39
5.1.4 Nonresponsibility of Landlord, Etc.....................40
5.2 Tenant's Personal Property......................................41
5.3 Yield Up........................................................41
5.4 Management Agreement............................................42
ARTICLE 6 IMPROVEMENTS, ETC.........................................42
6.1 Improvements to the Leased Property.............................42
6.2 Salvage.........................................................43
ARTICLE 7 LIENS.....................................................44
7.1 Liens...........................................................44
7.2 Landlord's Lien.................................................44
ARTICLE 8 PERMITTED CONTESTS........................................45
ARTICLE 9 INSURANCE AND INDEMNIFICATION.............................46
9.1 General Insurance Requirements..................................46
9.2 Replacement Cost................................................47
9.3 Waiver of Subrogation...........................................48
9.4 Form Satisfactory, Etc..........................................48
9.5 Blanket Policy..................................................49
9.6 No Separate Insurance...........................................49
9.7 Indemnification of Landlord.....................................49
ARTICLE 10 CASUALTY..................................................51
10.1 Insurance Proceeds.............................................51
10.2 Damage or Destruction..........................................51
10.2.1 Damage or Destruction of Leased Property...............51
10.2.2 Partial Damage or Destruction..........................52
10.2.3 Insufficient Insurance Proceeds........................52
10.2.4 Disbursement of Proceeds...............................52
10.3 Damage Near End of Term........................................54
10.4 Tenant's Property..............................................54
10.5 Restoration of Tenant's Property...............................54
10.6 No Abatement of Rent...........................................54
10.7 Waiver.........................................................55
ARTICLE 11 CONDEMNATION..............................................55
11.1 Total Condemnation, Etc........................................55
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Table of Contents
(continued)
Page
11.2 Partial Condemnation...........................................55
11.3 Abatement of Rent..............................................57
11.4 Temporary Condemnation.........................................57
11.5 Condemnation Near End of Term..................................57
11.6 Allocation of Award............................................57
ARTICLE 12 DEFAULTS AND REMEDIES.....................................58
12.1 Events of Default..............................................58
12.2 Remedies.......................................................61
12.3 Tenant's Waiver................................................63
12.4 Application of Funds...........................................63
12.5 Landlord's Right to Cure Tenant's Default......................63
ARTICLE 13 HOLDING OVER..............................................64
ARTICLE 14 LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT...........64
14.1 Landlord Notice Obligation.....................................64
14.2 Landlord's Default.............................................64
14.3 Indemnification of Tenant......................................65
ARTICLE 15 PURCHASE RIGHTS...........................................66
ARTICLE 16 SUBLETTING AND ASSIGNMENT.................................66
16.1 Subletting and Assignment......................................66
16.2 Required Sublease Provisions...................................67
16.3 Permitted Sublease.............................................69
16.4 Sublease Limitation............................................69
ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS............70
17.1 Estoppel Certificates..........................................70
17.2 Financial Statements...........................................70
ARTICLE 18 LANDLORD'S RIGHT TO INSPECT...............................71
ARTICLE 19 EASEMENTS.................................................71
19.1 Grant of Easements.............................................72
19.2 Exercise of Rights by Tenant...................................72
19.3 Permitted Encumbrances.........................................72
ARTICLE 20 HOTEL MORTGAGES...........................................72
20.1 Landlord May Grant Liens.......................................72
20.2 Subordination of Lease.........................................73
20.3 Notice to Mortgagee and Superior Landlord......................75
ARTICLE 21 ADDITIONAL COVENANTS OF TENANT............................75
21.1 Prompt Payment of Indebtedness.................................75
21.2 Conduct of Business............................................75
21.3 Maintenance of Accounts and Records............................76
21.4 Notice of Litigation, Etc......................................76
21.5 Notice of Discontinuance of Operation..........................76
21.6 Indebtedness of Tenant.........................................76
21.7 Financial Condition of Tenant..................................77
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Table of Contents
(continued)
Page
21.8 Distributions, Payments to Affiliated Persons, Etc.............78
21.9 Prohibited Transactions........................................78
21.10 Liens and Encumbrances........................................78
21.11 Merger; Sale of Assets; Etc...................................78
ARTICLE 22 MISCELLANEOUS.............................................79
22.1 Limitation on Payment of Rent..................................79
22.2 No Waiver......................................................79
22.3 Remedies Cumulative............................................80
22.4 Severability...................................................80
22.5 Acceptance of Surrender........................................80
22.6 No Merger of Title.............................................80
22.7 Conveyance by Landlord.........................................80
22.8 Quiet Enjoyment................................................81
22.9 Memorandum of Lease............................................81
22.10 Notices.......................................................82
22.11 Trade Area Restriction........................................83
22.12 Construction..................................................85
22.13 Counterparts; Headings........................................85
22.14 Applicable Law, Etc...........................................85
22.15 Right to Make Agreement.......................................86
22.16 Attorneys' Fees...............................................86
22.17 Nonrecourse...................................................87
22.18 Nonliability of Trustees......................................87
EXHIBITS
A-1 through X-00- Xxx Xxxx
X-0 through B-2 - Restricted Trade Area
C - Allocation of Minimum Rent
vi
SECOND AMENDED AND RESTATED LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT is entered into as of
this 12th day of April, 2002, by and between HPT CW PROPERTIES TRUST, a Maryland
real estate investment trust, as landlord ("Landlord"), and CANDLEWOOD LEASING
NO. 1, INC., a Delaware corporation, as tenant ("Tenant").
W I T N E S S E T H :
WHEREAS, pursuant to a Lease Agreement, dated as of December 24, 1997
(as amended, the "First Lease") between Landlord, as lessor, and Tenant, as
lessee, Landlord agreed to lease seventeen (17) hotel properties to Tenant
(collectively, the "HPT CW I Leased Property"); and
WHEREAS, pursuant to a Lease Agreement, dated as of May 20, 1998 (as
amended, the "Second Lease" and, together with the First Lease, collectively,
the "Original Leases") between HPT XX XX Properties Trust ("HPT XX XX"), as
lessor, and Candlewood Leasing No. 2, Inc. ("Candlewood 2"), as lessee, HPT XX
XX agreed to lease seventeen (17) hotel properties (collectively, the "HPT XX XX
Leased Property" and, together with the HPT CW I Leased Property, collectively,
the "Original Leased Property") to Candlewood 2; and
WHEREAS, HPT XX XX has merged into Landlord and, in connection
therewith, transferred to Landlord HPT CW II's entire right, title and interest
in and to the HPT XX XX Leased Property; and
WHEREAS, Candlewood 2 has merged into Tenant and, in connection
therewith, transferred to Tenant Candlewood 2's entire right, title and interest
in and to the HPT XX XX Leased Property; and
WHEREAS, on August 10, 2001, Landlord acquired two (2) additional hotel
properties located in Mt. Laurel, New Jersey and Las Vegas, Nevada
(collectively, the "Additional Leased Property"); and
WHEREAS, pursuant to an Amended and Restated Lease Agreement, dated as
of August 10, 2001 (the "Amended Lease"), Landlord and Tenant amended and
restated the Original Leases to consolidate the Original Leases into a single
lease and to
include the Additional Leased Property among the Leased Property demised
thereby; and
WHEREAS, simultaneously herewith, Landlord is acquiring twenty-one (21)
additional hotel properties (collectively, the "New Leased Property"); and
WHEREAS, as a result of the foregoing, Landlord owns fee simple title
to the Leased Property (this and other capitalized terms used and not otherwise
defined herein having the meanings ascribed to such terms in Article 1)
described in Exhibit A-1 through A-57; and
WHEREAS, Landlord and Tenant wish to amend and restate the Amended
Lease to include the New Leased Property among the Leased Property demised
thereby, subject to, and upon, the terms and conditions contained herein; and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Article shall have the meanings assigned to them in this Article and include the
plural as well as the singular, (ii) all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with GAAP, (iii)
all references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Accounting Period" shall mean each calendar month.
1.2 "Additional Charges" shall have the meaning given such term in
Section 3.1.3.
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1.3 "Additional Leased Property" shall have the meaning given such term
in the preambles to this Agreement.
1.4 "Additional Rent" shall have the meaning given such term in Section
3.1.2(a).
1.5 "Affiliated Person" shall mean, with respect to any Person, (a) in
the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited liability
company, any member of such company, (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons referred to in the preceding clauses (a) and (b), (d) any
other Person who is an officer, director, trustee or employee of, or partner in
or member of, such Person or any Person referred to in the preceding clauses
(a), (b) and (c), and (e) any other Person who is a member of the Immediate
Family of such Person or of any Person referred to in the preceding clauses (a)
through (d).
1.6 "Agreement" shall mean this Second Amended and Restated Lease
Agreement, including Exhibits A, B and C hereto, as it and they may be amended
from time to time as herein provided.
1.7 "Amended Lease" shall have the meaning given such term in the
preambles to this Agreement.
1.8 "Applicable Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, actions and
policies from time to time in existence, of all courts of competent jurisdiction
and Government Agencies, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health or the Environment, including, without limitation, all
valid and lawful requirements of courts and other Government Agencies pertaining
to reporting, licensing, permitting, investigation, remediation and removal of
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil xxxxx), or emissions, discharges, releases or
threatened releases of Hazardous Substances, chemical substances, pesticides,
petroleum or petroleum products, pollutants, contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or
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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.
1.9 "Applicable Percentage" shall mean (a) with respect to each
Original Leased Property, five percent (5%); (b) with respect to each Additional
Leased Property, (i) three percent (3%) with respect to the 2001 Fiscal Year;
(ii) four percent (4%) with respect to the 2002 Fiscal Year; and (c) thereafter,
five percent (5%); and (c) with respect to each New Leased Property, five
percent (5%).
1.10 "Award" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of any of the
Leased Property (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert witness
fees, incurred by Landlord, in connection with obtaining any such award).
1.11 "Base Total Hotel Sales" shall mean, with respect to any Property,
Total Hotel Sales at such Property for the Base Year; provided, however, that in
the event that, with respect to any Lease Year, or portion thereof, for any
reason (including, without limitation, a casualty or Condemnation) there shall
be a reduction of five percent (5%) or more in the number of rooms at any Hotel
or a change in the services provided at any Hotel (including, without
limitation, if applicable, the closing of restaurants or the discontinuation of
food or beverage services) from the number of rooms or the services provided
during the Base Year, in determining Additional Rent payable with respect to
such Lease Year, Base Total Hotel Sales with respect to the affected Property
shall be reduced as follows: (a) in the event of the termination of this
Agreement with respect to any Property pursuant to Article 10, 11 or 12, all
Total Hotel Sales attributable to such Property during the Base Year shall be
subtracted from Base Total Hotel Sales, appropriately prorated based on time
elapsed if such termination occurs on a date other than the first day of any
Fiscal Year; (b) in the event of a complete closing of a Hotel, all Total Hotel
Sales attributable to such Hotel during the Base Year shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; (c) in
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the event of a partial closing of a Hotel affecting five percent (5%) or more of
the guest rooms in such Hotel, Total Hotel Sales attributable to guest room
occupancy or guest room services at such Hotel during the Base Year shall be
ratably allocated among all guest rooms in service at such Hotel during the Base
Year and all such Total Hotel Sales attributable to rooms no longer in service
shall be subtracted from Base Total Hotel Sales throughout the period of such
closing; (d) in the event of a closing of a restaurant, all Total Hotel Sales
attributable to such restaurant during the Base Year shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; and (e) in the
event of any other change in circumstances affecting any Hotel, Base Total Hotel
Sales shall be equitably adjusted in such manner as Landlord and Tenant shall
reasonably agree.
1.12 "Base Year" shall mean, (a) with respect to any Property other
than a New Leased Property, the period commencing on the first anniversary of
the first full day of the first full calendar month following the Opening Date
of the Hotel located at such Property and expiring on the day preceding the
second anniversary of such Opening Date and (b) with respect to any New Leased
Property, the 2002 Fiscal Year.
1.13 "Business Day" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of New York are authorized by law or executive action to close.
1.14 "Candlewood" shall mean Candlewood Hotel Company, Inc., a Delaware
corporation, its successors and assigns.
1.15 "Capital Addition" shall mean any renovation, repair or
improvement to the Leased Property (or portion thereof), the cost of which
constitutes a Capital Expenditure.
1.16 "Capital Expenditure" shall mean any expenditure treated as
capital in nature in accordance with GAAP.
1.17 "Change in Control" shall mean: (a) except for changes in the
ownership of Candlewood that do not constitute a Change in Control under clauses
(b) through (f) of this definition, the direct or indirect acquisition by a
Person or group of Persons acting in concert (a "Group") of any beneficial or
voting ownership of any class of equity of Tenant, including any ownership
rights to acquire beneficial or voting interests
-5-
whether expressed as rights, options, warrants, convertible securities or
otherwise; (b) the direct or indirect acquisition by a Person or Group of stock
representing a majority of voting interests of Candlewood, including any rights
to acquire any voting interests whether expressed as rights, options, warrants,
convertible securities or otherwise, provided that the direct or indirect
acquisition of Candlewood equity by a Person who currently owns preferred shares
of Candlewood pursuant to the terms of the Certificate of Designation for such
preferred shares filed with the Delaware Secretary of State (a "Preferred
Certificate of Designation") shall not be considered a Change in Control; (c)
the acquisition by contract or otherwise by a Person or Group of the power to
direct the management and policies of Tenant or Candlewood, provided that the
continuation of the Voting Agreement and the exercise of rights thereunder shall
not be considered a Change in Control; (d) the merger of Tenant or Candlewood
with another Person, provided that a merger of Candlewood which results in a
continuing Entity which is majority owned by a majority of all of the
shareholders of Candlewood immediately before the merger shall not be considered
a Change in Control (unless the same would constitute a Change in Control
pursuant to the preceding clause (b) of this definition), and provided further
that a merger of Tenant or Candlewood with an Entity which is wholly owned,
directly or indirectly, by Candlewood shall not be considered a Change in
Control; (e) any sale, series of sales or similar conveyances of a majority of
the assets of Tenant or of Candlewood; and (f) any amendment, modification or
change to the terms of the Preferred Certificates of Designation or the Voting
Agreement which is not approved by Landlord in its discretion.
1.18 "Claim" shall have the meaning given such term in Article 8.
1.19 "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.
1.20 "Commencement Date" shall mean (a) with respect to each Original
Leased Property, the date on which the terms of its Original Lease commenced,
(b) with respect to each Additional Leased Property, August 10, 2001, and (c)
with respect to each New Leased Property, the date of this Agreement.
1.21 "Condemnation" shall mean, with respect to any Property, (a) the
exercise of any governmental power with
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respect to such Property, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation, (b) a voluntary sale or transfer of such
Property by Landlord to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending, or (c) a taking or
voluntary conveyance of all or part of such Property, or any interest therein,
or right accruing thereto or use thereof, as the result or in settlement of any
condemnation or other eminent domain proceeding affecting such Property, whether
or not the same shall have actually been commenced.
1.22 "Condemnor" shall mean any public or quasi-public Person, having
the power of Condemnation.
1.23 "Consolidated Financials" shall mean, for any Fiscal Year or other
accounting period of Candlewood, annual audited and quarterly unaudited
financial statements of Candlewood prepared on a consolidated basis, including
Candlewood'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.
1.24 "Date of Taking" shall mean, with respect to any Property, the
date the Condemnor has the right to possession of such Property, or any portion
thereof, in connection with a Condemnation.
1.25 "Default" shall mean any event or condition which with the giving
of notice and/or lapse of time would ripen into an Event of Default.
1.26 "Designated Areas One" shall have the meaning given such term in
Section 22.11.
1.27 "Designated Areas Two" shall have the meaning given such term in
Section 22.11.
1.28 "Disbursement Rate" shall mean an annual rate of interest, as of
the date of determination, equal to the greater of (i) the Interest Rate and
(ii) the per annum rate for fifteen (15) year U.S. Treasury Obligations as
published in The Wall Street Journal plus three hundred fifty (350) basis
points.
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1.29 "Distribution" shall mean (a) any declaration or payment of any
dividend (except dividends payable in common stock of Tenant) on or in respect
of any shares of any class of capital stock of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of
capital stock of a corporation, (c) any other distribution on or in respect of
any shares of any class of capital stock of a corporation or (d) any return of
capital to shareholders.
1.30 "Easement Agreement" shall mean any conditions, covenants and
restrictions, easements, declarations, licenses and other agreements which are
Permitted Encumbrances and such other agreements as may be granted in accordance
with Section 19.1.
1.31 "Encumbrance" shall have the meaning given such term in Section
20.1.
1.32 "Entity" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency, authority or
political subdivision thereof or any other entity.
1.33 "Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
1.34 "Environmental Obligation" shall have the meaning given such term
in Section 4.3.1.
1.35 "Environmental Notice" shall have the meaning given such term in
Section 4.3.1.
1.36 "Event of Default" shall have the meaning given such term in
Section 12.1.
1.37 "Excess Total Hotel Sales" shall mean, with respect to any
Property, with respect to any Lease Year, or portion thereof, the amount of
Total Hotel Sales for such Property for such Lease Year, or portion thereof, in
excess of Base Total Hotel Sales for such Property for the equivalent period
during the Base Year.
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1.38 "Extended Terms" shall have the meaning given such term in Section
2.4.
1.39 "FF&E Estimate" shall have the meaning given such term in Section
5.1.2(c).
1.40 "FF&E Pledge" shall mean the Second Amended and Restated
Assignment and Security Agreement, dated as of the date hereof, made by Tenant
for the benefit of Landlord.
1.41 "FF&E Reserve" shall have the meaning given such term in Section
5.1.2(a).
1.42 "Financial Officer's Certificate" shall mean, as to any Person, a
certificate of the chief executive officer, chief financial officer or chief
accounting officer (or such officers' authorized designee) of such Person, duly
authorized, accompanying the financial statements required to be delivered by
such Person pursuant to Section 17.2, in which such officer shall certify (a)
that such statements have been properly prepared in accordance with GAAP and are
true, correct and complete in all material respects and fairly present the
consolidated financial condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby, and
(b), in the event that the certifying party is an officer of Tenant and the
certificate is being given in such capacity, certify that no Event of Default
has occurred and is continuing hereunder.
1.43 "First Lease" shall have the meaning given such term in the
preambles to this Agreement.
1.44 "Fiscal Year" shall mean the calendar year.
1.45 "Fixed Term" shall have the meaning given such term in Section
2.3.
1.46 "Fixtures" shall have the meaning given such term in Section
2.1(d).
1.47 "GAAP" shall mean generally accepted accounting principles
consistently applied.
1.48 "Government Agencies" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission,
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department, office or instrumentality of any nature whatsoever of any
governmental or quasi-governmental unit of the United States or any State or any
county or any political subdivision of any of the foregoing, whether now or
hereafter in existence, having jurisdiction over Tenant or the Leased Property
or any portion thereof or any Hotel operated thereon.
1.49 "Group" shall have the meaning given such term in Section 1.17.
1.50 "Guaranty" shall mean the Second Amended and Restated Guaranty
Agreement, dated the date hereof, made by Candlewood for the benefit of Landlord
and Hospitality Properties Trust.
1.51 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any Applicable Laws;
or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any Applicable Laws, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act
(42 U.S.C. section 6901 et seq.) and the regulations promulgated
thereunder; or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
and is or becomes regulated under any Applicable Laws; or
(d) the presence of which on the Leased Property, or any
portion thereof, causes or materially threatens to cause an unlawful
nuisance upon the Leased Property, or any portion thereof, or to
adjacent properties or poses or materially threatens to pose a hazard
to the Leased Property, or any portion thereof, or to the health or
safety of persons on or about the Leased Property, or any portion
thereof; or
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(e) without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons or volatile organic compounds; or
(f) without limitation, which contains polychlorinated
biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive
particles, waves or material; or
(h) without limitation, constitutes materials which are now or
may hereafter be subject to regulation pursuant to the Material Waste
Tracking Act of 1988.
1.52 "Hotel" shall mean, with respect to any Property, the hotel being
operated on such Property.
1.53 "Hotel Mortgage" shall mean any Encumbrance placed upon the Leased
Property in accordance with Article 20.
1.54 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
1.55 "HPT CW I Leased Property" shall have the meaning given such term
in the preambles to this Agreement.
1.56 "HPT XX XX Leased Property" shall have the meaning given such term
in the preambles to this Agreement.
1.57 "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.
1.58 "Impositions" shall mean collectively, all taxes (including,
without limitation, all taxes imposed under the laws of any State, as such laws
may be amended from time to time, and all ad valorem, sales and use, or similar
taxes as the same relate to or are imposed upon Landlord, Tenant or the business
conducted upon the Leased Property), assessments (including, without limitation,
all assessments for public improvements or benefit, whether or not commenced or
completed prior to the date hereof), water, sewer or other rents and charges,
excises, tax levies, fees (including, without limitation, license, permit,
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inspection, authorization and similar fees), and all other governmental charges,
in each case whether general or special, ordinary or extraordinary, or foreseen
or unforeseen, of every character in respect of the Leased Property or the
business conducted thereon by Tenant (including all interest and penalties
thereon due to any failure in payment by Tenant), which at any time prior to,
during or in respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Landlord's interest in the Leased Property, (b)
the Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Leased Property or the leasing or use of the Leased Property or any part
thereof by Tenant; provided, however, that nothing contained herein shall be
construed to require Tenant to pay and the term "Impositions" shall not include
(i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of
Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax
payable in connection with a Hotel Mortgage) or other tax imposed with respect
to the sale, exchange or other disposition by Landlord of the Leased Property or
the proceeds thereof, (iv) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Landlord, (v) any interest or penalties imposed on Landlord as a result of the
failure of Landlord to file any return or report timely and in the form
prescribed by law or to pay any tax or imposition, except to the extent such
failure is a result of a breach by Tenant of its obligations pursuant to Section
3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord
not being considered a "United States person" as defined in Section 7701(a)(30)
of the Code, (vii) any impositions that are enacted or adopted by their express
terms as a substitute for any tax that would not have been payable by Tenant
pursuant to the terms of this Agreement or (viii) any impositions imposed as a
result of a breach of covenant or representation by Landlord in any agreement
governing Landlord's conduct or operation or as a result of the negligence or
willful misconduct of Landlord.
1.59 "Incidental Documents" shall mean the Guaranty, the Security
Agreement, the Stock Pledge Agreement and the FF&E Pledge.
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1.60 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
1.61 "Insurance Requirements" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any such
policy and all orders, rules and regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon Landlord, Tenant or the Leased Property.
1.62 "Interest Rate" shall mean ten percent (10%) per annum.
1.63 "Land" shall have the meaning given such term in Section 2.1(a).
1.64 "Landlord" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.
1.65 "Landlord Default" shall have the meaning given such term in
Section 14.2.
1.66 "Landlord Liens" shall mean liens on or against the Leased
Property or any payment of Rent (a) which result from any act of, or any claim
against, Landlord or any owner of a direct or indirect interest in the Leased
Property, or which result from any violation by Landlord of any terms of this
Agreement or the Purchase Documents, or (b) which result from liens in favor of
any taxing authority by reason of any tax owed by Landlord or any fee owner of a
direct or indirect interest in the Leased Property; provided, however, that
"Landlord Lien" shall not include any lien resulting from any tax for which
Tenant is obligated to pay or indemnify Landlord against until such time as
Tenant shall have already paid to or on behalf of Landlord the tax or the
required indemnity with respect to the same.
1.67 "Lease Year" shall mean any Fiscal Year or portion thereof during
the Term.
1.68 "Leased Improvements" shall have the meaning given such term in
Section 2.1(b).
1.69 "Leased Intangible Property" shall mean all hotel licensing
agreements and other service contracts, equipment
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leases, booking agreements and other arrangements or agreements affecting the
ownership, repair, maintenance, management, leasing or operation of the Leased
Property to which Landlord is a party; all books, records and files relating to
the leasing, maintenance, management or operation of the Leased Property
belonging to Landlord; all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone exchange numbers identified with the Leased
Property, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character belonging to Landlord with
respect to the Leased Property other than liquor licenses.
1.70 "Leased Personal Property" shall have the meaning given such term
in Section 2.1(e).
1.71 "Leased Property" shall have the meaning given such term in
Section 2.1.
1.72 "Legal Requirements" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Property or
the maintenance, construction, alteration or operation thereof, whether now or
hereafter enacted or in existence, including, without limitation, (a) all
permits, licenses, authorizations, certificates and regulations necessary to
operate any Property for its Permitted Use, and (b) all covenants, agreements,
restrictions and encumbrances contained in any instruments at any time in force
affecting any Property, including those which may (i) require material repairs,
modifications or alterations in or to any Property or (ii) in any way materially
and adversely affect the use and enjoyment thereof, but excluding any
requirements arising as a result of Landlord's status as a real estate
investment trust.
1.73 "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.
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1.74 "Management Agreement" shall mean any management, franchise,
operating, branding or flagging agreement entered into by Tenant with respect to
all or any portion of the Leased Property, together with all amendments,
modifications and supplements thereto.
1.75 "Manager" shall mean any manager under a Management Agreement.
1.76 "Minimum Rent" shall mean Three Million Seven Hundred Ninety-Two
Thousand Two Hundred Seventy-Three Dollars ($3,792,273) per Accounting Period.
1.77 "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; provided, however, that for purposes of this definition,
the shares of Series A Cumulative Preferred Stock and Series B Cumulative
Convertible Preferred Stock of Candlewood which are issued and outstanding as of
the date hereof shall not constitute liabilities.
1.78 "New Leased Property" shall have the meaning given such term in
the preambles to this Agreement.
1.79 "Notice" shall mean a notice given in accordance with Section
22.10.
1.80 "Officer's Certificate" shall mean a certificate signed by an
officer or other duly authorized individual of the certifying Entity duly
authorized by the board of directors or other governing body of the certifying
Entity.
1.81 "Opening Date" shall, with respect to any Property, have the
meaning given such term in the Purchase Documents with respect to such Property.
1.82 "Original Leases" shall have the meaning given such term in the
preambles to this Agreement.
1.83 "Original Leased Property" shall have the meaning given such term
in the preambles to this Agreement.
1.84 "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.
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1.85 "Parent" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, fifty percent (50%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.
1.86 "Permitted Encumbrances" shall mean, with respect to any Property,
all rights, restrictions, and easements of record set forth on Schedule B to the
applicable owner's or leasehold title insurance policy issued to Landlord in
connection with the transactions contemplated by the Purchase Documents with
respect to such Property, plus any other encumbrances as may be "Permitted
Encumbrances" under the Purchase Documents or as may have been consented to in
writing by Landlord and Tenant from time to time.
1.87 "Permitted Liens" shall mean any Liens granted in accordance with
Section 21.10(a).
1.88 "Permitted Use" shall mean, with respect to any Property, any use
of such Property permitted pursuant to Section 4.1.1.
1.89 "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.
1.90 "Property" shall have the meaning given such term in Section 2.1.
1.91 "Purchase Documents" shall mean, collectively, (a) the Purchase
and Sale Agreement, dated as of November 19, 1997, by and among Hospitality
Properties Trust, Candlewood and certain of Candlewood's Subsidiaries and the
Agreement to Lease, dated as of November 19, 1997, by and among Hospitality
Properties Trust and Candlewood, as they may have been or hereafter be amended,
restated, supplemented or otherwise modified from time to time, (b) the Purchase
and Sale Agreement, dated as of May 14, 1998, by and among Hospitality
Properties Trust, Candlewood and certain of Candlewood's Subsidiaries and the
Agreement to Lease, dated as of May 14, 1998, by and among Hospitality
Properties Trust and Candlewood, as they may have been or hereafter be amended,
restated, supplemented or otherwise modified from time to time, (c) the Purchase
and Sale
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Agreement, dated as of August 10, 2001, by and among Hospitality Properties
Trust, Candlewood and certain of Candlewood's Subsidiaries, as it may have been
or hereafter be amended, restated, supplemented or otherwise modified from time
to time, and (d) the Purchase and Sale Agreement, dated as of the date hereof,
by and among Hospitality Properties Trust, Candlewood and certain of
Candlewood's Subsidiaries, as it may have been or hereafter be amended,
restated, supplemented or otherwise modified from time to time.
1.92 "Records" shall have the meaning given such term in Section 7.2.
1.93 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent
and Additional Charges.
1.94 "Retained Funds" shall mean a cash amount equal to Forty-Six
Million Eighty-Five Thousand Seven Hundred Fifty Dollars ($46,085,750).
1.95 "SEC" shall mean the Securities and Exchange Commission.
1.96 "Second Lease" shall have the meaning given such term in the
preambles to this Agreement.
1.97 "Security Agreement" shall mean the Second Amended and Restated
Security Agreement, dated as of the date hereof, made by Tenant for the benefit
of Landlord, as it may be amended, restated, supplemented or otherwise modified
from time to time.
1.98 "State" shall mean, with respect to any Property, the state,
commonwealth or district in which the such Property is located.
1.99 "Stock Pledge Agreement" shall mean the Second Amended and
Restated Stock Pledge Agreement, dated as of the date hereof, made by Candlewood
to Landlord with respect to the stock of Tenant, as it may be amended, restated,
supplemented or otherwise modified from time to time.
1.100 "Subordinated Creditor" shall mean any creditor of Tenant which
is a party to a Subordination Agreement in favor of Landlord.
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1.101 "Subordination Agreement" shall mean any agreement (and any
amendments thereto) executed by a Subordinated Creditor pursuant to which the
payment and performance of Tenant's obligations to such Subordinated Creditor
are subordinated to the payment and performance of Tenant's obligations to
Landlord under this Agreement.
1.102 "Subsidiary" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).
1.103 "Successor Landlord" shall have the meaning given such term in
Section 20.2.
1.104 "Tenant" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.
1.105 "Tenant's Personal Property" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other tangible personal property of
Tenant, if any, acquired by Tenant on and after the date hereof and located at
the Leased Property or used in Tenant's business at the Leased Property and all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, other than any items included within the
definition of Fixtures or Leased Personal Property.
1.106 "Term" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of Section
2.4, unless sooner terminated pursuant to the provisions of this Agreement.
1.107 "Total Hotel Sales" shall mean, with respect to any Property, for
each Fiscal Year during the Term, all revenues and receipts of every kind
derived by Tenant from operating such Property and parts thereof, including, but
not limited to: income (from both cash and credit transactions), after
deductions for bad debts, and discounts for prompt or cash payments and refunds,
from rental of rooms, stores, offices, meeting, exhibit or sales space of every
kind; license, lease and concession fees and rentals (not including gross
receipts of
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licensees, lessees and concessionaires); income from vending machines; health
club membership fees; food and beverage sales; wholesale and retail sales of
merchandise (other than proceeds from the sale of furnishings, fixture and
equipment no longer necessary to the operation of the Hotel located thereon,
which shall be deposited in the FF&E Reserve); service charges, to the extent
not distributed to the employees at the Hotel located thereon as gratuities; and
proceeds, if any, from business interruption or other loss of income insurance;
provided, however, that Total Hotel Sales shall not include the following:
gratuities to or collected on behalf of Hotel employees; federal, state or
municipal excise, sales, use, occupancy or similar taxes collected directly from
patrons or guests or included as part of the sales price of any goods or
services; insurance proceeds (other than proceeds from business interruption or
other loss of income insurance); Award proceeds (other than for a temporary
Condemnation); any proceeds from any sale of such Property or from the
refinancing of any debt encumbering such Property; proceeds from the disposition
of furnishings, fixture and equipment no longer necessary for the operation of
the Hotel located thereon; interest which accrues on amounts deposited in the
FF&E Reserve; and any security deposits and other advance deposits, until and
unless the same are forfeited to Tenant or applied for the purpose for which
they were collected; and interest income from any bank account or investment of
Tenant.
1.108 "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.
1.109 "Unsuitable for Its Permitted Use" shall mean, with respect to
such Hotel, a state or condition of such Hotel such that (a) following any
damage or destruction involving a Hotel, such Hotel cannot be operated in the
good faith judgment of Tenant on a commercially practicable basis for its
Permitted Use and it cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such damage or
destruction, and as otherwise required by Section 10.2.4, within twelve (12)
months following such damage or destruction or such shorter period of time as to
which business interruption insurance is available to cover Rent and other costs
related to the applicable Property following such damage or destruction, or (b)
as the result of a partial taking by
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Condemnation, such Hotel cannot be operated, in the good faith judgment of
Tenant, on a commercially practicable basis for its Permitted Use.
1.110 "Voting Agreement" shall mean that certain Amended and Restated
Stockholders Agreement, dated as of July 10, 1998, by and among Candlewood,
Doubletree Corporation, the Xxxxxx X. Fix Family Partnership, L.P., and Xxxx
XxXxxx, on behalf of himself and certain family trusts, and the purchasers of
the Series A and Series B Preferred Shares as the same may be amended from time
to time (but only with the approval of Landlord as provided herein).
1.111 "Work" shall have the meaning given such term in Section 10.2.4.
ARTICLE 2
LEASED PROPERTY AND TERM
2.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following (each
of items (a) through (g) below which, as of the Commencement Date, relates to
any single Hotel, a "Property" and, collectively, the "Leased Property"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit A-1 through A-57, attached hereto and
made a part hereof (the "Land");
(b) all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and structures
presently situated upon the Land (collectively, the "Leased
Improvements");
(c) all easements, rights and appurtenances relating to the
Land and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or incorporated into
the Leased Improvements, including,
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without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the parties
hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically
excluding all items included within the category of Tenant's Personal
Property (collectively, the "Fixtures");
(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other personal
property of any kind or description used or useful in Tenant's business
on or in the Leased Improvements, and located on or in the Leased
Improvements, and all modifications, replacements, alterations and
additions to such personal property, except items, if any, included
within the category of Fixtures, but specifically excluding all items
included within the category of Tenant's Personal Property
(collectively, the "Leased Personal Property");
(f) all of the Leased Intangible Property; and
(g) any and all leases of space in the Leased Improvements.
2.2 Condition of Leased Property. Tenant acknowledges receipt and
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Leased Property, all applicable
Legal Requirements, the lien of any financing instruments, mortgages and deeds
of trust existing prior to the Commencement Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an inspection
of the Leased Property and the record title thereto or by an accurate survey
thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF
THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS
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OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law,
however, Landlord hereby assigns to Tenant all of Landlord's rights to proceed
against any predecessor in title for breaches of warranties or representations
or for latent defects in the Leased Property. Landlord shall fully cooperate
with Tenant in the prosecution of any such claims, in Landlord's or Tenant's
name, all at Tenant's sole cost and expense. Tenant shall indemnify, defend, and
hold harmless Landlord from and against any loss, cost, damage or liability
(including reasonable attorneys' fees) incurred by Landlord in connection with
such cooperation.
2.3 Fixed Term. The initial term of this Agreement (the "Fixed Term")
shall commence on the Commencement Date and shall expire December 31, 2018.
2.4 Extended Term. Provided that no Event of Default shall have
occurred and be continuing, the Term shall be automatically extended for three
(3) consecutive renewal terms of fifteen (15) years each (collectively, the
"Extended Terms"), unless Tenant shall give Landlord Notice, not later than
eighteen (18) months prior to the scheduled expiration of the then current Term
of this Agreement (Fixed or Extended, as the case may be), that Tenant elects
not so to extend the term of this Agreement.
Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it elects
not to extend the Term in accordance with this Section 2.4, Landlord may
terminate this Agreement at any time during the remainder of the then current
Term of this Agreement (Fixed or Extended, as the case may be), by giving Tenant
thirty (30) days Notice of Landlord's election to so terminate. If Landlord does
not so terminate and Tenant has given Notice that
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it elects not to extend the Term in accordance with this Section 2.4, then this
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement.
Otherwise, the extension of this Agreement shall be automatically effected
without the execution of any additional documents; it being understood and
agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.
ARTICLE 3
RENT
3.1 Rent. Tenant shall pay, in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
without offset, abatement, demand or deduction (unless otherwise expressly
provided in this Agreement), Minimum Rent and Additional Rent to Landlord and
Additional Charges to the party to whom such Additional Charges are payable,
during the Term. All payments to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord in
its sole discretion. Rent for any partial Accounting Period shall be prorated on
a per diem basis.
3.1.1 Minimum Rent.
(a) Payments. Minimum Rent shall be paid in advance on the
first Business Day of each Accounting Period; provided, however, that
the first payment of Minimum Rent shall be payable on the Commencement
Date (and, if applicable, such payment shall be prorated as provided in
the last sentence of the first paragraph of Section 3.1).
(b) Adjustments of Minimum Rent Following Disbursements Under
Sections 5.1.3(b), 10.2.3 and 11.2. Effective on the date of each
disbursement to pay for the cost of any repairs, maintenance,
renovations or replacements pursuant to Sections 5.1.3(b), 10.2.3 or
11.2, the annual Minimum Rent shall be increased by a per annum amount
equal to the Disbursement Rate times the amount so disbursed. If any
such disbursement is made during any month on a day other than the
first Business Day of an Accounting Period, Tenant shall pay to
Landlord on the first Business Day of the immediately following
Accounting
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Period (in addition to the amount of Minimum Rent payable with respect
to such Accounting Period, as adjusted pursuant to this paragraph (b))
the amount by which Minimum Rent for the preceding Accounting Period,
as adjusted for such disbursement on a per diem basis, exceeded the
amount of Minimum Rent paid by Tenant for such preceding Accounting
Period.
(c) Adjustments of Minimum Rent Following Partial Lease
Termination. If this Agreement shall terminate with respect to any
Property but less than all of the Leased Property, Minimum Rent shall
be reduced by the affected Property's allocable share of Minimum Rent
as set forth in Exhibit C.
3.1.2 Additional Rent.
(a) Amount. Tenant shall pay additional rent ("Additional
Rent") with respect to each Lease Year subsequent to the Base Year, in
an amount, not less than zero, equal to ten percent (10%) of Excess
Total Hotel Sales with respect to each Property.
(b) Accounting Period Installments. Installments of Additional
Rent for each Lease Year or portion thereof shall be calculated and
paid with respect to each Accounting Period in arrears on the first
Business Day of each Accounting Period, based on Total Hotel Sales for
the preceding year, together with an Officer's Certificate setting
forth the calculation of Additional Rent due and payable for such
Accounting Period.
(c) Reconciliation of Additional Rent. On or before April 30
of the calendar year immediately following the Base Year for any
Property, Tenant shall deliver to Landlord an Officer's Certificate
setting forth Total Hotel Sales for such Property for the Base Year,
together with an audit thereof by Ernst & Young, LLP or another firm of
independent certified public accountants proposed by Tenant and
approved by Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned). On or before April 30, of each year
thereafter, Tenant shall deliver to Landlord an Officer's Certificate
setting forth the Total Hotel Sales for such Property for the preceding
Lease Year and the Additional Rent payable with respect to such Lease
Year with respect to such Property, together
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with an audit thereof, by Ernst & Young, LLP or another firm of
independent certified public accountants proposed by Tenant and
approved by Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned).
If the annual Additional Rent for such preceding Lease Year as
shown in the Officer's Certificate exceeds the amount previously paid
with respect thereto by Tenant, Tenant shall pay such excess to
Landlord at such time as the Officer's Certificate is delivered,
together with interest at the Interest Rate, which interest shall
accrue from the close of such preceding Lease Year until the date that
such certificate is required to be delivered and, thereafter, such
interest shall accrue at the Overdue Rate, until the amount of such
difference shall be paid or otherwise discharged. If the annual
Additional Rent for such preceding Lease Year as shown in the Officer's
Certificate is less than the amount previously paid with respect
thereto by Tenant, provided that no Event of Default shall have
occurred and be continuing, Landlord shall grant Tenant a credit
against the Rent next coming due in the amount of such difference,
together with interest at the Interest Rate, which interest shall
accrue from the date of payment by Tenant until the date such credit is
applied or paid, as the case may be. If such credit cannot be made
because the Term has expired prior to application in full thereof,
provided no Event of Default has occurred and is continuing, Landlord
shall pay the unapplied balance of such credit to Tenant, together with
interest at the Interest Rate, which interest shall accrue from the
date of payment by Tenant until the date of payment by Landlord.
(d) Confirmation of Additional Rent. Tenant shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices and in accordance
with GAAP, which will accurately record all Total Hotel Sales and
Tenant shall retain, for at least three (3) years after the expiration
of each Lease Year, reasonably adequate records conforming to such
accounting system showing all Total Hotel Sales for such Lease Year.
Landlord, at its own expense, except as provided hereinbelow, shall
have the right, exercisable by Notice to Tenant within one (1) year
after receipt of the applicable Officer's Certificate, by its
accountants or
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representatives, to audit the information set forth in the Officer's
Certificate referred to in subparagraph (c) above and, in connection
with such audits, to examine Tenant's books and records with respect
thereto (including supporting data and sales and excise tax returns).
If any such audit discloses a deficiency in the payment of Additional
Rent and, either Tenant agrees with the result of such audit or the
matter is otherwise compromised with Landlord, Tenant shall forthwith
pay to Landlord the amount of the deficiency, as finally agreed or
determined, together with interest at the Interest Rate, from the date
such payment should have been made to the date of payment thereof. If
such deficiency, as agreed upon or compromised as aforesaid, is more
than five percent (5%) of Additional Rent paid by Tenant for such Lease
Year and, as a result, Landlord did not receive at least ninety-five
percent (95%) of the Additional Rent payable with respect to such Lease
Year, Tenant shall pay the reasonable cost of such audit and
examination. If any such audit discloses that Tenant paid more
Additional Rent for any Lease Year than was due hereunder, and either
Landlord agrees with the result of such audit or the matter is
otherwise determined, provided no Event of Default has occurred and is
continuing, Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at
the Interest Rate, which interest shall accrue from the time of payment
by Tenant until the date such credit is applied or paid, as the case
may be. If such a credit cannot be made because the Term has expired
before the credit can be applied in full, provided no Event of Default
has occurred and is continuing, Landlord shall pay the unapplied
balance of such credit to Tenant, together with interest at the
Interest Rate, which interest shall accrue from the date of payment by
Tenant until the date of payment from Landlord.
Any proprietary information obtained by Landlord with respect
to Tenant pursuant to the provisions of this Agreement shall be treated
as confidential, except that such information may be used, subject to
appropriate confidentiality safeguards, in any litigation between the
parties and except further that Landlord may disclose such information
to its prospective lenders, provided that Landlord shall direct and
obtain the agreement of such
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lenders to maintain such information as confidential. The obligations
of Tenant and Landlord contained in this Section 3.1.2 shall survive
the expiration or earlier termination of this Agreement.
3.1.3 Additional Charges. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay to the appropriate parties
and discharge as and when due and payable the following (collectively,
"Additional Charges"):
(a) Impositions. Subject to Article 8 relating to permitted
contests, Tenant shall pay, or cause to be paid, all Impositions before
any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early
payment) may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and shall promptly,
upon request, furnish to Landlord copies of official receipts or other
reasonably satisfactory proof evidencing such payments. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Tenant may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such
installments during the Term as the same become due and before any
fine, penalty, premium, further interest or cost may be added thereto.
Landlord, at its expense, shall, to the extent required or permitted by
Applicable Law, prepare and file all tax returns and pay all taxes due
in respect of Landlord's net income, gross receipts, sales and use,
single business, transaction privilege, rent, ad valorem, franchise
taxes and taxes on its capital stock, and Tenant, at its expense,
shall, to the extent required or permitted by Applicable Laws and
regulations, prepare and file all other tax returns and reports in
respect of any Imposition as may be required by Government Agencies.
Provided no Event of Default shall have occurred and be continuing, if
any refund shall be due from any taxing authority in respect of any
Imposition paid by Tenant, the same shall be paid over to or retained
by Tenant. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is
made with respect to the Leased Property as may be necessary to prepare
any required returns and reports. In
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the event Government Agencies classify any property covered by this
Agreement as personal property, Tenant shall file all personal property
tax returns in such jurisdictions where it may legally so file. Each
party shall, to the extent it possesses the same, provide the other,
upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns for
property covered by this Agreement, Landlord shall provide Tenant with
copies of assessment notices in sufficient time for Tenant to file a
protest. All Impositions assessed against such personal property shall
be (irrespective of whether Landlord or Tenant shall file the relevant
return) paid by Tenant not later than the last date on which the same
may be made without interest or penalty, subject to the provisions of
Article 8.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has
knowledge; provided, however, that Landlord's failure to give any such
notice shall in no way diminish Tenant's obligation hereunder to pay
such Impositions, unless such failure continues for more than ninety
(90) days after the date Landlord learned of such Imposition.
(b) Utility Charges. Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities
used in connection with the Leased Property.
(c) Insurance Premiums. Tenant shall pay or cause to be paid
all premiums for the insurance coverage required to be maintained
pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid all
other amounts, liabilities and obligations, including, without
limitation, ground rents, if any, and all amounts payable under any
equipment leases and all agreements to indemnify Landlord under
Sections 4.3.2 and 9.7.
(e) Reimbursement for Additional Charges. If Tenant pays or
causes to be paid property taxes or similar or other Additional Charges
attributable to periods after the
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end of the Term, whether upon expiration or sooner termination of this
Agreement (other than termination by reason of an Event of Default),
Tenant may, within a reasonable time after the end of the Term, provide
Notice to Landlord of its estimate of such amounts. Landlord shall
promptly reimburse Tenant for all payments of such taxes and other
similar Additional Charges that are attributable to any period after
the Term of this Agreement.
3.2 Late Payment of Rent, Etc. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Landlord) shall not be paid within ten (10) days
after its due date, Tenant shall pay Landlord, on demand, as Additional Charges,
a late charge (to the extent permitted by law) computed at the Overdue Rate on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that Tenant pays any Additional Charges
directly to Landlord or any Hotel Mortgagee pursuant to any requirement of this
Agreement, Tenant shall be relieved of its obligation to pay such Additional
Charges to the Entity to which they would otherwise be due. If any payments due
from Landlord to Tenant shall not be paid within ten (10) days after its due
date, Landlord shall pay to Tenant, on demand, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such installment
from the due date of such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which is added for non-payment or late payment
of such items. Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the case of non-payment of the Additional Charges as in the case of
non-payment of the Minimum Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord so that
this Agreement shall yield to Landlord the full amount of the installments or
amounts of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise, including those provisions for
adjustment or abatement of such Rent.
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3.4 No Termination, Abatement, Etc Except as otherwise specifically
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off against
the Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise affected by reason of (a) any damage to or destruction of the Leased
Property or any portion thereof from whatever cause or any Condemnation, (b) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any portion thereof, or the interference with such use by
any Person or by reason of eviction by paramount title; (c) any claim which
Tenant may have against Landlord by reason of any default (other than a monetary
default) or breach of any warranty by Landlord under this Agreement or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties; (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord; or (e) for any
other cause whether similar or dissimilar to any of the foregoing (other than a
monetary default by Landlord); provided, however, that the foregoing shall not
apply or be construed to restrict Tenant's rights in the event of any act or
omission by Landlord constituting negligence or willful misconduct. Except as
otherwise specifically provided in this Agreement, Tenant hereby waives all
rights arising from any occurrence whatsoever, which may now or hereafter be
conferred upon it by law (a) to modify, surrender or terminate this Agreement or
quit or surrender the Leased Property or any portion thereof, or (b) which would
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable or other obligations to be performed by Tenant hereunder.
The obligations of Tenant hereunder shall be separate and independent covenants
and agreements, and the Rent and all other sums payable by Tenant hereunder
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to the express provisions of this Agreement.
In any instance where, after the occurrence of an Event of Default, Landlord
retains funds which, but for the occurrence of such Event of Default, would be
payable to Tenant, Landlord shall refund such funds to
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Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
3.5 Retained Funds. Pursuant to the Purchase Documents, Landlord is
holding the Retained Funds as security for the faithful observance and
performance by Tenant of all the terms, covenants and conditions of this
Agreement by Tenant to be observed and performed. The Retained Funds shall not
be mortgaged, assigned, transferred or otherwise encumbered by Tenant or any of
its Affiliated Persons without the prior written consent of Landlord and any
such act on the part of Tenant or any of its Affiliated Persons without first
having obtained Landlord's consent shall be without force and effect and shall
not be binding upon Landlord.
If an Event of Default shall occur and be continuing, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have on
account thereof, appropriate and apply the entire Retained Funds or so much
thereof as may be necessary to compensate Landlord toward the payment of Rent or
other sums or loss or damage sustained by Landlord due to such breach on the
part of Tenant. It is understood and agreed that the Retained Funds are not to
be considered as prepaid rent, nor shall damages be limited to the amount of the
Retained Funds. Provided no Event of Default shall have occurred and be
continuing, any unapplied balance of the Retained Funds shall be paid to Tenant
or its Affiliated Persons at the end of the Term or, in the event of any early
termination of this Agreement with respect to any Property, such portion thereof
as is allocable to such Property (as reasonably determined by Landlord) upon
such termination. Landlord shall have no obligation to pay interest on the
Retained Funds and shall have the right to commingle the same with Landlord's
other funds. If Landlord conveys Landlord's interest under this Agreement, the
Retained Funds, or any part thereof not previously applied, shall be turned over
by Landlord to Landlord's grantee, and, if so turned over, Tenant shall look
solely to such grantee for proper application of the Retained Funds in
accordance with the terms of this Section 3.5 and the return thereof in
accordance herewith; provided, however, that Landlord shall not be released from
liability with respect to any Retained Funds so turned over unless such grantee
shall have a Net Worth equal to or greater than the lesser of (i) ten (10) times
the amount of such Retained Funds so turned over or (ii) One Hundred Million
Dollars ($100,000,000). If
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such grantee shall not satisfy the aforesaid Net Worth requirement, Landlord
shall, in a guaranty in form and substance reasonably satisfactory to Tenant,
guarantee payment of the amount of the Retained Funds so turned over in
accordance with this Agreement and the Purchase Documents. The holder of a
mortgage on the Leased Property shall not be responsible to Tenant for the
return or application of the Retained Funds, if it succeeds to the position of
Landlord hereunder, unless the Retained Funds shall have been received in hand
by such holder.
In the event of bankruptcy or other creditor-debtor proceedings against
Tenant, the Retained Funds shall be deemed to be applied first to the payment of
Rent and other charges due Landlord for all periods prior to the filing of such
proceedings.
ARTICLE 4
USE OF THE LEASED PROPERTY
4.1 Permitted Use.
4.1.1 Permitted Use. (a) Tenant shall, at all times during the
Term, subject to temporary periods for the repair of damage caused by casualty
or Condemnation, continuously use and operate each Property as an extended stay
hotel and any uses incidental thereto. Tenant shall not use or permit to be used
any Property or any portion thereof for any other use without the prior written
consent of Landlord, which approval shall not be unreasonably withheld, delayed
or conditioned. Tenant shall not change the brand of the Hotels without
Landlord's prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned, it being agreed that, on the Commencement
Date, the Hotels shall be operated under the "Candlewood Hotel" brand. No use
shall be made or permitted to be made of any Property and no acts shall be done
thereon which will cause the cancellation of any insurance policy covering such
Property or any part thereof that is required hereunder (unless another adequate
policy is available), nor shall Tenant sell or otherwise provide or permit to be
kept, used or sold in or about any Property any article which may be prohibited
by law or by the standard form of fire insurance policies, or any other
insurance policies required to be carried hereunder, or
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fire underwriter's regulations. Tenant shall, at its sole cost, comply with all
Insurance Requirements.
(b) In the event that, in the reasonable determination of
Tenant, it shall no longer be economically practical to operate any
Property as a Candlewood hotel, Tenant shall give Landlord Notice
thereof, which Notice shall set forth in reasonable detail the reasons
therefor. Thereafter, Landlord and Tenant shall negotiate in good faith
to agree on an alternative use for the Property or a replacement
property therefor (in which event the affected Property shall be
transferred to Tenant's designee), appropriate adjustments to the
Additional Rent and other related matters; provided, however, in no
such event shall the Minimum Rent be reduced or abated.
4.1.2 Necessary Approvals. Tenant shall proceed with all due
diligence and exercise reasonable efforts to obtain and maintain all approvals
necessary to use and operate, for its Permitted Use, each Property and the Hotel
located thereon under applicable law.
4.1.3 Lawful Use, Etc. Tenant shall not use or suffer or permit the
use of the Leased Property or Tenant's Personal Property, if any, for any
unlawful purpose. Tenant shall not, and shall direct the Manager not to, commit
or suffer to be committed any waste on any Property, or in any Hotel, nor shall
Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall
not, and shall direct the Manager not to, suffer nor permit the Leased Property,
or any portion thereof, to be used in such a manner as (i) may materially and
adversely impair Landlord's title thereto or to any portion thereof, or (ii) may
reasonably allow a claim or claims for adverse usage or adverse possession by
the public, as such, or of implied dedication of the Leased Property or any
portion thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc. Subject to the
provisions of Article 8 and Section 5.1.3(b), Tenant, at its sole expense, shall
(i) comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair, alteration and restoration
of the Leased Property and with the terms and conditions of any sublease
affecting the Leased Property, (ii) perform all obligations of the landlord
under any sublease affecting the Leased Property and (iii) procure, maintain and
comply with all material licenses, and other authorizations and agreements
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required for any use of the Leased Property and Tenant's Personal Property, if
any, then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.
4.3 Environmental Matters.
4.3.1 Restriction on Use, Etc. During the Term and any other time
that Tenant shall be in possession of the Leased Property, Tenant shall not
store, spill upon, dispose of or transfer to or from the Leased Property any
Hazardous Substance, except in compliance with all Applicable Laws. During the
Term and any other time that Tenant shall be in possession of the Leased
Property, Tenant shall maintain (and shall direct the Manager to maintain) the
Leased Property at all times free of any Hazardous Substance (except in
compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of
notice or knowledge and shall direct the Manager upon receipt of notice or
knowledge promptly to, notify Landlord in writing of any material change in the
nature or extent of Hazardous Substances at the Leased Property, (b) transmit to
Landlord a copy of any report which is required to be filed with respect to the
Leased Property pursuant to XXXX Title III or any other Applicable Law, (c)
transmit to Landlord copies of any citations, orders, notices or other
governmental communications received by Tenant or its agents or representatives
with respect thereto (collectively, "Environmental Notice"), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Applicable Law and/or presents a material risk of any
material cost, expense, loss or damage (an "Environmental Obligation"), (d),
subject to the provisions of Article 8, observe and comply with all Applicable
Laws relating to the use, maintenance and disposal of Hazardous Substances and
all orders or directives from any official, court or agency of competent
jurisdiction relating to the use or maintenance or requiring the removal,
treatment, containment or other disposition thereof, and (e) subject to the
provisions of Article 8, pay or otherwise dispose of any fine, charge or
Imposition related thereto.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's right to contest the same
in accordance with Article 8, Tenant shall take all actions and incur any and
all
expenses, as are required by any Government Agency and by Applicable Law, (i) to
clean up and remove from and about the Leased Property all Hazardous Substances
thereon, (ii) to contain and prevent any further release or threat of release of
Hazardous Substances on or about the Leased Property and (iii) to use good faith
efforts to eliminate any further release or threat of release of Hazardous
Substances on or about the Leased Property.
4.3.2 Indemnification of Landlord. Tenant shall protect, indemnify
and hold harmless Landlord and each Hotel Mortgagee, their trustees, officers,
agents, employees and beneficiaries, and any of their respective successors or
assigns with respect to this Agreement (collectively, the "Indemnitees" and,
individually, an "Indemnitee") for, from and against any and all debts, liens,
claims, causes of action, administrative orders or notices, costs, fines,
penalties or expenses (including, without limitation, reasonable attorney's fees
and expenses) imposed upon, incurred by or asserted against any Indemnitee
resulting from, either directly or indirectly, the presence during the Term (or
any other time Tenant shall be in possession of the Leased Property) in, upon or
under the soil or ground water of the Leased Property or any properties
surrounding the Leased Property of any Hazardous Substances in violation of any
Applicable Law, provided that any of the foregoing arises by reason of any
failure by Tenant or any Person claiming by, through or under Tenant to perform
or comply with any of the terms of this Section 4.3, except to the extent the
same arise from the acts or omissions of Landlord or any other Indemnitee or
during any period that Landlord or a Person designated by Landlord (other than
Tenant) is in possession of the Leased Property. Tenant's duty herein includes,
but is not limited to, costs associated with personal injury or property damage
claims as a result of the presence prior to the expiration or sooner termination
of the Term and the surrender of the Leased Property to Landlord in accordance
with the terms of this Agreement of Hazardous Substances in, upon or under the
soil or ground water of the Leased Property in violation of any Applicable Law.
Upon Notice from Landlord and any other of the Indemnitees, Tenant shall
undertake the defense, at Tenant's sole cost and expense, of any indemnification
duties set forth herein, in which event, Tenant shall not be liable for payment
of any duplicative attorneys' fees incurred by any Indemnitee.
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Tenant shall, upon demand, pay to Landlord, as an Additional Charge,
any cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) reasonably incurred by Landlord and arising from a failure of
Tenant to observe and perform the requirements of this Section 4.3, which
amounts shall bear interest from the date ten (10) Business Days after written
demand therefor is given to Tenant until paid by Tenant to Landlord at the
Overdue Rate.
4.3.3 Survival. The provisions of this Section 4.3 shall survive
the expiration or sooner termination of this Agreement.
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ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's General Obligations. Tenant shall, at its sole cost
and expense (except as expressly provided in Section 5.1.3(b)), keep the Leased
Property and all private roadways, sidewalks and curbs appurtenant thereto (and
Tenant's Personal Property) in good order and repair, reasonable wear and tear
excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of the Leased Property or
Tenant's Personal Property or any portion thereof), and shall promptly make all
necessary and appropriate repairs and replacements thereto of every kind and
nature, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the commencement of the Term (concealed or otherwise). All
repairs shall be made in a good, workmanlike manner, consistent with industry
standards for like hotels in like locales, in accordance with all applicable
federal, state and local statutes, ordinances, codes, rules and regulations
relating to any such work. Tenant shall not take or omit to take any action, the
taking or omission of which would materially and adversely impair the value or
the usefulness of the Leased Property or any material part thereof for its
Permitted Use. Tenant's obligations under this Section 5.1.1 shall be limited in
the event of any casualty or Condemnation as set forth in Sections 10.2 and 11.2
and also as set forth in Section 5.1.3(b) and Tenant's obligations with respect
to Hazardous Substances are as set forth in Section 4.3.
5.1.2 FF&E Reserve.
(a) Upon execution of this Agreement, Tenant has established a
reserve account (the "FF&E Reserve") in a bank designated by Tenant and
approved by Landlord. The purpose of the FF&E Reserve is to cover the
cost of:
(i) Replacements and renewals to any Hotel's furnishings, fixtures
and equipment;
(ii) Certain routine repairs and maintenance to any Hotel building
which are normally capitalized under GAAP
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such as exterior and interior repainting, resurfacing building
walls, floors, roofs and parking areas, and replacing folding
walls and the like; and
(iii) Major repairs, alterations, improvements, renewals or
replacements to any Hotel's buildings' structure, roof, or
exterior facade, or to its mechanical, electrical, heating,
ventilating, air conditioning, plumbing or vertical
transportation systems.
Tenant agrees that it will, from time to time, execute such
reasonable documentation as may be requested by Landlord and any Hotel
Mortgagee to assist Landlord and such Hotel Mortgagee in establishing
or perfecting the Hotel Mortgagee's security interest in Landlord's
residual interest in the funds which are in the FF&E Reserve; provided,
however, that no such documentation shall contain any amendment to or
modification of any of the provisions of this Agreement. It is
acknowledged and agreed that, during the Term, funds in the FF&E
Reserve are the property of Tenant.
(b) Throughout the Term, Tenant shall transfer (within ten
(10) Business Days after the end of each Accounting Period during the
Term) into the FF&E Reserve an amount equal to the Applicable
Percentage of Total Hotel Sales for such Accounting Period. Together
with the documentation provided to Landlord pursuant to Section
3.1.2(c), Tenant shall deliver to Landlord an Officer's Certificate
setting forth the total amount of deposits made to and expenditures
from the FF&E Reserve for the preceding Fiscal Year, together with a
reconciliation of such expenditures with the applicable FF&E Estimate.
(c) With respect to each Lease Year, Tenant shall prepare an
estimate (the "FF&E Estimate") of FF&E Reserve expenditures necessary
during the ensuing Fiscal Year, and shall submit such FF&E Estimate to
Landlord, on or before December 1 of the preceding Lease Year, for its
review and approval, which approval shall not be unreasonably withheld,
delayed or conditioned. In the event that Landlord shall fail to
respond within thirty (30) days after receipt of the FF&E Estimate,
such FF&E Estimate shall be deemed approved by Landlord. All
expenditures from the FF&E Reserve shall be (as to both the amount of
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each such expenditure and the timing thereof) both reasonable and
necessary, given the objective that the Hotels will be maintained and
operated to a standard comparable to competitive hotels. All amounts
from the FF&E Reserve shall be paid to Persons who are not Affiliated
Persons of Tenant without xxxx-up or allocated internal costs by Tenant
or its Affiliated Persons.
(d) Tenant shall, consistent with the FF&E Estimate approved
by Landlord, from time to time make expenditures from the FF&E Reserve
as it deems necessary provided that Tenant shall not materially deviate
from the FF&E Estimate approved by Landlord without the prior approval
of Landlord, which approval shall not be unreasonably withheld, delayed
or conditioned, except in the case of emergency where immediate action
is necessary to prevent imminent harm to person or property.
(e) Upon the expiration or sooner termination of this
Agreement, funds in the FF&E Reserve and all property purchased with
funds from the FF&E Reserve during the Term shall be paid, granted and
assigned to Landlord as Additional Charges.
(f) Notwithstanding anything to the contrary set forth in this
Agreement, no portion of the FF&E Reserve may be used for "punch-list"
or other initial construction items, the cost of which shall be the
sole responsibility of Tenant and its Affiliated Persons.
5.1.3 Landlord's Obligations.
(a) Except as otherwise expressly provided in this Agreement,
Landlord shall not, under any circumstances, be required to build or
rebuild any improvement on the Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto, or to maintain the Leased
Property in any way. Except as otherwise expressly provided in this
Agreement, Tenant hereby waives, to the maximum extent permitted by
law, the right to make repairs at the expense of Landlord pursuant to
any law in effect on the date hereof or hereafter enacted. Landlord
shall have the right
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to give, record and post, as appropriate, notices of nonresponsibility
under any mechanic's lien laws now or hereafter existing.
(b) If, at any time, funds in the FF&E Reserve shall be
insufficient for necessary and permitted expenditures thereof or,
pursuant to the terms of this Agreement, Tenant is required to make any
expenditures in connection with any repair, maintenance or renovation
with respect to the Leased Property and the amount of such
disbursements or expenditures exceeds the amount on deposit in the FF&E
Reserve or such repair, maintenance or renovation is not a permitted
expenditure from the FF&E Reserve as described in Section 5.1.2(a)(i),
(ii) and (iii), Tenant may, at its election, give Landlord Notice
thereof, which Notice shall set forth, in reasonable detail, the nature
of the required repair, renovation or replacement, the estimated cost
thereof and such other information with respect thereto as Landlord may
reasonably require. Provided that no Event of Default shall have
occurred and be continuing and Tenant shall otherwise comply with the
applicable provisions of Article 6, Landlord shall, within ten (10)
Business Days after such Notice, subject to and in accordance with the
applicable provisions of Article 6, disburse such required funds to
Tenant (or, if Tenant shall so elect, directly to any other Person
performing the required work) and, upon such disbursement, the Minimum
Rent shall be adjusted as provided in Section 3.1.1(b); provided,
however, that, in the event that Landlord shall elect not to disburse
any funds pursuant to this Section 5.1.3(b), Tenant's sole recourse
shall be to elect not to make the applicable repair, maintenance or
renovation, and such failure shall, except as otherwise provided in
Section 5.1.2(f), not be deemed a Default or Event of Default. Tenant
shall include a good faith projection of funds required pursuant to
this Section 5.1.3(b) in the FF&E Estimate.
5.1.4 Nonresponsibility of Landlord, Etc. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the Leased Property, or any part thereof, are hereby
charged with notice that liens on the Leased Property or on Landlord's interest
therein are expressly prohibited and that they must look solely to Tenant to
secure payment for any work done or material
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furnished by Tenant or for any other purpose during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any
way as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or materialmen
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the Leased Property or any part
thereof or as giving Tenant any right, power or authority to contract for or
permit the rendering of any services or the furnishing of any materials that
would give rise to the filing of any lien against the Leased Property or any
part thereof nor to subject Landlord's estate in the Leased Property or any part
thereof to liability under any mechanic's lien law of any State in any way, it
being expressly understood Landlord's estate shall not be subject to any such
liability.
5.2 Tenant's Personal Property. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary in
order to operate in compliance with applicable material Legal Requirements and
Insurance Requirements and otherwise in accordance with customary practice in
the industry for the Permitted Use, and all of such Tenant's Personal Property
shall, upon the expiration or earlier termination of this Agreement, become the
property of Landlord. If, from and after the Commencement Date, Tenant acquires
an interest in any item of tangible personal property (other than motor
vehicles) on, or in connection with, the Leased Property which belongs to anyone
other than Tenant, Tenant shall require the agreements permitting such use to
provide that Landlord or its designee may assume Tenant's rights and obligations
under such agreement upon the termination of this Agreement and the assumption
of management or operation of the Hotel by Landlord or its designee.
5.3 Yield Up. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in
substantially the same condition in which the Leased Property was in on the
Commencement Date, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Agreement, reasonable wear and
tear excepted (and casualty damage and Condemnation, in the event that this
Agreement is terminated following a casualty or Condemnation in accordance with
Article
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10 or Article 11 excepted), and except for repairs Tenant elects not to make
pursuant to Section 5.1.3(b).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good faith
efforts to transfer to and cooperate with Landlord or Landlord's nominee in
connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental Entities which may be
necessary for the use and operation of the Hotel as then operated. If requested
by Landlord, Tenant will direct the Manager to continue, or if there is no
Manager, Tenant shall continue to manage one or more of the Hotels after the
expiration of the Term and for up to one (1) year, on such reasonable terms
(which shall include a market rate management fee, customary royalty for
non-exclusive license to use the trademarks then being used at the Leased
Property and an agreement to reimburse the Manager or Tenant, as the case may
be, for its reasonable out-of-pocket costs and expenses, and reasonable
administrative costs), as Landlord shall reasonably request.
5.4 Management Agreement. Tenant shall not, without Landlord's prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned), enter into, or amend or modify the provisions of any Management
Agreement. Any Management Agreement shall be subordinate to this Agreement and
shall provide, inter alia, that all amounts due from Tenant to the Manager shall
be subordinate to all amounts due from Tenant to Landlord (provided that, as
long as no Event of Default has occurred and is continuing, Tenant may pay all
amounts due to a Manager pursuant to a Management Agreement) and for termination
thereof, at Landlord's option, upon the termination of this Agreement. Tenant
shall not take any action, grant any consent or permit any action under any
Management Agreement which might have a material adverse effect on Landlord,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, delayed or conditioned.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1 Improvements to the Leased Property. Tenant shall not make,
construct or install any Capital Additions (other than
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Capital Additions of the type described in Section 5.1.2(a)(ii) or 5.1.2(a)(iii)
and approved pursuant to Section 5.1.2(c)) without, in each instance, obtaining
Landlord's prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned provided that (a) construction or installation
of the same would not adversely affect or violate any material Legal Requirement
or Insurance Requirement applicable to the Leased Property and (b) Landlord
shall have received an Officer's Certificate certifying as to the satisfaction
of the conditions set out in clause (a) above; provided, however, that no such
consent shall be required in the event immediate action is required to prevent
imminent harm to person or property. Prior to commencing construction of any
Capital Addition, Tenant shall submit to Landlord, in writing, a proposal
setting forth, in reasonable detail, any such proposed improvement and shall
provide to Landlord such plans and specifications, and such permits, licenses,
contracts and such other information concerning the same as Landlord may
reasonably request. Landlord shall have thirty (30) days to review all materials
submitted to Landlord in connection with any such proposal. Failure of Landlord
to respond to Tenant's proposal within such 30-day period shall be deemed
approval thereof. Without limiting the generality of the foregoing, such
proposal shall indicate the approximate projected cost of constructing such
proposed improvement and the use or uses to which it will be put. No Capital
Addition shall be made which would tie in or connect any Leased Improvements
with any other improvements on property adjacent to the Leased Property (and not
part of the Land) including, without limitation, tie-ins of buildings or other
structures or utilities. Except as permitted herein, Tenant shall not finance
the cost of any construction of such improvement by the granting of a lien on or
security interest in the Leased Property or such improvement, or Tenant's
interest therein, without the prior written consent of Landlord, which consent
may be withheld by Landlord in Landlord's sole discretion. Any such improvements
shall, upon the expiration or sooner termination of this Agreement, remain or
pass to and become the property of Landlord, free and clear of all encumbrances
other than Permitted Encumbrances.
6.2 Salvage. All materials which are scrapped or removed in connection
with the making of either Capital Additions or non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
such work.
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ARTICLE 7
LIENS
7.1 Liens. Subject to Article 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) subleases permitted by Article 16,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet due and payable, or (ii) are
being contested in accordance with Article 8, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable or are for sums that are being contested in
accordance with Article 8, (g) any Hotel Mortgages or other liens which are the
responsibility of Landlord pursuant to the provisions of Article 20 and (h)
Landlord Liens and any other voluntary liens created by Landlord.
7.2 Landlord's Lien. In addition to any statutory landlord's lien and
in order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord, to the maximum extent permitted by Applicable Law, a security interest
in and an express contractual lien upon Tenant's Personal Property (except motor
vehicles and liquor licenses and permits), and Tenant's interest in all ledger
sheets, files, records, documents and instruments (including, without
limitation, computer programs, tapes and related electronic data processing)
relating to the operation of the Hotels (the "Records") and all proceeds
therefrom, subject to any Permitted Encumbrances; and such Tenant's Personal
Property shall not be removed from the Leased Property at any time when an Event
of Default has occurred and is continuing.
Upon Landlord's request, Tenant shall execute and deliver any financing
statements necessary to perfect the security interest of Landlord in Tenant's
Personal Property and the
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proceeds thereof in accordance with the provisions of the applicable laws of the
State. During the continuance of an Event of Default, Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims") as
to the Leased Property, by appropriate legal proceedings, conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving, modifying or extending Tenant's obligation to pay any
Claims as finally determined, (b) such contest shall not cause Landlord or
Tenant to be in default under any mortgage or deed of trust encumbering the
Leased Property (Landlord agreeing that any such mortgage or deed of trust shall
permit Tenant to exercise the rights granted pursuant to this Article 8) or any
interest therein or result in or reasonably be expected to result in a lien
attaching to the Leased Property (unless Tenant shall provide Landlord with a
bond or other assurance reasonably acceptable to Landlord with respect to any
such lien), (c) no part of the Leased Property nor any Rent therefrom shall be
in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant
shall indemnify and hold harmless Landlord from and against any cost, claim,
damage, penalty or reasonable expense, including reasonable attorneys' fees,
incurred by Landlord in connection therewith or as a result thereof. Landlord
agrees to join in any such proceedings if required legally to prosecute such
contest, provided that Landlord shall not thereby be subjected to any liability
therefor (including, without limitation, for the payment of any costs or
expenses in connection therewith) unless Tenant agrees by agreement in form and
substance reasonably satisfactory to Landlord, to assume and indemnify Landlord
with respect to the same. Tenant shall be entitled to any refund of any Claims
and such charges and penalties or interest thereon which have been paid by
Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed
by Tenant. If Tenant
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shall fail (x) to pay or cause to be paid any Claims when finally determined,
(y) to provide reasonable security therefor or (z) to prosecute or cause to be
prosecuted any such contest diligently and in good faith, Landlord may, upon
reasonable notice to Tenant (which notice shall not be required if Landlord
shall reasonably determine that the same is not practicable), pay such charges,
together with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements. Tenant shall, at all times during
the Term and at any other time Tenant shall be in possession of the Leased
Property, keep the Leased Property and all property located therein or thereon,
insured against the risks and in the amounts as follows and shall maintain, with
respect to each Property, the following insurance:
(a) "All-risk" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, earthquake,
explosion of steam boilers, pressure vessels or other similar
apparatus, now or hereafter installed in the Hotel located at such
Property, with the usual extended coverage endorsements, in an amount
equal to one hundred percent (100%) of the then full Replacement Cost
thereof (as defined in Section 9.2);
(b) Business interruption insurance covering risk of loss
during the lesser of the first twelve (12) months of reconstruction or
the actual reconstruction period necessitated by the occurrence of any
of the hazards described in subparagraph (a) above, in such amounts as
may be customary for comparable properties in the area and in an amount
sufficient to prevent Landlord or Tenant from becoming a co-insurer;
(c) Comprehensive general liability insurance, including
bodily injury and property damage in a form reasonably satisfactory to
Landlord (and including, without limitation, broad form contractual
liability, independent contractor's hazard and completed operations
coverage) in an amount not less than One Million Dollars ($1,000,000)
per occurrence, Two Million Dollars ($2,000,000) in the
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aggregate and umbrella coverage of all such claims in an amount not
less than Seventy-Five Million Dollars ($75,000,000);
(d) Flood (if such Property is located in whole or in part
within an area identified as an area having special flood hazards and
in which flood insurance has been made available under the National
Flood Insurance Act of 1968, as amended, or the Flood Disaster
Protection Act of 1973, as amended (or any successor acts thereto)) in
such amounts as may be customary for comparable properties in the area;
(e) Worker's compensation insurance coverage if required by
applicable law for all persons employed by Tenant on such Property with
statutory limits and otherwise with limits of and provisions in
accordance with the requirements of applicable local, State and federal
law, and employer's liability insurance as is customarily carried by
similar employers; and
(f) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Hotel Mortgagee and which is
customarily carried by comparable lodging properties in the area.
9.2 Replacement Cost. "Replacement Cost" as used herein, shall mean the
estimated replacement cost of the property, including estimated increases in
construction costs as determined annually by Landlord and Tenant, requiring
replacement from time to time, 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.
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9.3 Waiver of Subrogation. Landlord and Tenant agree that (insofar as
and to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in any State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a result
of this provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.
9.4 Form Satisfactory, Etc. All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for, nonassessable and
be issued by insurance carriers authorized to do business in the State, having a
general policy holder's rating of no less than A in Best's latest rating guide.
All such policies described in Sections 9.1(a) through (d) shall include no
deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) (with the
exception of insurance described in Section 9.1(a) providing coverage for
windstorm which may have a deductible not exceeding five percent (5%) of the
policy amount for such insurance or such lesser amount as may be usual and
customary in the insurance industry for like properties) and, with the exception
of the insurance described in Sections 9.1(e), shall name Landlord and any Hotel
Mortgagee as additional insureds, as their interests may appear. All loss
adjustments shall be payable as provided in Article 10, except that losses under
Sections 9.1(c) and (e) shall be payable directly to the party entitled thereto.
Tenant shall cause all insurance premiums to be paid and shall deliver policies
or certificates thereof to Landlord prior to their effective date (and, with
respect to any renewal policy, prior to the expiration of the existing policy).
All such policies shall provide Landlord (and any Hotel Mortgagee if required by
the same) thirty (30) days prior written notice of any material change or
cancellation of such policy. In the event Tenant shall fail to effect such
insurance as herein required, to pay the premiums therefor or to deliver such
policies or certificates to Landlord or any Hotel Mortgagee at the times
required, Landlord shall have the right, upon Notice to Tenant,
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but not the obligation, to acquire such insurance and pay the premiums therefor,
which amounts shall be payable to Landlord, upon demand, as Additional Charges,
together with interest accrued thereon at the Overdue Rate from the date such
payment is made until (but excluding) the date repaid.
9.5 Blanket Policy. Notwithstanding anything to the contrary contained
in this Article 9, Tenant's obligation to maintain the insurance herein required
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant, provided, that (a) the coverage
thereby afforded will not be reduced or diminished from that which would exist
under a separate policy meeting all other requirements of this Agreement, and
(b) the requirements of this Article 9 are otherwise satisfied. Without limiting
the foregoing, the amounts of insurance that are required to be maintained
pursuant to Section 9.1 shall be on a Hotel by Hotel basis, and shall not be
subject to an aggregate limit, except for flood, earthquake and umbrella
coverages.
9.6 No Separate Insurance. Tenant shall not take out separate
insurance, concurrent in form or contributing in the event of loss with that
required by this Article 9, or increase the amount of any existing insurance by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of such insurance, including
Landlord and all Hotel Mortgagees, are included therein as additional insureds
and the loss is payable under such insurance in the same manner as losses are
payable under this Agreement. In the event Tenant shall take out any such
separate insurance or increase any of the amounts of the then existing
insurance, Tenant shall give Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of the following,
except to the extent caused by Landlord's negligence on willful misconduct or a
Landlord Default: (a) any accident, injury to or death of persons or loss of or
damage to property occurring
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on or about the Leased Property or adjoining sidewalks or rights of way, (b) any
past, present or future use, misuse, non-use, condition, management, maintenance
or repair by Tenant or anyone claiming under Tenant of the Leased Property or
Tenant's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a party
or participant relating to the Leased Property or Tenant's Personal Property or
such use, misuse, non-use, condition, management, maintenance, or repair thereof
including, failure to perform obligations (other than Condemnation proceedings)
to which Landlord is made a party, (c) any Impositions that are the obligations
of Tenant to pay pursuant to the applicable provisions of this Agreement, and
(d) any failure on the part of Tenant or anyone claiming under Tenant to perform
or comply with any of the terms of this Agreement. Tenant, at its expense, shall
contest, resist and defend any such claim, action or proceeding asserted or
instituted against Landlord (and shall not be responsible for any duplicative
attorneys' fees incurred by Landlord) or may compromise or otherwise dispose of
the same, with Landlord's prior written consent (which consent may not be
unreasonably withheld, delayed or conditioned). The obligations of Tenant under
this Section 9.7 are in addition to the obligations set forth in Section 4.3 and
shall survive the termination of this Agreement.
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ARTICLE 10
CASUALTY
10.1 Insurance Proceeds. Except as provided in the last clause of this
sentence, all proceeds payable by reason of any loss or damage to any Property,
or any portion thereof, and insured under any policy of insurance required by
Article 9 (other than the proceeds of any business interruption insurance) shall
be paid directly to Landlord (subject to the provisions of Section 10.2) and all
loss adjustments with respect to losses payable to Landlord shall require the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned; provided, however, that, so long as no Event
of Default shall have occurred and be continuing, all such proceeds less than or
equal to Five Hundred Thousand Dollars ($500,000) shall be paid directly to
Tenant and such losses may be adjusted without Landlord's consent. If Tenant is
required to reconstruct or repair any Property as provided herein, such proceeds
shall be paid out by Landlord from time to time for the reasonable costs of
reconstruction or repair of such Property necessitated by such damage or
destruction, subject to and in accordance with the provisions of Section 10.2.4.
Provided no Default or Event of Default has occurred and is continuing, any
excess proceeds of insurance remaining after the completion of the restoration
shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are
applicable, the insurance proceeds shall be retained by the party entitled
thereto pursuant to Section 10.2.1.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property. If, during the Term,
any Property shall be totally or partially destroyed and the Hotel located
thereon is thereby rendered Unsuitable for Its Permitted Use, Tenant may, by the
giving of Notice thereof to Landlord, within ninety (90) days after the date of
casualty, terminate this Agreement with respect to such Property, in which
event, Landlord shall be entitled to retain the insurance proceeds payable on
account of such damage, except that Landlord shall pay to Tenant any net
proceeds in excess of the replacement cost of such Property reasonably allocable
to the value of Tenant's leasehold, Tenant's Personal Property and Capital
Additions paid for by Tenant.
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10.2.2 Partial Damage or Destruction. If, during the Term, any Property
shall be totally or partially destroyed but the Hotel is not rendered Unsuitable
for Its Permitted Use, Tenant shall promptly restore such Hotel as provided in
Section 10.2.4 unless this Agreement is terminated as to such Hotel as provided
in Section 10.2.3.
10.2.3 Insufficient Insurance Proceeds. If this Agreement is not
otherwise terminated pursuant to this Article 10 and the cost of the repair or
restoration of the applicable Property exceeds the amount of insurance proceeds
received by Landlord and Tenant pursuant to Section 9(a), (c), (d) or, if
applicable, (f), Tenant shall give Landlord Notice thereof which notice shall
set forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that, if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant, given within sixty
(60) days after Tenant's notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; provided, however, in such event, upon any disbursement by Landlord
thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement with respect to the affected Property by Notice to the other,
whereupon, this Agreement shall terminate and insurance proceeds shall be
distributed as provided in Section 10.2.1. It is expressly understood and
agreed, however, that, notwithstanding anything in this Agreement to the
contrary, Tenant shall be strictly liable and solely responsible for the amount
of any deductible and shall, upon any insurable loss, pay over the amount of
such deductible to Landlord at the time and in the manner herein provided for
payment of the applicable proceeds to Landlord.
10.2.4 Disbursement of Proceeds. In the event Tenant is required to
restore any Property pursuant to Section 10.2 and this Agreement is not
terminated as to such Property pursuant to this Article 10, Tenant shall
commence promptly and continue diligently to perform the repair and restoration
of
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such Property (hereinafter called the "Work"), so as to restore such Property in
material compliance with all Legal Requirements and so that such Property shall
be, to the extent practicable, substantially equivalent in value and general
utility to its general utility and value immediately prior to such damage or
destruction. Subject to the terms hereof, Landlord shall advance the insurance
proceeds and any additional amounts payable by Landlord pursuant to Section
10.2.3 or otherwise deposited with Landlord to Tenant regularly during the
repair and restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than monthly
within ten (10) Business Days after Tenant submits to Landlord a written
requisition and substantiation therefor on AIA Forms G702 and G703 (or on such
other form or forms as may be reasonably acceptable to Landlord). Landlord may,
at its option, condition advancement of such insurance proceeds and other
amounts on (i) the absence of any Event of Default, (ii) its approval of plans
and specifications of an architect satisfactory to Landlord (which approval
shall not be unreasonably withheld, delayed or conditioned), (iii) general
contractors' estimates, (iv) architect's certificates, (v) conditional lien
waivers of general contractors, if available, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is required,
(vii), if Tenant has elected to advance deficiency funds pursuant to Section
10.2.3, Tenant depositing the amount thereof with Landlord and (viii) such other
certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article
10 during the last two (2) years of the Term (including any automatic renewals
thereof) shall be subject to the release of such proceeds by any Hotel Mortgagee
to Landlord. If any Hotel Mortgagee shall be unwilling to disburse insurance
proceeds in accordance with the terms of this Agreement, Tenant shall have the
right, by the giving of Notice thereof to Landlord within ten (10) Business Days
after Tenant learns of such unwillingness, to treat such Property as rendered
Unsuitable for its Permitted Use for purposes of Section 10.2.1. Tenant's
obligation to restore the applicable Property pursuant to this Article 10 shall
be subject to the release of available insurance proceeds by the applicable
Hotel Mortgagee to Landlord or directly to Tenant.
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10.3 Damage Near End of Term. Notwithstanding any provisions of Section
10.1 or 10.2 to the contrary, if damage to or destruction of any Property occurs
during the last two (2) years of the Term (including any automatic Extended
Terms) and if such damage or destruction cannot reasonably be expected to be
fully repaired and restored prior to the date that is twelve (12) months prior
to the end of the Term, the provisions of Section 10.2.1 shall apply as if such
Property had been totally or partially destroyed and the Hotel thereon rendered
Unsuitable for its Permitted Use.
10.4 Tenant's Property. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's Personal Property shall be paid to Tenant
and, to the extent necessary to repair or replace Tenant's Personal Property in
accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay
the cost of repairing or replacing damaged Tenant's Personal Property.
10.5 Restoration of Tenant's Property. If Tenant is required to restore
any Property as hereinabove provided and this Agreement is not terminated as to
such Property pursuant to the terms of Article 10, Tenant shall either (a)
restore all alterations and improvements made by Tenant and Tenant's Personal
Property, or (b) replace such alterations and improvements and Tenant's Personal
Property with improvements or items of the same or better quality and utility in
the operation of such Property. If Tenant is not required to restore and does
not, in fact, restore, Tenant shall pay over to Landlord the amount, if any, of
insurance proceeds received by Tenant with respect to any of Tenant's Personal
Property which was purchased with funds from the FF&E Reserve.
10.6 No Abatement of Rent. Except as expressly provided herein, this
Agreement shall remain in full force and effect and Tenant's obligation to make
all payments of Rent and to pay all other charges as and when required under
this Agreement shall remain unabated during the Term notwithstanding any damage
involving the Leased Property (provided that Landlord shall credit against such
payments any amounts paid to Landlord as a consequence of such damage under any
business interruption insurance obtained by Tenant hereunder). The provisions of
this Article 10 shall be considered an express agreement governing any cause of
damage or destruction to the Leased Property and, to the maximum extent
permitted by law, no local or State statute, laws, rules, regulation or
ordinance in effect during
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the Term which provide for such a contingency shall have any application in such
case.
10.7 Waiver. Tenant hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of the Leased Property,
or any portion thereof.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc. If either (i) the whole of any Property
shall be taken by Condemnation or (ii) a Condemnation of less than the whole of
any Property renders any Property Unsuitable for Its Permitted Use, this
Agreement shall terminate with respect to such Property, Tenant and Landlord
shall seek the Award for their interests in the applicable Property as provided
in Section 11.6 and, as the effective date of taking, the Minimum Rent payable
hereunder shall be reduced by such Property's allocable share thereof as set
forth in Exhibit C.
11.2 Partial Condemnation. In the event of a Condemnation of less than
the whole of any Property such that such Property is still suitable for its
Permitted Use, Tenant shall commence promptly and continue diligently to restore
the untaken portion of the applicable Leased Improvements so that such Leased
Improvements shall constitute a complete architectural unit of the same general
character and condition (as nearly as may be possible under the circumstances)
as such Leased Improvements existing immediately prior to such Condemnation, in
material compliance with all Legal Requirements, subject to and unless this
Agreement is terminated pursuant to the provisions of this Section 11.2. If the
cost of the repair or restoration of the affected Property exceeds the amount of
the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant given within sixty
(60) days after Tenant's Notice of the deficiency, to elect to make available
for application to
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the cost of repair or restoration the amount of such deficiency; provided,
however, in such event, upon any disbursement by Landlord thereof, the Minimum
Rent shall be adjusted as provided in Section 3.1.1(b). In the event that
neither Landlord nor Tenant shall elect to make such deficiency available for
restoration, either Landlord or Tenant may terminate this Agreement with respect
to the affected Property and the entire Award shall be allocated as set forth in
Section 11.6.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any other amounts deposited with or payable by Landlord,
to Tenant regularly during the restoration period so as to permit payment for
the cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld,
delayed or conditioned), (iii) general contractors' estimates, (iv) architect's
certificates, (v) conditional lien waivers of general contractors, if available,
(vi) evidence of approval by all governmental authorities and other regulatory
bodies whose approval is required, (vii), if Tenant has elected to advance
deficiency funds pursuant to the preceding paragraph, Tenant depositing the
amount thereof with Landlord and (viii) such other certificates as Landlord may,
from time to time, reasonably require. Landlord's obligation under this Section
11.2 to disburse the Award and such other amounts shall be subject to (x) the
collection thereof by Landlord and (y) during the last two (2) years of the Term
(including any exercised renewals thereof), the release of such Award by the
applicable Hotel Mortgagee. If any Hotel Mortgagee shall be unwilling to
disburse Award proceeds in accordance with the terms of this Agreement, Tenant
shall have the right, by the giving of Notice thereof to Landlord within ten
(10) Business Days after Tenant learns of such unwillingness, to treat such
Property as rendered Unsuitable for its Permitted Use for purposes of Section
11.1. Tenant's obligation to restore the Leased Property shall be subject to the
release of the Award by the applicable Hotel Mortgagee to Landlord or directly
to Tenant.
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11.3 Abatement of Rent. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property, or any portion
thereof. The provisions of this Article 11 shall be considered an express
agreement governing any Condemnation involving the Leased Property and, to the
maximum extent permitted by law, no local or State statute, law, rule,
regulation or ordinance in effect during the Term which provides for such a
contingency shall have any application in such case.
11.4 Temporary Condemnation. In the event of any temporary Condemnation
of any Property or Tenant's interest therein, this Agreement shall continue in
full force and effect and Tenant shall continue to pay, in the manner and on the
terms herein specified, the full amount of the Rent. Tenant shall continue to
perform and observe all of the other terms and conditions of this Agreement on
the part of the Tenant to be performed and observed. Provided no Event of
Default has occurred and is continuing, the entire amount of any Award made for
such temporary Condemnation allocable to the Term, whether paid by way of
damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon
the termination of any such period of temporary Condemnation, at its sole cost
and expense, restore the Leased Property to the condition that existed
immediately prior to such Condemnation, in material compliance with all
applicable Legal Requirements, unless such period of temporary Condemnation
shall extend beyond the expiration of the Term, in which event Tenant shall not
be required to make such restoration.
11.5 Condemnation Near End of Term. Notwithstanding any provisions of
Sections 11.2 or 11.3 to the contrary, if Condemnation of any Property occurs
during the last two (2) years of the Term (including any automatic Extended
Terms) and if restoration cannot reasonably be expected to be completed prior to
the date that is twelve (12) months prior to the end of the Term, the provisions
of Section 11.1 shall apply as if such Property had been totally or partially
taken and the Hotel thereon rendered Unsuitable for its Permitted Use.
11.6 Allocation of Award. Except as provided in Section 11.4 and the
second sentence of this Section 11.6, the total Award shall be solely the
property of and payable to Landlord.
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Any portion of the Award made for the taking of Tenant's leasehold interest in
the Leased Property, loss of business during the remainder of the Term, the
taking of Tenant's Personal Property (other than any such property purchased
with the FF&E Reserve), the taking of Capital Additions paid for by Tenant and
Tenant's removal and relocation expenses shall be the sole property of and
payable to Tenant. In any Condemnation proceedings, Landlord and Tenant shall
each seek its own Award in conformity herewith, at its own expense.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) should Tenant fail to make any payment of the Rent or any
other sum (including, but not limited to, funding of the FF&E Reserve)
payable hereunder when due; or
(b) should Tenant fail to continuously use and operate any
Property as an extended stay hotel in accordance with the terms and
conditions of Article 4 for (i) thirty (30) or more consecutive days or
(ii) ninety (90) or more days in any twelve (12) month period; or
(c) should Tenant fail to maintain the insurance coverages
required under Article 9 and such failure shall continue for ten (10)
Business Days after Notice thereof (except that no Notice shall be
required if any such insurance coverages shall have lapsed); or
(d) should Tenant default in the due observance or performance
of any of the terms, covenants or agreements contained herein to be
performed or observed by it (other than as specified in clauses (a) and
(b) above) and such default shall continue for a period of thirty (30)
days after Notice thereof from Landlord to Tenant; provided, however,
that if such default is susceptible of cure but such cure cannot be
accomplished with due diligence within such period of time and if, in
addition, Tenant commences to cure or cause to be cured such default
within thirty (30) days after Notice thereof from Landlord and
thereafter prosecutes the curing of such default with all due
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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
(e) should any obligation of Tenant in respect of any
Indebtedness for money borrowed or for any material property or
services, or any guaranty relating thereto, be declared to be or become
due and payable prior to the stated maturity thereof, or should there
occur and be continuing with respect to any such Indebtedness any event
of default under any instrument or agreement evidencing or securing the
same, the effect of which is to permit the holder or holders of such
instrument or agreement or a trustee, agent or other representative on
behalf of such holder or holders, to cause such any such obligations to
become due prior to its stated maturity; or
(f) should an event of default by Candlewood or Tenant or any
Affiliated Person as to Candlewood or Tenant occur and be continuing
beyond the expiration of any applicable cure period under any of the
Incidental Documents or by the Candlewood Parties (as defined therein)
under the Purchase Documents, including, without limitation, an event
of default under Section 3.6 of the Guaranty; or
(g) should any material representation or warranty made by
Tenant or the Candlewood Parties (as defined in the Purchase Documents)
under or in connection with this Agreement or any Incidental Document
or the Purchase Documents, or in any document, certificate or agreement
delivered in connection herewith or therewith, prove to have been false
or misleading in any material respect on the date when made or deemed
made and the same shall continue for five (5) Business Days after
Notice thereof from Landlord; or
(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 Tenant a bankrupt
or insolvent, or seeking
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liquidation, reorganization, arrangement, adjustment or composition of
Tenant's debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or
other similar official for Tenant or for any substantial part of the
property of Tenant and such proceeding is not dismissed within one
hundred eighty (180) days after institution thereof; or
(j) should Tenant cause or institute any proceeding for its
dissolution or termination; or
(k) should the estate or interest of Tenant in the Leased
Property or any part thereof be levied upon or attached in any
proceeding and the same shall not be vacated or discharged within the
later of (x) ninety (90) 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) two hundred seventy (270) days after receipt by
Tenant of Notice thereof from Landlord (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with
Article 8); or
(l) should Tenant at any time cease to be a wholly owned,
direct or indirect, Subsidiary of Candlewood; or
(m) should there occur any Change in Control, except as
otherwise permitted by Article 16;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to any or all of the
Leased Property by giving Notice thereof to Tenant and upon the expiration of
the time, if any, fixed in such Notice, this Agreement shall terminate with
respect to all or the designated portion of the Leased Property and all rights
of Tenant under this Agreement with respect thereto shall cease. Landlord shall
have and may exercise all rights and remedies available at law and in equity to
Landlord as a result of Tenant's breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition
to any other remedies provided herein, enter upon the Leased Property or any
portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the
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Records, without liability for trespass or conversion (Tenant hereby waiving any
right to notice or hearing prior to such taking of possession by Landlord) and
sell the same at public or private sale, after giving Tenant reasonable Notice
of the time and place of any public or private sale, at which sale Landlord or
its assigns may purchase all or any portion of Tenant's Personal Property, if
any, unless otherwise prohibited by law. Unless otherwise provided by law and
without intending to exclude any other manner of giving Tenant reasonable
notice, the requirement of reasonable Notice shall be met if such Notice is
given at least ten (10) days before the date of sale. The proceeds from any such
disposition, less all expenses incurred in connection with the taking of
possession, holding and selling of such property (including, reasonable
attorneys' fees) shall be applied as a credit against the indebtedness which is
secured by the security interest granted in Section 7.2. Any surplus shall be
paid to Tenant or as otherwise required by law and Tenant shall pay any
deficiency to Landlord, as Additional Charges, upon demand.
12.2 Remedies. None of (a) the termination of this Agreement pursuant
to Section 12.1, (b) the repossession of the Leased Property or any portion
thereof, (c) the failure of Landlord to re-let the Leased Property or any
portion thereof, nor (d) the reletting of all or any of portion of the Leased
Property, shall relieve Tenant of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or re-letting. In the
event of any such termination, Tenant shall forthwith pay to Landlord all Rent
due and payable with respect to the Leased Property through and including the
date of such termination. Thereafter, Tenant, until the end of what would have
been the Term of this Agreement in the absence of such termination, and whether
or not the Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent (Additional Rent to be reasonably calculated by Landlord based on
historical Total Hotel Sales) and other charges which would be payable hereunder
for the remainder of the Term had such termination not occurred, less the net
proceeds, if any, of any re-letting of the Leased Property, after deducting all
reasonable expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, advertising, expenses of employees, alteration costs and
expenses of preparation for such reletting. Tenant
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shall pay such current damages to Landlord monthly on the days on which the
Minimum Rent would have been payable hereunder if this Agreement had not been so
terminated with respect to such of the Leased Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the present value (discounted at the Interest Rate) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding twelve
calendar months, or if less than twelve calendar months have expired since the
Commencement Date, the payments required for such lesser period projected to an
annual amount) for what would be the then unexpired term of this Agreement if
the same remained in effect, over the fair market rental for the same period.
Nothing contained in this Agreement shall, however, limit or prejudice the right
of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet the Leased Property
or any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms which may at Landlord's option, be equal to, less than or exceed
the period which would otherwise have constituted the balance of the Term and
may grant concessions or free rent to the extent that Landlord considers
advisable and necessary to relet the same, and (b) may make such reasonable
alterations, repairs and decorations in the Leased Property or any portion
thereof as Landlord, in its sole and absolute discretion, considers advisable
and necessary for the purpose of reletting the Leased Property; and the making
of such alterations, repairs and decorations shall not operate or be construed
to release Tenant from liability hereunder as aforesaid. Subject to the last
sentence of this paragraph and as long as Landlord uses
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reasonable efforts to mitigate its damages as provided in such sentence,
Landlord shall in no event be liable in any way whatsoever for any failure to
relet all or any portion of the Leased Property, or, in the event that the
Leased Property is relet, for failure to collect the rent under such reletting.
To the maximum extent permitted by law, Tenant hereby expressly waives any and
all rights of redemption granted under any present or future laws in the event
of Tenant being evicted or dispossessed, or in the event of Landlord obtaining
possession of the Leased Property, by reason of the occurrence and continuation
of an Event of Default hereunder. Landlord covenants and agrees, in the event of
any termination of this Agreement as a result of an Event of Default, to use
reasonable efforts to mitigate its damages.
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO
SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT
TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES
SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN
FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 Application of Funds. Any payments received by Landlord under any
of the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
due obligations under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State. Any balance shall be paid to
Tenant.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Leased Property or any
portion thereof for such purpose and take all such action thereon as, in
Landlord's sole and absolute discretion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
costs and expenses (including, without limitation, reasonable
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attorneys' fees) incurred by Landlord in connection therewith, together with
interest thereon (to the extent permitted by law) at the Overdue Rate from the
date such sums are paid by Landlord until repaid, shall be paid by Tenant to
Landlord, on demand.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination
of this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to two (2) times the Minimum Rent and other charges herein provided
(prorated on a daily basis). Tenant shall also pay to Landlord all damages
(direct or indirect) sustained by reason of any such holding over. Otherwise,
such holding over shall be on the terms and conditions set forth in this
Agreement, to the extent applicable. Nothing contained herein shall constitute
the consent, express or implied, of Landlord to the holding over of Tenant after
the expiration or earlier termination of this Agreement.
ARTICLE 14
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
14.1 Landlord Notice Obligation. Notwithstanding anything to the
contrary contained herein, Landlord shall give prompt Notice to Tenant of any
matters affecting the Leased Property of which Landlord receives written notice
or actual knowledge and, to the extent Tenant otherwise has no notice or actual
knowledge thereof, Landlord shall be liable for any liabilities arising from the
failure to deliver such Notice to Tenant.
14.2 Landlord's Default. If Landlord shall default in the performance
or observance of any of its covenants or obligations set forth in this Agreement
or any obligation of Landlord, if any, under any agreement affecting the Leased
Property, the performance of which is not Tenant's obligation pursuant to this
Agreement, and any such default shall continue for a period of five (5) Business
Days after Notice thereof with respect to monetary defaults and twenty (20)
Business Days after Notice thereof with respect to non-monetary defaults from
Tenant to Landlord and any applicable Hotel Mortgagee, or such additional period
as may be reasonably required to correct the same, provided Landlord is
proceeding with due diligence to correct
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the same, Tenant may declare the occurrence of a "Landlord Default" by a second
Notice to Landlord and to such Hotel Mortgagee. Thereafter, Tenant may forthwith
cure the same and, subject to the provisions of the following paragraph, invoice
Landlord for costs and expenses (including reasonable attorneys' fees and court
costs) incurred by Tenant in curing the same, together with interest thereon (to
the extent permitted by law) from the date Landlord receives Tenant's invoice
until paid, at the Overdue Rate, and/or offset such amounts against Additional
Rent due and payable hereunder; provided, however, that, from and after the
bankruptcy of Landlord, Tenant may offset such amounts against Minimum Rent
and/or Additional Rent payable hereunder. Tenant shall have no right to
terminate this Agreement for any default by Landlord hereunder and no right, for
any such default, to offset or counterclaim against any Rent or other charges
due hereunder, as set forth in the preceding sentence.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof; provided, however, that in the event of any such adverse determination,
Landlord shall pay to Tenant interest on any disputed funds at the Interest
Rate, from the date demand for such funds was made by Tenant until the date of
final adverse determination and, thereafter, at the Overdue Rate until paid. If
Tenant and Landlord shall fail, in good faith, to resolve any such dispute
within ten (10) days after Landlord's Notice of dispute, either may submit the
matter for resolution to a court of competent jurisdiction.
14.3 Indemnification of Tenant. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Landlord shall protect, indemnify and hold harmless Tenant for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Tenant by reason of the following,
except to the extent caused by Tenant's negligence, willful misconduct or
Default: (a) any Impositions that are the obligations of
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Landlord to pay pursuant to the applicable provisions of this Agreement, and (b)
any failure on the part of Landlord or anyone claiming under Landlord to perform
or comply with any of the terms of this Agreement. Landlord, at its expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against Tenant (and shall not be responsible for any duplicative
attorneys' fees incurred by Tenant) or may compromise or otherwise dispose of
the same, with Tenant's prior written consent (which consent may not be
unreasonably withheld, delayed or conditioned). The obligations of Landlord
under this Section 14.3 shall survive termination of this Agreement.
ARTICLE 15
PURCHASE RIGHTS
Landlord shall have the option to purchase Tenant's Personal Property,
at the expiration or termination of this Agreement, for an amount equal to the
then net market value thereof (current replacement cost as determined by
agreement of the parties or, in the absence of such agreement, appraisal),
subject to, and with appropriate price adjustments for, all equipment leases,
conditional sale contracts, UCC-1 financing statements and other encumbrances to
which such Personal Property is subject (except that any such property purchased
with the FF&E Reserve shall be transferred to Landlord as provided in Section
5.1.2(e)). Upon the expiration or sooner termination of this Agreement, Tenant
shall use its reasonable efforts to transfer and assign to Landlord or its
designee, or assist Landlord or its designee in obtaining, any contracts,
licenses, and certificates required for the then operation of the Leased
Property.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment. Except as provided in Section 16.3,
Tenant shall not, without Landlord's prior written consent (which consent may be
given or withheld in Landlord's sole and absolute discretion), assign, mortgage,
pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease
(which term shall be deemed to include the granting of concessions, licenses and
the like but shall not be deemed to include the lodging of hotel guests
consistent with the
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Permitted Use), all or any part of the Leased Property or suffer or permit this
Agreement or the leasehold estate created hereby or any other rights arising
under this Agreement to be assigned, transferred, mortgaged, pledged,
hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law, or permit the use or operation of the
Leased Property by anyone other than Tenant, or the Leased Property to be
offered or advertised for assignment or subletting; provided, however, that an
assignment to a wholly owned subsidiary (direct or indirect) of Candlewood shall
be permitted without the consent of, but upon Notice to, Landlord. For purposes
of this Section 16.1, an assignment of this Agreement shall be deemed to
include, without limitation, any direct or indirect Change in Control of Tenant
or Candlewood.
If this Agreement is assigned or if the Leased Property or any part
thereof are sublet (or occupied by anybody other than Tenant and their
respective employees or hotel guests) Landlord may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net amount
collected to the Rent herein reserved, but no such collection shall be deemed a
waiver of the provisions set forth in the first paragraph of this Section 16.1,
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
Tenant of its covenants, agreements or obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations hereunder),
and no consent to any subletting or assignment in a particular instance shall be
deemed to be a waiver of the prohibition set forth in this Section 16.1. No
assignment, subletting or occupancy shall affect any Permitted Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in contravention of this Section 16.1 shall be voidable at Landlord's
option.
16.2 Required Sublease Provisions. Any sublease of all or any portion
of the Leased Property entered into on or after the date hereof shall provide
(a) that it is subject and subordinate to this Agreement and to the matters to
which this Agreement is or shall be subject or subordinate; (b) that in the
event of termination of this Agreement or reentry or dispossession of
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Tenant by Landlord under this Agreement, Landlord may, at its option, terminate
such sublease or take over all of the right, title and interest of Tenant, as
sublessor under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor any Hotel Mortgagee, as holder of a mortgage or
as Landlord under this Agreement, if such mortgagee succeeds to that position,
shall (i) be liable for any act or omission of Tenant under such sublease, (ii)
be subject to any credit, counterclaim, offset or defense which theretofore
accrued to such subtenant against Tenant, (iii) be bound by any previous
modification of such sublease not consented to in writing by Landlord or by any
previous prepayment of more than one (1) month's rent, (iv) be bound by any
covenant of Tenant to undertake or complete any construction of the Leased
Property or any portion thereof, (v) be required to account for any Retained
Funds of the subtenant other than any Retained Funds actually delivered to
Landlord by Tenant, (vi) be bound by any obligation to make any payment to such
subtenant or grant any credits, except for services, repairs, maintenance and
restoration provided for under the sublease that are performed after the date of
such attornment, (vii) be responsible for any monies owing by Tenant to the
credit of such subtenant unless actually delivered to Landlord by Tenant, or
(viii) be required to remove any Person occupying any portion of the Leased
Property; and (c), in the event that such subtenant receives a written Notice
from Landlord or any Hotel Mortgagee stating that an Event of Default has
occurred and is continuing, such subtenant shall thereafter be obligated to pay
all rentals accruing under such sublease directly to the party giving such
Notice or as such party may direct. All rentals received from such subtenant by
Landlord or the Hotel Mortgagee, as the case may be, shall be credited against
the amounts owing by Tenant under this Agreement and such sublease shall provide
that the subtenant thereunder shall, at the request of Landlord, execute a
suitable instrument in confirmation of such agreement to attorn. An original
counterpart of each such sublease and assignment and assumption, duly executed
by Tenant and such subtenant or assignee, as the case may be, in form and
substance reasonably satisfactory to Landlord, shall be delivered promptly to
Landlord and (a) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Agreement on the
part of Tenant to be kept and performed and shall be, and become, jointly and
severally liable with Tenant for the performance thereof and (b) in case of
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either an assignment or subletting, Tenant shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Sublease Notwithstanding the foregoing, including,
without limitation, Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or limitations set forth herein, Tenant may, in
each instance after Notice to Landlord, sublease space at any Property for
newsstand, car rental agency, business services office, gift shop, parking
garage, health club, restaurant, bar or commissary purposes or other concessions
in furtherance of the Permitted Use, so long as such subleases do not demise, in
the aggregate, in excess of two thousand (2,000) square feet per Property or, in
the case of a restaurant or bar, four thousand (4,000) square feet per Property,
will not violate or affect any Legal Requirement or Insurance Requirement, and
Tenant shall provide such additional insurance coverage applicable to the
activities to be conducted in such subleased space as Landlord and any Hotel
Mortgagee may reasonably require.
16.4 Sublease Limitation. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a real estate investment trust,
anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by any sublessee thereunder would be based, in whole or in part, on the net
income or profits derived by the business activities of such sublessee, any
other formula such that any portion of such sublease rental would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto or would otherwise
disqualify Landlord for treatment as a real estate investment trust.
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ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates. At any time and from time to time, but not
more than a reasonable amount of times per year, upon not less than ten (10)
Business Days prior Notice by either party, the party receiving such Notice
shall furnish to the other an Officer's Certificate certifying that this
Agreement is unmodified and in full force and effect (or that this Agreement is
in full force and effect as modified and setting forth the modifications), the
date to which the Rent has been paid, that no Default or an Event of Default has
occurred and is continuing or, if a Default or an Event of Default shall exist,
specifying in reasonable detail the nature thereof, and the steps being taken to
remedy the same, and such additional information as the requesting party may
reasonably request. Any such certificate furnished pursuant to this Section 17.1
may be relied upon by the requesting party, its lenders and any prospective
purchaser or mortgagee of the Leased Property or the leasehold estate created
hereby.
17.2 Financial Statements. Tenant shall furnish or cause Candlewood to
furnish, as applicable, the following statements to Landlord:
(a) within forty-five (45) days after each of the first three
fiscal quarters of any Fiscal Year, the most recent Consolidated
Financials, accompanied by the Financial Officer's Certificate;
(b) within ninety (90) days after the end of each Fiscal Year,
the most recent Consolidated Financials and financials of Tenant for
such year, certified by an independent certified public accountant
reasonably satisfactory to Landlord and accompanied by a Financial
Officer's Certificate;
(c) within forty-five (45) days after the end of each month,
an unaudited operating statement and statement of capital expenditures
prepared on a Hotel by Hotel basis and a combined basis, including
occupancy percentages and average rate, accompanied by a Financial
Officer's Certificate;
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(d) at any time and from time to time upon not less than
twenty (20) days Notice from Landlord or such additional period as may
be reasonable under the circumstances, any Consolidated Financials,
Tenant financials or any other audited or unaudited financial reporting
information required to be filed by Landlord with any securities and
exchange commission, the SEC or any successor agency, or any other
governmental authority, or required pursuant to any order issued by any
court, governmental authority or arbitrator in any litigation to which
Landlord is a party, for purposes of compliance therewith; provided,
however, that, except as to calculations pertaining to Total Hotel
Sales, Tenant shall not be required to provide audited financials with
respect to individual Hotels unless Landlord shall agree to pay for the
cost thereof; and
(e) promptly, upon Notice from Landlord, such other
information concerning the business, financial condition and affairs of
Tenant and Candlewood as Landlord reasonably may request from time to
time.
Landlord may at any time, and from time to time, provide any Hotel
Mortgagee with copies of any of the foregoing statements, subject to Landlord
obtaining the agreement of such Hotel Mortgagee to maintain such statements and
the information therein as confidential.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to
inspect the Leased Property during usual business hours upon not less than
forty-eight (48) hours' notice and to make such repairs as Landlord is permitted
or required to make pursuant to the terms of this Agreement, provided that any
inspection or repair by Landlord or its representatives will not unreasonably
interfere with Tenant's use and operation of the Leased Property and further
provided that in the event of an emergency, as determined by Landlord in its
reasonable discretion, prior Notice shall not be necessary.
ARTICLE 19
EASEMENTS
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19.1 Grant of Easements. Provided no Event of Default has occurred and
is continuing, Landlord will join in granting and, if necessary, modifying or
abandoning such rights-of-way, easements and other interests as may be
reasonably requested by Tenant for ingress and egress, and electric, telephone,
gas, water, sewer and other utilities so long as:
(a) the instrument creating, modifying or abandoning any such
easement, right-of-way or other interest is satisfactory to and
approved by Landlord (which approval shall not be unreasonably
withheld, delayed or conditioned); and
(b) Landlord receives an Officer's Certificate from Tenant
stating (i) that such grant, modification or abandonment is not
detrimental to the proper conduct of business on such Property, (ii)
the consideration, if any, being paid for such grant, modification or
abandonment (which consideration shall be paid by Tenant), (iii) that
such grant, modification or abandonment does not impair the use or
value of such Property for the Permitted Use, and (iv) that, for as
long as this Agreement shall be in effect, Tenant will perform all
obligations, if any, of Landlord under any such instrument.
19.2 Exercise of Rights by Tenant. So long as no Event of Default has
occurred and is continuing, Tenant shall have the right to exercise all rights
of Landlord under the Easement Agreements and, in connection therewith, Landlord
shall execute and promptly return to Tenant such documents as Tenant shall
reasonably request. Tenant shall perform all obligations of Landlord under the
Easement Agreements.
19.3 Permitted Encumbrances. Any agreements entered into in accordance
with Section 19.1 shall be deemed a Permitted Encumbrance.
ARTICLE 20
HOTEL MORTGAGES
20.1 Landlord May Grant Liens. Without the consent of Tenant, Landlord
may, subject to the terms and conditions set forth in this Section 20.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon
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the Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. Notwithstanding
anything to the contrary set forth in Section 20.2, any such Encumbrance shall
include the right to prepay (whether or not subject to a prepayment penalty) and
shall provide (subject to Section 20.2) that it is subject to the rights of
Tenant under this Agreement.
20.2 Subordination of Lease. Subject to Section 20.1 and this Section
20.2, this Agreement and any and all rights of Tenant hereunder, are and shall
be subject and subordinate to any ground or master lease, and all renewals,
extensions, modifications and replacements thereof, and to all mortgages and
deeds of trust, which may now or hereafter affect the Leased Property or any
improvements thereon and/or any of such leases, whether or not such mortgages or
deeds of trust shall also cover other lands and/or buildings and/or leases, to
each and every advance made or hereafter to be made under such mortgages and
deeds of trust, and to all renewals, modifications, replacements and extensions
of such leases and such mortgages and deeds of trust and all consolidations of
such mortgages and deeds of trust. This section shall be self-operative and no
further instrument of subordination shall be required provided that Tenant has
received a nondisturbance and attornment agreement from each Superior Mortgagee
(as defined below), consistent with the provisions of this Section 20.2 and
otherwise in form and substance reasonably satisfactory to Tenant. In
confirmation of such subordination, Tenant shall promptly execute, acknowledge
and deliver any instrument that Landlord, the lessor under any such lease or the
holder of any such mortgage or the trustee or beneficiary of any deed of trust
or any of their respective successors in interest may reasonably request to
evidence such subordination. Any lease to which this Agreement is, at the time
referred to, subject and subordinate is herein called "Superior Lease" and the
lessor of a Superior Lease or its successor in interest at the time referred to
is herein called "Superior Landlord" and any mortgage or deed of trust to which
this Agreement is, at the time referred to, subject and subordinate is herein
called "Superior Mortgage" and the holder, trustee or beneficiary of a Superior
Mortgage is herein called "Superior Mortgagee".
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this
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Agreement (any such person, "Successor Landlord"), whether through possession or
foreclosure action or delivery of a new lease or deed, or otherwise, such
Successor Landlord shall recognize Tenant's rights under this Agreement as
herein provided and Tenant shall attorn to and recognize the Successor Landlord
as Tenant's landlord under this Agreement and Tenant shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment (provided that such instrument does not alter the terms
of this Agreement), whereupon, this Agreement shall continue in full force and
effect as a direct lease between the Successor Landlord and Tenant upon all of
the terms, conditions and covenants as are set forth in this Agreement, except
that the Successor Landlord (unless formerly the landlord under this Agreement
or its nominee or designee) shall not be (a) liable in any way to Tenant for any
act or omission, neglect or default on the part of any prior Landlord under this
Agreement, (b) responsible for any monies owing by or on deposit with any prior
Landlord to the credit of Tenant (except to the extent actually paid or
delivered to the Successor Landlord), (c) subject to any counterclaim or setoff
which theretofore accrued to Tenant against any prior Landlord, (d) bound by any
modification of this Agreement subsequent to such Superior Lease or Mortgage, or
by any previous prepayment of Rent for more than one (1) month in advance of the
date due hereunder, which was not approved in writing by the Superior Landlord
or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor
Landlord's interest in the Leased Property and the rents, income, receipts,
revenues, issues and profits issuing from the Leased Property, (f) responsible
for the performance of any work to be done by the Landlord under this Agreement
to render the Leased Property ready for occupancy by Tenant, or (g) required to
remove any Person occupying the Leased Property or any part thereof, except if
such person claims by, through or under the Successor Landlord. Tenant agrees at
any time and from time to time to execute a suitable instrument in confirmation
of Tenant's agreement to attorn, as aforesaid and Landlord agrees to provide
Tenant with an instrument of nondisturbance and attornment from each such
Superior Mortgagee and Superior Landlord in form and substance reasonably
satisfactory to Tenant. Nothing contained in this Section 20.2 shall relieve
Landlord from any liability to Tenant under this Agreement following the
exercise of remedies by a Superior Mortgagee.
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20.3 Notice to Mortgagee and Superior Landlord. Subsequent to the
receipt by Tenant of Notice from Landlord as to the identity of any Hotel
Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee,
which includes the Leased Property as part of the demised premises and which
complies with Section 20.1 and 20.2 (which Notice shall be accompanied by a copy
of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a
default by Landlord under this Agreement shall be effective with respect to a
Hotel Mortgagee or Superior Landlord unless and until a copy of the same is
given to such Hotel Mortgagee or Superior Landlord at the address set forth in
the above described Notice, and the curing of any of Landlord's defaults within
the applicable notice and cure periods set forth in Section 14.2 by such Hotel
Mortgagee or Superior Landlord shall be treated as performance by Landlord.
ARTICLE 21
ADDITIONAL COVENANTS OF TENANT
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause to
be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor and
rents with respect to the Leased Property, (c) pay or cause to be paid when due
all trade payables and (d) pay or cause to be paid when due all other of
Tenant's Indebtedness upon which it is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with Article 8
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
21.2 Conduct of Business. Tenant shall not engage in any business other
than the leasing and operation of the Leased Property (including any incidental
or ancillary business relating thereto) and shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect and in
good standing its corporate existence and its rights and licenses necessary to
conduct such business.
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21.3 Maintenance of Accounts and Records. Tenant shall keep true
records and books of account of Tenant in which full, true and correct entries
will be made of dealings and transactions in relation to the business and
affairs of Tenant in accordance with GAAP. Tenant shall apply accounting
principles in the preparation of the financial statements of Tenant which, in
the judgment of and the opinion of its independent public accountants, are in
accordance with GAAP, where applicable, except for changes approved by such
independent public accountants. Tenant shall provide to Landlord either in a
footnote to the financial statements delivered under Section 17.2 which relate
to the period in which such change occurs, or in separate schedules to such
financial statements, information sufficient to show the effect of any such
changes on such financial statements.
21.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential liability equal to or greater than 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 Notice of Discontinuance of Operation. Tenant shall give immediate
Notice to Landlord if Tenant shall fail to continuously use and operate any
Property as an extended stay hotel in accordance with the terms and conditions
of Article 4 and such failure shall continue (i) for fifteen (15) consecutive
days or (ii) for sixty (60) days in any twelve (12) month period.
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21.6 Indebtedness of Tenant. Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or indirectly
upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in
accordance with the provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal period
and in respect of which execution thereof shall have been stayed
pending such appeal or review, or (ii) which are fully covered by
insurance payable to Tenant, or (iii) which are for an amount not in
excess of $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 21.10(a) and other operating liabilities incurred in the
ordinary course of Tenant's business.
21.7 Financial Condition of Tenant. Tenant shall at all times maintain
Net Worth (except as provided in the last clause of this sentence) in an amount
at least equal to the aggregate of one year's Minimum Rent payable pursuant to
this Agreement; it being expressly understood and agreed that the right to
receive the Retained Funds, if assigned to Tenant, may for such purpose be
counted as equity at the full amount thereof and that
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accrued and unpaid subordinated amounts due from Tenant to its Affiliated
Persons may be included in Net Worth.
21.8 Distributions, Payments to Affiliated Persons, Etc. Tenant shall
not declare, order, pay or make, directly or indirectly, any Distributions or
any payment to any Affiliated Person of Tenant (including payments in the
ordinary course of business and payments pursuant to Management Agreements with
any such Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after giving
effect thereto, any Event of Default shall have occurred and be continuing.
Otherwise, as long as no Event of Default shall have occurred and be continuing,
Tenant may make Distributions and payments to Affiliated Persons (other than
from the FF&E Reserve which shall be governed by Section 5.1.2) without
restriction.
21.9 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.
21.10 Liens and Encumbrances. Except as permitted by Section 7.1 and
Section 21.6, 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 21.6.
21.11 Assets and Personal Property. Without Landlord's prior written
consent (which consent may be given or withheld in Landlord's sole discretion),
Tenant shall not (i) lease (as
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lessor or sublessor), transfer, convey or otherwise dispose of, or abandon, all
or a majority of its assets or (ii) 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 (ii) preceding, Tenant may dispose of equipment or fixtures which have
become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary,
provided substitute equipment or fixtures having equal or greater value and
utility (but not necessarily having the same function) have been provided.
ARTICLE 22
MISCELLANEOUS
22.1 Limitation on Payment of Rent. All agreements between Landlord and
Tenant herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the
Rent or any other amounts payable to Landlord under this Agreement exceed the
maximum permissible under applicable law, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of
any provision of this Agreement, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law, or
if from any circumstances Landlord should ever receive as fulfillment of such
provision such an excessive amount, then, ipso facto, the amount which would be
excessive shall be applied to the reduction of the installment(s) of Minimum
Rent next due and not to the payment of such excessive amount. This provision
shall control every other provision of this Agreement and any other agreements
between Landlord and Tenant.
22.2 No Waiver. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
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22.3 Remedies Cumulative. To the maximum extent permitted by law, each
legal, equitable or contractual right, power and remedy of Landlord or Tenant,
now or hereafter provided either in this Agreement or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.
22.4 Severability. Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be invalid,
illegal or ineffective, and this Agreement shall be construed as if such
invalid, illegal or ineffective provisions had never been contained therein.
22.5 Acceptance of Surrender. No surrender to Landlord of this
Agreement or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing by
Landlord and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an acceptance
of any such surrender.
22.6 No Merger of Title. It is expressly acknowledged and agreed that
it is the intent of the parties that there shall be no merger of this Agreement
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in the Leased Property.
22.7 Conveyance by Landlord. If Landlord or any successor owner of all
or any portion of the Leased Property shall convey all or any portion of the
Leased Property in accordance with the terms hereof other than as security for a
debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Landlord
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under this Agreement with respect to such of the Leased Property arising or
accruing from and after the date of such conveyance or other transfer and all
such future liabilities and obligations shall thereupon be binding upon the new
owner; provided, however, that Landlord shall not be released from liability
with respect to any Retained Funds transferred in connection with such a
conveyance unless such successor shall have a Net Worth equal to or greater than
the lesser of (i) ten (10) times the amount of the Retained Funds so transferred
or (ii) One Hundred Million Dollars ($100,000,000). If such successor shall not
satisfy the aforesaid Net Worth requirement, Landlord shall, in a guaranty in
form and substance reasonably satisfactory to Tenant, guaranty payment of the
amount of the Retained Funds so transferred in accordance with this Agreement
and the Purchase Documents.
22.8 Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and
enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a)
any Encumbrance permitted under Article 20 or otherwise permitted to be created
by Landlord hereunder provided that the holder of such Encumbrance has, to the
extent appropriate, executed a nondisturbance agreement pursuant to Section 20.2
or a subordination agreement in form and substance reasonably acceptable to
Tenant, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord
that are either not yet due or which are being contested in good faith and by
proper proceedings, provided the same do not materially interfere with Tenant's
ability to operate the Hotels and (d) liens that have been consented to in
writing by Tenant. Except as otherwise provided in this Agreement, no failure by
Landlord to comply with the foregoing covenant shall give Tenant any right to
cancel or terminate this Agreement or xxxxx, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Agreement (except as
expressly provided in Section 14.2), or to fail to perform any other obligation
of Tenant hereunder.
22.9 Memorandum of Lease. Neither Landlord nor Tenant shall record this
Agreement. However, Landlord and Tenant shall promptly, upon the request of the
other, enter into a short form memorandum of this Agreement, in form suitable
for recording under the laws of the State in which reference to this Agreement,
and all options contained herein, shall be made.
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Tenant shall pay all costs and expenses of recording such memorandum.
22.10 Notices.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same
shall be delivered either in hand, by telecopier with written
acknowledgment of receipt, or by mail or Federal Express or similar
expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if
by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).
(b) All notices required or permitted to be sent hereunder
shall be deemed to have been given for all purposes of this Agreement
upon the date of acknowledged receipt, in the case of a notice by
telecopier, and, in all other cases, upon the date of receipt or
refusal, except that whenever under this Agreement a notice is either
received on a day which is not a Business Day or is required to be
delivered on or before a specific day which is not a Business Day, the
day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to Landlord:
c/o Hospitality Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
[Telecopier No. (000) 000-0000]
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
[Telecopier No. (000) 000-0000]
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if to Tenant to:
Candlewood Leasing Number 1, Inc.
0000 X. 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxx 00000
Attn: Mr. Xxx Xxxxxxx
[Telecopier No. (000) 000-0000]
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
[Telecopier No. (000) 000-0000]
(d) By notice given as herein provided, the parties hereto and
their respective successors and assigns shall have the right from time
to time and at any time during the term of this Agreement to change
their respective addresses effective upon receipt by the other parties
of such notice and each shall have the right to specify as its address
any other address within the United States of America.
22.11 Trade Area Restriction. With respect to the HPT CW I Leased
Property and the New Leased Property, neither Tenant, Candlewood nor any of
their Affiliated Persons shall own, build, franchise, manage or operate a hotel
of the same brand as the Hotels within the designated areas on Exhibit B-1 (the
"Designated Areas One"), at any time during the Term.
With respect to the HPT XX XX Leased Property and the Additional Leased
Property, during the period expiring on the Burn-Off Date (as defined below),
none of Tenant, Candlewood or any of their Affiliated Persons shall own, build,
franchise, manage or operate a hotel of the same brand as the Hotels within the
designated areas on Exhibit B-2 (the "Designated Areas Two").
Notwithstanding the foregoing, after the Burn-Off Date, provided no
Default or Event of Default shall have occurred and be continuing, Candlewood or
any Affiliated Persons of Candlewood may own, build, franchise, manage or
operate a hotel of the same brand as the Hotels within a Designated Area Two,
provided that Candlewood shall give Landlord prior written notice thereof, which
notice shall set forth in reasonable
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detail the location and aggregate acquisition costs of the proposed hotel (the
"Proposed Hotel") and address such other matters with respect thereto as
Landlord may reasonably request. Landlord or its Affiliated Persons shall have
the right, by notice given, within forty-five (45) days after Landlord receives
all requested information with respect to the Proposed Hotel, to elect to
acquire the Proposed Hotel on terms substantially similar to those set forth in
the Purchase Agreement and to lease the same to Tenant or another Affiliated
Person of Candlewood on terms substantially similar to those set forth in this
Agreement (and, if Landlord shall so elect, this Agreement shall be amended to
include the Proposed Hotel among the properties demised hereunder). If Landlord
or any of its Affiliated Persons shall fail to give such notice of election
prior to the expiration of such 45-day period and, provided the Burn-Off Date
shall have occurred and no Default or Event of Default shall have occurred and
be continuing, Candlewood or its Affiliated Persons may build, franchise, manage
or operate the Proposed Hotel on substantially the same terms and conditions as
set forth in the information with respect thereto provided to Landlord.
For purposes of this Section 22.11, the Burn-Off Date shall mean the
later to occur of (i) with respect to a Property, the date which is the fifth
anniversary of the Commencement Date of such Property and (ii) the date as of
which (x) Candlewood has one hundred (100) or more hotels of the same brand as
the Hotels under management or (y) Cash Flow (as defined below) on a cumulative
basis for a period of twelve (12) full consecutive Accounting Periods with
respect to the Hotel in which Designated Area Two the Proposed Hotel is situated
equals or exceeds Minimum Rent by one hundred percent (100%) or more with
respect to such period, and Landlord shall receive a schedule evidencing the
foregoing, in form and substance reasonably satisfactory to Landlord prepared by
a, so-called, "Big-Five" accounting firm or such other certified public
accountants as are approved by Landlord (such approval not to be unreasonably
withheld, delayed or conditioned).
As used herein, "Cash Flow" shall mean the net income before federal
and state income tax (or loss) of Tenant in connection with the operation of the
applicable Hotel, calculated in accordance with GAAP for the applicable period,
adjusted by adding back (a) all extraordinary expense items, (b) depreciation
and amortization, (c) interest expense on
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Indebtedness permitted under this Agreement, (d) Minimum Rent and Additional
Rent, (e) base management fees, incentive management fees, trade name fees,
franchise fees, royalty fees and central marketing fees paid to the Manager to
the extent subordinate to payment of rent pursuant to this Agreement from and
after the occurrence of an Event of Default, and further adjusted by deducting
(f) required contributions to the FF&E Reserve and (g) all extraordinary income
items.
22.12 Construction. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such termination or
expiration. In no event shall Landlord be liable for any consequential damages
suffered by Tenant as the result of a breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each term or provision of this Agreement to be performed
by Tenant shall be construed as an independent covenant and condition. Time is
of the essence with respect to the provisions of this Agreement. Except as
otherwise set forth in this Agreement, any obligations of Tenant (including
without limitation, any monetary, repair and indemnification obligations) and
Landlord shall survive the expiration or sooner termination of this Agreement.
22.13 Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.
22.14 Applicable Law, Etc. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of The Commonwealth
of Massachusetts applicable to contracts between residents of Massachusetts
which are to be performed entirely within Massachusetts, regardless of (i) where
this Agreement is executed or delivered; or (ii) where any
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payment or other performance required by this Agreement is made or required to
be made; or (iii) where any breach of any provision of this Agreement occurs, or
any cause of action otherwise accrues; or (iv) where any action or other
proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principal place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum jurisdiction
otherwise would apply the laws of a jurisdiction other than Massachusetts; or
(vii) any combination of the foregoing. Notwithstanding the foregoing, the laws
of the State shall apply to the perfection and priority of liens upon and the
disposition of any Property.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
The Commonwealth of Massachusetts as is provided by law; and the parties consent
to the jurisdiction of said court or courts located in Massachusetts and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
22.15 Right to Make Agreement. Each party warrants, with respect to
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken, or at the time of the transaction involved
shall not have been given or taken. Each party covenants that it has and will
continue to have throughout the term of this Agreement and any extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.
22.16 Attorneys' Fees. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation
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therefor and on appeal therefrom, which amounts shall be included in any
judgment therein.
22.17 Nonrecourse. Nothing contained in this Agreement shall be
construed to impose any liabilities or obligations on Tenant's shareholders,
officers, directors, agents or employees (or any shareholders, officers,
directors, agents or employees of any of the foregoing) for the performance of
the obligations of Landlord or Tenant hereunder.
22.18 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HPT CW 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 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.
23.19 Amendment and Restatement. This Agreement amends, restates and
replaces in its entirety that certain Amended and Restated Lease Agreement,
dated as of August 10, 2001, as the same may have been amended from time to
time, by and between Landlord and Tenant.
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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:
HPT CW PROPERTIES TRUST, a
Maryland real estate investment
trust
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
President
TENANT:
CANDLEWOOD LEASING NO. 1, INC., a
Delaware corporation
By: /s/ Xxx Xxxxxxx
Its: Vice President Treasurer
Candlewood Hotel Company, Inc. hereby acknowledges and agrees to be bound by the
provisions of Section 22.11 of the foregoing Second Amended and Restated Lease
Agreement.
CANDLEWOOD HOTEL COMPANY, INC.,
a Delaware corporation
By: /s/ Xxx Xxxxxxx
Its: Vice President Treasurer
Date: April 12, 2002
OMITTED EXHIBITS
The following exhibits to the Second Amended and Restated Master Lease have been
omitted:
Exhibit Letter Exhibit Title
A-1 through X-00 Xxx Xxxx
X-0 Designated Areas One
B-2 Designated Areas Two
C Allocable Rents
The Registrant agrees to furnish supplementally a copy of the foregoing omitted
exhibits to the Securities and Exchange Commission upon request.
