Exhibit 10.7
LIMITED GUARANTY AGREEMENT
THIS LIMITED GUARANTY AGREEMENT (this "AGREEMENT") is made and
given as of this _____ day of ________, 1997, by SHOLODGE, INC., a
Tennessee corporation (the "GUARANTOR"), for the benefit of ____________
AND HOSPITALITY PROPERTIES TRUST, each a Maryland real estate investment
trust (collectively, together with their successors and assigns, "HPT").
W I T N E S S E T H :
WHEREAS, pursuant to a Lease Agreement, dated as of the date
hereof (the "LEASE"), ______________ has agreed to lease to
_________________, a _________ corporation (the "TENANT"), certain real
property, the related improvements and personal property, comprising
fourteen (14) ▇▇▇▇▇▇ Suite hotels, as more particularly described in the
Lease; and
WHEREAS, it is a condition precedent to ______________'s entering
into the Lease that the Guarantor guarantee on a limited basis as set forth
herein all of the payment and performance obligations of the Tenant with
respect to the Lease; and
WHEREAS, the transactions contemplated by the Lease are of direct
material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the mutual receipt and legal sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. CERTAIN TERMS. Capitalized terms used and not otherwise
defined in this Agreement shall have the meanings ascribed to such terms in
the Lease. The Lease and the Incidental Documents are herein collectively
referred to as the "TRANSACTION DOCUMENTS."
2. GUARANTEED OBLIGATIONS. For purposes of this Agreement, the
term "GUARANTEED OBLIGATIONS" shall mean the payment and performance of
each and every obligation of the Tenant to HPT under the Transaction
Documents, whether now existing or hereafter arising, and including,
without limitation, the payment of the full amount of the Rent payable
under the Lease.
3. REPRESENTATIONS AND COVENANTS. The Guarantor represents,
warrants, covenants and agrees that:
3.1 PERFORMANCE OF COVENANTS AND AGREEMENTS. Subject to the
limitations set forth in SECTION 20, during the term of this Agreement, the
Guarantor will cause the Tenant duly and punctually to perform all of the
covenants and agreements set forth in the Transaction Documents.
3.2 VALIDITY OF AGREEMENT. The Guarantor has duly and
validly executed and delivered this Agreement; this Agreement constitutes
the legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors; and the execution, delivery and performance of this
Agreement have been duly authorized by all requisite action of the
Guarantor and such execution, delivery and performance by the Guarantor
will not result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation of
any lien, charge or encumbrance upon any of the property or assets of the
Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust,
note, other evidence of indebtedness, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor or any property or
assets of the Guarantor is bound, or violate any provision of law
applicable to the Guarantor, or any order, writ, injunction, judgement or
decree of any court applicable to the Guarantor or any order or other
public regulation of any governmental commission, bureau or administrative
agency applicable to the Guarantor.
3.3 PAYMENT OF EXPENSES. The Guarantor agrees, as
principal obligor and not as Guarantor only, to pay to HPT forthwith, upon
demand, in immediately available Federal funds, all costs and expenses
(including court costs and reasonable legal expenses) incurred or expended
by HPT in connection with the enforcement of this Agreement, together with
interest on amounts recoverable under this Agreement from the time such
amounts become due until payment at the Interest Rate, but recourse
therefor shall be limited as provided in SECTION 20.
3.4 REPORTS. The Guarantor shall promptly provide to HPT
each of the financial reports, certificates and other documents required of
the Guarantor under the Transaction Documents.
3.5 LEGAL EXISTENCE. During the term of this Agreement,
the Guarantor shall do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence.
4. GUARANTEE. Subject to the limitations set forth in SECTION
20, the Guarantor hereby unconditionally guarantees that the Guaranteed
Obligations which are monetary obligations which become due and payable
during the term of this Agreement shall be paid in full when due and
payable, whether upon demand, at the stated or accelerated maturity thereof
or upon any mandatory or voluntary prepayment pursuant to any Transaction
Document, or otherwise, and that the Guaranteed Obligations which are
performance obligations which are required to be performed during the term
of this Agreement shall be fully performed at the times and in the manner
such performance is required by the Transaction Documents. With respect to
the Guaranteed Obligations which are monetary obligations, this guarantee
is a guarantee of payment and not of collectibility and is absolute and in
no way conditional or contingent, subject to the limitations set forth in
SECTION 20. In case any part of the Guaranteed Obligations shall not have
been paid when due and payable or performed at the time performance is
required, the Guarantor shall, within five (5) days after receipt of notice
from HPT, subject to the limitations set forth in SECTION 20, pay or cause
to be paid to HPT the amount thereof as is then due and payable and unpaid
(including interest and other charges, if any, due thereon through the date
of payment in accordance with the applicable provisions of the Transaction
Documents) or perform or cause to be performed such obligations in
accordance with the Transaction Documents.
5. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS, ETC. If the
Tenant is for any reason under no legal obligation to discharge any of the
Guaranteed Obligations, or if any other moneys included in the Guaranteed
Obligations have become unrecoverable from the Tenant by operation of law
or for any other reason, including, without limitation, the invalidity or
irregularity in whole or in part of any Guaranteed Obligation or of any
Transaction Document or any limitation on the liability of the Tenant
thereunder or any limitation on the method or terms of payment thereunder
which may now or hereafter be caused or imposed in any manner whatsoever,
the guarantees contained in this Agreement shall nevertheless remain in
full force and effect in accordance with the terms set forth herein and
shall be binding upon the Guarantor to the same extent as if the Guarantor
at all times had been the principal debtor on all such Guaranteed
Obligations.
6. ADDITIONAL GUARANTEES. This Agreement shall be in addition
to any other guarantee or other security for the Guaranteed Obligations and
it shall not be prejudiced or rendered unenforceable by the invalidity of
any such other guarantee or security or by any waiver, amendment, release
or modification thereof.
7. CONSENTS AND WAIVERS, ETC. The Guarantor hereby
acknowledges receipt of correct and complete copies of each of the
Transaction Documents and consents to all of the terms and provisions
thereof, as the same may be from time to time hereafter amended or changed
in accordance therewith, and waives, to the extent the Guarantor lawfully
may do so, (a) presentment, demand for payment, and protest of nonpayment,
of any of the Guaranteed Obligations, (b) notice of acceptance of this
Agreement and of diligence, presentment, demand and protest, (c) notice of
any default hereunder and any default, breach or nonperformance or Event of
Default under any of the Guaranteed Obligations or the Transaction
Documents, except as expressly provided in SECTION 4, (d) notice of the
terms, time and place of any private or public sale of collateral held as
security for the Guaranteed Obligations, (e) demand for performance or
observance of, and any enforcement of any provision of, or any pursuit or
exhaustion of rights or remedies against the Tenant or any other guarantor
of the Guaranteed Obligations, under or pursuant to the Transaction
Documents, or any agreement directly or indirectly relating thereto and any
requirements of diligence or promptness on the part of the holders of the
Guaranteed Obligations in connection therewith, and (f) any and all demands
and notices of every kind and description with respect to the foregoing or
which may be required to be given by any statute or rule of law.
8. NO IMPAIRMENT, ETC. The obligations, covenants, agreements
and duties of the Guarantor under this Agreement shall not be affected or
impaired by any assignment or transfer in whole or in part of any of the
Guaranteed Obligations without notice to the Guarantor, or any waiver by
HPT or any holder of any of the Guaranteed Obligations or by the holders of
all of the Guaranteed Obligations of the performance or observance by the
Tenant or any other guarantor of any of the agreements, covenants, terms or
conditions contained in the Guaranteed Obligations or the Transaction
Documents or any indulgence in or the extension of the time for payment by
the Tenant or any other guarantor of any amounts payable under or in
connection with the Guaranteed Obligations or the Transaction Documents or
any other instrument or agreement relating to the Guaranteed Obligations or
of the time for performance by the Tenant or any other guarantor of any
other obligations under or arising out of any of the foregoing or the
extension or renewal thereof, or the modification or amendment (whether
material or otherwise) of any duty, agreement or obligation of the Tenant
or any other guarantor set forth in any of the foregoing, or the voluntary
or involuntary sale or other disposition of all or substantially all the
assets of the Tenant or any other guarantor or insolvency, bankruptcy, or
other similar proceedings affecting the Tenant or any other guarantor or
any assets of the Tenant or any such other guarantor, or the release or
discharge of the Tenant or any such other guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any
of the foregoing without the consent of the holders of the Guaranteed
Obligations by operation of law.
9. REIMBURSEMENT, SUBROGATION, ETC. The Guarantor hereby
covenants and agrees that, as long as no Event of Default has occurred and
is continuing under the Transaction Documents, the Guarantor will not
enforce or otherwise exercise any rights of reimbursement, subrogation,
contribution or other similar rights against the Tenant or any other person
with respect to the Guaranteed Obligations prior to the payment in full of
all amounts then due and owing but unpaid with respect to the Lease, and
until the Guaranteed Obligations have been satisfied in full, the Guarantor
shall not have any right of subrogation, and the Guarantor waives any
defense it may have based upon any election of remedies by HPT which
destroys the Guarantor's subrogation rights or the Guarantor's rights to
proceed against the Tenant for reimbursement, including, without
limitation, any loss of rights the Guarantor may suffer by reason of any
rights, powers or remedies of the Tenant in connection with any
anti-deficiency laws or any other laws limiting, qualifying or discharging
the indebtedness to HPT. Until all obligations of the Tenant pursuant to
the Transaction Documents shall have been paid and satisfied in full, the
Guarantor waives any right to enforce any remedy which HPT now has or may
in the future have against the Tenant, any other guarantor or any other
person and any benefit of, or any right to participate in, any security
whatsoever now or in the future held by HPT.
10. DEFEASANCE. (a) Except as expressly provided in paragraph
(b) below, this Agreement shall terminate at such time as the Guaranteed
Obligations have been paid and performed in full and all other obligations
of the Guarantor to HPT under this Agreement have been satisfied in full;
PROVIDED, HOWEVER, if at any time, all or any part of any payment applied
on account of the Guaranteed Obligations is or must be rescinded or
returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Tenant), this Agreement, to
the extent such payment is or must be rescinded or returned, shall be
deemed to have continued in existence notwithstanding any such termination.
(b) Provided that no (i) monetary Default, (ii) Default as to
which Notice thereof has been given to Tenant or (iii) Event of Default
shall have occurred and be continuing under the Lease, (y) Cash Flow (as
defined below) for a period of thirteen (13) full consecutive Accounting
Periods equals or exceeds Eighteen Million Five Hundred Thousand Dollars
($18,500,000) with respect to such period, and (z) HPT shall receive a
schedule evidencing the foregoing, in form and substance reasonably
satisfactory to HPT prepared by a, so-called, "Big-Six" accounting firm or
such other certified public accountants as are approved by HPT (such
approval not to be unreasonably withheld, delayed or conditioned), this
Agreement shall terminate ten (10) Business Days after delivery to HPT of
the financial statements described in clause (z) preceding, and HPT shall,
within ten (10) Business Days after the written request of the Guarantor,
confirm such termination by executing a release of the Guarantor from all
obligations and liabilities arising under this Agreement subsequent to the
release date and returning any unapplied balance of the Guaranty Deposit
(as hereinafter defined) to the Guarantor, together with any accrued and
unpaid interest thereon.
As used herein, "CASH FLOW" shall mean the net income (or loss)
of Tenant in connection with the operation of the Hotels before income
taxes, calculated in accordance with GAAP, PLUS (a) all extraordinary
expense items, (b) depreciation and amortization, (c) interest expense on
Indebtedness permitted under the Lease, (d) 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 the Lease from and after the occurrence of an Event of
Default MINUS (e) required contributions to the FF&E Reserve and (f) all
extraordinary income items.
11. 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 HPT to:
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to the Guarantor to:
ShoLodge, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
Boult ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
(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.
12. SUCCESSORS AND ASSIGNS. Whenever in this Agreement, any of
the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party, including without
limitation the holders, from time to time, of the Guaranteed Obligations;
and all representations, warranties, covenants and agreements by or on
behalf of the Guarantor which are contained in this Agreement shall inure
to the benefit of HPT's successors and assigns, including without
limitation said holders, whether so expressed or not; PROVIDED, HOWEVER,
that, if HPT shall transfer the Guaranty Deposit to a person having a Net
Worth less than ten (10) times the unapplied balance thereof, HPT shall
guaranty repayment thereof and payment of any accrued interest thereon to
the Guarantor in accordance with the terms of this Agreement pursuant to a
guaranty in form and substance reasonably satisfactory to the Guarantor.
13. APPLICABLE LAW. Except as to matters regarding the internal
affairs of HPT and issues of or limitations on any personal liability of
the shareholders and trustees of HPT for obligations of HPT, as to which
the laws of the State of Maryland shall govern, this Agreement and any
other instruments executed and delivered to evidence, complete or perfect
the transactions contemplated hereby 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 any such instrument is executed or delivered; or (ii) where any
payment or other performance required by any such instrument is made or
required to be made; or (iii) where any breach of any provision of any such
instrument 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.
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 may be 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.
14. MODIFICATION OF AGREEMENT. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the
Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by HPT, and such modification, waiver or consent
shall be effective only in the specific instances and for the purpose for
which given. No notice to or demand on the Guarantor in any case shall
entitle the Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
15. WAIVER OF RIGHTS BY HPT. Neither any failure nor any delay
on HPT's part in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of
any other right, power or privilege.
16. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, but this Agreement shall be reformed and construed and enforced to
the maximum extent permitted by applicable law.
17. ENTIRE CONTRACT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof and shall supersede and take the place of any other instruments
purporting to be an agreement of the parties hereto relating to the subject
matter hereof.
18. HEADINGS; COUNTERPARTS. Headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument, and in pleading or proving any provision
of this Agreement, it shall not be necessary to produce more than one of
such counterparts.
19. REMEDIES CUMULATIVE. No remedy herein conferred upon HPT is
intended to be exclusive of any other remedy, and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
20. LIMITATION ON GUARANTOR'S LIABILITY. Notwithstanding
anything to the contrary contained herein, the liability of the Guarantor
hereunder, and HPT's recourse to the assets of the Guarantor hereunder,
shall be limited to the sum (the "GUARANTY DEPOSIT") of Fourteen Million
Dollars ($14,000,000), which amount has been deposited with HPT on the date
hereof. HPT shall have no obligation to hold the Guaranty Deposit in a
segregated account and may commingle the same with its general funds.
Provided that no Event of Default shall have occurred and be continuing,
HPT shall credit the Guarantor or its assigns with interest on any
unapplied balance of the Guaranty Deposit at a rate of 11.11% per annum.
Such interest shall be credited in arrears and pro rated with respect to
any partial month. Upon the termination of this Agreement in accordance
with SECTION 10, HPT shall refund any unapplied balance of the Guaranty
Deposit, together with any accrued and unpaid interest with respect
thereto, to the Guarantor. In the event HPT shall fail to refund any
unapplied balance of the Guaranty Deposit and accrued interest to the
Guarantor on the date due, HPT shall thereafter pay the Guarantor interest
thereon at the Overdue Rate until paid. At the written request of the
Guarantor, HPT shall credit accrued interest on the Guaranty Deposit
against the monthly Minimum Rent.
WITNESS the execution hereof under seal as of the date above
first written.
SHOLODGE, INC.
By:
Its (Vice) President
ACKNOWLEDGED AND AGREED:
By:
Its (Vice) President
HOSPITALITY PROPERTIES TRUST
By:
Its (Vice) President