Exhibit 10.2
LEASE AGREEMENT
DATED AS OF __________, __ 1996
BY AND BETWEEN
HPTCY CORPORATION,
AS LANDLORD,
AND
HMH HPT COURTYARD, INC.,
AS TENANT
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS.................................................... 1
1.1 Accounting Period............................................... 1
1.2 Additional Rent................................................. 1
1.3 Additional Charges.............................................. 1
1.4 Affiliated Person............................................... 2
1.5 Agreement....................................................... 2
1.6 Applicable Laws................................................. 2
1.7 Award........................................................... 2
1.8 Base Gross Revenues............................................. 2
1.9 Base Year....................................................... 3
1.10 Business Day.................................................... 3
1.11 Capital Addition................................................ 3
1.12 Capital Expenditure............................................. 3
1.13 Claim........................................................... 3
1.14 Code............................................................ 3
1.15 Collective Leased Properties.................................... 4
1.16 Commencement Date............................................... 4
1.17 Condemnation.................................................... 4
1.18 Condemnor....................................................... 4
1.19 Consolidated Financials......................................... 4
1.20 Date of Taking.................................................. 4
1.21 Default......................................................... 4
1.22 Distribution.................................................... 4
1.23 Encumbrance..................................................... 4
1.24 Entity.......................................................... 5
1.25 Environment..................................................... 5
1.26 Environmental Obligation........................................ 5
1.27 Environmental Notice............................................ 5
1.28 Event of Default................................................ 5
1.29 Excess Gross Revenues........................................... 5
1.30 Extended Terms.................................................. 5
1.31 FF&E Reserve.................................................... 5
1.32 Financial Officer's Certificate................................. 5
1.33 Fiscal Year..................................................... 5
1.34 Fixed Term...................................................... 5
1.35 Fixtures........................................................ 6
1.36 GAAP............................................................ 6
1.37 Government Agencies............................................. 6
1.38 Gross Revenues.................................................. 6
1.39 Hazardous Substances............................................ 6
1.40 Host............................................................ 7
1.41 Hotel........................................................... 7
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1.42 Hotel Mortgage.................................................. 7
1.43 Hotel Mortgagee................................................. 7
1.44 Immediate Family................................................ 7
1.45 Impositions..................................................... 7
1.46 Incidental Documents............................................ 8
1.47 Indebtedness.................................................... 8
1.48 Insurance Requirements.......................................... 8
1.49 Interest Rate................................................... 8
1.50 Land............................................................ 8
1.51 Landlord........................................................ 8
1.52 Landlord Liens.................................................. 9
1.53 Lease Year...................................................... 9
1.54 Leased Improvements............................................. 9
1.55 Leased Intangible Property...................................... 9
1.56 Leased Personal Property........................................ 9
1.57 Leased Property................................................. 9
1.58 Legal Requirements.............................................. 9
1.59 Lending Institution............................................. 10
1.60 Lien............................................................ 10
1.61 Management Agreement............................................ 10
1.62 Manager......................................................... 10
1.63 Minimum Rent.................................................... 10
1.64 Notice.......................................................... 10
1.65 Officer's Certificate........................................... 10
1.66 Other Leases.................................................... 10
1.67 Overdue Rate.................................................... 10
1.68 Parent.......................................................... 11
1.69 Permitted Encumbrances.......................................... 11
1.70 Permitted Liens................................................. 11
1.71 Permitted Use................................................... 11
1.72 Person.......................................................... 11
1.73 Pledge and Security Agreement................................... 11
1.74 Purchase Agreement.............................................. 11
1.75 Records......................................................... 11
1.76 Rent............................................................ 11
1.77 Request Notice.................................................. 11
1.78 Response Notice................................................. 11
1.79 SEC............................................................. 11
1.80 State........................................................... 11
1.81 Subordinated Creditor........................................... 12
1.82 Subordination Agreement......................................... 12
1.83 Subsidiary...................................................... 12
1.84 Successor Landlord.............................................. 12
1.85 Tangible Net Worth.............................................. 12
1.86 Tenant.......................................................... 12
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1.87 Tenant's Personal Property...................................... 12
1.88 Term............................................................ 13
1.89 Uniform System of Accounts...................................... 13
1.90 Unsuitable for Its Permitted Use................................ 13
1.91 Work............................................................ 13
ARTICLE 2: LEASED PROPERTY AND TERM....................................... 13
2.1 Leased Property................................................ 13
2.2 Condition of Leased Property................................... 14
2.3 Fixed Term..................................................... 15
2.4 Extended Term.................................................. 15
ARTICLE 3: RENT........................................................... 16
3.1 Rent........................................................... 16
3.1.1 Minimum Rent............................................ 16
3.1.2 Additional Rent......................................... 16
3.1.3 Additional Charges...................................... 19
3.2 Late Payment of Rent, Etc...................................... 20
3.3 Net Lease...................................................... 21
3.4 No Termination, Abatement, Etc................................. 21
3.5 Security for Tenant's Performance.............................. 22
ARTICLE 4: USE OF THE LEASED PROPERTY..................................... 22
4.1 Permitted Use.................................................. 22
4.1.1 Permitted Use........................................... 22
4.1.2 Necessary Approvals..................................... 23
4.1.3 Lawful Use, Etc......................................... 23
4.2 Compliance with Legal/Insurance Requirements, Etc.............. 23
4.3 Environmental Matters.......................................... 24
4.3.1 Restriction on Use, Etc................................. 24
4.3.2 Indemnification of Landlord............................. 25
4.3.3 Survival................................................ 25
ARTICLE 5: MAINTENANCE AND REPAIRS........................................ 26
5.1 Maintenance and Repairs........................................ 26
5.1.1 Tenant's Obligations.................................... 26
5.1.2 Landlord's Obligations.................................. 27
5.1.3 Nonresponsibility of Landlord, Etc...................... 27
5.2 Tenant's Personal Property..................................... 28
5.3 Yield Up....................................................... 28
5.4 Management Agreement........................................... 29
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ARTICLE 6: IMPROVEMENTS, ETC.............................................. 29
6.1 Improvements to the Leased Property............................ 29
6.2 Salvage........................................................ 30
ARTICLE 7: LIENS.......................................................... 30
7.1 Liens.......................................................... 30
7.2 Landlord's Lien................................................ 31
ARTICLE 8: PERMITTED CONTESTS............................................. 31
ARTICLE 9: INSURANCE AND INDEMNIFICATION.................................. 32
9.1 General Insurance Requirements................................. 32
9.2 Replacement Cost............................................... 33
9.3 Waiver of Subrogation.......................................... 33
9.4 Form Satisfactory, Etc......................................... 34
9.5 Blanket Policy................................................. 34
9.6 No Separate Insurance.......................................... 35
9.7 Indemnification of Landlord.................................... 35
ARTICLE 10: CASUALTY....................................................... 36
10.1 Insurance Proceeds............................................. 36
10.2 Damage or Destruction.......................................... 36
10.2.1 Damage or Destruction of Leased Property............... 36
10.2.2 Partial Damage or Destruction.......................... 36
10.2.3 Insufficient Insurance Proceeds........................ 36
10.2.4 Disbursement of Proceeds............................... 37
10.3 Damage Near End of Term........................................ 38
10.4 Tenant's Property.............................................. 38
10.5 Restoration of Tenant's Property............................... 38
10.6 No Abatement of Rent........................................... 38
10.7 Waiver......................................................... 38
ARTICLE 11: CONDEMNATION................................................... 39
11.1 Total Condemnation, Etc........................................ 39
11.2 Partial Condemnation........................................... 39
11.3 Abatement of Rent.............................................. 40
11.4 Temporary Condemnation......................................... 40
11.5 Allocation of Award............................................ 40
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ARTICLE 12: DEFAULTS AND REMEDIES.......................................... 41
12.1 Events of Default.............................................. 41
12.2 Remedies....................................................... 44
12.3 Tenant's Waiver................................................ 45
12.4 Application of Funds........................................... 45
12.5 Landlord's Right to Cure Tenant's Default...................... 46
ARTICLE 13: HOLDING OVER................................................... 46
ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT................ 46
14.1 Landlord Notice Obligation..................................... 46
14.2 Landlord's Default............................................. 47
ARTICLE 15: INTENTIONALLY DELETED.......................................... 47
ARTICLE 16: SUBLETTING AND ASSIGNMENT...................................... 47
16.1 Subletting and Assignment...................................... 47
16.2 Required Sublease Provisions................................... 49
16.3 Permitted Sublease............................................. 50
16.4 Sublease Limitation............................................ 50
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS................. 50
17.1 Estoppel Certificates.......................................... 50
17.2 Financial Statements........................................... 51
17.3 General Operations............................................. 52
ARTICLE 18: LANDLORD'S RIGHT TO INSPECT.................................... 52
ARTICLE 19: INTENTIONALLY DELETED.......................................... 53
ARTICLE 20: HOTEL MORTGAGES................................................ 53
20.1 Landlord May Grant Liens....................................... 53
20.2 Subordination of Lease......................................... 53
20.3 Notices........................................................ 55
20.4 Transfer of Leased Property.................................... 55
ARTICLE 21: ADDITIONAL COVENANTS OF TENANT................................. 55
21.1 Prompt Payment of Indebtedness................................. 55
21.2 Conduct of Business............................................ 56
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21.3 Maintenance of Accounts and Records............................ 56
21.4 Notice of Litigation, Etc...................................... 56
21.5 Indebtedness of Tenant......................................... 56
21.6 Financial Condition of Tenant.................................. 57
21.7 Distributions, Payments to Affiliated Persons, Etc............. 57
21.8 Prohibited Transactions........................................ 57
21.9 Liens and Encumbrances......................................... 58
21.10 Merger; Sale of Assets; Etc.................................... 58
ARTICLE 22: MISCELLANEOUS.................................................. 58
22.1 Limitation on Payment of Rent.................................. 58
22.2 No Waiver...................................................... 59
22.3 Remedies Cumulative............................................ 59
22.4 Severability................................................... 59
22.5 Acceptance of Surrender........................................ 59
22.6 No Merger of Title............................................. 59
22.7 Conveyance by Landlord......................................... 59
22.8 Quiet Enjoyment................................................ 60
22.9 Memorandum of Lease............................................ 60
22.10 Notices........................................................ 60
22.11 Construction; Recourse......................................... 62
22.12 Counterparts; Headings......................................... 62
22.13 Applicable Law, Etc............................................ 62
22.14 Right to Make Agreement........................................ 63
EXHIBITS
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A - Minimum Rent
B - Other Leases
C - The Land
LEASE AGREEMENT
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THIS LEASE AGREEMENT is entered into as of this day of
, 1995, by and between HPTCY CORPORATION, a Delaware corporation, as landlord
("Landlord"), and HMH HPT COURTYARD, INC., a Delaware corporation, as tenant
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("Tenant").
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W I T N E S S E T H :
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WHEREAS, Landlord owns fee simple title to the Leased Property (this and
other capitalized terms used and not otherwise defined herein having the
meanings ascribed to such terms in Article 1); and
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WHEREAS, Landlord wishes to lease the Leased Property to Tenant and Tenant
wishes to lease the Leased Property from Landlord, all subject to and upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
ARTICLE 1
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DEFINITIONS
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For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, (i) the terms defined in this Article
shall have the meanings assigned to them in this Article and include the plural
as well as the singular, (ii) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Accounting Period" shall have the meaning given such term in the
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Management Agreement.
1.2 "Additional Rent" shall have the meaning given such term in Section
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3.1.2(a).
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1.3 "Additional Charges" shall have the meaning given such term in Section
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3.1.3.
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1.4 "Affiliated Person" shall mean, with respect to any Person, (a) in the
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case of any such Person which is a partnership, any partner in such partnership,
(b) in the case of any such Person which is a limited liability company, any
member of such company, (c) any other Person which is a Parent, a Subsidiary, or
a Subsidiary of a Parent with respect to such Person or to one or more of the
Persons referred to in the preceding clauses (a) and (b), (d) any other Person
who is an officer, director, trustee or employee of, or partner in, such Person
or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any
other Person who is a member of the Immediate Family of such Person or of any
Person referred to in the preceding clauses (a) through (d).
1.5 "Agreement" shall mean this Lease Agreement, including Exhibits A to C
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hereto, as it and they may be amended from time to time as herein provided.
1.6 "Applicable Laws" shall mean all applicable laws, statutes,
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regulations, rules, ordinances, codes, licenses, permits and orders, from time
to time in existence, of all courts of competent jurisdiction and Government
Agencies, and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations, relating
to injury to, or the protection of, real or personal property or human health
(except those requirements which, by definition, are solely the responsibility
of employers) or the Environment, including, without limitation, all valid and
lawful requirements of courts and other Government Agencies pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil ▇▇▇▇▇), or emissions, discharges, releases or
threatened releases of Hazardous Substances, chemical substances, pesticides,
petroleum or petroleum products, pollutants, contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or gaseous in nature, into
the Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil ▇▇▇▇▇), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.
1.7 "Award" shall mean all compensation, sums or other value awarded, paid
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or received by virtue of a total or partial Condemnation 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).
1.8 "Base Gross Revenues" shall mean Gross Revenues for the Base Year;
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provided, however, that in the event that, with respect to any Lease Year, or
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portion thereof, for any reason (including, without limitation, a casualty or
Condemnation)
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there shall be a reduction in the number of rooms at the Hotel or
any other Hotel (as defined in the Other Leases) or a change in the services
provided at the Hotel or such other Hotels (including, without limitation,
closing of restaurants) from the number of rooms or the services provided during
the Base Year, in determining Additional Rent payable with respect to such Lease
Year, Base Gross Revenues shall be reduced as follows: (a) in the event of the
termination of any of the Other Leases, all Gross Revenues attributable to the
Leased Property demised thereunder during the Base Year shall be subtracted from
Base Gross Revenues; (b) in the event of a complete closing of a Hotel, all
Gross Revenues attributable to such Hotel during the Base Year shall be
subtracted from Base Gross Revenues throughout the period of such closing; (c)
in the event of a partial closing of a Hotel affecting any number of guest rooms
in such Hotel, Gross Revenues 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 Gross
Revenues attributable to rooms no longer in service shall be subtracted from
Base Gross Revenues throughout the period of such closing; (d) in the event of a
closing of a restaurant, all Gross Revenues attributable to such restaurant
during the Base Year shall be subtracted from Base Gross Revenues throughout the
period of such closing; and (e) in the event of any other change in
circumstances affecting any Hotel, Base Gross Revenues shall be equitably
adjusted in such manner as Landlord and Tenant shall reasonably agree.
1.9 "Base Year" shall mean the 1995 Fiscal Year.
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1.10 "Business Day" shall mean any day other than Saturday, Sunday, or any
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other day on which banking institutions in The Commonwealth of Massachusetts or
the State of Maryland are authorized by law or executive action to close.
1.11 "Capital Addition" shall mean any renovation, repair or improvement
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to the Leased Property (or portion thereof), the cost of which constitutes a
Capital Expenditure and the making or implementation of which requires "Owner's"
consent under the Management Agreement.
1.12 "Capital Expenditure" shall mean any expenditure treated as capital
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in nature in accordance with GAAP.
1.13 "Claim" shall have the meaning given such term in Article 8.
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1.14 "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.
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1.15 "Collective Leased Properties" shall mean, collectively, the Leased
----------------------------
Property and every other Leased Property (as defined therein) under the Other
Leases.
1.16 "Commencement Date" shall mean the date of this Agreement.
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1.17 "Condemnation" shall mean (a) the exercise of any governmental power
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with respect to the Leased Property, whether by legal proceedings or otherwise,
by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of
the Leased Property by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending, or (c) a
taking or voluntary conveyance of all or part of the Leased Property, or any
interest therein, or right accruing thereto or use thereof, as the result or in
settlement of any Condemnation or other eminent domain proceeding affecting the
Leased Property, whether or not the same shall have actually been commenced.
1.18 "Condemnor" shall mean any public or quasi-public authority, or
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private corporation or individual, having the power of Condemnation.
1.19 "Consolidated Financials" shall mean, for any Fiscal Year or other
-----------------------
accounting period of Tenant, annual audited and quarterly unaudited financial
statements of Host prepared on a consolidated basis, including Host's
consolidated balance sheet and the related statements of income and cash flows,
all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal Year,
and prepared in accordance with GAAP throughout the periods reflected.
1.20 "Date of Taking" shall mean the date the Condemnor has the right to
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possession of the Leased Property, or any portion thereof, in connection with a
Condemnation.
1.21 "Default" shall mean any event or condition which with the giving of
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notice and/or lapse of time may ripen into an Event of Default.
1.22 "Distribution" shall mean (a) any declaration or payment of any
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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.
1.23 "Encumbrance" shall have the meaning given such term in Section 20.1.
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1.24 "Entity" shall mean any corporation, general or limited partnership,
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limited liability company or partnership, stock company or association, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, cooperative, any government or agency or political subdivision thereof or
any other entity.
1.25 "Environment" shall mean soil, surface waters, ground waters, land,
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stream, sediments, surface or subsurface strata and ambient air.
1.26 "Environmental Obligation" shall have the meaning given such term in
------------------------
Section 4.3.1.
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1.27 "Environmental Notice" shall have the meaning given such term in
--------------------
Section 4.3.1.
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1.28 "Event of Default" shall have the meaning given such term in Section
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12.1.
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1.29 "Excess Gross Revenues" shall mean, with respect to any Lease Year,
---------------------
or portion thereof, the amount of Gross Revenues for such Lease Year with
respect to the Collective Leased Properties, or portion thereof, in excess of
Base Gross Revenues with respect to the Collective Leased Properties for the
equivalent period.
1.30 "Extended Terms" shall have the meaning given such term in Section
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2.4.
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1.31 "FF&E Reserve" shall have the meaning given such term in the
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Management Agreement.
1.32 "Financial Officer's Certificate" shall mean, as to any Person, a
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certificate of the chief financial officer or chief accounting officer (or such
officer's authorized designee) of such Person, duly authorized, accompanying the
financial statements required to be delivered by such Person pursuant to Section
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17.2, in which such officer shall certify (a) that such statements have been
----
properly prepared in accordance with GAAP and are true, correct and complete in
all material respects and fairly present the consolidated financial condition of
such Person at and as of the dates thereof and the results of its and their
operations for the periods covered thereby, and (b) certify that such officer
has reviewed this Agreement and has no knowledge of any Default or Event of
Default hereunder.
1.33 "Fiscal Year" shall have the meaning given such term in the
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Management Agreement.
1.34 "Fixed Term" shall have the meaning given such term in Section 2.3.
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1.35 "Fixtures" shall have the meaning given such term in Section 2.1(d).
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1.36 "GAAP" shall mean generally accepted accounting principles
----
consistently applied.
1.37 "Government Agencies" shall mean any court, agency, authority, board
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(including, without limitation, environmental protection, planning and zoning),
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or the State or any county or any political subdivision of any of the foregoing,
whether now or hereafter in existence, having jurisdiction over Tenant or the
Leased Property or any portion thereof or the Hotel operated thereon.
1.38 "Gross Revenues" shall have the meaning given such term in the
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Management Agreement.
1.39 "Hazardous Substances" shall mean any substance:
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(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste", "hazardous
material" or "hazardous substance" or "pollutant" or "contaminant" under
any present or future federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. et seq.) and the Resource Conservation and Recovery Act (42 U.S.C.
-- ---
section 6901 et seq.) and the regulations promulgated thereunder; or
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(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, any
state of the United States, or any political subdivision thereof; or
(d) the presence of which on the Leased Property causes or
materially threatens to cause an unlawful nuisance upon the Leased Property
or to adjacent properties or poses or materially threatens to pose a hazard
to the Leased Property or to the health or safety of persons on or about
the Leased Property; or
(e) without limitation, which contains gasoline, diesel fuel or
other petroleum hydrocarbons or volatile organic compounds; or
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(f) without limitation, which contains polychlorinated biphenyls
(PCBs) or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive
particles, waves or material; or
(h) without limitation, constitutes materials which are now or may
hereafter be subject to regulation pursuant to the Material Waste Tracking
Act of 1988, or any Applicable Laws promulgated by any Government Agencies.
1.40 "Host" shall mean Host Marriott Corporation, a Delaware corporation.
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1.41 "Hotel" shall mean the Marriott Courtyard Hotel being operated on the
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Leased Property.
1.42 "Hotel Mortgage" shall mean any Encumbrance placed upon the Leased
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Property in accordance with Article 20.
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1.43 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
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1.44 "Immediate Family" shall mean, with respect to any individual, such
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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.
1.45 "Impositions" shall mean collectively, all taxes (including, without
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limitation, all taxes imposed under the laws of the State, as such laws may be
amended from time to time, and all ad valorem, sales and use, single business,
gross receipts, transaction privilege, rent or similar taxes as the same relate
to or are imposed upon Landlord, Tenant or the business conducted upon the
Leased Property), assessments (including, without limitation, all assessments
for public improvements or benefit, whether or not commenced or completed prior
to the date hereof), water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property or the business
conducted thereon by Tenant (including all interest and penalties thereon due to
any failure in payment by Tenant), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Landlord's interest in the Leased Property, (b) the Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased Property
or the leasing or use of the Leased Property or any part thereof by Tenant;
provided,
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however, that nothing contained herein shall be construed to require
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Tenant to pay (i) any tax based on net income imposed on Landlord, (ii) any net
revenue tax of Landlord, (iii) any transfer fee or other tax imposed with
respect to the sale, exchange or other disposition by Landlord of the Leased
Property or the proceeds thereof (other than in connection with the sale,
exchange or other disposition to, or in connection with a transaction involving,
Tenant), (iv) any single business, gross receipts tax (other than a tax on any
rent received by Landlord from Tenant unless such gross receipts tax on such
rent is in lieu of any other tax, assessment, levy or charge otherwise excluded
from this definition of Impositions), transaction privilege, rent or similar
taxes as the same relate to or are imposed upon Landlord, except to the extent
that any tax, assessment, tax levy or charge which is in effect at any time
during the Term hereof is totally or partially repealed, and a tax, assessment,
tax levy or charge set forth in clause (i) or (ii) preceding is levied, assessed
or imposed expressly in lieu thereof, (v) any interest or penalties imposed on
Landlord as a result of the failure of Landlord to file any return or report
timely and in the form prescribed by law or to pay any tax or imposition, except
to the extent such failure is a result of a breach by Tenant of its obligations
pursuant to Section 3.1.3, (vi) any Impositions imposed on Landlord that are a
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result of Landlord not being considered a "United States person" as defined in
Section 7701(a)(30) of the Code, (vii) any Impositions that are enacted or
adopted by their express terms as a substitute for any tax that would not have
been payable by Tenant pursuant to the terms of this Agreement or (viii) any
Impositions imposed as a result of a breach of covenant or representation by
Landlord in any agreement governing Landlord's conduct or operation or as a
result of the gross negligence or willful misconduct of Landlord.
1.46 "Incidental Documents" shall mean the Pledge and Security Agreement.
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1.47 "Indebtedness" shall mean all obligations, contingent or otherwise,
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which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.
1.48 "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.
1.49 "Interest Rate" shall mean ten percent (10%) per annum.
-------------
1.50 "Land" shall have the meaning given such term in Section 2.1(a).
---- --------------
1.51 "Landlord" shall have the meaning given such term in the preambles to
--------
this Agreement.
- 9 -
1.52 "Landlord Liens" shall mean liens on or against the Leased Property
--------------
or any payment of Rent (a) which result from any act of, or any claim against,
Landlord or any owner of a direct or indirect interest in the Leased Property,
or which result from any violation by Landlord of any terms of this Agreement or
the Purchase Agreement, or (b) which result from liens in favor of any taxing
authority by reason of any tax owed by Landlord or any fee owner of a direct or
indirect interest in the Leased Property; provided, however, that "Landlord
-------- ------- --------
Lien" shall not include any lien resulting from any tax for which Tenant is
----
obligated to pay or indemnify Landlord against until such time as Tenant shall
have already paid to or on behalf of Landlord the tax or the required indemnity
with respect to the same.
1.53 "Lease Year" shall mean any Fiscal Year or portion thereof,
----------
commencing with the 1995 Fiscal Year, during the Term.
1.54 "Leased Improvements" shall have the meaning given such term in
-------------------
Section 2.1(b).
--------------
1.55 "Leased Intangible Property" shall mean all hotel licensing
--------------------------
agreements and other service contracts, equipment leases, booking agreements and
other arrangements or agreements affecting the ownership, repair, maintenance,
management, leasing or operation of the Leased Property to which Landlord is a
party; all books, records and files relating to the leasing, maintenance,
management or operation of the Leased Property belonging to Landlord; all
transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, rights to deposits, trade names, service marks,
telephone exchange numbers identified with the Leased Property, and all other
transferable intangible property, miscellaneous rights, benefits and privileges
of any kind or character belonging to Landlord with respect to the Leased
Property.
1.56 "Leased Personal Property" shall have the meaning given such term in
------------------------
Section 2.1(e).
--------------
1.57 "Leased Property" shall have the meaning given such term in Section
--------------- -------
2.1.
---
1.58 "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 the Leased Property for its Permitted Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force
- 10 -
affecting the Leased Property, including those which may (i) require material
repairs, modifications or alterations in or to the Leased Property or (ii) in
any way materially and adversely affect the use and enjoyment thereof, but
excluding any requirements arising as a result of Landlord's status as a real
estate investment trust.
1.59 "Lending Institution" shall mean any United States insurance company,
-------------------
federally insured commercial or savings bank, national banking association,
United States savings and loan association, employees' welfare, pension or
retirement fund or system, corporate profit sharing or pension trust, college or
university, or real estate investment trust, including any corporation qualified
to be treated for federal tax purposes as a real estate investment trust, such
trust having a net worth of at least $100,000,000.
1.60 "Lien" shall mean any mortgage, security interest, pledge, collateral
----
assignment, or other encumbrance, lien or charge of any kind, or any transfer of
property or assets for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors.
1.61 "Management Agreement" shall mean the Management Agreement between
--------------------
Tenant and the Manager with respect to the Leased Premises, dated September 25,
1993, together with all amendments, modifications and supplements thereto.
1.62 "Manager" shall mean Courtyard Management Corporation, a Delaware
-------
corporation.
1.63 "Minimum Rent" shall mean, with respect to each Accounting Period,
------------
the sum set forth on Exhibit A.
---------
1.64 "Notice" shall mean a notice given in accordance with Section 22.10.
------ -------------
1.65 "Officer's Certificate" shall mean a certificate signed by an officer
---------------------
of the certifying Entity duly authorized by the board of directors of the
certifying Entity.
1.66 "Other Leases" shall mean, collectively, the Lease Agreements between
------------
Landlord or Hospitality Properties Trust and Tenant described on Exhibit B.
---------
1.67 "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.
- 11 -
1.68 "Parent" shall mean, with respect to any Person, any Person which
------
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, five percent (5%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.
1.69 "Permitted Encumbrances" shall mean 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 on the date hereof, plus any
other such encumbrances as may have been consented to in writing by Landlord
from time to time.
1.70 "Permitted Liens" shall mean any Liens granted in accordance with
---------------
Section 21.9(a).
---------------
1.71 "Permitted Use" shall mean any use of the Leased Property permitted
-------------
pursuant to Section 4.1.1(a) or (b).
-----------------------
1.72 "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.
1.73 "Pledge and Security Agreement" shall mean the Pledge and Security
-----------------------------
Agreement, dated as of the date hereof, made by Tenant for the benefit of
Landlord.
1.74 "Purchase Agreement" shall mean the Purchase-Sale and Option
------------------
Agreement, dated as of February 3, 1995, by and among Hospitality Properties
Trust, HMH Courtyard Properties, Inc., and HMH Properties, Inc., as amended.
1.75 "Records" shall have the meaning given such term in Section 7.2.
------- -----------
1.76 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent
----
and Additional Charges.
1.77 "Request Notice" shall have the meaning given such term in Section
-------------- -------
16.1.
----
1.78 "Response Notice" shall mean the meaning given such term in Section
--------------- -------
16.1.
----
1.79 "SEC" shall mean the Securities and Exchange Commission.
---
1.80 "State" shall mean the state or commonwealth or district in which the
-----
Leased Property is located.
- 12 -
1.81 "Subordinated Creditor" shall mean any creditor of Tenant which is a
---------------------
party to a Subordination Agreement in favor of Landlord.
1.82 "Subordination Agreement" shall mean any agreement executed by a
-----------------------
Subordinated Creditor pursuant to which the payment and performance of Tenant's
obligations to such Subordinated Creditor are subordinated to the payment and
performance of Tenant's obligations to Landlord under this Agreement.
1.83 "Subsidiary" shall mean, with respect to any Person, any Entity (a)
----------
in which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty-one percent (51%) or more of the voting or beneficial
interest or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).
1.84 "Successor Landlord" shall have the meaning given such term in
------------------
Section 20.2.
------------
1.85 "Tangible Net Worth" shall mean the excess of total assets over total
------------------
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (b) all
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the Commencement Date; (g) deferred gain; and (h) any items not
included in clauses (a) through (g) above that are treated as intangibles in
conformity with GAAP.
1.86 "Tenant" shall have the meaning given such term in the preambles to
------
this Agreement.
1.87 "Tenant's Personal Property" shall mean all motor vehicles and
--------------------------
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other personal property of Tenant,
if any, acquired by Tenant on and after the date hereof and located at the
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.
- 13 -
1.88 "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.
---
1.89 "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.
1.90 "Unsuitable for Its Permitted Use" shall mean a state or condition of
--------------------------------
the Hotel such that (a) following any damage or destruction involving the Hotel,
the Hotel cannot be operated in the good faith judgment of Tenant or the Manager
on a commercially practicable basis for its Permitted Use and it cannot
reasonably be expected to be restored to substantially the same condition as
existed immediately before such damage or destruction, and as otherwise required
by Section 10.2.4, within six (6) months following such damage or destruction or
--------------
such shorter period of time as to which business interruption insurance is
available to cover Rent and other costs related to the Leased Property following
such damage or destruction, or (b) as the result of a partial taking by
Condemnation, the Hotel cannot be operated, in the good faith judgment of Tenant
or the Manager on a commercially practicable basis for its Permitted Use.
1.91 "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
(collectively, the "Leased Property"):
---------------
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit C, 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;
- 14 -
(d) all equipment, machinery, fixtures, and other items of property,
now or hereafter permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the category of Tenant's Personal Property (collectively,
the "Fixtures");
--------
(e) all machinery, equipment, furniture, furnishings, moveable walls
or partitions, computers or trade fixtures or other personal property of
any kind or description used or useful in Tenant's business on or in the
Leased Improvements, and located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such personal
property, except items, if any, included within the category of Fixtures,
but specifically excluding all items included within the category of
Tenant's Personal Property (collectively, the "Leased Personal Property");
------------------------
(f) all of the Leased Intangible Property; and
(g) any and all leases of space (including any security deposits held
by Tenant or the Manager pursuant thereto) in the Leased Improvements to
tenants thereof.
2.2 Condition of Leased Property. Tenant acknowledges receipt and
----------------------------
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Leased Property, all applicable
Legal Requirements, the lien of any financing instruments, mortgages and deeds
of trust existing prior to the Commencement Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an inspection
of the Leased Property and the record title thereto or by an accurate survey
thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF
THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR
EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR
- 15 -
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, 2012.
2.4 Extended Term. Provided that no Event of Default shall have occurred
-------------
and be continuing, this Agreement shall be in full force and effect, and the
term of all of the Other Leases shall be simultaneously extended, the Term shall
be automatically extended for three (3) consecutive renewal terms of twelve (12)
years each (collectively, the "Extended Terms''), unless Tenant shall give
--------------
Landlord Notice, not later than two (2) years prior to the scheduled expiration
of the then current Term of this Agreement (Fixed or Extended, as the case may
be), that Tenant elects not so to extend the term of this Agreement (and time
shall be of the essence with respect to the giving of such Notice). It is
expressly understood and agreed that such Notice from Tenant shall be void and
of no effect and the Term shall be automatically extended unless Tenant shall
simultaneously elect not to extend the term of the Other Leases.
Each Extended Term shall commence on the day succeeding the expiration of
the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it
elects not to extend the Term in accordance with this Section 2.4, this
-----------
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement.
Otherwise, the extension of this Agreement shall be automatically effected
without the execution of any additional documents; it being understood and
agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.
- 16 -
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) 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 Section
-----------------------------------------------------------------
5.1.2(b), 10.2.4 or 11.2. Effective on the date of each disbursement to
------------------------
pay for the cost of any repairs, maintenance, renovations or replacements
pursuant to Section 5.1.2(b), 10.2.4 or 11.2, the Minimum Rent shall be
--------------------------------
increased by a per annum amount equal to ten percent (10%) of the amount so
--- -----
disbursed. If any such disbursement is made during any Accounting Period
on a day other than the first day of an Accounting Period, Tenant shall pay
to Landlord on the first day of the immediately following Accounting Period
(in addition to the amount of Minimum Rent payable with respect to such
Accounting Period, as adjusted pursuant to this paragraph (b)) the amount
by which Minimum Rent for the preceding Accounting Period, as adjusted for
such disbursement on a per diem basis, exceeded the amount of Minimum Rent
paid by Tenant for such preceding Accounting Period.
3.1.2 Additional Rent.
---------------
(a) Amount. For each Lease Year or portion thereof, Tenant shall pay
------
an aggregate amount of additional rent ("Additional Rent") with respect to
---------------
such Lease Year, pursuant to this Agreement and the Other Leases, in an
amount, not less than zero, equal to five percent (5%) of Excess Gross
Revenues.
- 17 -
(b) Quarterly Installments. Installments of Additional Rent for each
----------------------
Lease Year or portion thereof shall be calculated and paid quarterly in
arrears, together with an Officer's Certificate setting forth the
calculation of Additional Rent due and payable for such quarter. Copies of
each Accounting Period Statement (as defined in the Management Agreement)
delivered pursuant to Section 5.03 of the Management Agreement shall be
delivered to Landlord upon receipt by Tenant and each quarterly payment of
Additional Rent shall be due and payable and shall be delivered to Landlord
with the payment of the Minimum Rent next due after receipt of such
Accounting Period Statement, together with an Officer's Certificate setting
forth the calculation of Additional Rent due and payable for such quarter.
(c) Reconciliation of Additional Rent. In addition, on or before
---------------------------------
April 30, of each year, commencing April 30, 1996, Tenant shall deliver to
Landlord an Officer's Certificate setting forth the Gross Revenues for the
Collective Leased Properties for such preceding Lease Year, together with
an audit of Tenant's revenues for the preceding Lease Year, conducted by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Co., or another "Big Six", so-called, firm of
independent certified public accountants proposed by Tenant and approved by
Landlord (which approval shall not be unreasonably withheld or delayed).
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 Additional
Rent next coming due in the amount of such difference, together with
interest at the Interest Rate, which interest shall accrue from the date of
payment of Tenant until the date such credit is applied or paid, as the
case may be. If such credit cannot be made because the Term has expired
prior to application in full thereof, provided no Event of Default has
occurred and is continuing, Landlord shall pay the unapplied balance of
such credit to Tenant, together with interest at the Interest Rate, which
interest shall accrue from the date of payment by Tenant until the date of
payment by Landlord.
(d) Confirmation of Additional Rent. Tenant shall utilize, or cause
-------------------------------
to be utilized, an accounting system for the Collective Leased Properties
in accordance with its usual and customary practices and in accordance with
- 18 -
GAAP, which will accurately record all Gross Revenues 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 Gross Revenues for such Lease Year. Landlord, at its own
expense except as provided hereinbelow, shall have the right, exercisable
by Notice to Tenant within one (1) year after receipt of the applicable
Officer's Certificate, by its accountants or representatives to audit the
information set forth in the Officer's Certificate referred to in
subparagraph (c) above and, in connection with such audits, to examine
Tenant's and the Manager's books and records with respect thereto
(including supporting data and sales and excise tax returns). If any such
audit discloses a deficiency in the payment of Additional Rent, and either
Tenant agrees with the result of such audit or the matter is otherwise
compromised with Landlord, Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as agreed upon or
compromised as aforesaid, is more than three percent (3%) of the Gross
Revenues reported by Tenant for such Lease Year and, as a result, Landlord
did not receive at least ninety-five percent (95%) of the Additional Rent
payable with respect to such Lease Year, Tenant shall pay the reasonable
cost of such audit and examination. If any such audit discloses that
Tenant paid more Additional Rent for any Lease Year than was due hereunder,
and either Landlord agrees with the result of such audit or the matter is
otherwise determined, provided no Event of Default has occurred and is
continuing, Landlord shall grant Tenant a credit equal to the amount of
such overpayment against Additional Rent next coming due in the amount of
such difference, as finally agreed or determined, together with interest at
the Interest Rate, which interest shall accrue from the time of payment by
Tenant until the date such credit is applied or paid, as the case may be.
If such a credit cannot be made because the Term has expired before the
credit can be applied in full, provided no Event of Default has occurred
and is continuing, Landlord shall pay the unapplied balance of such credit
to Tenant, together with interest at the Interest Rate, which interest
shall accrue from the date of payment by Tenant until the date of payment
from Landlord.
Any proprietary information obtained by Landlord with respect to
Tenant or the Manager pursuant to the provisions of this Agreement shall be
treated as confidential, except that such information may be used, subject
to appropriate confidentiality safeguards, in any litigation between the
parties and except further that Landlord may disclose such information to
its prospective lenders, provided that Landlord shall direct and obtain the
agreement of such lenders to maintain such information as confidential.
The obligations of Tenant and Landlord contained in this Section 3.1.2
-------------
shall survive the expiration or earlier termination of this Agreement.
- 19 -
3.1.3 Additional Charges. In addition to the Minimum Rent and
------------------
Additional Rent payable hereunder, Tenant shall pay to the appropriate parties
and discharge as and when due and payable the following (collectively,
"Additional Charges"):
---------- -------
(a) Impositions. Subject to Article 8 relating to permitted contests,
----------- ---------
Tenant shall pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost (other than any opportunity cost as a result of a
failure to take advantage of any discount for early payment) may be added
for non-payment, such payments to be made directly to the taxing
authorities where feasible, and shall promptly, upon request, furnish to
Landlord copies of official receipts or other reasonably satisfactory proof
evidencing such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may exercise the
option to pay the same (and any accrued interest on the unpaid balance of
such Imposition) in installments and, in such event, shall pay such
installments during the Term as the same become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Landlord,
at its expense, shall, to the extent required or permitted by Applicable
Law, prepare and file all tax returns and pay all taxes due in respect of
Landlord's net income, gross receipts, sales and use, single business,
transaction privilege, rent, ad valorem, franchise taxes and taxes on its
capital stock, and Tenant, at its expense, shall, to the extent required or
permitted by Applicable Laws and regulations, prepare and file all other
tax returns and reports in respect of any Imposition as may be required by
Government Agencies. Provided no Event of Default shall have occurred and
be continuing, if any refund shall be due from any taxing authority in
respect of any Imposition paid by Tenant, the same shall be paid over to or
retained by Tenant. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event Government Agencies classify
any property covered by this Agreement as personal property, Tenant shall
file all personal property tax returns in such jurisdictions where it may
legally so file. Each party shall, to the extent it possesses the same,
provide the other, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Landlord is legally required to file personal property tax
returns for property covered by this Agreement, Landlord shall provide
Tenant with copies of assessment notices in sufficient time for Tenant to
file a protest. All Impositions assessed against such personal property
shall be (irrespective of whether Landlord or Tenant shall file the
relevant return) paid by Tenant not later than the last date on which the
same may be made without interest or penalty.
- 20 -
Landlord shall give prompt Notice to Tenant and the Manager of all
Impositions payable by Tenant hereunder of which Landlord at any time has
knowledge; provided, however, that Landlord's failure to give any such
-------- -------
notice shall in no way diminish Tenant's obligation hereunder to pay such
Impositions (except that Landlord shall be responsible for any interest or
penalties incurred as a result of Landlord's failure promptly to forward
the same).
(b) Utility Charges. Tenant shall pay or cause to be paid all charges
---------------
for electricity, power, gas, oil, water and other utilities used in
connection with the 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, and
all amounts payable under or with respect to the Management Agreement
(except as expressly provided in Section 5.1.2(b)) and any equipment leases
----------------
and all agreements to indemnify Landlord under Sections 4.3.2 and 9.7.
----------------------
(e) Reimbursement for Additional Charges. If Tenant pays or causes to
------------------------------------
be paid property taxes or similar or other Additional Charges attributable
to periods after the end of the Term, whether upon expiration or sooner
termination of this Agreement (other than termination by reason of an Event
of Default), Tenant may, within a reasonable time after the end of the
Term, provide Notice to Landlord of its estimate of such amounts. Landlord
shall promptly reimburse Tenant for all payments of such taxes and other
similar Additional Charges that are attributable to any period after the
Term of this Agreement (unless this Agreement shall have been terminated
following an Event of Default).
3.2 Late Payment of Rent, Etc. If any installment of Minimum Rent,
-------------------------
Additional Rent or Additional Charges (but only as 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,
- 21 -
Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted
by law) computed at the Overdue Rate on the amount of such installment from the
due date of such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, except as expressly provided in Section 3.1.3(a), Tenant shall promptly pay
----------------
and discharge, as Additional Charges, every fine, penalty, interest and cost
which may be added for non-payment or late payment of such items. Landlord
shall have all legal, equitable and contractual rights, powers and remedies
provided either in this Agreement or by statute or otherwise in the case of non-
payment of the Additional Charges as in the case of non-payment of the Minimum
Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord so that this
---------
Agreement shall yield to Landlord the full amount of the installments or amounts
of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise, including those provisions for
adjustment or abatement of such Rent.
3.4 No Termination Abatement, Etc. Except as otherwise specifically
------------------------------
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or 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 gross negligence or willful misconduct.
Except as otherwise specifically provided in this Agreement, Tenant hereby
waives all rights arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law, to (a) modify, surrender or terminate
this Agreement or quit or surrender the Leased Property or any portion thereof,
or (b) entitle Tenant to any abatement, reduction, suspension or deferment of
the Rent or other sums payable or
- 22 -
other obligations to be performed by Tenant hereunder. The obligations of each
party hereunder shall be separate and independent covenants and agreements, and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement. In any instance where,
after the occurrence of an Event of Default, Landlord retains funds which, but
for the occurrence of such Event of Default, would be payable to Tenant,
Landlord shall refund such funds to Tenant to the extent the amount thereof
exceeds the amount necessary to compensate Landlord for any cost, loss or damage
incurred in connection with such Event of Default.
3.5 Security for Tenant's Performance. Tenant acknowledges that the
---------------------------------
Initial Retained Funds and the Option Retained Funds (as defined in the Purchase
Agreement) constitute security for the faithful observance and performance by
Tenant of all the terms, covenants and conditions of this Agreement by Tenant to
be observed and performed. If any Event of Default shall occur and be
continuing, Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, appropriate and apply the
entire amount of such Retained Funds or so much thereof as may be necessary to
compensate Landlord toward the payment of the Rent or other sums or loss or
damage sustained by Landlord due to such breach by Tenant. It is understood and
agreed that the amount of such Retained Funds is not to be considered as prepaid
rent, nor shall damages be limited to the amount of the amount of such Retained
Funds. Provided this Agreement shall not be terminated as a result of an Event
of Default, such Retained Funds shall be paid as provided in the Purchase
Agreement.
ARTICLE 4
---------
USE OF THE LEASED PROPERTY
--------------------------
4.1 Permitted Use.
-------------
4.1.1 Permitted Use.
-------------
(a) Except as otherwise provided in the Management Agreement, Tenant
shall, at all times during the Term and at any other time that Tenant shall
be in possession of the Leased Property, continuously use and operate, and
cause the Manager to use and operate, the Leased Property as a Marriott
Courtyard hotel and any uses incidental thereto. Subject to Section 16.3,
------------
Tenant shall not use (and shall direct the Manager not to use) the Leased
Property or any portion thereof for any other use without the prior written
consent of Landlord. No use shall be made or permitted to be made of the
Leased Property and no acts shall be done thereon which will cause the
cancellation of any insurance policy covering the Leased Property or any
part thereof (unless another adequate policy is available), nor shall
Tenant sell or
- 23 -
otherwise provide or permit to be kept, used or sold in or about
the Leased Property any article which may be prohibited by law or by
the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriter's
regulations. Tenant shall, at its sole cost (except as expressly provided
in Section 5.1.2(b)), comply (or direct the Manager to comply) with all
----------------
Insurance Requirements. Except as otherwise provided in the Management
Agreement, Tenant shall not take or omit to take (and Tenant shall direct
the Manager not to take or omit to take) any action, the taking or omission
of which materially impairs the value or the usefulness of the Leased
Property or any part thereof for its Permitted Use.
(b) In the event that, in the reasonable determination of Tenant, it
shall no longer be economically practical to operate the Leased Property as
a Marriott Courtyard hotel, Tenant shall give Landlord Notice thereof,
which Notice shall set forth in reasonable detail the reasons therefor.
Thereafter, Landlord and Tenant shall negotiate in good faith to agree on
an alternative use for the Leased Property, appropriate adjustments to the
Additional Rent and other related matters; provided, however, in no such
-------- -------
event shall the Minimum Rent be reduced or abated.
4.1.2 Necessary Approvals. Tenant shall proceed with all due
-------------------
diligence and exercise best efforts to obtain and maintain, and shall direct the
Manager to obtain and maintain, all approvals necessary to use and operate, for
its Permitted Use, the Leased Property and the Hotel located thereon under
applicable law.
4.1.3 Lawful Use. Etc. Tenant shall not, and shall direct the
-----------------
Manager not to, use or suffer or permit the use of 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 the Leased Property, or in the 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) might reasonably impair Landlord's title
thereto or to any portion thereof, or (ii) may reasonably allow a claim or
claims for adverse usage or adverse possession by the public, as such, or of
implied dedication of the Leased Property or any portion thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc. Except as
-------------------------------------------------
otherwise provided in the Management Agreement, subject to the provisions of
Article 8 and Section 5.1.2(b), Tenant, at its sole expense, shall (or shall
-----------------------------
direct the Manager to) (i) comply with Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair, alteration
and restoration of the Leased Property and with the terms and conditions of any
ground lease affecting the Leased Property, and (ii) and (iii) procure, maintain
and comply with all
- 24 -
appropriate licenses, and other authorizations and agreements required for any
use of the Leased Property and Tenant's Personal Property, if any, then being
made, and for the proper erection, installation, operation and maintenance of
the Leased Property or any part thereof.
4.3 Environmental Matters.
---------------------
4.3.1 Restriction on Use, Etc. During the Term and any other time
------------------------
that Tenant shall be in possession of the Leased Property, Tenant shall not (and
shall direct the Manager not to) 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 Community Right to Know
report which is required to be filed by Tenant or the Manager with respect to
the Leased Property pursuant to ▇▇▇▇ Title III or any other Applicable Law, (c)
transmit to Landlord copies of any citations, orders, notices or other
governmental communications received by Tenant or the Manager or their
respective agents or representatives with respect thereto (collectively,
"Environmental Notice"), which Environmental Notice requires a written response
--------------------
or any action to be taken and/or if such Environmental Notice gives notice of
and/or presents a material risk of any material violation of any Applicable Law
and/or presents a material risk of any material cost, expense, loss or damage
(an "Environmental Obligation"), (d) observe and comply (and direct the Manager
------------------------
to observe and comply) with all Applicable Laws relating to the use, maintenance
and disposal of Hazardous Substances and all orders or directives from any
official, court or agency of competent jurisdiction relating to the use or
maintenance or requiring the removal, treatment, containment or other
disposition thereof, and (e) pay or otherwise dispose of any fine, charge or
Imposition related thereto, unless Tenant or the Manager shall contest the same
in good faith and by appropriate proceedings and the right to use and the value
of the Leased Property is not materially and adversely affected thereby.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's and the Manager's right
to contest the same in accordance with Article 8, Tenant shall take (and shall
---------
direct the Manager to take) all actions and incur any and all expenses, as may
be reasonably necessary and as may be required by any Government Agency, (i) to
clean up and remove from and about the Leased Property all Hazardous Substances
thereon, (ii) to contain and prevent any further release or threat of release of
- 25 -
Hazardous Substances on or about the Leased Property and (iii) to use good faith
efforts to eliminate any further release or threat of release of Hazardous
Substances on or about the Leased Property.
4.3.2 Indemnification of Landlord. Tenant shall protect, indemnify
---------------------------
and hold harmless Landlord and each Hotel Mortgagee, their trustees, officers,
agents, employees and beneficiaries, and any of their respective successors or
assigns with respect to this Agreement (collectively, the "Indemnitees" and,
-----------
individually, an "Indemnitee") for, from and against any and all debts, liens,
----------
claims, causes of action, administrative orders or notices, costs, fines,
penalties or expenses (including, without limitation, reasonable attorney's fees
and expenses) imposed upon, incurred by or asserted against any Indemnitee
resulting from, either directly or indirectly, the presence during the Term (or
any other time Tenant shall be in possession of the Leased Property) in, upon or
under the soil or ground water of the Leased Property or any properties
surrounding the Leased Property of any Hazardous Substances in violation of any
Applicable Law or otherwise, provided that any of the foregoing arises by reason
of any failure by Tenant, the Manager or any Person claiming by, through or
under Tenant or the Manager to perform or comply with any of the terms of this
Section 4.3, except to the extent the same arise from the gross negligence or
-----------
willful misconduct of Landlord or any other Indemnitee. Tenant's duty herein
includes, but is not limited to, costs associated with personal injury or
property damage claims as a result of the presence prior to the expiration or
sooner termination of the Term and the surrender of the Leased Property to
Landlord in accordance with the terms of this Agreement of Hazardous Substances
in, upon or under the soil or ground water of the Leased Property in violation
of any Applicable Law. Upon Notice from Landlord and any other of the
Indemnitees, Tenant shall undertake the defense, at Tenant's sole cost and
expense, of any indemnification duties set forth herein, in which event, Tenant
shall not be liable for payment of any duplicative attorneys' fees incurred by
any Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) incurred by Landlord and arising from a failure of Tenant
strictly to observe and perform the requirements of this Section 4.3, which
-----------
amounts shall bear interest from the date ten (10) days after written demand
therefor is given to Tenant until paid by Tenant to Landlord at the Overdue
Rate.
4.3.3 Survival. The provisions of this Section 4.3 shall survive the
-------- -----------
expiration or sooner termination of this Agreement.
- 26 -
ARTICLE 5
---------
MAINTENANCE AND REPAIRS
-----------------------
5.1 Maintenance and Repairs.
-----------------------
5.1.1 Tenant's Obligations.
--------------------
(a) Tenant shall, at its sole cost and expense (except as expressly
provided in Section 5.1.2(b)), or shall direct the Manager to, keep the
----------------
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto (and Tenant's Personal Property, if any) in good order and repair,
reasonable wear and tear excepted (whether or not the need for such repairs
occurs as a result of Tenant's or the Manager's use, any prior use, the
elements or the age of the Leased Property or Tenant's Personal Property,
if any, or any portion thereof), and shall promptly make (or cause the
Manager to make) all necessary and appropriate repairs and replacements
thereto of every kind and nature, whether interior or exterior, structural
or nonstructural, ordinary or extraordinary, foreseen or unforeseen or
arising by reason of a condition existing prior to the commencement of the
Term (concealed or otherwise). All repairs shall be made in a good,
workmanlike manner, consistent with the Manager's and industry standards
for like hotels in like locales, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to any such work. Tenant shall not take or omit to take (and
shall direct the Manager not to take or omit to take) any action, the
taking or omission of which would materially and adversely impair the value
or the usefulness of the Leased Property or any part thereof for its
Permitted Use. Tenant's obligations under this Section 5.1.1(a) shall be
---------------
limited in the event of any casualty or Condemnation as set forth in
Sections 10.2 and 11.2 and Tenant's obligations with respect to Hazardous
----------------------
Substances are as set forth in Section 4.3.
-----------
(b) In addition, notwithstanding anything in this Agreement to the
contrary, Tenant shall, with respect to each Lease Year, or portion
thereof, fund, or cause the Manager to fund, into the FF&E Reserve a cash
amount equal to not less than five percent (5%) of Gross Revenues from the
Leased Property for such Lease Year, or portion thereof, which amounts
shall be applied to the cost of repairs, maintenance, renovations and
replacements to and at the Leased Property in accordance with this
Agreement and the Management Agreement. Provided that Tenant shall comply
with the provisions of this paragraph (b) and any similar provisions of the
Management Agreement, any additional funds required for repairs,
maintenance, renovations and replacements to and at the Leased Property in
excess of those on deposit in the FF&E Reserve shall be advanced by
Landlord, subject to and in accordance with Section 5.1.2(b).
---------------
- 27 -
5.1.2 Landlord's Obligations.
----------------------
(a) Except as otherwise expressly provided in this Agreement, Landlord
shall not, under any circumstances, be required to build or rebuild any
improvement on the 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, except as provided in Section
-------
5.1.2(b), to make any expenditure whatsoever with respect thereto, or to
--------
maintain the Leased Property in any way. Except as otherwise expressly
provided in this Agreement, Tenant hereby waives, to the maximum extent
permitted by law, the right to make repairs at the expense of Landlord
pursuant to any law in effect on the date hereof or hereafter enacted.
Landlord shall have the right to give, record and post, as appropriate,
notices of nonresponsibility under any mechanic's lien laws now or
hereafter existing.
(b) If, at any time, the Management Agreement requires that funds be
disbursed for repairs, maintenance, renovations or replacements at or to
the Leased Property (including, but not limited to, pursuant to Section
8.01 and 8.03 of the Management Agreement), or, pursuant to the terms of
this Agreement (including, without limitation, Section 4.3), Tenant is
-----------
required to make any expenditures in connection with any repair,
maintenance 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, Tenant may, at its election, give Landlord Notice thereof,
which Notice shall set forth, in reasonable detail, the nature of the
required repair, renovation or replacement, the estimated cost thereof and
such other information with respect thereto as Landlord may reasonably
require. Provided that no Event of Default shall have occurred and be
continuing and Tenant shall otherwise comply with the applicable provisions
of Article 6, Landlord shall, within ten (10) Business Days after such
---------
Notice, subject to and in accordance with the applicable provisions of
Article 6, disburse such required funds to Tenant (or, if Tenant shall so
---------
elect, directly to the Manager or any other Person performing the required
work) and, upon such disbursement, the Minimum Rent shall be adjusted as
provided in Section 3.1.1(b).
----------------
5.1.3 Nonresponsibility of Landlord, Etc. All materialmen,
----------------------------------
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the 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
- 28 -
any work done or material furnished by Tenant, the Manager or for any other
purpose during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any way
as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or materialmen
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the 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 the 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 Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Permitted Use and all of such Personal Property shall, upon the
expiration or earlier termination of this Agreement, shall become the property
of Landlord. If, 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 total Condemnation in accordance
with Article 10 or Article 11).
---------- ----------
In addition, upon the expiration or earlier termination of this Agreement,
Tenant shall, at Landlord's sole cost and expense, use its good faith efforts to
transfer to and cooperate with Landlord or Landlord's nominee in connection with
the processing of all applications for licenses, operating permits and other
governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental Entities which may be necessary for the use
and operation of the Hotel as then operated. Consistent with the terms of the
- 29 -
Management Agreement, if requested by Landlord, Tenant will direct the Manager
to continue to manage the Hotel after the expiration of the Term and for up to
one hundred twenty (120) days, on such reasonable terms (which shall include an
agreement to reimburse the Manager for its reasonable out-of-pocket costs and
expenses, and reasonable administrative costs), as Landlord shall reasonably
request.
5.4 Management Agreement. Except as expressly provided in Section
-------------------- -------
5.1.2(b), Tenant shall, at its sole cost and expense, perform all of the
-------
obligations of "Owner" under the Management Agreement, including, without
limitation, the funding of the FF&E Reserve and, upon the expiration or sooner
termination of this Agreement, the then existing balance of the FF&E Reserve
shall be paid to or as directed by Landlord. Tenant shall, at all times, direct
the Manager to perform all of the Manager's obligations under the Management
Agreement. Tenant shall not amend or modify the Management Agreement without
Landlord's prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Tenant shall not take any action, grant any
consent or, except as provided in the Management Agreement, permit any action
under the Management Agreement, which might have a material adverse effect on
Landlord, without the prior written consent of Landlord. Except as provided in
the Management Agreement, Tenant shall not agree to any change in the Manager,
to any change in the Management Agreement, terminate the Management Agreement or
permit the Manager to assign the Management Agreement without the prior written
approval of Landlord in each instance, which approval shall not be unreasonably
withheld, delayed or conditioned. If Landlord shall perform any obligations of
"Owner" under the Management Agreement (which Landlord may do subject to Section
-------
12.5), the cost of such performance shall be payable upon demand by Tenant to
----
Landlord with interest accruing from the demand date at the Overdue Rate and
Landlord shall have the same rights and remedies for failure to pay such costs
on demand as for Tenant's failure to pay Minimum Rent.
ARTICLE 6
---------
IMPROVEMENTS, ETC.
------------------
6.1 Improvements to the Leased Property. Tenant shall not make, construct
-----------------------------------
or install (and shall direct the Manager not to construct or install) any
Capital Additions without, in each instance, obtaining Landlord's prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned provided that (a) construction or installation of the same would not
adversely affect or violate any Legal Requirement or Insurance Requirement
applicable to 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 danger to
person or property. Prior to
- 30 -
commencing construction of any Capital Addition, Tenant shall submit, or shall
direct the Manager to submit, to Landlord, in writing, a proposal setting forth,
in reasonable detail, any such proposed improvement and shall provide to
Landlord such plans and specifications, and such permits, licenses, contracts
and such other information concerning the same as Landlord may reasonably
request. Landlord shall have thirty (30) days to review all materials submitted
to Landlord in connection with any such proposal. Failure of Landlord to respond
to Tenant's or the Manager's proposal within thirty (30) days after receipt of
all information and materials requested by Landlord in connection with the
proposed improvement shall be deemed to constitute approval of the same. Without
limiting the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such proposed improvement and the use
or uses to which it will be put. No Capital Addition shall be made which would
tie in or connect any Leased Improvement 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. Tenant shall
not finance, and shall direct the Manager not to finance, the cost of any
construction of such improvement by the granting of a lien on or security
interest in the Leased Property or such improvement, or Tenant's interest
therein, without the prior written consent of Landlord, which consent may be
withheld by Landlord in Landlord's sole discretion. Any such improvements shall,
upon the expiration or sooner termination of this Agreement, remain or pass to
and become the property of Landlord, free and clear of all encumbrances other
than Permitted Encumbrances.
6.2 Salvage. All materials which are scrapped or removed in connection
-------
with the making of either Capital Additions or non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
---------
such work.
ARTICLE 7
---------
LIENS
-----
7.1 Liens. Subject to Article 8, Tenant shall not, directly or
----- ---------
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) subleases permitted by Article 17,
----------
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet due and payable, or (ii) are
being contested in accordance with Article 8, (f) liens of mechanics, laborers,
---------
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable or are
- 31 -
for sums that are being contested in accordance with Article 8, (g) any Hotel
---------
Mortgages or other liens which are the responsibility of Landlord pursuant to
the provisions of Article 21 and (h) Landlord Liens.
----------
7.2 Landlord's Lien. In addition to any statutory landlord's lien and in
---------------
order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord a security interest in and an express contractual lien upon Tenant's
Personal Property (except motor vehicles), and all ledger sheets, files,
records, documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing) relating to the
operation of the Hotels (the "Records") and all proceeds therefrom, subject to
-------
any Permitted Encumbrances; and such Tenant's Personal Property shall not be
removed from the Leased Property at any time when a Default or an Event of
Default has occurred and is continuing.
Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with the provisions of the applicable laws of the State. Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
---------
PERMITTED CONTESTS
------------------
Tenant and the Manager shall have the right to contest the amount or
validity of any Imposition, Legal Requirement, Insurance Requirement,
Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim
(collectively, "Claims") as to 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 and the Manager to exercise the
rights granted pursuant to this Article 8) or any interest therein or result in
---------
or reasonably be expected to result in a lien attaching to the Leased Property,
(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.
- 32 -
Landlord agrees to join in any such proceedings if required legally to prosecute
such contest, provided that Landlord shall not thereby be subjected to any
liability therefor (including, without limitation, for the payment of any costs
or expenses in connection therewith) unless Tenant agrees by agreement in form
and substance reasonably satisfactory to Landlord, to assume and indemnify
Landlord with respect to the same. Tenant shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any
Claims when finally determined, (y) to provide reasonable security therefor, or
(z) to prosecute or cause to be prosecuted any such contest diligently and in
good faith, Landlord may, upon reasonable notice to Tenant (which notice may be
oral and shall not be required if Landlord shall reasonably determine that the
same is not practicable), pay such charges, together with interest and penalties
due with respect thereto, and Tenant shall reimburse Landlord therefor, upon
demand, as Additional Charges.
ARTICLE 9
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
9.1 General Insurance Requirements. Tenant shall, at all times during the
------------------------------
Term and at any other time Tenant shall be in possession of the Leased Property,
keep (or direct the Manager to keep) the Leased Property and all property
located therein or thereon, insured against the risks and in the amounts as
follows and shall maintain the following insurance:
(a) "All-risk" property insurance, including insurance against loss or
damage by fire, vandalism and malicious mischief, explosion of
steamboilers, pressure vessels or other similar apparatus, now or hereafter
installed in the Hotel located at the Leased Property, with equivalent
coverage as that provided by the usual extended coverage endorsements, in
an amount equal to one hundred percent (100%) of the then full Replacement
Cost thereof (as defined in Section 9.2);
-----------
(b) Business interruption and blanket earnings plus extra expense
under a rental value insurance policy or endorsement covering risk of loss
during the lesser of the 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 (on an occurrence basis and on a 1973 or 1988 ISO CGL
form or on a form otherwise maintained by similarly situated
- 33 -
tenants, including, without limitation, broad form contractual liability,
independent contractor's hazard and completed operations coverage) in an
amount not less than Two Million Dollars ($2,000,000) per occurrence and
umbrella coverage of all such claims in an amount not less than Twenty-
Three Million Dollars ($23,000,000);
(d) Flood (if the Leased Property is located in whole or in part
within an area identified as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968, as amended, or the Flood Disaster Protection Act of
1973, as amended (or any successor acts thereto)), and such other hazards
and in such amounts as may be customary for comparable properties in the
area;
(e) Worker's compensation insurance coverage for all persons employed
by Tenant on the Leased Property with statutory limits and otherwise with
limits of and provisions in accordance with the requirements of applicable
local, State and federal law, and employer's liability insurance as is
customarily carried by similar employers; and
(f) Such additional insurance as may be reasonably required, from time
to time, by Landlord or any Hotel Mortgagee and which is customarily
carried by comparable lodging properties in the area.
9.2 Replacement Cost. "Replacement Cost," as used herein, shall mean the
---------------- ----------------
actual replacement cost of the property requiring replacement from time to time,
including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In the event either
party believes that the then full Replacement Cost has increased or decreased at
any time during the Term, such party, at its own cost, shall have the right to
have such full Replacement Cost redetermined by an independent accredited
appraiser approved by the other, which approval shall not be unreasonably
withheld or delayed. The party desiring to have the full Replacement Cost so
redetermined shall forthwith, on receipt of such determination by such
appraiser, give Notice thereof to the other. The determination of such
appraiser shall be final and binding on the parties hereto until any subsequent
determination under this Section 9.2, and Tenant shall forthwith conform the
-----------
amount of the insurance carried to the amount so determined by the appraiser.
9.3 Waiver of Subrogation. Landlord and Tenant agree that (insofar as and
---------------------
to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in the 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
- 34 -
any and all claims with respect to such loss; and they further agree that their
respective insurance companies shall have no right of subrogation against the
other on account thereof, even though extra premium may result therefrom. In the
event that any extra premium is payable by Tenant as a result of this provision,
Landlord shall not be liable for reimbursement to Tenant for such extra premium.
9.4 Form Satisfactory, Etc. All insurance policies and endorsements
-----------------------
required pursuant to this Article 9 shall be fully paid for, nonassessable and,
---------
except for umbrella and flood coverage, be issued by insurance carriers
authorized to do business in the State, having a general policy holder's rating
of no less than B++ in Best's latest rating guide. All such policies described
in Sections 9.1(a) through (d)shall include no deductible in excess of Two
--------------------------
Hundred Fifty Thousand Dollars ($250,000) and, with the exception of the
insurance described in Section 9.1(e), shall name Landlord and any Hotel
-------------
Mortgagee as additional insureds, as their interests may appear. All loss
adjustments shall be payable as provided in Article 10. Tenant shall cause all
----------
insurance premiums to be paid and shall deliver policies or certificates thereof
to Landlord prior to their effective date (and, with respect to any renewal
policy, prior to the expiration of the existing policy). All such policies
shall provide Landlord (and any Hotel Mortgagee if required by the same) thirty
(30) days' prior written notice of any material change or cancellation of such
policy. In the event Tenant shall fail to effect such insurance as herein
required, to pay the premiums therefor or to deliver such policies or
certificates to Landlord or any Hotel Mortgagee at the times required, Landlord
shall have the right, but not the obligation, subject to the provisions of
Section 12.5, to acquire such insurance and pay the premiums therefor, which
amounts shall be payable to Landlord, upon demand, as Additional Charges,
together with interest accrued thereon at the Overdue Rate from the date such
payment is made until (but excluding) the date repaid.
9.5 Blanket Policy. Notwithstanding anything to the contrary contained in
--------------
this Article 9, Tenant's obligation to maintain the insurance herein required
---------
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant or the Manager, provided, that (a)
the coverage thereby afforded 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 products, completed operations
and flood. Notwithstanding any other provisions of Article 9 or 10, Tenant may
---------------
permit the Manager to self insure or otherwise retain such workers' insurance
risks or portions thereof as the Manager does with respect to other similar
hotels the Manager owns, leases or manages under the Marriott name in the United
States pursuant to any established self insurance program of Marriott
International, Inc.
- 35 -
9.6 No Separate Insurance. Tenant shall not take out separate insurance,
---------------------
concurrent in form or contributing in the event of loss with that required by
this Article 9, or increase the amount of any existing insurance by securing an
---------
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of such insurance, including Landlord and all
Hotel Mortgagees, are included therein as additional insureds and the loss is
payable under such insurance in the same manner as losses are payable under this
Agreement. In the event Tenant shall take out any such separate insurance or
increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the existence of any
---------------------------
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks or rights of
way, (b) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant or anyone claiming under Tenant of
the Leased Property or Tenant's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Landlord is
made a party or participant relating to the Leased Property or Tenant's Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any Impositions
that are the obligations of Tenant to pay pursuant to the applicable provisions
of this Agreement, and (d) any failure on the part of Tenant or anyone claiming
under Tenant to perform or comply with any of the terms of this Agreement.
Tenant, at its expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Landlord (and shall not be
responsible for any duplicative attorneys' fees incurred by Landlord) or may
compromise or otherwise dispose of the same, with Landlord's prior written
consent (which consent may not be unreasonably withheld or delayed). In the
event Landlord shall unreasonably withhold or delay its consent, Tenant shall
not be liable pursuant to this Section 9.7 for any incremental increase in costs
-----------
or expenses resulting therefrom. The obligations of Tenant under this Section
-------
9.7 are in addition to the obligations set forth in Section 4.3 and shall
--- -----------
survive the termination of this Agreement.
- 36 -
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 the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article 9 (other than the proceeds of any business interruption
---------
insurance) shall be paid directly to Landlord (subject to the provisions of
Section 10.2) and all loss adjustments with respect to losses payable to
------------
Landlord shall require the prior written consent of Landlord; provided, however,
-------- -------
that, so long as no Event of Default shall have occurred and be continuing, all
such proceeds less than or equal to Two Hundred Fifty Thousand Dollars
($250,000) shall be paid directly to Tenant or the Manager and such losses may
be adjusted without Landlord's consent. If Tenant is required to reconstruct or
repair the Leased Property as provided herein, such proceeds shall be paid out
by Landlord from time to time for the reasonable costs of reconstruction or
repair of the Leased Property necessitated by such damage or destruction,
subject to and in accordance with the provisions of Section 10.2.4. Provided no
--------------
Default or Event of Default has occurred and is continuing, any excess proceeds
of insurance remaining after the completion of the restoration shall be paid to
Tenant or the Manager. In the event that the provisions of Section 10.2.1 are
---------------
applicable, the insurance proceeds shall be retained by the party entitled
thereto pursuant to Section 10.2.1. All salvage resulting from any risk covered
--------------
by insurance shall belong to Landlord, provided any rights to the same have been
waived by the insurer.
10.2 Damage or Destruction.
---------------------
10.2.1 Damage or Destruction of Leased Property. If, during the
----------------------------------------
Term, the Leased Property shall be totally or partially destroyed and the Hotel
located thereon is thereby rendered Unsuitable for Its Permitted Use, either
Landlord or Tenant may, by the giving of Notice thereof to the other, terminate
this Agreement, whereupon, this Agreement shall terminate and Landlord shall be
entitled to retain the insurance proceeds payable on account of such damage.
10.2.2 Partial Damage or Destruction. If, during the Term, the
-----------------------------
Leased Property shall be totally or partially destroyed but the Hotel is not
rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section
-------
10.2.3, promptly restore the Hotel as provided in Section 10.2.4.
------ --------------
10.2.3 Insufficient Insurance Proceeds. If the cost of the repair or
-------------------------------
restoration of the Leased Property exceeds the amount of insurance proceeds
received by Landlord and Tenant pursuant to Article 9(a), (c), (d) or, if
-----------------------------
applicable, (e), Tenant shall give Landlord Notice thereof which notice shall
--------------
set forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and
- 37 -
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 by Notice to the other, whereupon, this Agreement shall terminate 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 the Leased Property pursuant to Section 10.2, Tenant shall (or shall
------------
direct the Manager to) commence promptly and continue diligently to perform the
repair and restoration of the Leased Property (hereinafter called the "Work"),
----
so as to restore the Leased Property in compliance with all Legal Requirements
and so that the Leased Property shall be, to the extent practicable,
substantially equivalent in value and general utility to its general utility and
value immediately prior to such damage or destruction. Subject to the terms
hereof, Landlord shall advance the insurance proceeds and any additional amounts
payable by Landlord pursuant to Section 10.2.3 to Tenant regularly during the
--------------
repair and restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than monthly
within ten (10) Business Days after Tenant submits to Landlord a written
requisition and substantiation therefor on AIA Forms G702 and G703 (or on such
other form or forms as may be reasonably acceptable to Landlord). Landlord may,
at its option, condition advancement of said insurance proceeds and other
amounts on (i) the absence of any Event of Default, (ii) its approval of plans
and specifications of an architect satisfactory to Landlord (which approval
shall not be unreasonably withheld or delayed), (iii) general contractors'
estimates, (iv) architect's certificates, (v) unconditional lien waivers of
general contractors, if available, (vi) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required and (vii)
such other certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article 10
----------
shall be subject to the release of such proceeds by any Hotel Mortgagee to
Landlord.
- 38 -
Tenant's obligation to restore the Leased Property pursuant to this Article
-------
10 shall be subject to the release of available insurance proceeds by the
---
applicable Hotel Mortgagee to Landlord or directly to Tenant or the Manager and,
in the event such proceeds are insufficient, Landlord electing to make such
deficiency available therefor (and disbursement of such deficiency).
10.3 Damage Near End of Term. Notwithstanding any provisions of Section
----------------------- -------
10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property
------------
occurs during the last twelve (12) months of the fourth Extended Term and if
such damage or destruction cannot reasonably be expected to be fully repaired
and restored prior to the date that is six (6) months prior to the end of such
Extended Term, the provisions of Section 10.2.1 shall apply as if the Leased
--------------
Property had been totally or partially destroyed and the Hotel 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
--------------------------------
the Leased Property as hereinabove provided, Tenant shall either (a) restore all
alterations and improvements made by Tenant and Tenant's Personal Property, or
(b) replace such alterations and improvements and Tenant's Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.
10.6 No Abatement of Rent. This Agreement shall remain in full force and
--------------------
effect and Tenant's obligation to make all payments of Rent and to pay all other
charges as and when required under this Agreement shall remain unabated during
the Term notwithstanding any damage involving the Leased Property (provided that
Landlord shall credit against such payments any amounts paid to Landlord as a
consequence of such damage under any business interruption insurance obtained by
Tenant hereunder). The provisions of this Article 10 shall be considered an
----------
express agreement governing any cause of damage or destruction to the Leased
Property and, to the maximum extent permitted by law, no local or State statute,
laws, rules, regulation or ordinance in effect during the Term which provide for
such a contingency shall have any application in such case.
10.7 Waiver. Tenant hereby waives any statutory rights of termination
------
which may arise by reason of any damage or destruction of the Leased Property.
- 39 -
ARTICLE 11
----------
CONDEMNATION
------------
11.1 Total Condemnation, Etc. If either (i) the whole of the Leased
------------------------
Property shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of the Leased Property renders the Leased Property Unsuitable for Its
Permitted Use, this Agreement shall terminate and Tenant and Landlord shall seek
the Award for their interests in the Leased Property as provided in Section
-------
11.5.
----
11.2 Partial Condemnation. In the event of a Condemnation of less than the
--------------------
whole of the Leased Property such that the Leased Property is still suitable for
its Permitted Use, Tenant shall, or shall direct the Manager to, to the extent
of the Award and any additional amounts disbursed by Landlord as hereinafter
provided, commence promptly and continue diligently to restore the untaken
portion of the Leased Improvements so that such Leased Improvements shall
constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existing immediately prior to such Condemnation, in full compliance
with all Legal Requirements, subject to the provisions of this Section 11.2. If
------------
the cost of the repair or restoration of the Leased Property exceeds the amount
of the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant given within sixty
(60) days after Tenant's Notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; provided, however, in such event, upon any disbursement by Landlord
-------- -------
thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In
----------------
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement and the entire Award shall be retained by Landlord.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any deficiency Landlord has agreed to disburse, to
Tenant regularly during the restoration period so as to permit payment for the
cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors'
- 40 -
estimates, (iv) architect's certificates, unconditional lien waivers of general
contractors, if available, (vi) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required and (vii)
such other certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation under this Section 11.2 to disburse the Award and such
------------
other amounts shall be subject to (x) the collection thereof by Landlord and (y)
the satisfaction of any applicable requirements of any Hotel Mortgage, and the
release of such Award by the applicable Hotel Mortgagee. Tenant's obligation to
restore the Leased Property shall be subject to the release of the Award by the
applicable Hotel Mortgagee to Landlord.
11.3 Abatement of Rent. Other than as specifically provided in this
-----------------
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property. 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
----------------------
the Leased Property or Tenant's interest therein, this Agreement shall continue
in full force and effect and Tenant shall continue to pay, in the manner and on
the terms herein specified, the full amount of the Rent. Tenant shall continue
to perform and observe all of the other terms and conditions of this Agreement
on the part of the Tenant to be performed and observed. Provided no Event of
Default has occurred and is continuing, the entire amount of any Award made for
such temporary Condemnation allocable to the Term, whether paid by way of
damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly
upon the termination of any such period of temporary Condemnation, at its sole
cost and expense, restore the Leased Property to the condition that existed
immediately prior to such Condemnation, in full compliance with all Legal
Requirements, unless such period of temporary Condemnation shall extend beyond
the expiration of the Term, in which event Tenant shall not be required to make
such restoration. For purposes of this Section 11.4, a Condemnation shall be
------------
deemed to be temporary if the period of such Condemnation is not expected to,
and does not, exceed twelve (12) months.
11.5 Allocation of Award. Except as provided in Section 11.4 and the
------------------- -------------
second sentence of this Section 11.5, the total Award shall be solely the
------------
property of and payable to Landlord. Any portion of the Award made for the
taking of Tenant's leasehold interest in the Leased Property, loss of business
during the remainder of the Term, the taking of Tenant's Personal Property, or
Tenant's removal and
- 41 -
relocation expenses shall be the sole property of and payable to Tenant (subject
to the provisions of Section 11.2). In any condemnation proceedings, Landlord
and Tenant shall each seek its own Award in conformity herewith, at its own
expense.
ARTICLE 12
----------
DEFAULTS AND REMEDIES
---------------------
12.1 Events of Default. The occurrence of any one or more of the following
-----------------
events shall constitute an "Event of Default" hereunder:
----------------
(a) should Tenant fail to make any payment of the Rent or any other
sum (including, but not limited to, funding of the FF&E Reserve, payable
hereunder when due and such failure shall continue for a period of ten (10)
days after Notice thereof; or
(b) should Tenant or the Manager fail to maintain the insurance
coverages required under Article 9 and such failure shall continue for ten
---------
(10) days after Notice thereof (except that no Notice shall be required if
any such insurance coverages shall have lapsed); or
(c) should Tenant default in the due observance or performance of
any of the terms, covenants or agreements contained herein to be performed
or observed by it (other than as specified in clauses (a) and (b) above)
and such default shall continue for a period of thirty (30) days after
Notice thereof from Landlord to Tenant (provided that no such Notice shall
be required if Landlord shall reasonably determine immediate action is
necessary to protect person or property); provided, however, that if such
-------- -------
default is susceptible of cure but such cure cannot be accomplished with
due diligence within such period of time and if, in addition, Tenant
commences to cure or cause to be cured such default within fifteen (15)
days after Notice thereof from Landlord and thereafter prosecutes the
curing of such default with all due diligence, such period of time shall be
extended to such period of time (not to exceed an additional ninety (90)
days in the aggregate) as may be necessary to cure such default with all
due diligence; or
(d) should any obligation of Tenant in respect of any Indebtedness
for money borrowed or for the Retained Funds of any material property or
services, or any guaranty relating thereto, be declared to be or become due
and payable prior to the stated maturity thereof, or should there occur and
be continuing with respect to any such Indebtedness or Retained Funds any
event of default under any instrument or agreement evidencing or securing
the same, the effect of which is to permit the holder or holders of such
instrument or agreement or a trustee, agent or other representative on
behalf
- 42 -
of such holder or holders, to cause any such obligations to become
due prior to its stated maturity; or
(e) should an event of default occur and be continuing beyond the
expiration of any applicable cure period under any of the Incidental
Documents, the Other Leases, or by Host or the Sellers (as defined therein)
under the Purchase Agreement; or
(f) should there occur a final unappealable determination by
applicable State authorities of the revocation or limitation of any
material license, permit, certification or approval required for the lawful
operation of the Hotel in accordance with its Permitted Use or the loss or
material limitation of any material license, permit, certification or
approval under any other circumstances under which Tenant or the Manager is
required to cease its operation of the Hotel in accordance with its
Permitted Use at the time of such loss or limitation; or
(g) should any material representation or warranty made by Tenant or
the Sellers (as defined in the Purchase Agreement) under or in connection
with this Agreement, any Incidental Document, the Other Leases or the
Purchase Agreement, or in any document, certificate or agreement delivered
in connection herewith or therewith prove to have been false or misleading
in any material respect on the date when made or deemed made; or
(h) should Tenant generally not be paying its debts as they become
due or should Tenant make a general assignment for the benefit of
creditors; or
(i) should any petition be filed by or against Tenant under the
Federal bankruptcy laws, or should any other proceeding be instituted by or
against Tenant seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for Tenant or for any substantial part of the property of
Tenant and such proceeding is not dismissed within ninety (90) days after
institution thereof, or should Tenant take any action to authorize or
effect any of the actions set forth above in this paragraph; or
(j) should Tenant cause or institute any proceeding for its
dissolution or termination; or
- 43 -
(k) should an event of default occur and be continuing under any
mortgage which is secured by Tenant's leasehold interest hereunder or
should the mortgagee under any such mortgage accelerate the indebtedness
secured thereby or commence a foreclosure action in connection with said
mortgage; or
(l) should the estate or interest of Tenant in the 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) one hundred
and twenty (120) days after commencement thereof, unless the amount in
dispute is less than $250,000, in which case Tenant shall give notice to
Landlord of the dispute but Tenant may defend in any suitable way, and (y)
thirty (30) days after receipt by Tenant of Notice thereof from Landlord
(unless Tenant shall be contesting such lien or attachment in good faith in
accordance with Article 8); or
---------
(m) should any Event of Default (as defined in the Management
Agreement) by Tenant as "Owner" under the Management Agreement occur and be
continuing beyond the expiration of any applicable cure period under the
Management Agreement; or
(n) should Tenant at any time cease to be a direct or indirect
Subsidiary of Host;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement by giving Notice thereof to Tenant
and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement 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, subject to the rights of the
Manager under the Management Agreement, Landlord may, in addition to any other
remedies provided herein, enter upon the Leased Property or any portion thereof
and take possession of any and all of Tenant's Personal Property, if any, and
the Records, without liability for trespass or conversion (Tenant hereby waiving
any right to notice or hearing prior to such taking of possession by Landlord)
and sell the same at public or private sale, after giving Tenant reasonable
Notice of the time and place of any public or private sale, at which sale
Landlord or its assigns may purchase all or any portion of Tenant's Personal
Property, if any, unless otherwise prohibited by law. Unless otherwise provided
by law and without intending to exclude any other manner of giving Tenant
reasonable notice, the requirement of reasonable Notice shall be met if such
Notice is given at least five (5) days before the date of sale. The proceeds
from any such disposition, less all expenses incurred in connection with the
taking of possession, holding and selling of such property
- 44 -
(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 and other charges which would be payable hereunder for the remainder of the
Term had such termination not occurred, less the net proceeds, if any, of any
re-letting of the Leased Property, after deducting all reasonable expenses in
connection with such reletting, including, without limitation, all repossession
costs, brokerage commissions, legal expenses, attorneys' fees, advertising,
expenses of employees, alteration costs and expenses of preparation for such
reletting. Tenant shall pay such current damages to Landlord monthly on the
days on which the Minimum Rent would have been payable hereunder if this
Agreement had not been so terminated with respect to such of the Leased
Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the present value (discounted at the Interest Rate) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding twelve
calendar months, or if less than twelve calendar months have expired since the
Commencement Date, the payments required for such lesser period projected to an
annual amount) for what would be the then unexpired term of this Agreement if
the same remained in effect, over the fair market rental for the same period.
Nothing contained in this Agreement shall, however, limit or prejudice the right
of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.
- 45 -
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may, subject to the rights of the
Manager under the Management Agreement, (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, 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. IN ADDITION, TENANT
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT, IN THE EVENT THIS AGREEMENT IS
TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, NEITHER THE INITIAL RETAINED FUNDS
--------------------
NOR THE OPTION RETAINED FUNDS (AS SUCH TERMS ARE DEFINED IN THE PURCHASE
AGREEMENT) SHALL BE PAID OR PAYABLE (TENANT WAIVING, ON BEHALF OF ITSELF AND ITS
AFFILIATED PERSONS, ALL CLAIMS AND CAUSES OF ACTION WITH RESPECT THERETO).
12.4 Application of Funds. Any payments received by Landlord under any of
--------------------
the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
- 46 -
due obligations under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of Default
-----------------------------------------
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Leased Property or any
portion thereof for such purpose and take all such action thereon as, in
Landlord's sole and absolute discretion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, together with interest thereon (to
the extent permitted by law) at the Overdue Rate from the date such sums are
paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.
ARTICLE 13
----------
HOLDING OVER
------------
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate equal
to one and one-half (1.5) times the Rent and other charges herein provided
(prorated on a daily basis). Tenant shall also pay to Landlord all damages
(direct or indirect) sustained by reason of any such holding over. Otherwise,
such holding over shall be on the terms and conditions set forth in this
Agreement, to the extent applicable. Nothing contained herein shall constitute
the consent, express or implied, of Landlord to the holding over of Tenant after
the expiration or earlier termination of this Agreement.
ARTICLE 14
----------
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
-----------------------------------------------
14.1 Landlord Notice Obligation. Landlord shall give prompt Notice to
--------------------------
Tenant and the Manager of any matters affecting the 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.
Landlord shall not amend the Management Agreement or any other agreement
affecting the Leased Property without Tenant's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed.
- 47 -
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 ten (10) days
after Notice thereof with respect to monetary defaults and thirty (30) days
after Notice thereof with respect to non-monetary defaults from Tenant to
Landlord and any applicable Hotel Mortgagee, or such additional period as may be
reasonably required to correct the same, Tenant may declare the occurrence of a
"Landlord Default" by a second Notice to Landlord and to such Hotel Mortgagee.
----------------
Thereafter, Tenant may forthwith cure the same and, subject to the provisions of
the following paragraph, invoice Landlord for costs and expenses (including
reasonable attorneys' fees and court costs) incurred by Tenant in curing the
same, together with interest thereon from the date Landlord receives Tenant's
invoice, at the Overdue Rate. Tenant shall have no right to terminate this
Agreement for any default by Landlord hereunder and no right, for any such
default, to offset or counterclaim against any Rent or other charges due
hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof; provided, however, that in the event of any such adverse determination,
-------- -------
Landlord shall pay to Tenant interest on any disputed funds at the Interest
Rate, from the date demand for such funds was made by Tenant until the date of
final adverse determination and, thereafter, at the Overdue Rate until paid. If
Tenant and Landlord shall fail, in good faith, to resolve any such dispute
within ten (10) days after Landlord's Notice of dispute, either may submit the
matter for resolution to a court of competent jurisdiction.
ARTICLE 15
----------
INTENTIONALLY DELETED
---------------------
ARTICLE 16
----------
SUBLETTING AND ASSIGNMENT
-------------------------
16.1 Subletting and Assignment. Except as provided in Section 16.3 below,
------------------------- ------------
Tenant shall not, without Landlord's prior written consent (which consent may be
given or withheld in Landlord's sole and absolute discretion), assign, mortgage,
pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease
- 48 -
(which term shall be deemed to include the granting of concessions, licenses and
the like), 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 and the Manager, or the Leased
Property to be offered or advertised for assignment or subletting. For purposes
of this Section 16.1, an assignment of this Agreement shall be deemed to include
------------
any direct or indirect transfer of any interest in Tenant such that Tenant shall
cease to be a direct or indirect Subsidiary of Host or any transaction pursuant
to which Tenant is merged or consolidated with another Entity or pursuant to
which all or substantially all of Tenant's assets are transferred to any other
Entity, as if such change in control or transaction were an assignment of this
Agreement.
Notwithstanding the foregoing, Landlord agrees that Landlord shall not
unreasonably withhold, delay or condition Landlord's consent to an assignment of
this Agreement by Tenant provided that (i) Tenant shall simultaneously assign
its interest under all of the Other Leases to the same assignee on the same
terms and conditions, (ii) the Manager shall have granted its consent to such
transfer and the Management Agreement and all of the other Management Agreements
(as defined therein) under the Other Leases shall remain in full force and
effect, (iii) such assignee shall, in Landlord's reasonable determination, have
sufficient financial resources and liquidity to fulfill Tenant's obligations
under this Agreement and the Other Leases, and (iv) such assignee shall not be
under common control with or controlled by persons who have been convicted of
felonies involving moral turpitude in any state or federal court. If Tenant
wishes to assign this Agreement as provided in this paragraph, Tenant shall give
Landlord Notice thereof (the "Request Notice"), which Request Notice shall
--------------
identify the proposed assignee and the terms and conditions of the assignment
and shall include appropriate information relating to such assignee
demonstrating compliance with the provisions of this paragraph. Landlord shall,
within sixty (60) days after the giving the Request Notice, give Notice to
Tenant (the "Response Notice") as to whether Landlord consents to such transfer.
---------------
Landlord shall also have the right, exercisable by notice given in the Response
Notice, to require Tenant to assign this Agreement to a Person designated by
Landlord on the same terms and conditions as those described in the Request
Notice for transfer to Tenant's proposed assignee.
If this Agreement is assigned or if the Leased Property or any part thereof
is sublet (or occupied by anybody other than Tenant, the Manager and their
respective employees) Landlord may collect the rents from such assignee,
subtenant or occupant, as the case may be, and apply the net amount collected to
the Rent herein reserved, but no such collection shall be deemed a waiver of the
provisions set forth in the first paragraph of this Section 16.1, the acceptance
------------
by Landlord of such assignee, subtenant or occupant, as the case may be, as a
tenant, or a release of
- 49 -
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 be consistent
with any applicable terms and conditions of the Management Agreement and shall
provide (a) that it is subject and subordinate to this Agreement and to the
matters to which this Agreement is or shall be subject or subordinate; (b) that
in the event of termination of this Agreement or reentry or dispossession of
Tenant by Landlord under this Agreement, Landlord may, at its option, terminate
such sublease or take over all of the right, title and interest of Tenant, as
sublessor under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor any Hotel Mortgagee, as holder of a mortgage or
as Landlord under this Agreement, if such mortgagee succeeds to that position,
shall (i) be liable for any act or omission of Tenant under such sublease, (ii)
be subject to any credit, counterclaim, offset or defense which theretofore
accrued to such subtenant against Tenant, (iii) be bound by any previous
modification of such sublease not consented to in writing by Landlord or by any
previous prepayment of more than one (1) month's Rent, (iv) be bound by any
covenant of Tenant to undertake or complete any construction of the Leased
Property or any portion thereof, (v) be required to account for any security
deposit of the subtenant other than any security deposit actually delivered to
Landlord by Tenant, (vi) be bound by any obligation to make any payment to such
subtenant or grant any credits, except for services, repairs, maintenance and
restoration provided for under the sublease that are performed after the date of
such attornment, (vii) be responsible for any monies owing by Tenant to the
credit of such subtenant, or (viii) be required to remove any Person occupying
any portion of the 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
- 50 -
each such sublease and assignment and assumption, duly executed by Tenant and
such subtenant or assignee, as the case may be, in form and substance reasonably
satisfactory to Landlord, shall be delivered promptly to Landlord and (a) in the
case of an assignment, the assignee shall assume in writing and agree to keep
and perform all of the terms of this Agreement on the part of Tenant to be kept
and performed and shall be, and become, jointly and severally liable with Tenant
for the performance thereof and (b) in case of either an assignment or
subletting, Tenant shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the covenants and conditions to be performed by Tenant
hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
------------
provisions set forth in the first paragraph of Section 16.1.
------------
16.3 Permitted Sublease. Notwithstanding the foregoing, but subject to the
------------------
provisions of Section 16.4 and any other express conditions or limitations set
------------
forth herein, Tenant may, in each instance after Notice to Landlord (unless
otherwise provided in the Management Agreement), sublease space at the Leased
Property for newsstand, gift shop, parking garage, health club, restaurant, bar
or commissary purposes or similar concessions in furtherance of the Permitted
Use, so long as such subleases do not demise, in the aggregate, in excess of
three thousand (3,000) square feet, 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 either (a) the
income or profits derived by the business activities of such sublessee, or (b)
any other formula such that any portion of such sublease rental would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto.
ARTICLE 17
----------
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
----------------------------------------------
17.1 Estoppel Certificates. At any time and from time to time, upon not
---------------------
less than ten (10) Business Days prior Notice by either party, the party
receiving such Notice shall furnish to the other an Officer's Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to
- 51 -
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 the following statements
--------------------
to Landlord:
(a) within forty-five (45) days after each of the first three quarters
of any Fiscal Year, the most recent Consolidated Financials, accompanied by
the Financial Officer's Certificate;
(b) within ninety (90) days after the end of each Fiscal Year, the
most recent Consolidated Financials for such year, certified by an
independent certified public accountant reasonably satisfactory to Landlord
and accompanied by a Financial Officer's Certificate;
(c) within thirty (30) days after the end of each Accounting Period,
an unaudited operating statement prepared on a Hotel by Hotel basis,
including occupancy percentages and average rate, accompanied by a
Financial Officer's Certificate;
(d) promptly after the sending or filing thereof, copies of all
reports which Tenant, Host or Host Marriott Hospitality, Inc. sends to its
security holders generally, and copies of all periodic reports which
Tenant, Host or Host Marriott Hospitality, Inc. files with the SEC or any
stock exchange on which its shares are listed or traded;
(e) promptly after the delivery thereof to Tenant, a copy of any
management letter or written report prepared by the certified public
accountants with respect to the financial condition, operations, business
or prospects of Tenant;
(f) at any time and from time to time upon not less than forty-five
(45) days Notice from Landlord, any Consolidated Financials or any other
financial reporting information required to be filed by Landlord with any
securities and exchange commission, the SEC or any successor agency, or any
other governmental authority, or required pursuant to any order issued by
any court, governmental authority or arbitrator in any litigation to which
Landlord is a party, for purposes of compliance therewith, provided that
Landlord shall pay for any costs incurred by Tenant in connection with the
preparation of the same; and
- 52 -
(g) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant as
Landlord reasonably may request from time to time.
Landlord may at any time, and from time to time, provide any Hotel Mortgagee
with copies of any of the foregoing statements.
In addition, Landlord shall have the right, from time to time at Landlord's
sole cost and expense, upon reasonable Notice, during Tenant's customary
business hours, to cause Tenant's books and records with respect to the Leased
Property to be audited by auditors selected by Landlord at the place where such
books and records are customarily kept.
17.3 General Operations. Tenant shall furnish to Landlord:
------------------
(a) Within thirty (30) days after receipt or modification thereof,
copies of all licenses authorizing Tenant and/or the Manager to operate the
Hotel for its Permitted Use;
(b) Not less than thirty (30) days after the commencement of any
Fiscal Year, proposed annual income and ordinary expense and capital
improvement budgets setting forth projected income and costs and expenses
projected to be incurred by Tenant in managing, owning, maintaining and
operating the Hotel during the next succeeding Fiscal Year; and
(c) Promptly after receipt or sending thereof, copies of all notices
given or received by Tenant under the Management Agreement.
ARTICLE 18
----------
LANDLORD'S RIGHT TO INSPECT
---------------------------
Tenant shall permit, and shall direct the Manager to permit, Landlord and
its authorized representatives to inspect the Leased Property during usual
business hours upon not less than twenty-four (24) hours' notice and to make
such repairs as Landlord is permitted or required to make pursuant to the terms
of this Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant's or the Manager's
use and operation of the 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.
- 53 -
ARTICLE 19
----------
INTENTIONALLY DELETED
---------------------
ARTICLE 20
----------
HOTEL MORTGAGES
---------------
20.1 Landlord May Grant Liens. Without the consent of Tenant, Landlord
------------------------
may, subject to the terms and conditions set forth in this Section 20.1, from
------------
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
-----------
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing, provided that any such
Encumbrance shall be consistent with the requirements of Article 6 of the
Management Agreement. Any such Encumbrance shall include the right to prepay
(whether or not subject to a prepayment penalty) and shall provide (subject to
Section 20.2) that it is subject to the rights of Tenant under this Agreement.
------------
20.2 Subordination of Lease. Subject to Section 20.1 and this Section
---------------------- ------------ -------
20.2, this Agreement, any and all rights of Tenant hereunder, are and shall be
subject and subordinate to any ground or master lease, and all renewals,
extensions, modifications and replacements thereof, and to all mortgages and
deeds of trust, which may now or hereafter affect 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. In confirmation of such
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any deed of trust or any of their
respective successors in interest may reasonably request to evidence such
subordination. Any lease to which this Agreement is, at the time referred to,
subject and subordinate is herein called "Superior Lease" and the lessor of a
--------------
Superior Lease or its successor in interest at the time referred to, is herein
called "Superior Landlord" and any mortgage or deed of trust to which this
-----------------
Agreement is, at the time referred to, subject and subordinate, is herein called
"Superior Mortgage" and the holder, trustee or beneficiary of a Superior
-----------------
Mortgage is herein called "Superior Mortgagee". Tenant shall have no
------------------
obligations under any Superior Lease or Superior Mortgage other than those
expressly set forth in this Section 20.2.
------------
- 54 -
If any Superior Landlord or Superior Mortgagee or the nominee or designee
of any Superior Landlord or Superior Mortgagee shall succeed to the rights of
Landlord under this Agreement (any such person, "Successor Landlord"), whether
------------------
through possession or foreclosure action or delivery of a new lease or deed, or
otherwise, such Successor Landlord shall recognize Tenant's rights under this
Agreement as herein provided and Tenant shall attorn to and recognize the
Successor Landlord as Tenant's landlord under this Agreement and Tenant shall
promptly execute and deliver any instrument that such Successor Landlord may
reasonably request to evidence such attornment (provided that such instrument
does not alter the terms of this Agreement), whereupon, this Agreement shall
continue in full force and effect as a direct lease between the Successor
Landlord and Tenant upon all of the terms, conditions and covenants as are set
forth in this Agreement, except that the Successor Landlord (unless formerly the
landlord under this Agreement or its nominee or designee) shall not be (a)
liable in any way to Tenant for any act or omission, neglect or default on the
part of any prior Landlord under this Agreement, (b) responsible for any monies
owing by or on deposit with any prior Landlord to the credit of Tenant (except
to the extent actually paid or delivered to the Successor Landlord), (c) subject
to any counterclaim or setoff which theretofore accrued to Tenant against any
prior Landlord, (d) bound by any modification of this Agreement subsequent to
such Superior Lease or Mortgage, or by any previous prepayment of Minimum Rent
or Additional Rent for more than one (1) month in advance of the date due
hereunder, which was not approved in writing by the Superior Landlord or the
Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord's
interest in the 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 (subject to Landlord's
obligations under Section 5.1.2(b) or with respect to any insurance or
----------------
Condemnation proceeds), or (g) required to remove any Person occupying 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.
Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to
pay, as and when required by the Purchase Agreement, to Tenant a pro rata
portion of the Initial Retained Funds or Retained Funds (as such terms are
defined in the Purchase Agreement) in accordance with the terms of the Purchase
Agreement and this Agreement, including Article 15, if and to the extent that
----------
the rights of the Sellers under the Purchase Agreement with respect to such
Retained Funds shall have been assigned to Tenant, (b) to pay to Tenant any
amounts owed under Section 5.1.2(b), and (c) to pay to Tenant any portions of
----------------
insurance proceeds or Awards received by Landlord or the Successor Landlord
required to be paid to Tenant pursuant to the terms of this Agreement, and, as a
condition to any
- 55 -
mortgage, lien or lease in respect of the Leased Property, and the subordination
of this Agreement thereto, the mortgagee, lienholder or lessor, as applicable,
shall expressly agree, for the benefit of Tenant, to make such payments, which
agreement shall be embodied in an instrument in form reasonably satisfactory to
Tenant.
20.3 Notices. Subsequent to the receipt by Tenant of Notice from Landlord
-------
as to the identity of any Hotel Mortgagee or ground lessor under a lease with
Landlord, as ground lessee, which includes 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 the Leased Property shall be effective unless and
until a copy of the same is given to such Hotel Mortgagee or ground lessor at
the address set forth in the above described Notice, and the curing of any of
Landlord's defaults by such Hotel Mortgagee or ground lessor shall be treated as
performance by Landlord. Each Hotel Mortgagee shall provide to Tenant copies of
any notices of default given by such Hotel Mortgagee to Landlord.
20.4 Transfer of Leased Property. Landlord shall not, without the consent
---------------------------
of Tenant, transfer the Leased Property, or any interest therein to any Person
which: (i) does not have sufficient financial resources and liquidity to
fulfill "Owner's" obligations under the Management Agreement; (ii) is in control
of or controlled by Persons who have been convicted of felonies involving moral
turpitude in any state or federal court; or (iii) is engaged in the business of
operating or franchising (as distinguished from owning) a branded hotel chain
having fifteen hundred (1,500) or more guest rooms in competition with the
Manager. An individual or entity shall not be deemed to be in the business of
operating hotels in competition with the Manager solely by virtue of (x) the
ownership of such hotels, either directly or indirectly through subsidiaries,
affiliates and partnerships, or (y) holding a mortgage or mortgages secured by
one or more hotels. Landlord may transfer the Leased Property, or any interest
therein, to any other Person without the consent of Tenant.
ARTICLE 21
----------
ADDITIONAL COVENANTS OF TENANT
------------------------------
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause to be
------------------------------
paid when due all payments of principal of and premium and interest on Tenant's
Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor and
rents, (c) pay or cause to be paid when due all trade payables and (d) pay or
cause to be paid when due all other of Tenant's Indebtedness upon which it is or
becomes obligated, except, in each case, other than that referred to in clause
(a), to the extent payment is being contested in good faith by appropriate
proceedings in accordance with
- 56 -
Article 8 and if Tenant shall have set aside on its books adequate reserves with
---------
respect thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
21.2 Conduct of Business. Tenant shall not engage in any business other
-------------------
than the leasing and operation of the Collective Leased Properties and shall do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and its rights and
licenses necessary to conduct such business.
21.3 Maintenance of Accounts and Records. Tenant shall keep true records
-----------------------------------
and books of account of Tenant in which full, true and correct entries will be
made of dealings and transactions in relation to the business and affairs of
Tenant in accordance with GAAP, where applicable, Tenant shall apply accounting
principles in the preparation of the financial statements of Tenant which, in
the judgment of and the opinion of its independent public accountants, are in
accordance with GAAP, where applicable, except for changes approved by such
independent public accountants. Tenant shall provide to Landlord either in a
footnote to the financial statements delivered under Section 17.2 which relate
-------------
to the period in which such change occurs, or in separate schedules to such
financial statements, information sufficient to show the effect of any such
changes on such financial statements.
21.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to
--------------------------
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential liability equal to or greater than Two Hundred Fifty
Thousand Dollars ($250,000) or which may otherwise result in any material
adverse change in the business, operations, property, prospects, results of
operation or condition, financial or other, of Tenant. Forthwith upon Tenant
obtaining knowledge of any Default, Event of Default or any default or event of
default under any agreement relating to Indebtedness for money borrowed in an
aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars
($250,000), or any event or condition that would be required to be disclosed in
a current report filed by Tenant on Form 8-K or in Part II of a quarterly report
on Form 10-Q if Tenant were required to file such reports under the Securities
Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to
Landlord specifying the nature and period of existence thereof and what action
Tenant has taken or is taking or proposes to take with respect thereto.
21.5 Indebtedness of Tenant. Tenant shall not create, incur, assume or
----------------------
guarantee, or permit to exist, or become or remain liable directly or indirectly
upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
- 57 -
(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 21.9(a) and other operating liabilities incurred in the ordinary
---------------
course of Tenant's business.
21.6 Financial Condition of Tenant. Tenant shall at all times maintain
-----------------------------
Tangible Net Worth (except as provided in the last clause of this sentence) in
an amount at least equal to the aggregate of one year's Minimum Rent payable
pursuant to this Agreement and the Other Leases; it being expressly understood
and agreed that the sum of the Initial Retained Funds (as defined in the
Purchase Agreement) and, if Landlord shall acquire the Option Properties (as
defined in the Purchase Agreement), the Option Retained Funds (as defined in the
Purchase Agreement) may for such purpose be counted as equity at the full amount
thereof if such amounts are contributed to Tenant.
21.7 Distributions, Payments to Affiliated Persons, Etc. Tenant shall not
---------------------------------------------------
declare, order, pay or make, directly or indirectly, any Distributions or any
payment to any Affiliated Person of Tenant (including payments in the ordinary
course of business and payments pursuant to management agreements with any such
Affiliated Person) or set apart any sum or property therefor, or agree to do so,
if, at the time of such proposed action, or immediately after giving effect
thereto, any Event of Default shall exist.
21.8 Prohibited Transactions. Tenant shall not permit to exist or enter
-----------------------
into any agreement or arrangement whereby it engages in a transaction of any
kind
- 58 -
with any Affiliated Person as to Tenant, except on terms and conditions which
are commercially reasonable.
21.9 Liens and Encumbrances. Except as permitted by Section 7.1, Tenant
---------------------- -----------
shall not create or incur or suffer to be created or incurred or to exist any
Lien on this Agreement or any of Tenant's assets, properties, rights or income,
or any of its interest therein, now or at any time hereafter owned, other than:
(a) Security interests securing the purchase price of equipment or
personal property whether acquired before or after the Commencement Date;
provided, however, that (i) such Lien shall at all times be confined solely
-------- -------
to the asset in question and (ii) the aggregate principal amount of
Indebtedness secured by any such Lien shall not exceed the cost of
acquisition or construction of the property subject thereto;
(b) Permitted Encumbrances; and
(c) As permitted pursuant to Section 21.5.
------------
21.10 Merger; Sale of Assets; Etc. Tenant shall not (i) sell, lease (as
---------------------------
lessor or sublessor), transfer or otherwise dispose of, or abandon, all or any
material portion of its assets (including capital stock) or business to any
Person, (ii) merge into or with or consolidate with any other Entity, or (iii)
sell, lease (as lessor or sublessor), transfer or otherwise dispose of, or
abandon, any personal property or fixtures or any real property; provided,
--------
however, that, notwithstanding the provisions of clause (iii) preceding, Tenant
-------
may dispose of equipment or fixtures which have become inadequate, obsolete,
worn-out, unsuitable, undesirable or unnecessary, provided substitute equipment
or fixtures having equal or greater value and utility (but not necessarily
having the same function) have been provided.
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
- 59 -
the payment of such excessive amount. This provision shall control every other
provision of this Agreement and any other agreements between Landlord and
Tenant.
22.2 No Waiver. No failure by Landlord or Tenant to insist upon the strict
---------
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
22.3 Remedies Cumulative. To the maximum extent permitted by law, each
-------------------
legal, equitable or contractual right, power and remedy of Landlord or Tenant,
now or hereafter provided either in this Agreement or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.
22.4 Severability. Any clause, sentence, paragraph, section or provision
------------
of this Agreement held by a court of competent jurisdiction to be invalid,
illegal or ineffective shall not impair, invalidate or nullify the remainder of
this Agreement, but rather the effect thereof shall be confined to the clause,
sentence, paragraph, section or provision so held to be invalid, illegal or
ineffective, and this Agreement shall be construed as if such invalid, illegal
or ineffective provisions had never been contained therein.
22.5 Acceptance of Surrender. No surrender to Landlord of this Agreement
-----------------------
or of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Landlord and
no act by Landlord or any representative or agent of Landlord, other than such a
written acceptance by Landlord, shall constitute an acceptance of any such
surrender.
22.6 No Merger of Title. It is expressly acknowledged and agreed that it
------------------
is the intent of the parties that there shall be no merger of this Agreement or
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in the Leased Property.
22.7 Conveyance by Landlord. If Landlord or any successor owner of all or
----------------------
any portion of the Leased Property shall convey all or any portion of the Leased
Property in accordance with the terms hereof other than as security for a debt,
and
- 60 -
the grantee or transferee of such of the Leased Property shall expressly assume
all obligations of Landlord hereunder arising or accruing from and after the
date of such conveyance or transfer, Landlord or such successor owner, as the
case may be, shall thereupon be released from all future liabilities and
obligations of Landlord under this Agreement with respect to such of the Leased
Property arising or accruing from and after the date of such conveyance or other
transfer and all such future liabilities and obligations shall thereupon be
binding upon the new owner.
22.8 Quiet Enjoyment. Provided that no Event of Default shall have
---------------
occurred and be continuing, Tenant shall peaceably and quietly have, hold and
enjoy the 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, (b) all Permitted Encumbrances, (c) liens as to
obligations of Landlord that are either not yet due or which are being contested
in good faith and by proper proceedings, provided the same do not materially
interfere with Tenant's ability to operate the Hotel and (d) liens that have
been consented to in writing by Tenant. Except as otherwise provided in this
Agreement, no failure by Landlord to comply with the foregoing covenant shall
give Tenant any right to cancel or terminate this Agreement or ▇▇▇▇▇, reduce or
make a deduction from or offset against the Rent or any other sum payable under
this Agreement, or to fail to perform any other obligation of Tenant hereunder.
22.9 Memorandum of Lease. Neither Landlord nor Tenant shall record this
-------------------
Agreement. However, Landlord and Tenant shall promptly, upon the request of the
other, enter into a short form memorandum of this Agreement, in form suitable
for recording under the laws of the State in which reference to this Agreement,
and all options contained herein, shall be made. The parties shall share
equally all costs and expenses of recording such memorandum.
22.10 Notices.
-------
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall
be delivered either in hand, by telecopier with written acknowledgment of
receipt, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postpaid and registered
or certified with return receipt requested (if by mail), or with all
freight charges prepaid (if by Federal Express or similar carrier).
(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
- 61 -
Agreement a notice is either received on a day which is not a Business Day
or is required to be delivered on or before a specific day which is not a
Business Day, the day of receipt or required delivery shall automatically
be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
c/o Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to Tenant to:
Host Marriott Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. Block, Asset Manager
Asset Management Department 909
[Telecopier No. (▇▇▇)▇▇▇-▇▇▇▇]
with a copy to:
Host Marriott Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Law Department 923
[Telecopier No. (▇▇▇)▇▇▇-▇▇▇▇ or -3588]
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time and
at any time during the term of this Agreement to change their respective
addresses effective upon receipt by the other parties of such notice and
each
- 62 -
shall have the right to specify as its address any other address within the
United States of America.
22.11 Construction; Nonrecourse. Anything contained in this Agreement to
-------------------------
the contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the 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 exercise of any rights of Tenant
under this Agreement. Except as otherwise set forth in this Agreement, any
obligations of Tenant (including without limitation, any monetary, repair and
indemnification obligations) and Landlord shall survive the expiration or sooner
termination of this Agreement. Whenever it is provided in this Agreement that
Tenant shall direct the Manager to take any action, Tenant shall not be deemed
to have satisfied such obligation unless Tenant shall have exhausted all
applicable rights and remedies of Tenant as "Owner" under the Management
Agreement. Except as otherwise expressly provided with respect to the Initial
Retained Funds and the Option Retained Funds (as such terms are defined in the
Purchase Agreement), nothing contained in this Agreement (including, without
limitation, Section 3.5) shall be construed to create or impose any liabilities
-----------
or obligations and no such liabilities or obligations shall be imposed on any of
the shareholders or beneficial owners, direct or indirect, of Landlord or Tenant
(including, but not limited, Host Marriott, Host Marriott Hospitality, Inc. and
HMH Properties, Inc.) for the payment or performance of the obligations or
liabilities of Landlord or Tenant hereunder.
22.12 Counterparts; Headings. This Agreement may be executed in two or
----------------------
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.
22.13 Applicable Law, Etc. This Agreement shall be interpreted,
--------------------
construed, applied and enforced in accordance with the laws of the State
applicable to contracts between residents of the State which are to be performed
entirely within the State, regardless of (i) where this Agreement is executed or
delivered; or (ii) where any payment or other performance required by this
Agreement is made or
- 63 -
required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where any
action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principal place of business, or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply the laws of a jurisdiction other than
the State; 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
State as is provided by law; and the parties consent to the jurisdiction of said
court or courts located in the State and to service of process by registered
mail, return receipt requested, or by any other manner provided by law.
22.14 Right to Make Agreement. Each party warrants, with respect to
-----------------------
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken, or at the time of the transaction involved
shall not have been given or taken. Each party covenants that it has and will
continue to have throughout the term of this Agreement and any extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HPTCY CORPORATION
By:
---------------------------------------
Its:
-----------------------------------
TENANT:
HMH HPT COURTYARD, INC.
By:
---------------------------------------
Its (Vice) President
EXHIBIT A
---------
Minimum Rent
------------
[See attached copy.]
EXHIBIT B
---------
Other Leases
------------
[See attached copy.]
EXHIBIT C
---------
The Land
--------
[See attached copy.]