LEASE AGREEMENT
DATED AS OF FEBRUARY 26, 1996
BY AND BETWEEN
HOSPITALITY PROPERTIES TRUST,
AS LANDLORD,
AND
HMH HPT RESIDENCE INN, INC.
AS TENANT
[CALIFORNIA AND GROUND LEASE PROVISIONS, WHEN APPLICABLE,
TO BE IDENTICAL TO THOSE IN COURTYARD LEASES.]
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS.................................................. 1
1.1 Accounting Period............................................ 1
1.2 Additional Rent.............................................. 1
1.3 Additional Charges........................................... 2
1.4 Affiliated Person............................................ 2
1.5 Agreement.................................................... 2
1.6 Applicable Laws.............................................. 2
1.7 Award........................................................ 2
1.8 Base Gross Revenues.......................................... 3
1.9 Base Year.................................................... 3
1.10 Business Day................................................. 3
1.11 Capital Addition............................................. 3
1.12 Capital Expenditure.......................................... 3
1.13 Claim........................................................ 4
1.14 Code......................................................... 4
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.................................................. 5
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.................................................. 6
1.34 Fixed Term................................................... 6
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
1.42 Hotel Mortgage............................................... 7
1.43 Hotel Mortgagee.............................................. 7
1.44 Immediate Family............................................. 7
1.45 Impositions.................................................. 7
1.46 Incidental Documents......................................... 9
1.47 Indebtedness................................................. 9
1.48 Insurance Requirements....................................... 9
1.49 Interest Rate................................................ 9
1.50 Land......................................................... 9
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1.51 Landlord................................................... 9
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................................... 10
1.57 Leased Property............................................ 10
1.58 Legal Requirements......................................... 10
1.59 Lending Institution........................................ 10
1.60 Lien....................................................... 10
1.61 Management Agreement....................................... 11
1.62 Manager.................................................... 11
1.63 Minimum Rent............................................... 11
1.64 Notice..................................................... 11
1.65 Officer's Certificate...................................... 11
1.66 Other Leases............................................... 11
1.67 Overdue Rate............................................... 11
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.............................. 12
1.74 Purchase Agreement......................................... 12
1.75 Records.................................................... 12
1.76 Rent....................................................... 12
1.77 Request Notice............................................. 12
1.78 Response Notice............................................ 12
1.79 SEC........................................................ 12
1.80 State...................................................... 12
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..................................................... 13
1.87 Tenant's Personal Property................................. 13
1.88 Term....................................................... 13
1.89 Uniform System of Accounts................................. 13
1.90 Unsuitable for Its Permitted Use........................... 13
1.91 Work....................................................... 14
ARTICLE 2: LEASED PROPERTY AND TERM................................... 14
2.1 Leased Property............................................ 14
2.2 Condition of Leased Property............................... 15
2.3 Fixed Term................................................. 16
2.4 Extended Term.............................................. 16
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ARTICLE 3: RENT....................................................... 16
3.1 Rent......................................................... 16
3.1.1 Minimum Rent.......................................... 17
3.1.2 Additional Rent....................................... 17
3.1.3 Additional Charges.................................... 20
3.2 Late Payment of Rent, Etc.................................... 21
3.3 Net Lease.................................................... 22
3.4 No Termination, Abatement, Etc............................... 22
3.5 Security for Tenant's Performance............................ 23
ARTICLE 4: USE OF THE LEASED PROPERTY................................. 24
4.1 Permitted Use................................................ 24
4.1.1 Permitted Use......................................... 24
4.1.2 Necessary Approvals................................... 24
4.1.3 Lawful Use, Etc....................................... 25
4.2 Compliance with Legal/Insurance Requirements, Etc............ 25
4.3 Environmental Matters........................................ 25
4.3.1 Restriction on Use, Etc............................... 25
4.3.3 Survival.............................................. 27
ARTICLE 5: MAINTENANCE AND REPAIRS.................................... 27
5.1 Maintenance and Repair....................................... 27
5.1.1 Tenant's Obligations.................................. 27
5.1.2 Landlord's Obligations................................ 28
5.1.3 Nonresponsibility of Landlord, Etc.................... 29
5.2 Tenant's Personal Property................................... 30
5.3 Yield Up..................................................... 30
5.4 Management Agreement......................................... 31
ARTICLE 6: IMPROVEMENTS, ETC.......................................... 31
6.1 Improvements to the Leased Property.......................... 31
6.2 Salvage...................................................... 32
ARTICLE 7: LIENS...................................................... 32
7.1 Liens........................................................ 32
7.2 Landlord's Lien.............................................. 33
ARTICLE 8: PERMITTED CONTESTS......................................... 33
ARTICLE 9: INSURANCE AND INDEMNIFICATION.............................. 34
9.1 General Insurance Requirements............................... 34
9.2 Replacement Cost............................................. 35
9.3 Waiver of Subrogation........................................ 36
9.4 Form Satisfactory, Etc....................................... 36
9.5 Blanket Policy............................................... 37
9.6 No Separate Insurance........................................ 37
9.7 Indemnification of Landlord.................................. 37
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ARTICLE 10: CASUALTY.................................................. 38
10.1 Insurance Proceeds.......................................... 38
10.2 Damage or Destruction....................................... 39
10.2.1 Damage or Destruction of Leased Property............ 39
10.2.2 Partial Damage or Destruction....................... 39
10.2.3 Insufficient Insurance Proceeds..................... 39
10.2.4 Disbursement of Proceeds............................ 40
10.3 Damage Near End of Term..................................... 40
10.4 Tenant's Property........................................... 41
10.5 Restoration of Tenant's Property............................ 41
10.6 No Abatement of Rent........................................ 41
10.7 Waiver...................................................... 41
ARTICLE 11: CONDEMNATION.............................................. 41
11.1 Total Condemnation, Etc..................................... 41
11.2 Partial Condemnation........................................ 42
11.3 Abatement of Rent........................................... 43
11.4 Temporary Condemnation...................................... 43
11.5 Allocation of Award......................................... 43
ARTICLE 12: DEFAULTS AND REMEDIES..................................... 44
12.1 Events of Default........................................... 44
12.2 Remedies.................................................... 47
12.3 Tenant's Waiver............................................. 48
12.4 Application of Funds........................................ 49
12.5 Landlord's Right to Cure Tenant's Default................... 49
ARTICLE 13: HOLDING OVER.............................................. 49
ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT........... 50
14.1 Landlord Notice Obligation.................................. 50
14.2 Landlord's Default.......................................... 50
ARTICLE 15: INTENTIONALLY DELETED..................................... 51
ARTICLE 16: SUBLETTING AND ASSIGNMENT................................. 51
16.1 Subletting and Assignment................................... 51
16.2 Required Sublease Provisions................................ 52
16.3 Permitted Sublease.......................................... 54
16.4 Sublease Limitation......................................... 54
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS............ 54
17.1 Estoppel Certificates....................................... 54
17.2 Financial Statements........................................ 54
17.3 General Operations.......................................... 56
ARTICLE 18: LANDLORD'S RIGHT TO INSPECT............................... 56
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ARTICLE 19: INTENTIONALLY DELETED..................................... 56
ARTICLE 20: HOTEL MORTGAGES........................................... 57
20.1 Landlord May Grant Liens.................................... 57
20.2 Subordination of Lease...................................... 57
20.3 Notice to Mortgagee and Ground Landlord..................... 59
20.4 Transfer of Leased Property................................. 59
ARTICLE 21: ADDITIONAL COVENANTS OF TENANT............................ 60
21.1 Prompt Payment of Indebtedness.............................. 60
21.2 Conduct of Business......................................... 60
21.3 Maintenance of Accounts and Records......................... 60
21.4 Notice of Litigation, Etc................................... 60
21.5 Indebtedness of Tenant...................................... 61
21.6 Financial Condition of Tenant............................... 62
21.7 Distributions, Payments to Affiliated Persons, Etc.......... 62
21.8 Prohibited Transactions..................................... 62
21.9 Liens and Encumbrances...................................... 62
21.10 Merger; Sale of Assets; Etc................................. 62
ARTICLE 22: MISCELLANEOUS............................................. 63
22.1 Limitation on Payment of Rent............................... 63
22.2 No Waiver................................................... 63
22.3 Remedies Cumulative......................................... 63
22.4 Severability................................................ 64
22.5 Acceptance of Surrender..................................... 64
22.6 No Merger of Title.......................................... 64
22.7 Conveyance by Landlord...................................... 64
22.8 Quiet Enjoyment............................................. 64
22.9 Memorandum of Lease......................................... 65
22.10 Notices..................................................... 65
22.11 Construction; Recourse...................................... 66
22.12 Counterparts; Headings...................................... 67
22.13 Applicable Law, Etc......................................... 67
22.14 Right to Make Agreement..................................... 68
22.15 Non-Liability of Trustees................................... 68
EXHIBITS
--------
A - Minimum Rent
B - Other Leases
C - The Land
Exhibit 10.12
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT is entered into as of this 26th day of February,
1996, by and between HOSPITALITY PROPERTIES TRUST, a Maryland real estate
investment trust, as landlord ("Landlord"), and HMH HPT RESIDENCE INN, INC., a
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Delaware corporation, as tenant ("Tenant").
------
W I T N E S S E T H :
- - - - - - - - - -
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
---------
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 3.1.3.
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1.4 "Affiliated Person" shall mean, with respect to any Person, (a) in
-----------------
the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited liability
company, any member of such company, (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons referred to in the preceding clauses (a) and (b), (d) any
other Person who is an officer, director, trustee or employee of, or partner in,
such Person or any Person referred to in the preceding clauses (a), (b) and (c),
and (e) any other Person who is a member of the Immediate Family of such Person
or of any Person referred to in the preceding clauses (a) through (d).
1.5 "Agreement" shall mean this Lease Agreement, including Exhibits A to
--------- -------------
C 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, pesti cides,
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,
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paid or received by virtue of a total or partial Condemnation of the Leased
Property (after deduction of all
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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;
-------------------
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) 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 1996 Fiscal Year.
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1.10 "Business Day" shall mean any day other than Saturday, Sunday, or
------------
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of Maryland are authorized by law or executive action to close.
1.11 "Capital Addition" shall mean any renovation, repair or improvement
----------------
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
-------------------
in nature in accordance with GAAP.
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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.
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.
-----------------
1.17 "Condemnation" shall mean (a) the exercise of any governmental power
------------
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
---------
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
--------------
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
-------
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
------------
dividend (except dividends payable in common stock
-5-
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.
----
1.24 "Entity" shall mean any corporation, general or limited
------
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency or political
subdivision thereof or any other entity.
1.25 "Environment" shall mean soil, surface waters, ground waters, land,
-----------
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
---------------- -------
12.1.
----
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
-------------- -------
2.4.
---
1.31 "FF&E Reserve" shall have the meaning given such term in the
------------
Management Agreement.
1.32 "Financial Officer's Certificate" shall mean, as to any Person, a
-------------------------------
certificate of the chief financial officer or chief accounting officer (or such
officers' authorized designee) of such Person, duly authorized, accompanying the
financial statements required to be delivered by such Person pursuant to Section
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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
-6-
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
-----------
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
-------------------
(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
--------------
Management Agreement.
1.39 "Hazardous Substances" shall mean any substance:
--------------------
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste", "hazardous
material" or "hazardous substance" or "pollutant" or "contaminant" under
any present or future federal, state or local statute, regulation, rule or
ordi ▇▇▇▇▇ 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
-- ---
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any
-7-
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
(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.
----
1.41 "Hotel" shall mean the Residence Inn Hotel being operated on the
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Leased Property.
1.42 "Hotel Mortgage" shall mean any Encumbrance placed upon the Leased
--------------
Property in accordance with Article 20.
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1.43 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
---------------
1.44 "Immediate Family" shall mean, with respect to any individual, such
----------------
individual's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law,
sisters-in-law, nephews and nieces.
1.45 "Impositions" shall mean collectively, all taxes (including, without
-----------
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
-8-
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, 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, assess ment, tax levy or charge which is in effect at any time
during the Term hereof is totally or partially repealed, and a tax, assessment,
tax levy or charge set forth in clause (i) or (ii) preceding is levied, assessed
or imposed expressly in lieu thereof, (v) any interest or penalties imposed on
Landlord as a result of the failure of Landlord to file any return or report
timely and in the form prescribed by law or to pay any tax or imposition, except
to the extent such failure is a result of a breach by Tenant of its obligations
pursuant to Section 3.1.3, (vi) any Impositions imposed on Landlord that are a
-------------
result of Landlord not being considered a "United States person" as defined in
Section 7701(a)(30) of the Code, (vii) any Impositions that are enacted or
adopted by their express terms as a substitute for any tax that would not have
been payable by Tenant pursuant to the terms of this Agreement or (viii) any
Impositions imposed as a result of a breach of covenant or representation by
Landlord in
-9-
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.
--------------------
1.47 "Indebtedness" shall mean all obligations, contingent or otherwise,
------------
which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.
1.48 "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.
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;
-10-
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 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.
-11-
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 Residence Inn by Marriott, Inc., 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 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.
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.
-12-
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 and Sale Agreement,
------------------
dated as of February __, 1996, by and among Landlord 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.
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,
-13-
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.
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 can not be operated, in the good faith judgment of
Tenant or the
-14-
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;
(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
-15-
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 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.
-16-
2.3 Fixed Term. The initial term of this Agreement (the "Fixed Term")
---------- ----------
shall commence on the Commencement Date and shall expire December 31, 2010.
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, the first
such renewal term to be for a period of ten (10) years and the last two such
renewal terms to be for a period of fifteen (15) 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.
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
-17-
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
---------------------------------------------------------
Sections 5.1.2(b), 10.2.4 or 11.2. Effective on the date of each
---------------------------------
disbursement to pay for the cost of any repairs, maintenance, renovations
or replacements pursuant to Sections 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 a Accounting
Period, Tenant shall pay to Landlord on the first day of the immediately
following Accounting Period (in addition to the amount of Minimum Rent
payable with respect to such Accounting Period, as adjusted pursuant to
this paragraph (b)) the amount by which Minimum Rent for the preceding
Accounting Period, as adjusted for such disbursement on a per diem basis,
exceeded the amount of Minimum Rent paid by Tenant for such preceding
Accounting Period.
3.1.2 Additional Rent.
---------------
(a) Amount. For each 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 seven and one-half percent (7.5%) of
Excess Gross Revenues.
(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 due and payable and shall be delivered to Landlord
with the payment of the Minimum Rent next due after
-18-
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, 1997, 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 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
-19-
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
-20-
obligations of Tenant and Landlord contained in this Section 3.1.2 shall
-------------
survive the expiration or earlier termination of this Agreement.
3.1.3 Additional Charges. In addition to the Minimum Rent and
------------------
Additional Rent payable hereunder, Tenant shall pay to the appropriate parties
and discharge as and when due and payable the following (collectively,
"Additional Charges"):
-------------------
(a) Impositions. Subject to Article 8 relating to permitted
----------- ---------
contests, Tenant shall pay, or cause to be paid, all Impositions before
any fine, penalty, interest or cost (other than any opportunity cost as a
result of a failure to take advantage of any discount for early payment)
may be added for non-payment, such payments to be made directly to the
taxing authorities where feasible, and shall promptly, upon request,
furnish to Landlord copies of official receipts or other reasonably
satisfactory proof evidencing such payments. If any such Imposition may,
at the option of the taxpayer, lawfully be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Tenant may exercise the option to pay the same (and any accrued interest
on the unpaid balance of such Imposition) in installments and, in such
event, shall pay such installments during the Term as the same become due
and before any fine, penalty, premium, further interest or cost may be
added thereto. Landlord, at its expense, shall, to the extent required or
permitted by Applicable Law, prepare and file all tax returns and pay all
taxes due in respect of Landlord's net income, gross receipts, sales and
use, single business, transaction privilege, rent, ad valorem, franchise
taxes and taxes on its capital stock, and Tenant, at its expense, shall,
to the extent required or permitted by Applicable Laws and regulations,
prepare and file all other tax returns and reports in respect of any
Imposition as may be required by Government Agencies. Provided no Event of
Default shall have occurred and be continuing, if any refund shall be due
from any taxing authority in respect of any Imposition paid by Tenant, the
same shall be paid over to or retained by Tenant. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Leased Property
as may be necessary to prepare any required returns and reports. In 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
-21-
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.
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
-22-
date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge
(to the extent permitted by law) computed at the Overdue Rate on the amount of
such installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant pays any Additional Charges directly to
Landlord or any Hotel Mortgagee pursuant to any requirement of this Agreement,
Tenant shall be relieved of its obligation to pay such Additional Charges to the
Entity to which they would otherwise be due. If any payments due from Landlord
to Tenant shall not be paid within ten (10) days after its due date, Landlord
shall pay to Tenant, on demand, a late charge (to the extent permitted by law)
computed at the Overdue Rate on the amount of such installment from the due date
of such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, except as expressly provided in Section 3.1.3(a), Tenant shall promptly pay
----------------
and discharge, as Additional Charges, every fine, penalty, interest and cost
which may be added for non-payment or late payment of such items. Landlord
shall have all legal, equitable and contractual rights, powers and remedies
provided either in this Agreement or by statute or otherwise in the case of non-
payment of the Additional Charges as in the case of non-payment of the Minimum
Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord so that this
---------
Agreement shall yield to Landlord the full amount of the installments or amounts
of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise, including those provisions for
adjustment or abatement of such Rent.
3.4 No Termination, Abatement, Etc. Except as otherwise specifically
-------------------------------
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or 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
-23-
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 other
obligations to be performed by Tenant hereunder. The obligations of each party
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement. In any instance where,
after the occurrence of an Event of Default, Landlord retains funds which, but
for the occurrence of such Event of Default, would be payable to Tenant,
Landlord shall refund such funds to Tenant to the extent the amount thereof
exceeds the amount necessary to compensate Landlord for any cost, loss or damage
incurred in connection with such Event of Default.
3.5 Security for Tenant's Performance. Tenant acknowledges that the
---------------------------------
Retained Funds (as defined in the Purchase Agreement) constitute security for
the faithful observance and performance by Tenant of all the terms, covenants
and conditions of this Agreement by Tenant to be observed and performed. If any
Event of Default shall occur and be continuing, Landlord may, at its option and
without prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply the entire amount of the Retained Funds or so
much thereof as may be necessary to compensate Landlord toward the payment of
the Rent or other sums or loss or damage sustained by Landlord due to such
breach by Tenant. It is understood and agreed that the amount of the Retained
Funds is not to be considered as prepaid rent, nor shall damages be limited to
the amount of the amount of the Retained Funds. Provided this Agreement shall
not be terminated as a result of an Event of Default, the Retained Funds shall
be paid as provided in the Purchase Agreement.
-24-
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 Residence Inn 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 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 Residence Inn 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,
-25-
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 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
-26-
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 of
ficial, court or agency of competent jurisdiction relating to the use or
maintenance or requiring the removal, treatment, contain ment 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
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 possession of the Leased Property)
in, upon or under the soil or ground water of the Leased Property or any
properties surrounding the Leased
-27-
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.
ARTICLE 5
---------
MAINTENANCE AND REPAIRS
-----------------------
5.1 Maintenance and Repair.
----------------------
5.1.1 Tenant's Obligations.
--------------------
(a) Tenant shall, at its sole cost and expense (except as expressly
provided in Section 5.1.2(b)), or shall direct the Manager to, keep the
----------------
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,
-28-
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).
----------------
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
-29-
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 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
-30-
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 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
-31-
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 commencing
-32-
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 attach
ment, 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
-33-
noncompliance with Legal Requirements so long as (i) the same are not yet due
and payable, or (ii) are being contested in accordance with Article 8, (f) liens
---------
of mechanics, laborers, materialmen, suppliers or vendors incurred in the
ordinary course of business that are not yet due and payable or are for sums
that are being contested in accordance with Article 8, (g) any Hotel Mortgages
---------
or other liens which are the responsibility of Landlord pursuant to the
provisions of Article 21 and (h) Landlord Liens.
----------
7.2 Landlord's Lien. In addition to any statutory landlord's lien
---------------
and in order to secure payment of the Rent and all other sums payable hereunder
by Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord a security interest in and an express contractual lien upon Tenant's
Personal Property (except motor vehicles), and all ledger sheets, files,
records, documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing) relating to the
operation of the Hotels (the "Records") and all proceeds therefrom, subject to
-------
any Permitted Encumbrances; and such Tenant's Personal Property shall not be
removed from the 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
-34-
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. 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 penal ties 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);
-----------
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(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 maintain by similarly situated
tenants, including, without limitation, broad form contractual liability,
independent contractor's hazard and completed operations coverage) in an
amount not less than Two Million Dollars ($2,000,000) per occurrence and
umbrella coverage of all such claims in an amount not less than Twenty-
Three Million Dollars ($23,000,000);
(d) Flood (if 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
-36-
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 determina tion 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 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 Sections 9.1(e), shall name Landlord and any Hotel
---------------
Mortgagee as additional insureds, as their interests may appear. All loss
adjustments shall be payable as provided in Article 10. Tenant shall cause all
----------
insurance premiums to be paid and shall deliver policies or certificates thereof
to Landlord prior to their effective date (and, with respect to any renewal
policy, prior to the expiration of the existing policy). All such policies
shall provide Landlord (and any Hotel Mortgagee if required by the same) thirty
(30) days prior written notice of any material change or cancellation of such
policy. In the event Tenant shall fail to effect such insurance as herein
required, to pay the premiums therefor or to deliver such policies or
certificates to Landlord or any Hotel Mortgagee at the times required, Landlord
shall have the right, but not the obligation, subject to the provisions of
Section 12.5, to acquire such insurance and pay the premiums therefor, which
------------
amounts shall be payable to Landlord, upon demand, as Additional Charges,
together with interest
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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 Articles 9 or 10, Tenant may permit the Manager to self insure or otherwise
----------------
retain such workers' insurance risks or portions thereof as the Manager does
with respect to other similar hotels the Manager owns, leases or manages under
the Marriott name in the United States pursuant to any established self
insurance program of Marriott International, Inc.
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
-38-
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.
-----------
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
--------------
-39-
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 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
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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 contrac tors, if available, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is required
and (vii) such other certificates as Landlord may, from time to time, reasonably
require.
Landlord's obligation to disburse insurance proceeds under this
Article 10 shall be subject to the release of such proceeds by any Hotel
----------
Mortgagee to Landlord.
Tenant's obligation to restore 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
-41-
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.
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
-42-
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' estimates, (iv) architect's certificates,
(v) unconditional lien waivers of general contractors, if available, (vi)
evidence of approval by all governmental
-43-
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
-44-
during the remainder of the Term, the taking of Tenant's Personal Property, or
Tenant's removal and relocation expenses shall be the sole property of and
payable to Tenant (subject to the provisions of Section 11.2). In any
------------
Condemnation proceedings, Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.
ARTICLE 12
-----------
DEFAULTS AND REMEDIES
---------------------
12.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" hereunder:
----------------
(a) should Tenant fail to make any payment of the Rent or any other
sum (including, but not limited to, funding of the FF&E Reserve, payable
hereunder when due and such failure shall continue for a period of ten (10) days
after Notice thereof; or
(b) should Tenant or the Manager fail to maintain the insurance
coverages required under Article 9 and such failure shall continue for ten (10)
---------
days after Notice thereof (except that no Notice shall be required if any such
insurance coverages shall have lapsed); or
(c) should Tenant default in the due observance or performance of any
of the terms, covenants or agreements contained herein to be performed or
observed by it (other than as specified in clauses (a) and (b) above) and such
default shall continue for a period of thirty (30) days after Notice thereof
from Landlord to Tenant (provided that no such Notice shall be required if
Landlord shall reasonably determine immediate action is necessary to protect
person or property); provided, however, that if such default is susceptible of
-------- -------
cure but such cure cannot be 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
-45-
to the stated maturity thereof, or should there occur and be continuing with
respect to any such Indebtedness or Retained Funds any event of default under
any instrument or agreement evidencing or securing the same, the effect of which
is to permit the holder or holders of such instrument or agreement or a trustee,
agent or other representative on behalf of such holder or holders, to cause such
any such obligations to become due prior to its stated maturity; or
(e) should an event of default occur and be continuing beyond the
expiration of any applicable cure period under any of the Incidental Documents,
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
-46-
Tenant take any action to authorize or effect any of the actions set forth above
in this paragraph; or
(j) should Tenant cause or institute any proceeding for its
dissolution or termination; or
(k) should an event of default occur and be continuing under any
mortgage which is secured by Tenant's leasehold interest hereunder or should the
mortgagee under any such mortgage accelerate the indebtedness secured thereby or
com mence 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
-47-
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 (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
-48-
hereunder from the date of such termination (assuming that, for the purposes of
this paragraph, annual payments by Tenant on account of Impositions and
Additional Rent would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Agreement if the same remained in effect, over the fair market rental
for the same period. Nothing contained in this Agreement shall, however, limit
or prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may, subject to the
rights of the Manager under the Management 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
-49-
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, THE RETAINED FUNDS (AS DEFINED IN THE PURCHASE
--------------------
AGREEMENT) SHALL NOT BE PAID OR PAYABLE (TENANT WAIVING, ON BEHALF OF ITSELF AND
ITS AFFILIATED PERSONS, ALL CLAIMS AND CAUSES OF ACTION WITH RESPECT THERETO).
12.4 Application of Funds. Any payments received by Landlord under
--------------------
any of the provisions of this Agreement during the existence or continuance of
any Event of Default (and any payment made to Landlord rather than Tenant due to
the existence of any Event of Default) shall be applied to Tenant's current and
past due obligations under this Agreement in such order as Landlord may
determine or as may be prescribed by the laws of 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
-50-
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.
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
-51-
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 (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
-52-
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 are sublet (or occupied by anybody other than Tenant, the Manager and
their respective employees) Landlord may collect the rents from such assignee,
subtenant or occupant, as the case may be, and apply the net amount collected to
the Rent herein reserved, but no such collection shall be deemed a waiver of the
provisions set forth in the first paragraph of this Section 16.1, the acceptance
------------
by Landlord of such assignee, subtenant or occupant, as the case may be, as a
tenant, or a release of Tenant from the future performance by Tenant of its
covenants, agreements or obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations hereunder),
and no consent to any subletting or assignment in a particular instance shall be
deemed to be a waiver of the prohibition set forth in this Section 16.1. No
------------
assignment, subletting or occupancy shall affect any Permitted Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in contravention of this Section 16.1 shall be voidable at Landlord's
------------
option.
16.2 Required Sublease Provisions. Any sublease of all or any
----------------------------
portion of the 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
-53-
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 oc cupying
any portion of the Leased Property; and (c), in the event that such subtenant
receives a written Notice from Landlord or any Hotel Mortgagee stating that an
Event of Default has occurred and is continuing, such subtenant shall thereafter
be obligated to pay all rentals accruing under such sublease directly to the
party giving such Notice or as such party may direct. All rentals received from
such subtenant by Landlord or the Hotel Mortgagee, as the case may be, shall be
credited against the amounts owing by Tenant under this Agreement and such
sublease shall provide that the subtenant thereunder shall, at the request of
Landlord, execute a suitable instrument in confirmation of such agreement to
attorn. An original counterpart of each such sublease and assignment and
assumption, duly executed by Tenant and such subtenant or assignee, as the case
may be, in form and substance reasonably satisfactory to Landlord, shall be
delivered promptly to Landlord and (a) in the case of an assignment, the
assignee shall assume in writing and agree to keep and perform all of the terms
of this Agreement on the part of Tenant to be kept and performed and shall be,
and become, jointly and severally liable with Tenant for the performance thereof
and (b) in case of 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.
------------
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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 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:
-55-
(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
(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.
-56-
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.
ARTICLE 19
-----------
INTENTIONALLY DELETED
---------------------
-57-
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.
------------
-58-
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 Deferred Initial Purchase Price or Option Purchase Price (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
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rights of the Sellers under the Purchase Agreement with respect to such Retained
Funds shall have been assigned to Tenant, (b) to pay to Tenant any amounts owed
under Section 5.1.2(b), and (c) to pay to Tenant any portions of insurance
----------------
proceeds or Awards received by Landlord or the Successor Landlord required to be
paid to Tenant pursuant to the terms of this Agreement, and, as a condition to
any mortgage, lien or lease in respect of the 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 Notice to Mortgagee and Ground Landlord. 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.
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.
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ARTICLE 21
----------
ADDITIONAL COVENANTS OF TENANT
------------------------------
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause
------------------------------
to be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor and
rents, (c) pay or cause to be paid when due all trade payables and (d) pay or
cause to be paid when due all other of Tenant's Indebtedness upon which it is or
becomes obligated, except, in each case, other than that referred to in clause
(a), to the extent payment is being contested in good faith by appropriate
proceedings in accordance with Article 8 and if Tenant shall have set aside on
---------
its books adequate reserves with respect thereto in accordance with GAAP, if
appropriate, or unless and until foreclosure, distraint sale or other similar
proceedings shall have been commenced.
21.2 Conduct of Business. Tenant shall not engage in any business
-------------------
other than the leasing and operation of the Collective Leased Properties and
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect and in good standing its 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,
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results of operation or condition, financial or other, of Tenant. Forthwith upon
Tenant obtaining knowledge of any Default, Event of Default or any default or
event of default under any agreement relating to Indebtedness for money borrowed
in an aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand
Dollars ($250,000), or any event or condition that would be required to be
disclosed in a current report filed by Tenant on Form 8-K or in Part II of a
quarterly report on Form 10-Q if Tenant were required to file such reports under
the Securities Exchange Act of 1934, as amended, Tenant shall furnish Notice
thereof to Landlord specifying the nature and period of existence thereof and
what action Tenant has taken or is taking or proposes to take with respect
thereto.
21.5 Indebtedness of Tenant. Tenant shall not create, incur, assume
----------------------
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that payment
thereof shall not at the time be required to be made in accordance with the
provisions of Article 8;
---------
(c) Indebtedness of Tenant in respect of judgments or awards (i) which
have been in force for less than the applicable appeal period and in respect of
which execution 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.
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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 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 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
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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 the payment of such excessive
amount. This provision shall control every other provision of this Agreement
and any other agreements between Landlord and Tenant.
22.2 No Waiver. No failure by Landlord or Tenant to insist upon the
---------
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
22.3 Remedies Cumulative. To the maximum extent permitted by law,
-------------------
each legal, equitable or contractual right, power and remedy of Landlord or
Tenant, now or hereafter provided either in this Agreement or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.
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22.4 Severability. Any clause, sentence, paragraph, section or
------------
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be invalid,
illegal or ineffective, and this Agreement shall be construed as if such
invalid, illegal or ineffective provisions had never been contained therein.
22.5 Acceptance of Surrender. No surrender to Landlord of this
-----------------------
Agreement or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing by
Landlord and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an acceptance
of any such surrender.
22.6 No Merger of Title. It is expressly acknowledged and agreed
------------------
that it is the intent of the parties that there shall be no merger of this
Agreement or of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly this Agreement
or the leasehold estate created hereby and the fee estate or ground landlord's
interest in the Leased Property.
22.7 Conveyance by Landlord. If Landlord or any successor owner of
----------------------
all or any portion of the Leased Property shall convey all or any portion of the
Leased Property in accordance with the terms hereof other than as security for a
debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Landlord 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
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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
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:
Hospitality Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
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with a copy to:
▇▇▇▇▇▇▇▇ & Worcester
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 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
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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 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
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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.
22.15 Non-Liability of Trustees. The Declaration of Trust of
-------------------------
Landlord, a copy of which is duly filed with the Department of Assessments and
Taxation of the State of Maryland, provides that the name "Hospitality
Properties Trust" refers to the trustees under the Declaration of Trust
collectively as trustees, but not individually or personally, and that no
trustee, officer, shareholder, employee or agent of Landlord shall be held to
any personal liability, jointly or severally, for any obligation of, or claim
against, Landlord. All persons dealing with Landlord, in any way, shall look
only to the assets of Landlord for the payment of any sum or the performance of
any obligation.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HOSPITALITY PROPERTIES TRUST
By: _________________________
Its:_____________________
TENANT:
HMH HPT RESIDENCE INN, 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.]