EXHIBIT 99
LEASE AGREEMENT
BY AND BETWEEN
PMC COMMERCIAL TRUST, as LANDLORD
AND
AMERIHOST INNS, INC., as TENANT
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the
___ day of June, 1998 by and between PMC COMMERCIAL TRUST, a Texas real estate
investment trust ("Landlord"), and AMERIHOST INNS, INC., a Delaware corporation
("Tenant").
REFERENCE PAGE
In addition to the other terms elsewhere defined in this Lease, the
following terms, wherever used in this Lease, shall have the meaning set forth
in this Reference Page.
1. PREMISES: The motel property located at _________________.
2. NAME: AmeriHost Inn.
3. COMMENCEMENT DATE: June 30, 1998
4. EXPIRATION DATE: June 30, 2008
5. LEASE TERM: Ten (10) years, as the term may be extended
upon Tenant's exercise of either one or both of Tenant's
two (2) options to extend the Lease Term for five (5) years
each.
6. BASE RENT: The rent set forth in Schedule I annexed hereto
and made a part hereof.
7. PROJECT: The Land, Improvements, FF&E, and Operating
Equipment, which comprise a two (2) story motel, containing
____ rooms, located at the Premises.
The Reference Page information is incorporated into and made a part of
this Lease. In the event of any conflict between any Reference Page information
and the Lease, the Lease shall control.
RECITALS:
A. Landlord is the owner of the Project.
B. Tenant has represented to Landlord that it has substantial
experience in the operation, management and maintenance of facilities similar to
the Project and recognizes Landlord's expectation that Tenant will use such
experience to operate the Project.
C. Tenant desires to lease from Landlord and Landlord desires to
lease to Tenant the Project for the operation by Tenant of a motel and Tenant
desires to lease and operate the Project subject to and in accordance with the
terms and conditions set forth herein.
AGREEMENTS:
NOW, THEREFORE, for good, fair and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and, intending to be legally
bound hereby, Landlord and Tenant hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
The following words and terms shall have the following meanings
ascribed to them:
1.1"ADDITIONAL RENT" shall mean all costs, expenses, charges and other
amounts owed by Tenant to Landlord hereunder, other than Base Rent. Additional
Rent shall include any cost incurred by Landlord in fulfilling Tenant's
obligations hereunder. Additional Rent shall be due and payable two (2)
business days following written demand, unless specifically provided to the
contrary in this Lease; and shall bear interest at the Default Rate from the
date paid by Landlord until the date paid by Tenant to Landlord, if applicable.
1.2"AWARD" shall have the meaning ascribed to such term in Section 11.1
hereof.
1.3"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as
amended.
1.4"CAPITAL EVENT" shall mean any of the following events: (a) any sale,
assignment, transfer or refinancing of the Lessee's interest in the Project;
(b) the receipt of any insurance payments or damage recoveries paid to the
Lessee in respect of the Project; and (c) any condemnation or eminent domain
proceedings relating to all or part of any leasehold interest in the Project.
1.5"CAPITAL EXPENDITURE RESERVE ACCOUNT" shall have the meaning ascribed to
such term in Section 3.7 hereof.
1.6"CONSUMER PRICE INDEX" shall mean The "U.S. City Average, All Items"
Consumer Price Index for All Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor (Base: 1982-1984=100), or
any successor index thereto.
1.7"DEFAULT" shall mean an event which but for the giving of notice or
passing of time, or both, would constitute an Event of Default hereunder.
1.8"DEFAULT RATE" shall mean the annual rate of interest of two percent (2%)
over the Prime Rate as published in The Wall Street Journal, Southwest Edition,
or such lesser amount as may be the maximum amount permitted by applicable law.
1.9"ENVIRONMENTAL REGULATION(S)" means any law, rule, regulation, permit or
agreement relating to the environment, human health or safety now existing or
hereafter enacted.
1.10"EVENT OF DEFAULT" shall have the meaning ascribed to such term in
Section 12.1 hereof.
1.11"FF&E" shall mean all furniture, furnishings and equipment owned by
Landlord and located at the Project as of the date of this Lease and required
for the operation of the Improvements as a motel, including, without limitation,
(a) office furnishings and equipment, (b) specialized motel equipment necessary
for the operation of any portion of the Improvements as a motel, including
equipment for kitchens, laundries, dry cleaning facilities, bars, restaurants,
public rooms, commercial and parking spaces, and recreational facilities and (c)
all other furnishings and equipment as necessary or desirable in the operation
of the Project in accordance with the terms and conditions set forth in this
Lease.
1.12"FF&E RESERVE ACCOUNT" shall mean funds available for the repair,
replacement or refurbishment of FF&E, which funds shall be provided by, and
under the control of, Tenant through monthly payment into an account established
on the Commencement Date by Tenant and maintained by Tenant during the Lease
Term.
1.13"FIXTURES" shall mean all equipment, machinery, fixtures and other
items of property, including all components thereof now and hereafter,
permanently affixed to or incorporated into the 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 greatest extent permitted by law are hereby deemed by the parties
hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereof.
1.14"FRANCHISOR" A Related Party of Tenant or any other national or
regional hotel/motel franchisor reasonably acceptable to Landlord.
1.15"FRANCHISE AGREEMENT" Any agreement that may be entered into by and
between a Franchisor and Tenant, regarding the operation of the Project as a
franchised motel of Franchisor, on terms reasonably acceptable to Landlord.
1.16 "GAAP" means generally accepted accounting principles.
1.17"GOVERNMENTAL AUTHORITY" means any federal, state, or local
governmental body including elected bodies, departments, agencies, commissions,
boards or instrumentalities having or purporting to have jurisdiction over
Landlord, Tenant, the Project, or the business conducted or to be conducted from
the Project.
1.18"HAZARDOUS SUBSTANCES" means any substance, pollutant or contaminant,
as those terms are now or hereafter defined in any Environmental Regulation, and
specifically includes, but is not limited to, asbestos, asbestos-containing
materials, petroleum, or petroleum-based products, formaldehyde, and
polychlorinated biphenyls.
1.19"IMPOSITIONS" shall have the meaning ascribed to such term in Section
3.3(a) hereof.
1.20"IMPROVEMENTS" shall mean all buildings, structures and improvements
now located or hereafter constructed on the Land and all Fixtures and equipment
attached to, forming a part of and necessary for the operation of such
buildings, structures and improvements as a motel, and such (a) restaurants,
bars, banquet, meeting and other public areas, (b) commercial space, including
concessions and shops, (c) parking space, (d) storage and services areas, (e)
recreational facilities and areas, (f) public grounds and gardens, (g)
permanently affixed signage and (h) other facilities and appurtenances, as
necessary or desirable for the operation of the Improvements as a motel in
accordance with the terms and conditions of this Lease.
1.21"INSURED CASUALTY" shall have the meaning ascribed to such term in
Article 10 hereof.
1.22"LAND" shall mean that certain real property consisting of the Premises
described in the Reference Page and legally described on Exhibit A attached
hereto, together with all easements and rights benefitting or appurtenant to
such real property.
1.23"LANDLORD" shall mean PMC Commercial Trust, a Texas real estate
investment trust, and its successors and assigns.
1.24"LEASE YEAR" shall mean a full calendar year, provided that the first
and last Lease Years shall be determined in accordance with Section 2.3 hereof.
1.25"LEGAL REQUIREMENTS" shall have the meaning ascribed to such term in
Section 7.4 hereof.
1.26"MASTER AGREEMENT" shall mean the agreement made and entered into as of
June ___, 1998 by and among PMC Commercial Trust, Amerihost Properties, Inc. and
AmeriHost Inns, Inc.
1.27"NET OPERATING INCOME" shall mean Room Revenues and Sundry Revenues,
less Operating Expenses, but specifically excludes any and all income derived by
reason of the occurrence of a Capital Event.
1.28"NET WORTH" shall mean Landlord's net worth which shall be equal to the
excess of Landlord's assets over its liabilities as determined in accordance
with GAAP.
1.29"OPERATING EQUIPMENT" shall mean (a) all operating equipment required
for the operation of a motel, including chinaware, glassware, linens,
silverware, utensils, uniforms, smallwares, telephone equipment, computers and
all other similar items, and (b) all replacements, substitutions and additions
of and to all of the foregoing.
1.30"OPERATING EXPENSES" shall mean, for any applicable period, all
expenses incurred by the Tenant in connection with the operation of the Project
in aggregate during such period determined in accordance with GAAP, which
operating expenses shall be deemed to include a reserve of four percent (4%) of
Room Revenues for fixtures, furnishings and equipment and capital expenditures,
and a management fee of four percent (4%) of Room Revenues, provided, however
that "Operating Expenses" shall exclude capital expenditures, depreciation,
amortization expenses and interest expense but shall include administrative and
general expenses, management fees, marketing expenses, maintenance expenses,
energy costs, real and personal property taxes and insurance premiums, as such
terms are described and accounted for by Tenant in the ordinary course of its
business and in accordance with the financial statements periodically provided
by Tenant to Landlord in accordance with the provisions hereof.
1.31"OPERATING SUPPLIES" shall mean all food, beverages and other
consumable items used in the operation of a motel, such as fuel, soap, cleaning
materials, matches, stationery, brochures, folios and all other similar items,
together with all substitutions and replacements thereto.
1.32"PERMITS" shall have the meaning ascribed to such term in Section 7.6
hereof.
1.33"PERMITTED USE" shall mean the use of the Project as a motel in
compliance with all Legal Requirements and the terms and conditions of this
Lease.
1.34"PROHIBITED CASUALTY" shall have the meaning ascribed to such term in
Article 10 hereof.
1.35"PROHIBITED TAKING" shall have the meaning ascribed to such term in
Section 11.1 hereof.
1.36"QUALIFIED INVESTMENTS" shall mean any one or more of the following
obligations or securities:
(i) direct obligations of, and obligations fully guaranteed by, the United
States of America or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and credit of the
United States of America, excluding any principal-only or interest-only stripped
mortgage pass-throughs and provided that any obligations of any such agency or
instrumentality must be guaranteed as to timely payment of principal and
interest;
(ii) demand and time deposits in, certificates of deposits of, or bankers'
acceptances issued by, any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking authorities, so long
as at the time of such investment or contractual commitment providing for such
investment the commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a depository
institution which is the principal subsidiary of a holding company, the
commercial paper or other short-term debt obligations of such holding company)
have a credit rating not lower than the second hightest rating category from a
nationally recognized rating agency;
(iii) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than 270 days after the date of issuance thereof) having the highest
commercial paper rating from a nationally recognized rating agency;
(iv) money market funds registered under the Investment Company Act of 1940, as
amended, having a credit rating, at the time of such investment, not lower than
the highest rating category from a nationally recognized rating agency.
1.37"RELATED PARTY" shall mean a person or entity who controls, is
controlled by or is under common control with another person or entity.
1.38"RENT" shall mean Base Rent and Additional Rent.
1.39"ROOM REVENUES" shall mean all revenues, receipts, and income of any
kind derived directly or indirectly by Tenant from or in connection with the
rental of guest rooms or suites, whether to individuals, groups or transients,
at the Project, whether on a cash basis or credit, paid or collected, determined
in accordance with generally accepted accounting principles, excluding the
following:
(a) The amount of all credits, rebates or refunds to customers, guests or
patrons, and all service charges, finance charges, interest and discounts
attributable to charge accounts and credit cards, to the extent the same are
paid to Tenant by its customers, guests or patrons, or to the extent the same
are paid for by the Tenant to, or charged to Tenant by, credit card companies;
(b) All sales taxes or any other taxes imposed on the rental of such guest rooms
or suites;
(c) Gratuities or service charges actually paid to employees;
(d) Proceeds of business interruption and other insurance; and
(e) Revenues from the sale of food and beverage or Sundry Revenues.
1.40 "STATE" shall mean the state in which the Project is
located.
1.41 "SUNDRY REVENUES" shall mean all revenues, receipts, and income
derived from the Project's meeting rooms, telephones, TV and movie rentals,
check room, washroom, laundry, valet, vending machines, and other motel related
operation sources not specified herein as Room Revenues or food and beverage
revenues.
1.42 "TAX CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.43 "TENANT" shall mean AmeriHost Inns, Inc., a Delaware corporation, and
its successors and permitted assigns.
ARTICLE II
DEMISE; TERM; LEASE YEAR
2.1DEMISE.
(a) Subject to the terms and conditions of this Lease, Landlord leases to
Tenant and Tenant hereby leases from Landlord, the Land, Improvements, FF&E and
Operating Equipment.
(b) It is the intent of Landlord and Tenant that Tenant have uninterrupted
control in the operation of and business conducted at the Project so long as no
Event of Default has occurred and is continuing. Without limiting any of
Landlord's or Tenant's rights hereunder, Tenant shall have absolute discretion
in the determination of room rates and rates and charges to guests of the
Project for other motel related services available at the Project and in
determination of the terms of guest admittance to the Project, use of rooms for
commercial purposes, policies relating to entertainment, labor and food and
beverage service and all phases of advertising, publicity and promotion and
other matters incidental to the operation of Tenant's business at the Project.
2.2 TERM. The term of this Lease shall be for the Lease Term, unless
terminated sooner pursuant to any of the provisions hereof or extended as
provided in Section 2.4 hereof. The Lease Term shall commence on the date of
this Lease. Tenant's obligation to pay Rent shall commence on the Commencement
Date.
2.3 LEASE YEAR. The first Lease Year shall begin on the Commencement Date
and shall end on December 31st of the calendar year following the calendar year
in which the Commencement Date occurs. The second Lease Year shall begin on the
next succeeding January 1st and each Lease Year thereafter during the Lease Term
shall consist of a full calendar year, provided that if the Lease Term expires
on a date other than December 31, the period of time from January 1 of that
calendar year until such expiration date shall be construed as a Lease Year.
2.4 RENEWAL OPTIONS.
(a) Provided no Event of Default has occurred or is continuing, the Term
of this Lease shall be automatically extended for an additional five (5) years
to commence on the day next succeeding the Expiration Date (the "First Renewal
Term") and to expire on the day (hereinafter referred to as the "Renewal Term
Expiration Date") which shall be the fifth (5th) anniversary of the Expiration
Date, unless Tenant delivers notice to Landlord on or before the day which is
six (6) months prior to the Expiration Date of its election not to extend the
Term of this Lease for the First Renewal Term. If this Lease shall be renewed
for the First Renewal Term, it shall be upon all of the terms and conditions of
this Lease.
(b) Provided no Event of Default has occurred and is continuing, the Term
of this Lease shall be automatically extended for an additional five (5) years
to commence on the day next succeeding the Renewal Term Expiration Date (the
"Second Renewal Term") and to expire on the day which shall be the fifth
anniversary of the Renewal Term Expiration Date, unless Tenant delivers notice
to Landlord on or before the day which is six (6) months prior to the Renewal
Term Expiration Date of its election not to extend the Term of this Lease for
the Second Renewal Term. If this Lease shall be renewed for the Second Renewal
Term, it shall be upon all of the terms and conditions of this Lease except that
Tenant shall not have any further right to renew the Term of this Lease.
ARTICLE III
RENT AND OTHER CHARGES
3.1 BASE RENT. Tenant shall pay Base Rent commencing on the Commencement
Date. Base Rent shall be payable in advance in monthly installments as set
forth on Schedule I on or before the first day of each calendar month. Base
Rent for any period during the Lease Term which is less than one (1) month shall
be a pro-rata portion of the applicable monthly installment. If the Base Rent
is not paid within two (2) business days after written notice from Landlord, a
late fee equal to two percent (2%) of one-twelfth (1/12) of the amount of the
annual Base Rent shall also be due and payable.
3.2 CONSUMER PRICE INDEX ADJUSTMENTS TO BASE RENT. Effective as of the
first day of the first month of the fourth Lease Year and the first day of the
first month of each Lease Year thereafter, there shall be made a cost of living
adjustment of the annual Base Rent payable under Section 3.1 hereof.
(a) Effective as of the first day of the first month of the
fourth Lease Year and the first day of first month of each Lease Year
thereafter, annual Base Rent as adjusted shall be increased by two percent (2%)
and shall be payable monthly until such time as the actual change in the
Consumer Price Index can be determined and calculated pursuant to Section 3.2(b)
hereof. In the event that the change in the Consumer Price Index calculated
pursuant to Section 3.2(b) is less than two percent (2%), Landlord shall, within
two (2) business days of such determination, refund the difference to Tenant.
(b)For the Fourth (4th) Lease Year and each Lease Year thereafter, in the
event the Consumer Price Index for the first month of the Fourth Lease Year and
each Lease Year thereafter reflects an increase over the Consumer Price Index
for the first month of the immediately prior Lease Year, then the Base Rent
herein provided to be paid as of the first day of the first month of such Lease
Year and each month thereafter shall be adjusted by multiplying the Base Rent,
as previously adjusted for any Consumer Price Index increases, by the lesser of
(i) the percentage difference between the Consumer Price Index for the first
month of the current Lease Year and the Consumer Price Index for the first month
of the prior Lease Year, and (ii) two percent (2%), and the resulting amount
shall be added to the Base Rent, which adjusted Base Rent shall be effective as
of the first day of the first month of the current Lease Year. Said adjusted
Base Rent shall thereafter be payable as set forth on Schedule I until adjusted
as of the first month of the next Lease Year.
(c)If (i) a significant change is made in the number or nature (or both) of
items used in determining the Consumer Price Index, or (ii) the Consumer Price
Index shall be discontinued for any reason, the Bureau of Labor Statistics shall
be requested to furnish a new index comparable to the Consumer Price Index,
together with information which will make possible a conversion to the new index
in computing the adjusted Base Rent hereunder. If for any reason the Bureau of
Labor Statistics does not furnish such an index and such information, the
parties will instead mutually select, accept and use such other index or
comparable statistics on the cost of living that is computed and published by an
agency of the United States or a responsible financial periodical of recognized
authority.
3.3 PAYMENT OF IMPOSITIONS.
(a)Tenant shall pay and discharge when due all taxes of every kind and
nature (including, without limitation, all real and personal property,
franchise, withholding, sales, hotel occupancy, profits and gross receipts
taxes), all charges for any easement or agreement maintained for the benefit of
any portion of the Project, all general and special assessments, levies,
permits, inspection and license fees, all water and sewer rents and charges and
all other public charges, levies or taxes, whether of a like or different
nature, even if unforeseen or extraordinary, imposed upon or assessed of or
against Landlord with respect to the Project, Tenant or any portion of the
Project or interest therein, together with any penalties or interest on any of
the foregoing (all of the foregoing are hereinafter collectively referred to as
the "Impositions"). It is expressly understood and agreed that the Lease is a
triple net lease and all taxes expressly including, but not limited to, the
Michigan Single Business Tax, but not including any fees required to be paid by
Landlord in order for Landlord to maintain its organizational existence or
qualification to do business in certain states as required, the net income and
employee unemployment and withholding taxes of Landlord, shall be paid by
Tenant. Tenant will provide Landlord with copies of all bills and other demands
evidencing Impositions promptly following Tenant's receipt of the same and
Tenant shall deliver to Landlord (i) copies of receipted bills and cancelled
checks evidencing payment of such Imposition if it is a real estate tax or other
public charge, and (ii) evidence acceptable to Landlord showing the payment of
any other such Imposition.
(b)Tenant shall have the right, at Tenant's sole cost and expense, to
contest or object to an Imposition in good faith, but such right shall not be
deemed or construed in any way as relieving, modifying or extending Tenant's
covenant to pay any such Imposition at the time and in the manner provided in
this Section 3.3, unless (i) Tenant has given prior written notice to Landlord
of Tenant's intent so to contest or object to an Imposition, (ii) Tenant shall
diligently and in good faith contest the same by appropriate legal proceedings
which shall operate to prevent the enforcement or collection of the same and the
sale of the Project or any part thereof; (iii) Tenant shall have furnished to
Landlord a cash deposit, or an indemnity bond satisfactory to Landlord with a
surety satisfactory to Landlord, in the amount of the Imposition, plus a
reasonable additional sum to pay all costs, interest and penalties that may be
imposed or incurred in connection therewith, to assure payment of the matters
under contest and to prevent any sale or forfeiture of the Project or any part
thereof; (iv) Tenant shall promptly pay upon final determination thereof the
amount of any such Imposition so determined, together with all costs, interests
and penalties which may be payable in connection therewith; (v) notwithstanding
the foregoing, Tenant shall immediately upon the request of Landlord pay (and if
Tenant shall fail to do so, Landlord may, but shall not be required to, pay or
cause to be discharged or bonded against) any such Imposition under protest
notwithstanding such contest, if in the reasonable opinion of Landlord, the
Project shall be in jeopardy or in danger of being forfeited or foreclosed; and
(vi) no Event of Default has occurred and is continuing. Landlord may pay over
any such cash deposit or part thereof to the claimant entitled thereto at any
time when, in the judgment of Landlord, the entitlement of such claimant is
established after Landlord has first requested in writing that Tenant pay such
amount and Tenant does not provide evidence of payment within five (5) business
days thereafter. Tenant shall indemnify, defend and save Landlord harmless
against any loss, cost, expense or damage arising from such contest and shall,
if necessary to prevent a sale or other loss or damage to Landlord, pay such
tax, assessment or charge under protest and take such other steps as may be
necessary in Landlord's determination to prevent any sale or loss of the
Project. Subject to the foregoing, and if Landlord shall so request, within
twenty (20) days after the date when an Imposition is due and payable Tenant
shall deliver to Landlord evidence acceptable to Landlord showing the payment of
such Imposition.
(c)Landlord shall have the right, on notice to or demand upon Tenant, to
pay any Imposition not paid by Tenant after the date such Imposition shall have
become due (subject to Tenant's right to contest such Imposition as provided in
Section 3.3(b) hereof), and nothing herein contained shall affect such right and
such remedy. Any sums paid by Landlord in discharge of any Impositions shall be
treated as Additional Rent.
(d)Upon the occurrence of an Event of Default under this Lease, Tenant,
upon Landlord's request, shall deposit with Landlord monthly (as a deposit and
not a payment) an amount equal to one-twelfth of the annual Impositions
reasonably estimated by Landlord so that Landlord shall have sufficient funds to
pay the Impositions on the first day of the month preceding the month in which
they become due. In such event Tenant further agrees to cause all bills,
statements or other documents relating to Impositions to be sent or mailed
directly to Landlord. Upon receipt of such bills, statements or other
documents, and provided Tenant has deposited sufficient funds pursuant to this
Section 3.3(d), Landlord shall pay such amounts as may be due thereunder, in a
manner so as to take advantage of the maximum discount available, out of the
funds so deposited. If at any time and for any reason the funds deposited with
Landlord are or will be insufficient to pay such amounts as may then or
subsequently be due, Landlord shall notify Tenant and Tenant shall immediately
deposit an amount equal to such deficiency with Landlord. Notwithstanding the
foregoing, nothing contained herein shall cause Landlord to be obligated to pay
any amounts in excess of the amount of funds deposited pursuant to this Section
3.3(d). Landlord shall keep such deposits in a segregated account and shall not
commingle said funds with Landlord's own funds. In the event Landlord's Net
Worth decreases below $90,000,000, then Tenant shall deposit such funds with a
bank or financial institution or other escrow agent selected by Landlord and
Tenant, with the consent of Landlord's lender, if such funds have not already
been deposited by Landlord with a bank, financial institution or other escrow
agent (the "Reserve Agent") to administer the deposit account in accordance with
the terms of this Section 3.3(d). All such deposits shall be invested in
Qualified Investments. Any earnings on deposits shall remain in the account.
If amounts collected by Landlord under this Section 3.3(d) together with
earnings thereon exceed amounts necessary in order to pay Impositions, the
excess amounts shall be retained in the account and Tenant shall receive a
credit for such excess amount toward the next payments due for such
Impositions. Except as a result of their gross negligence or willful
misconduct, neither Landlord nor any of its officers, directors, shareholders
or employees shall be liable for any action taken or omitted to be taken by
it hereunder or in connection herewith. Landlord may rely on all
certificates, documents and other proofs delivered to it as to the facts
therein disclosed and the statements therein made, with respect to such
investments, and any such certificate, document or other proof shall be
evidence of such facts to protect Landlord in any action that it may or may
not take, or in respect of anything it may or may not do, by reason of the
supposed existence of such fact. Should Tenant fail to deposit with Landlord
sums sufficient to pay such Impositions in full at least thirty (30) days
before delinquency thereof after notice from Landlord as hereinabove
provided, such failure shall constitute an Event of Default hereunder and
Landlord may, at Landlord's election, but without any obligation so to do,
advance any amounts required to make up the deficiency, which advances, if
any, shall be treated as Additional Rent. Upon expiration or any earlier
termination of the Lease Term, and except in case of termination due to an
Event of Default, the sums held by Landlord under this Section 3.3(d) shall
be allocated between Landlord and Tenant as of such expiration or termination
date based upon the periods with respect to which such sums are due and payable,
and Landlord shall be entitled to retain such portion as represents amounts due
and payable up to such termination or expiration date, and the balance shall be
returned to Tenant.
(e)In compliance with Landlord's Net Worth requirement, on the
Commencement Date and within 120 days after the end of each fiscal year
beginning with the fiscal year ending December 31, 1998, the Landlord shall
deliver to the Tenant a copy of its annual audited financial statements which
have been audited by a nationally recognized firm of independent public
accountants. Such financial statements shall include a balance sheet, income
statement, statement of retained earnings, statement of stockholder's equity and
statement of cash flows and shall be in comparative form.
3.4UTILITIES AND OPERATING EXPENSES. Tenant shall pay or cause to be
paid when due, all charges, fees, assessments and related costs for public
utility services (including, without limitation, gas, water, sewer, electricity,
light, power, telephone, cable and other communication services and refuse and
garbage collection) used, rendered or supplied in connection with the Project
throughout the Lease Term. Tenant shall also pay or cause to be paid when due
all other costs and expenses in connection with operating the Project in
accordance with the terms and conditions hereof including, but not limited to,
costs and expenses for personnel, Operating Supplies, Operating Equipment,
insurance and compliance with Legal Requirements (subject to the provisions of
Section 7.4 hereof).
3.5LOCATION OF PAYMENTS. Tenant shall for the entire Lease Term pay Rent
to Landlord as herein provided at the address set forth in Section 15.8 hereof
or at such place as Landlord may from time to time in writing designate.
3.6NO SETOFF. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants and
agreements, and that Base Rent, Additional Rent and all other sums payable by
Tenant hereunder shall continue to be payable in all events, including any
default by Landlord hereunder, and that the obligations of Tenant hereunder
shall continue unaffected, unless the requirement to pay or perform the same
shall have been terminated pursuant to an express provision of this Lease. This
is a net lease and Base Rent, Additional Rent and all other sums payable
hereunder by Tenant shall be paid without notice or demand, and without setoff,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense, except as otherwise specifically set forth
herein. This Lease shall not terminate and Tenant shall not have any right to
terminate this Lease, during the Lease Term (except as otherwise expressly
provided herein). Tenant agrees that, except as otherwise expressly provided
herein, it shall not take any action to terminate, rescind or avoid this Lease
notwithstanding (i) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding-up or other proceeding affecting
Landlord, (ii) the exercise of any remedy, including foreclosure, under any
mortgage, (iii) any action with respect to this Lease (including the
disaffirmance hereof) which may be taken by Landlord under the Federal
Bankruptcy Code or by any trustee, receiver or liquidator of Landlord or by any
court under the Federal Bankruptcy Code or otherwise, (iv) the taking of the
Project or any portion thereof (except as specifically provided in this Lease
below), (v) the prohibition or restriction of Tenant's use of the Project under
any legal requirement or otherwise, (vi) the destruction of the Project or any
portion thereof, (vii) the eviction of Tenant from possession of the Project, by
paramount title or otherwise, or (viii) default by Landlord under any other
agreement between Landlord and Tenant. Tenant waives all rights which are not
expressly stated herein but which may now or hereafter otherwise be conferred by
law to quit, terminate or surrender this Lease or any of the Project; to any
setoff, counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense of or to Base Rent, Additional Rent or any other
sums payable under this Lease, and for any statutory lien or offset right
against Landlord or its property, each except as otherwise expressly provided
herein.
Landlord and Tenant agree that this Lease is a true lease and does not represent
a financing arrangement. Each party shall reflect the transaction represented
hereby in all applicable books, records and reports (including income tax
filings) in a manner consistent with "true lease" treatment rather than
"financing" treatment.
3.7CAPITAL EXPENDITURE RESERVE ACCOUNT AND FF&E RESERVE ACCOUNT
(a) Landlord shall establish an account (the "Capital Expenditure Reserve
Account") and all amounts deposited therein shall be held by Landlord in
accordance with the terms and conditions of this Section 3.7. In the event
Landlord's "Net Worth" decreases below $90,000,000, then Landlord and Tenant
shall establish and maintain the Capital Expenditure Reserve Account with the
Reserve Agent to administer the account in accordance with the terms of this
Section 3.7. Tenant shall have no right of withdrawal from the Capital
Expenditure Reserve Account except pursuant to the provisions of this Section,
and the Capital Expenditure Reserve Account shall be under the exclusive
dominion and control of Landlord or its assigns as the case may be.
(b)Not later than thirty (30) days prior to the commencement of each Lease
Year, including the first Lease Year, Tenant shall submit for approval a
proposed annual operating budget (the "Operating Budget") and a capital budget
(the "Capital Budget") to Landlord. Landlord shall have twenty (20) days from
the date of receipt of the Capital Budget to review and make reasonable comment
on the Capital Budget and Landlord and Tenant shall negotiate in good faith the
terms of the Capital Budget. If Landlord fails to object or otherwise respond
to the proposed Capital Budget within such 20-day period, Landlord shall be
deemed to have accepted the Capital Budget as so proposed. The Operating Budget
and Capital Budget shall contain the following as applicable:
(1) Tenant's reasonable estimate of Room Revenues and Sundry Revenues
(including average room rates), operating expenses, and operating profits for
the forthcoming Lease Year on a monthly basis, as same may be revised or updated
from time to time by Tenant.
(2) An estimate of the amounts to be dedicated to the capitalizable repair,
replacement or refurbishment of the Improvements from the Capital Expenditure
Reserve Account.
(3) An estimate of the amount to be dedicated to the repair, replacement or
refurbishment of FF&E from the FF&E Reserve Account.
(4) A cash flow projection.
(5) A marketing plan.
(6) Any amount required to be budgeted for matters required by the Franchise
Agreement except where the Franchisor is a Related Party of Tenant.
(c)Provided there is no existing Event of Default, Tenant is authorized to
seek reimbursement from the Capital Expenditure Reserve Account for all items
and matters contained in the Capital Budget with respect to capital expenditures
for the Improvements submitted by Tenant and reasonably approved by Landlord
pursuant to Section 3.7(b). In addition, Tenant is authorized to seek
reimbursement from the Capital Expenditure Reserve Account in emergency
situations at the Project when necessary, in the Tenant's opinion, to maintain
the Project and to provide for its continued operation and for the safety and
welfare of the Project guests. Tenant is further authorized to spend up to Five
Thousand Dollars ($5,000.00) per year for replacement and improvements on a
routine basis, without prior approval. In the event that Tenant desires to make
expenditures not contained in the Capital Budget previously approved or such
expenditures are above Tenant's authorized per year limit, Tenant shall provide
an explanation of the circumstances and need for any requested non-budgeted
expenditures from the Capital Expenditure Reserve Account and prior to
purchasing must receive Landlord's consent for such expenditures. Nothing
contained herein to the contrary shall obligate Landlord to spend or reimburse
Tenant for any expenditures in excess of the amount in the Capital Expenditure
Reserve Account. Tenant shall, except in emergency situations, obtain the
approval of Landlord for all expenditures for the Improvements in any Lease Year
which exceed the amount in the Capital Expenditure Reserve Account for that
Lease Year. Any amount of the Capital Expenditure Reserve Account not actually
expended in any Lease Year shall accumulate in the Capital Expenditure Reserve
Account for use in succeeding Lease Years. Subject to Landlord's rights under
Section 12.2(e), an amount equal to all cash, instruments, securities and funds,
if any, remaining in the Capital Expenditure Reserve Account shall be paid or
delivered to Tenant, on the expiration of the Lease Term, provided no Event of
Default exists, by Landlord.
(d)Tenant shall deposit monthly during the Lease Term (on or before the
15th day of the subsequent month) into the Capital Expenditure Reserve Account
an amount which is equal to two percent (2%) of Room Revenues for the prior
month. If the required monthly deposit into the Capital Expenditure Reserve
Account is not paid within two (2) days after written notice from Landlord, a
late fee equal to two percent (2%) of the amount of such deposit shall also be
due and payable.
(e)Funds in the Capital Expenditure Reserve Account held by Landlord shall
be deposited in segregated accounts and may not be commingled with any other
funds of Landlord. Cash on deposit in the Capital Expenditure Reserve Account
shall be invested in Qualified Investments. All dividends, interest and other
income earned from any such investment shall be added to and become a part of
the Capital Expenditure Reserve Account, and any losses from such investment
shall operate to reduce the Capital Expenditure Reserve Account by the amount of
such loss. Except as a result of their gross negligence or willful misconduct,
neither Landlord nor any of its officers, directors, shareholders or employees
shall be liable for any action taken or omitted to be taken by it hereunder or
in connection herewith. Landlord may rely on all certificates, documents and
other proofs delivered to it as to the facts therein disclosed and the
statements therein made, with respect to Qualified Investments, and any such
certificate, document or other proof shall be evidence of such facts to protect
Landlord in any action that it may or may not take, or in respect of anything it
may or may not do, by reason of the supposed existence of such fact.
(f)Tenant shall also deposit monthly into the FF&E Reserve Account an
amount equal to two percent (2%) of the Room Revenues for the prior month which
payment shall be due and payable on the same terms and conditions as set forth
in Section 3.7(d) for payments into the Capital Expenditure Reserve Account.
Tenant shall also provide Landlord written evidence of such payment and the
receipt thereof by the depository of such account within ten (10) days following
each such payment. Tenant shall at all times be deemed to be the owner of the
FF&E Reserve Account and, upon the expiration or earlier termination of this
Lease, shall have the right to retain all amounts in the FF&E Reserve Account
unless an Event of Default has occurred and Landlord is entitled to utilize such
account pursuant to Section 12.2(e).
(g)If at any time Tenant receives any proceeds from the sale or
disposition of any FF&E, all such proceeds shall be deposited in the FF&E
Reserve Account.
(h)In the event any of the standards of Section 5.1 hereof have not been
satisfied and Landlord determines that the FF&E requires repair, replacement or
refurbishment, or capital expenditures or major repairs to the Improvements are
required, Landlord agrees to make available to Tenant funds in the Capital
Expenditure Reserve Account therefor, and, if Tenant shall fail to accomplish
such repair, replacement or refurbishment of the FF&E or capital expenditures or
major repairs to the Improvements, within thirty (30) days of Landlord's written
notice to Tenant requiring the same (or within such longer period of time, as
may be reasonable and reasonably necessary to accomplish such work where Tenant
is diligently pursuing the work), Landlord shall draw funds from the Capital
Expenditure Reserve Account only in the event there are no funds remaining in
the FF&E Reserve Account as may be needed to make the required repair,
replacement or refurbishment to the FF&E or capital expenditures or major
repairs to the Improvements.
3.8SPECIFIED FF&E AND OPERATING EQUIPMENT. Notwithstanding any other
provision in this Lease to the contrary, and without affecting any other
provision of this Lease, Landlord and Tenant agree solely for purposes of this
Section 3.8, that FF&E and Operating Equipment consists of items with economic
useful lives of substantially less than the length of the Lease Term and Tenant
shall be replacing such items during the Lease Term. From and after the date of
the Lease, Landlord shall have no obligation whatsoever to repair, replace, add
to, renew or substitute for, any item constituting FF&E or Operating Equipment.
All such repairs, replacements, additions, renewals and substitutions and the
provision of FF&E or Operating Equipment that is either necessary or desirable
in the operation of the Project shall be at the sole cost and expense of
Tenant. Tenant at its sole cost and expense shall from time to time replace
with other operational equipment or parts any of FF&E, Operating Equipment or
the mechanical systems or other equipment included within the term
"Improvements" as defined in this Lease which shall have become worn out,
obsolete or unusable for the purpose for which it is intended, been taken by
condemnation, or been lost, stolen, damaged or destroyed. Tenant shall be
deemed to be the owner of all FF&E and Operating Equipment replaced by Tenant
during the Lease Term (all such FF&E and Operating Equipment being referred
to herein as the "Specified FF&E and Operating Equipment"). Landlord and
Tenant further agree that during the Lease Term Tenant shall be deemed to be
the owner of such Specified FF&E and Operating Equipment for all purposes of
the Tax Code and that Tenant and not Landlord shall be entitled to
depreciation or cost recovery deductions with respect thereto; provided,
however, that upon the expiration of the Lease Term or earlier termination of
this Lease in accordance with the provisions hereof, title to the FF&E and
Operating Equipment automatically shall vest in Landlord. Notwithstanding
such automatic vesting of title, Tenant agrees to execute and deliver such
documents as Landlord may request in order to effectuate or memorialize such
transfer. Landlord and Tenant agree to prepare their respective tax returns
in a manner consistent with the provisions of this Section 3.8. Nothing in
this Section 3.8 should increase the liability of Tenant or limit the rights
of Landlord otherwise provided for in this Lease.
ARTICLE IV
ALTERATIONS AND ADDITIONS
4.1ALTERATIONS.
(a)Tenant will not make or allow to be made any alterations, additions or
deletions in or to the Project which are not contained in the Capital Budget and
approved by Landlord, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed, except as set forth in
Sections 3.7(c), 4.1 (b) or 7.5 hereof, or except in the case where the failure
to make such changes would enable the Franchisor to terminate the Franchise
Agreement, except where the Franchisor is a Related Party of Tenant. Subject to
the provisions of Section 3.8 hereof, such alterations, physical additions, or
improvements shall become part of the Project and the property of the Landlord.
(b) Tenant may, at its sole cost and expense, make alterations or
additions to the Improvements without Landlord's prior consent, provided (i)
such alterations or additions do not affect the structural integrity of the
Improvements or adversely affect any of the mechanical or electrical systems of
the Improvements; (ii) such alterations or additions are performed by duly
licensed and qualified contractors in accordance with all Legal Requirements and
in a good and workmanlike manner; (iii) such alterations or additions are
completed prior to the expiration of the Lease Term; (iv) such alterations or
additions do not reduce the value of the Project; and (v) no Default or Event of
Default has occurred and is continuing.
4.2 CONSTRUCTION LIENS. Tenant shall pay when due, and indemnify, defend
and hold Landlord harmless from, all claims for labor or materials furnished or
alleged to have been furnished to Tenant for use in the Project, which claims
are or may be secured by any lien against the Project or any interest therein in
accordance with applicable law. Tenant shall not permit any liens to be filed
against the Project or any interest therein and shall immediately obtain a
release from any lien so filed or remove or discharge the same by bond in form
and content reasonably satisfactory to Landlord. In the event that any lien does
so attach, and is not released or bonded against as heretofore required,
Landlord, in its sole discretion, may pay and discharge the same and relieve the
Project therefrom after first requesting in writing Tenant to do so and Tenant
does not provide evidence of payment within five (5) business days thereafter,
and Tenant agrees to repay and reimburse Landlord upon demand for the amount so
paid by Landlord together with interest at the Default Rate from the date such
amount is paid until the date such amount is repaid. Nothing in the Lease shall
be construed in any way as constituting the consent or request of Landlord to
any contractor, subcontractor, laborer, or materialman for the performance of
any labor or the furnishing of any materials for any alteration, addition,
improvement or repair to the Project, nor as giving Tenant any right, power or
authority to contract for or permit the rendering of services or the furnishing
of materials that would give rise to the filing of a lien against the Project.
4.3 REMOVAL OF IMPROVEMENTS. All alterations, additions and other
improvements by Tenant shall become the property of Landlord and shall not be
removed from the Project, unless request is made by Landlord to Tenant to remove
those alterations, additions and other improvements which were made without
Landlord's approval where such approval was required under this Lease. All (i)
moveable trade fixtures and signs installed in the Project by Tenant and paid
for by Tenant, other than those items comprising FF&E or Operating Equipment
which are replacements, substitutions or additions thereof or thereto made by
Tenant and FF&E and Operating Equipment present in the Project as of the date
hereof, and (ii) signs, logos and other property, including Operating Equipment
and Supplies, bearing the logo of any Franchisor which is not continuing as the
Franchisor following the expiration of the Term of this Lease shall remain the
property of Tenant or Franchisor, as the case may be, and may be removed upon
the expiration of the Lease Term; provided that any of such items as are affixed
to the Project and require severance may be removed only if Tenant repairs any
damage caused by such removal and that Tenant shall have fully performed all of
the terms, conditions and covenants to be performed by Tenant under this Lease.
If Tenant fails to remove such items from the Project by the expiration of the
Lease Term or earlier termination of this Lease, all such trade fixtures,
furniture, furnishings and signs shall become the property of Landlord, unless
Landlord elects to require their removal, in which case Tenant shall, at its
sole cost and expense, promptly remove the same and restore the Project to its
condition on the date of this Lease. The covenants contained in this Section
shall survive the expiration or earlier termination of this Lease.
ARTICLE V
REPAIRS AND MAINTENANCE
5.1 TENANT'S OBLIGATIONS. Tenant is solely responsible for causing the
Project to be kept in good condition and state of repair. Landlord shall not be
required to make any repair, whether foreseen or unforeseen, or to maintain any
of the Project in any way, and Tenant hereby expressly waives the right to make
repairs at the expense of the Landlord, which right may otherwise be provided
for in any law now or hereafter in effect. Nothing in the preceding sentence
shall be deemed to preclude Tenant from being entitled to insurance proceeds or
condemnation awards for restoration pursuant to the terms of this Lease. Tenant
shall, in all events, make all repairs promptly, and all repairs shall be in
good, proper and workmanlike manner. In this regard and by way of example,
Tenant shall keep the exterior of the Project and the foundations, roof, and
structural portions of the walls and roofs of the Improvements in good condition
and repair; Tenant shall also keep the Project and every part thereof and any
fixtures, facilities or equipment contained therein (including FF&E and
Operating Equipment), in good condition and repair, including, but not limited
to, exterior doors, window frames and all portions of the facade area(s),
columns, nonstructural walls and partitions, the heating, air-conditioning,
ventilating, electrical, lighting, plumbing and sewer systems, and shall make
all replacements thereof and of all broken and cracked glass which may become
necessary during the Lease Term. Tenant shall provide for all scheduled
servicing of the Project and maintain necessary maintenance contracts to assure
proper maintenance of the Project. As used in this Section, the term "repairs"
shall include replacements and other improvements as are necessary to maintain
the Project in as good order and condition. If Landlord is required to make
repairs by reason of Tenant's acts or omissions or those of Tenant's employees,
agents, invitees, licensees or contractors, and provided that Landlord has first
given Tenant thirty (30) days notice of the need for such repairs and Tenant has
failed to commence such repairs within said thirty (30) days or has failed
thereafter to diligently pursue such repairs and complete all work within a
reasonable period of time but immediately upon notice in the event of an
emergency (that is, imminent danger of injury to persons or property), Landlord
shall have the right, but shall not be obligated, after prior written notice to
Tenant to make such repairs or replacements on behalf of and for the account of
Tenant and Tenant does not make such repairs or replacements within five (5)
business days thereafter. In such event, such work shall be paid for in full by
Tenant as Additional Rent.
5.2 TERMINATION FOR DECLINE IN QUALITY. In the event the Landlord
determines in the exercise of its reasonable business judgment that there has
occurred a material deterioration of the physical condition of a Project, the
Landlord shall have the right to obtain an independent quality assessment (the
"Quality Assessment") of such Project, conducted by a third party of national
reputation in the hotel/motel industry, funded from the Capital Expenditure
Reserve Account. The Landlord shall promptly provide to the Tenant a complete
copy of the Quality Assessment upon receipt by the Landlord. In the event the
rating for the Project from such Quality Assessment is less than a "B" level as
compared to a nationally recognized franchise of the same class of motel as the
subject Project, the Tenant shall have the right to remedy the reported defects
within ninety (90) days of its receipt of the Quality Assessment, provided that
in the event such remedy is not susceptible of cure within such 90 day period,
the Tenant shall be permitted such time as shall be needed to remedy the defect,
with the further provision that the Tenant shall timely commence to cure and
shall prosecute such cure to completion. If required by the Landlord, a re-
inspection of the subject Project thereafter shall be promptly conducted by the
same or comparable inspector. If the initial defective rating of less than "B"
is sustained by the re-inspection, the Landlord shall have the right to
terminate the Lease upon thirty (30) days' written notice to Tenant, pursuant to
and in accordance with Section 12.2 hereof.
5.3 SURRENDER. On the last day of the Lease Term, or on any sooner
termination of this Lease, Tenant shall surrender the Project in the same
condition as the Project existed on the Commencement Date, ordinary wear and
tear and damage by casualty or the elements excepted, with such additions,
replacements, betterments, alterations and improvements thereto as permitted
hereunder, broom clean, and shall surrender all keys to Landlord.
5.4 RIGHT OF ENTRY. Landlord and its authorized representatives
shall have the right to enter the Project (a) upon prior notice to Tenant at all
reasonable times to inspect the Land, Improvements, FF&E, Operating Equipment
and Operating Supplies or to show the Project to prospective purchasers or
tenants, provided any such entry is done in a manner such as to avoid
interference with the operation of the Project and, (b) in the event of the
existence of an Event of Default hereunder, to make repairs, alterations,
improvements or additions as Landlord may reasonably deem necessary, including
those to be performed by Tenant, without the same constituting an eviction of
Tenant in whole or in part, and Rent shall not abate as a result of such entry.
Nothing herein shall imply any duty upon the part of Landlord to do any work
which the Tenant may be required to perform under this Lease, and the
performance thereof by Landlord shall not constitute a waiver of Tenant's
default in failing to perform it. If Tenant is not present to permit entry into
the Project, Landlord may, in case of emergency, enter by master key, or may
forcibly enter, without rendering Landlord liable therefor, except to the extent
of Landlord's gross negligence or willful misconduct.
ARTICLE VI
HAZARDOUS SUBSTANCES
6.1 NO HAZARDOUS SUBSTANCES. Tenant shall not bring into or permit the
existence of any Hazardous Substance on the Project. If Tenant discovers the
presence of any Hazardous Substance on or in the Project which is in violation
of any Environmental Regulation, Tenant shall promptly give Landlord notice
thereof. If during Tenant's occupancy or at any time throughout the Lease Term
the existence of a Hazardous Substance is caused or permitted to occur by Tenant
or any of Tenant's agents, employees, contractors or invitees, (a) Tenant shall
remove such Hazardous Substance and dispose of it as required by any and all
applicable Environmental Regulations, or (b) Landlord, if it is advised to
remove such Hazardous Substance itself to protect or minimize against any
liability to Landlord as a result of the presence of any Hazardous Substance by
no less than ten (10) days' notice to Tenant, may elect to remove any Hazardous
Substance and dispose of it as required by any Environmental Regulation, in
which case Tenant shall pay the entire cost of such disposal within ten (10)
days after receipt of a statement for such cost by Landlord, such amount to be
treated as Additional Rent. If any Governmental Authority shall require any
remedial action or other response with respect to the Project as the result of
any Hazardous Substance brought into or permitted by Tenant on or in the Project
during the Lease Term, Tenant shall notify Landlord of such action or response
and shall Tenant shall be responsible for satisfying the requirements of the
applicable Governmental Authority.
6.2 INDEMNITY. Tenant agrees to indemnify, defend, protect and hold
Landlord harmless from any and all claims, causes of action, damages, penalties,
costs and expenses (including reasonable attorneys' fees, consultant fees and
related expenses) which may be asserted against or incurred by Landlord
resulting from the presence, release or threatened release of any Hazardous
Substance on, in or from the Project during the Lease Term and not caused by
Landlord or resulting from or due to any violation or alleged violation during
the Lease Term of any Environmental Regulation by Tenant or any of Tenant's
agents, employees, contractors or invitees. Tenant's duty to indemnify and hold
harmless includes, but is not limited to, proceedings or actions commenced by
any Governmental Authority.
6.3 SURVIVAL. The foregoing covenants and indemnifications shall be
deemed continuing covenants and indemnifications for the benefit of Landlord and
its successors and assigns and shall survive the expiration of the Lease Term or
earlier termination of this Lease and shall be in addition to any other
obligations or liabilities Tenant may have to Landlord at common law under all
statutes and ordinances or otherwise.
ARTICLE VII
COVENANTS OF TENANT
7.1 USE OF PROJECT. Tenant covenants and agrees that from and after the
Commencement Date, and except for reasonable periods of time caused by
unforeseeable events beyond Tenant's control or required for remodeling or
restoration otherwise permitted hereunder, it shall continuously and without
interruption use and occupy the entire Project (and not less than one hundred
percent (100%) of the Project except for subleases, licenses and concessions in
the ordinary course of business which are permitted and meet the requirements
hereunder) solely for the purpose of the Permitted Use and for no other
purpose. Tenant will not use or permit the use of the Project in any manner
which would result or would with the passage of time result in the creation
of any easement or prescriptive right. Tenant shall not use or occupy the
Project, or knowingly permit them to be used or occupied, contrary to any
statute, rule, order, ordinance, requirement, regulation or certificate of
occupancy affecting the same, or which would make void or voidable any
insurance then in force with respect thereto or which would make it
impossible to obtain fire or other insurance thereon required to be furnished
hereunder at Tenant's expense, or which would cause structural injury to the
Improvements or cause the value of usefulness of the Project, or any portion
thereof, to diminish (reasonable wear and tear excepted), or which would
constitute a public or private nuisance or waste, and Tenant agrees that it
will promptly, upon discovery of any such use, take all necessary steps to
compel the discontinuance of such use.
7.2 CONTINUING COVENANTS. Tenant covenants and agrees with Landlord to:
8. not abandon the Project;
9. maintain the Project and the abutting grounds, sidewalks,
roads, parking and landscaped areas in good condition and
state of repair;
10. promptly make all necessary repairs, renewals, replacements
and additions, to the Project;
11. not commit or suffer waste with respect to the Project;
12. not remove, demolish or in any material respect alter any
of the Improvements, FF&E or Operating Equipment, provided
that Tenant may (i) remove any FF&E and Operating Equipment
in accordance with the provisions of Section 7.5 hereof and
(ii) make alterations in accordance with Section 4.1
hereof;
13. subject to any Legal Requirement, not make, install or
permit to be made or installed, any alterations or
additions to the Project if doing so will violate the terms
and conditions of this Lease unless approved in advance by
Landlord in writing;
14. not make, suffer or permit any nuisance to exist on the
Project;
15. conduct its business in a manner consistent with the
purpose and character of the Project and in accordance with
the standards for operating the type of business currently
operated in the Project;
16. keep the Land and Improvements clean and attractive in
appearance;
7.3 OPERATING SUPPLIES. On the Commencement Date and thereafter during
the Lease Term, Tenant, at its sole cost and expense, shall furnish and maintain
at the Project all Operating Supplies necessary or desirable for the operation
of the Project in accordance with the provisions of this Lease. Tenant, at its
sole cost and expense, shall maintain and replace the Operating Supplies so that
the same quantities of such items that existed on the Commencement Date shall be
left for the use of Landlord on the date of the expiration of the Lease Term.
7.4 LEGAL REQUIREMENTS. Subject to the provisions of Section 7.9 hereof,
Tenant shall comply with, or cause to be complied with, and conform to all
present and future laws, statutes, codes, ordinances, orders, judgments,
decrees, injunctions, rules, regulations and requirements pertaining to the
Project including any applicable insurance, environmental, zoning or building,
use and land use laws, ordinances, rules or regulations and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to it or to any of the Project, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, construction, repair or
reconstruction of any of the Project (collectively, the "Legal Requirements").
7.5 FF&E AND OPERATING EQUIPMENT. Any additions to furniture, fixtures
and equipment located at the Project shall become part of the FF&E and Operating
Equipment. Upon the termination of this Lease, by expiration of the Lease Term
or otherwise, Tenant shall, at its sole cost and expense, cause all of the items
of FF&E and Operating Equipment to be in proper working order and in good
condition (ordinary wear and tear and damage by casualty and the elements
excepted). Any such item which requires replacement prior to termination of
this Lease shall be replaced with an item of the same utility and quality by
Tenant, at its sole cost and expense, and Tenant shall notify Landlord in
writing of such replacement promptly upon the occurrence of the same.
7.6 PERMITS AND LICENSES. From and after the Commencement Date, Tenant,
at its sole cost and expense and in its name, shall obtain and maintain all
licenses and permits necessary or desirable for the operation of the Project in
accordance with the provisions of this Lease required by any Governmental
Authority (collectively, the "Permits"). If Tenant, for any reason whatsoever,
is denied any necessary Permit or if any necessary Permit shall, at any time be
revoked as a result of the acts or inaction of Tenant and is not reinstated
within a reasonable period of time, the same shall constitute an Event of
Default.
7.7 TENANT'S OBLIGATION TO MANAGE. At all times during the term hereof,
Tenant or a Related Party or a manager reasonably acceptable to Landlord shall
manage and operate the Project.
7.8 PERMITTED CONTESTS. Tenant shall have the right to contest the amount
or validity of any Legal Requirement or insurance requirement or any lien,
attachment, levy, encumbrance, charge or claim ("Claims") by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Tenant's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Section provided), on condition, however, that such legal
proceedings shall not operate to relieve Tenant from its obligations hereunder
and shall not cause the sale or risk the loss of any portion of the Project, or
cause Landlord or Tenant to be in default under any mortgage, deed of trust,
security deed or other agreement encumbering the Project or any interest
therein. Upon the request of Landlord, Tenant shall either (a) provide a bond
or other monetary assurance reasonably satisfactory to Landlord that all Claims
which may be assessed against the Project together with interest and penalties,
if any, thereon will be paid, or (b) deposit within the time otherwise required
for payment with a bank or trust company as trustee upon terms reasonably
satisfactory to Landlord, as security for the payment of such claims, money in
an amount sufficient to pay the same, together with interest and penalties in
connection therewith, as to all Claims which may be assessed against or become a
Claim on the Project or any part thereof, in said legal proceedings. Tenant
shall furnish Landlord and any lender of Landlord with reasonable evidence of
such deposit within five (5) days of the same. Landlord agrees to join in any
such proceedings if the same be required legally to prosecute such contest of
the validity of such Claims; provided, however, that Landlord shall not thereby
be subjected to any liability for the payment of any costs or expenses in
connection with any proceedings brought by Tenant; and Tenant covenants to
indemnify, defend and save harmless Landlord from any such costs or expenses.
Tenant shall be entitled to any refund of any Claims and such charges and
penalties or interest thereon which have been paid by Tenant or paid by Landlord
and for which Landlord has been fully reimbursed. In the event that Tenant
fails to pay any Claims when due or to provide the security therefor as provided
in this Section and diligently to prosecute any contest of the same, Landlord
may, upon ten days advance notice to Tenant, pay such charges together with any
interest and penalties and the same shall be repayable by Tenant as Additional
Rent provided, however, that should Landlord reasonably determine that the
giving of such notice would risk loss to the Project then Landlord shall give
such notice as is practical under the circumstances. Landlord reserves the
right to contest any of the Claims at its expense not pursued by Tenant.
Landlord and Tenant agree to cooperate in coordinating the contest of any
Claims.
ARTICLE VIII
RESERVED
ARTICLE IX
INSURANCE AND INDEMNITIES
9.1 INSURANCE COVERAGES. Tenant shall obtain, at its sole cost and
expense, beginning on the Commencement Date and shall maintain through the Lease
Term, the following insurance coverages:
(a) A policy of commercial general liability insurance (including
Insurance Service Office (ISO) forms and endorsements or their equivalent)
naming Landlord, Tenant and any other party designated by Landlord as an
additional insured, to insure against injury to property, person or loss of life
arising out of the ownership, use, occupancy or maintenance of the Project with
limits of general liability not less than $10,000,000 for death and/or bodily
injury, personal injury, advertising injury and property damage. The policy
shall contain supplemental endorsements covering contractual liability as
provided in an ISO liability policy under the definition of insured contract.
(b) A policy providing commercial property insurance containing the
insuring agreement "Cause of Loss-Special Form" or its equivalent, together with
such endorsements as may be deemed advisable by Landlord to insure the
Improvements, Tenant's leasehold improvements, merchandise, trade fixtures,
furnishings, equipment and personal property, and naming Landlord and any other
party designated by Landlord in connection with a securitization or financing of
the Project as an additional insured. Such policy shall provide coverage in an
amount not less than the full replacement cost of the Project. An "Agreed
Amount Clause" waiving the coinsurance clause must be included, as well as, if
commercially reasonable and obtainable, flood and earthquake coverage at limits
equal to the maximum foreseeable loss at the location of the Project. Such
coverage must include the expense of tearing down any Improvements, including
the cost of removing its debris and increased cost of construction coverage.
(c) A policy of workers' compensation insurance must be provided that
insures the benefits required by the State law and includes coverage B
Employer's Liability. The Employer's liability limits must be at least:
Bodily Injury By Accident $1,000,000 Each Accident
Bodily Injury By Disease $1,000,000 Policy Limit
Bodily Injury By Disease $1,000,000 Each Employee
Landlord does not, by requiring such insurance or by any other act or
event, assume or undertake liability for any work-related injuries or death to
Tenant or Tenant's employees.
(d) If Tenant commits or permits any activity or the placing or operation
of any equipment on or about the Project creating unusual hazards, Tenant shall
promptly upon notice or demand from Landlord, procure and maintain in force,
during such activity or operation, insurance sufficient to cover the risks
created thereby. Landlord's demand for unusual hazard insurance shall not
constitute a waiver of any right Landlord may have to demand the removal or
cessation of such activity or operation.
(e) In the event Tenant is in the business of manufacturing, distributing,
selling, servicing or furnishing alcoholic beverages, a policy of alcoholic
beverage and liquor liability insurance naming Landlord and any other party
designated by Landlord in connection with the securitization or financing of the
Project as an additional insured with limits of not less than $10,000,000 per
occurrence. The limits may be obtained through a primary and an excess policy.
(f) A policy of business interruption insurance with an "Extra Expense"
insuring agreement naming Landlord and any other party designated by Landlord as
an additional insured providing coverage of not less than twelve (12) months of
Rent and other business income.
(g) All other insurance, if any, customarily maintained by businesses of
like type, or required by any Legal Requirement to be carried or maintained by
Tenant, or as otherwise may be reasonably required by Landlord, including but
not limited to, boiler and machinery coverage, innkeepers liability coverage,
automobile and garagekeepers liability coverage, service interruption coverage,
food spoilage coverage and coverage for employee dishonesty and loss of money
and securities.
Tenant may comply with the provisions of this Article by providing the
foregoing insurance coverage under a blanket policy covering other Projects and
properties of Tenant as well as the Project, provided that the amount of
insurance thereunder allocated to the Project is not less than that required
herein, and the blanket policy otherwise complies as to endorsements and
coverage with the provisions of this Article. Evidence of insurance in
compliance with this Section 9.1 shall be provided to Landlord fifteen (15) days
prior to the Commencement Date and, with respect to any renewal policy, thirty
(30) days prior to the expiration of the existing policy. A copy of such
insurance policies will be provided by Tenant to Landlord upon Tenant's receipt
from its insurance company.
9.2 INSURANCE POLICIES. Insurance required under Section 9.1 shall be
written by companies duly qualified to do business in the state where the
Project is located and shall be reasonably satisfactory in all respects to
Landlord, and, if required, the holder of any mortgage or deed of trust against
the Project. The companies providing such insurance shall deliver to Tenant and
Landlord copies of such policies or certificates evidencing the existence and
amount of such insurance. No such policy shall be cancelable or subject to
reduction of coverage or modification except after twenty (20) days prior
written notice to Landlord and such other persons designated by Landlord. At
least ten (10) days prior to the expiration of such policies, Landlord may on
notice to Tenant order such insurance and charge the cost to Tenant as
Additional Rent. Tenant shall not do, or permit anything to be done which will
invalidate the insurance policies furnished pursuant to Section 9.1 or by
Landlord and shall comply with all requirements imposed by Landlord's insurers,
unless such compliance is expressly waived in writing by Landlord. Landlord may
from time to time require that the policy limits of any or all such insurance be
increased to reflect the effects of inflation and changes in normal commercial
insurance practices. Each insurance policy referred to above shall, to the
extent applicable, contain standard non-contributory mortgagee clauses in favor
of any mortgagee of Landlord. Each policy required to be carried by Tenant
shall also provide that any loss otherwise payable thereunder shall be payable
notwithstanding (i) any act or omission of Landlord or Tenant which might,
absent such provision, result in a forfeiture of all or a part of such insurance
payment, (ii) the occupation or use of any of the Project for purposes more
hazardous than permitted by the provisions of such policy, (iii) any foreclosure
or other action or proceeding taken by any mortgagee of Landlord pursuant to any
provision of the mortgage held by such mortgagee upon the happening of an event
of default therein, or (iv) any change in title or ownership of any of the
Project.
Tenant shall pay as they become due all premiums for the insurance required by
this Lease and shall renew or replace each policy. In the event of Tenant's
failure to comply with any of the foregoing requirements of this Section 9.2
within the earlier of five (5) days after receipt of notice of impending
cancellation or five (5) days of written notice from Landlord, Landlord shall be
entitled to procure such insurance. Any sums expended by Landlord in procuring
such insurance shall be repaid by Tenant, together with interest thereon at the
Default Rate, from the time of payment by Landlord until fully paid by Tenant
immediately upon written demand therefor by Landlord.
9.3 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that
Landlord shall not be liable and Tenant hereby waives all claims against
Landlord for injury to Tenant's business or any loss of income or other
consequential damages or for damage to the inventory, fixtures, furnishings,
improvements or other property of Tenant, Tenant's employees, invitees,
customers, sublessees, agents, occupants, contractors, or injury to the person
of Tenant, Tenant's employees, agents, contractors, occupants, invitees,
customers, sublessees, or any other person in or about the Project, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air-conditioning or lighting
fixtures, or from any other cause whatsoever, whether said damage or injury
results from conditions arising upon the Project, or from other sources or
places, and regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to Tenant. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant of
the Project.
9.4 INDEMNIFICATION. Tenant shall indemnify, defend, protect and hold
harmless Landlord from and against any and all claims arising from Tenant's use
of the Project, or from the conduct of Tenant's business or from any activity,
work or things done, permitted or suffered by Tenant in or about the Project or
elsewhere, except to the extent such claim arises in whole or in part out of any
gross negligence or intentional misconduct of Landlord (and then only to the
extent such claim is attributable to the gross negligence or intentional
misconduct of Landlord), and shall further indemnify, defend and hold harmless
Landlord from and against any and all claims arising from any breach or default
in the performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or arising from any negligence of the Tenant, or any of
Tenant's sublessees, agents, customers, invitees, contractors, occupants, or
employees, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. In case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord, shall
defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord (but such approval shall not constitute a waiver of Landlord's right to
object to any dual or conflicting representation by such counsel that is
otherwise objectionable under any applicable code of professional conduct or
ethics). Landlord hereby approves of any counsel engaged by Tenant's insurance
carrier. The provisions of this Section shall survive expiration of the Lease
Term or the earlier termination thereof.
9.5 MUTUAL WAIVER OF SUBROGATION. Nothing in this Lease shall be
construed so as to authorize or permit any insurer of Landlord or Tenant to be
subrogated to any right of Landlord or Tenant against the other party arising
under this Lease. Landlord and Tenant each hereby release the other to the
extent of any loss required to be insured against by either of the parties under
the terms of this Lease, whether or not such insurance has actually been
secured, and to the extent of their respective insurance coverage actually
received for any loss or damage caused by any such casualty, even if such
incidents shall be brought about by the fault or negligence of either party or
persons for whose acts or negligence the other party is responsible. Landlord
and Tenant shall, to the extent permitted by their respective insurers, each
obtain appropriate waivers of subrogation from their respective insurance
carriers giving effect to this Section.
9.6 INSURANCE PREMIUM ESCROW. In the case of a Default or an Event of
Default hereunder, Tenant, upon Landlord's request, shall deposit with Landlord,
as a deposit and not a payment, an amount equal to one-twelfth of the estimated
aggregate annual insurance premiums on all policies of insurance required by
this Lease on the first day of each month. Upon Landlord's request, Tenant
shall cause all bills, statements or other documents relating to the foregoing
insurance premiums to be sent or mailed directly to Landlord. Upon receipt of
such bills, statements or other documents, and providing Tenant has deposited
sufficient funds pursuant to this Section, Landlord shall pay such amounts as
may be due thereunder out of the funds so deposited. If at any time and for any
reason the funds deposited with Landlord are or will be insufficient to pay such
amounts as may then or subsequently be due, Landlord shall notify Tenant and
Tenant shall immediately deposit an amount equal to such deficiency with
Landlord. Notwithstanding the foregoing, nothing contained herein shall cause
Landlord to be obligated to pay any amounts in excess of the amount of funds
deposited with Landlord pursuant to this Section. Landlord shall maintain all
deposits in a segregated account and shall not commingle said funds with its own
funds. All deposits shall be invested in Qualified Investments. In the event
Landlord's Net Worth decreases below $90,000,000 then Tenant shall deposit funds
with the Reserve Agent to administer the deposit account in accordance with the
terms of this Section 9.6. Any earnings on deposits shall remain in the account
to be applied against future premiums. Landlord may impound or reserve for
future payment of insurance premiums such portion of such payments or earnings
thereon as Landlord in its reasonable discretion may deem proper. Should Tenant
fail to deposit sums sufficient to pay in full such insurance premiums at least
thirty (30) days before delinquency thereof, Landlord may, at Landlord's
election, but without any obligation so to do, advance any amounts required to
make up the deficiency, which advances, if any, shall be treated as Additional
Rent. Subject to Section 12.2(e), upon expiration of the Lease Term and payment
of all sums due Landlord under this Lease, all remaining sums held under this
Section 9.6 if any, shall be remitted to Tenant.
ARTICLE X
DAMAGE OR DESTRUCTION
10.1 REPORTS ON INSURANCE CLAIMS. Tenant shall promptly investigate and
make a complete and timely written report to the appropriate insurance company
as to all accidents, claims for damage relating to the ownership, operation and
maintenance of the Project, any damage or destruction to the Project and the
estimated cost of repair thereof and shall prepare any and all reports required
by any insurance company in connection therewith. Tenant shall provide Landlord
notice of any such accident, claim, damage, or destruction promptly after the
occurrence thereof and at least on a quarterly basis. All such reports shall be
timely filed with the insurance company as required under the terms of the
insurance policy involved, and a final copy of such report shall be furnished to
Landlord. If no Event of Default has occurred and is continuing, Tenant shall
be authorized to adjust, settle or compromise any insurance loss, or to execute
proofs of such loss, in the aggregate amount of $25,000 or less, with respect to
any single casualty or other event, however, any single casualty loss or other
event over $25,000 shall require Landlord's consent and approval.
10.2 INSURANCE PROCEEDS. All insurance proceeds payable by reason of any
loss or damage to the Project, or any portion thereof, and insured under any
policy of insurance required by Article 9 of this Lease shall be paid to
Landlord and held in trust by Landlord in an interest-bearing account, shall be
made available, if applicable, for reconstruction or repair, as the case may be,
of any damage to or destruction of the Project, or any portion thereof, and, if
applicable, shall be paid out by Landlord from time to time for the reasonable
costs of such reconstruction or repair upon satisfaction of reasonable terms and
conditions specified by Landlord or its construction consultants. If neither
Landlord nor Tenant is required or elects to repair and restore, and the Lease
is terminated as described in Section 10.3, all such insurance proceeds shall be
retained by Landlord and salvage resulting from any risk covered by insurance
shall belong to Landlord.
10.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION.
(a) If during the Term the Project is totally or partially destroyed
by a risk covered by the insurance described in Article IX and the Project
thereby is rendered unsuitable for its primary intended use as a motel facility
and no Event of Default has occurred and is continuing Tenant, at its sole
option shall either (i) restore the Project to its original specifications
utilizing materials of similar or superior quality so that it is no longer
unsuitable for its primary intended use as a motel facility and all obligations
of Tenant hereunder shall remain unabated during such restorations or (ii)
terminate this Lease as of the date of the casualty and neither Landlord or
Tenant shall have any further liability hereunder, except for any liabilities
which have arisen prior to or which survive such termination, and Landlord shall
be entitled to retain all insurance proceeds. Notwithstanding the above, if the
ratio of the average Net Operating Income to Base Rent for the Project for the
prior three (3) years of this Lease does not equal or exceed 1.1 to 1.0, then
Tenant must obtain Landlord's consent to Tenant's election to either restore the
Project or terminate the Lease.
(b) If during the Term the Project is partially destroyed by a risk
covered by the insurance described in Article IX, but the motel is not thereby
rendered unsuitable for its primary intended use as a motel facility Tenant
shall restore the Project to substantially the same condition as existed
immediately before the damage or destruction and otherwise in accordance with
this terms of the Lease. Such damage or destruction shall not terminate this
Lease; provided, however, that if Tenant cannot within a reasonable time obtain
all necessary government approvals, including building permits, licenses and
conditional use permits, after diligent efforts to do so, to perform all
required repair and restoration work and to operate the Project for its primary
intended use as a motel facility in substantially the same manner as that
existing immediately prior to such damage or destruction and otherwise in
accordance with the terms of the Lease either Landlord or Tenant may terminate
this Lease upon notice to the other.
(c) Upon Landlord's final approval of the reconstruction or repair of
the Project, any excess proceeds of insurance and salvage value resulting from
any risk covered by insurance remaining after the completion of the restoration
or reconstruction of the Project, as hereinafter set forth, shall be paid to
Tenant.
(d) In the event that any damage or destruction shall occur at such
time as Tenant shall not have maintained third-party insurance in accordance
with this Lease, Tenant shall pay to the Landlord the amount of the proceeds
that would have been payable had such insurance program been in effect.
10.4 ABATEMENT OF RENT. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect and Tenant's
obligation to pay Rent required by this Lease shall remain unabated by any
damage or destruction.
ARTICLE XI
CONDEMNATION
11.1 TAKING OF WHOLE. In the event (a) the whole of the Project shall be
taken or condemned for a public or quasi-public use or purpose by a competent
authority or sold by Landlord in lieu thereof, (b) such a portion of the Project
or access thereto shall be taken, condemned or sold in lieu thereof so that the
balance cannot be used for the same purpose and with substantially the same
utility to Tenant as immediately prior to such taking, or (c) the Project or any
portion thereof or access thereto shall be taken or condemned for a public or
quasi-public use or purpose by a competent authority or sold by Landlord in lieu
thereof and Tenant is unable to repair, rebuild or restore the balance of the
Project under the terms of any agreement to which it is a party, or under any
Legal Requirement or other governmental order to which Landlord or the Project
is subject or to such condition that the Project can be operated for the same
purpose and substantially the same utility to Tenant as immediately prior to
such taking (a "Prohibited Taking"), this Lease shall terminate upon notice from
Landlord on Tenant, effective upon delivery of possession to the condemning
authority or its assignee. The award, compensation or damage (the "Award") for
the value of the fee interest in the Landlord in the Improvements shall be paid
to and be the sole property of Landlord. The Award as compensation for
diminution of the value of the leasehold estate shall be paid to and be the sole
property of Tenant. Tenant shall have no claim against Landlord by reason of
such taking or termination. Tenant shall continue to pay Rent and other charges
hereunder until the Lease is terminated.
11.2 PARTIAL TAKING. In the event (a) only a part of the Project is taken
or condemned but the Project or the part remaining can still be used for the
same purpose and with substantially the same utility to Tenant as immediately
prior to such taking, or (b) a Prohibited Taking has not occurred, this Lease
shall not terminate and Tenant shall repair and restore the remaining
Improvements provided the cost and expense of such repair and restoration does
not exceed the amount of the Award made available to Tenant and Base Rent shall
be adjusted in proportion to the lost value of the Project to Tenant for
Tenant's purposes. If the cost of such repair or restoration exceeds the amount
of the Award made available, Tenant may terminate this Lease by giving Landlord
written notice of termination.
11.3 TENANT'S AWARD. Tenant may claim and seek to recover from the
condemning authority such compensation as may otherwise be separately awarded to
Tenant for any damage to Tenant's business by reason of such condemnation and
for any cost or loss incurred by Tenant in removing or relocating Tenant's
fixtures, furnishings, Operating Equipment and Operating Supplies. Except with
respect to an award or payment to which Tenant is entitled pursuant to the
foregoing provisions of this Section, no agreement with any condemnor in
settlement of or under threat of any condemnation shall be made by either
Landlord or Tenant without the written consent of the other, and of Landlord's
mortgagee, if the Project is then subject to a mortgage, which consent shall not
be unreasonably withheld or delayed provided such award or payment is applied in
accordance with this Lease. No award made to Tenant may have the effect of
diminishing any award otherwise available to Landlord.
ARTICLE XII
DEFAULTS; REMEDIES
12.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant and each such
event shall be referred to herein as an "Event of Default":
(a) The vacation or abandonment of the Project (not operating for business
in the Project for fourteen (14) consecutive days), except to the extent caused
by casualty or condemnation or during a renovation or acts of God or third
parties not reasonably foreseeable and not within the control of Tenant.
(b) The failure of Tenant to make any payment of Rent or any other payment
required to be made by Tenant under this Lease, within ten (10) days after
written notice from Landlord.
(c) The failure by Tenant to observe or perform any of the terms,
covenants or conditions of this Lease to be observed or performed by Tenant
(other than those described in Sections 12.1(a), (b), (d), (e) or (f) hereof)
where such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant (or without notice in case of emergency
or a hazardous condition or in case any fine, penalty, interest or cost may
otherwise be imposed or incurred). Notwithstanding the foregoing, Tenant shall
have such longer period of time in excess of thirty (30) days after written
notice as may be reasonably necessary, in which to cure such failure in the
event such failure is reasonably susceptible to cure, Tenant commences such cure
within thirty (30) days of said notice and at all times diligently pursues such
cure.
(d) (i) The making by Tenant or any entity holding a controlling interest
in Tenant of any general assignment, or general arrangement for the benefit of
creditors; (ii) the filing by or against Tenant or any entity holding a
controlling interest in Tenant of a petition to have Tenant or such controlling
entity adjudged a bankrupt or a petition for reorganization or arrangement under
any law relating to bankruptcy (unless, in the case of a petition filed against
Tenant or such controlling entity, the same is dismissed within one-hundred and
twenty (120) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Project or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within one-hundred and twenty (120) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at the
Project or of Tenant's interest in this Lease or in the Project, where such
seizure is not discharged within one-hundred and twenty (120) days.
(e) The existence of any default (a "Franchise Default") by Tenant under
the Franchise Agreement, provided, however, such Franchise Default shall not
constitute an Event of Default under this Lease if (i) the Franchisor has not
elected to exercise any remedy under the Franchise Agreement unless the
Franchisor is a Related Party of Tenant, (ii) the Franchise Default is
reasonably susceptible to cure, (iii) Tenant commences such cure within thirty
(30) days, (iv) Tenant diligently pursues such cure and (v) the Franchise
Default is cured within a reasonable time and (vi) the Tenant enters into a new
Franchise Agreement with a Franchisor.
(f) The Franchise Agreement shall be materially amended or cease to be in
full force and effect for any reason, except by reason of the expiration of the
term thereof, without Landlord's prior written approval.
(g) An assignment shall occur in violation of Article 13 hereof.
(h) The occurrence of an Event of Default by Tenant under the Master
Agreement.
12.2 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or equity, or elsewhere in this Lease, to which
Landlord may resort cumulatively or in the alternative:
(a) Landlord may, at Landlord's election, terminate this Lease upon the
delivery of written notice of such termination to Tenant. On the delivery of
such notice, all Tenant's rights in the Project, in all improvements located at
the Project, to revenues thereafter arising from the Project, and to amounts
which may otherwise be due from Landlord to Tenant under this Lease, shall
terminate. Promptly after notice of termination, Tenant shall surrender and
vacate the Project in a broom clean condition, and Landlord may reenter and take
possession of the Land, Improvements, FF&E, Operating Equipment and Operating
Supplies and eject all parties in possession or eject some and not others or
eject none. Termination under this Subsection shall not relieve Tenant from the
payment of any sum then due to Landlord or from any claim for damages previously
accrued or then accruing against Tenant. Upon such termination Landlord shall
also be entitled to recover from Tenant unpaid Rent and such other amounts which
have been earned or are payable at the time of termination.
(b) Landlord may, at Landlord's election, terminate Tenant's right to
possession only, without terminating the Lease. Upon termination of Tenant's
right to possession without termination of the Lease, Tenant shall surrender
possession and vacate the Project immediately and deliver possession of the
Land, Improvements, FF&E, Operating Equipment and Operating Supplies to
Landlord, and Tenant hereby grants to Landlord the immediate right to enter into
the Project, remove Tenant's signs and other evidences of tenancy, and take and
hold possession of the Land, Improvements, FF&E, Operating Equipment and
Operating Supplies with or without process of law, and to dispossess the others
who may be occupying or within the Project, without being deemed in any manner
guilty of trespass, eviction, or forcible entry or detainer, without incurring
any liability for any damage resulting therefrom, without such entry and
possession terminating the Lease or releasing Tenant from Tenant's obligation to
pay Rent and to fulfill all other of Tenant's obligations under this Lease for
the full Lease Term. Landlord shall be entitled to recover from Tenant (i)
unpaid Rent or such other amounts which have been earned or are payable at the
time of termination, and (ii) such amounts as are payable pursuant to the last
sentence of Section 12.2(d) below. Notwithstanding any remedial action taken
hereunder by Landlord short of termination, including reletting the Project to a
substitute tenant, Landlord may at any time thereafter elect to terminate this
Lease for any previous Event of Default.
(c) Landlord may, at Landlord's election, store Tenant's personal
property, if any, for the account and at the cost of Tenant.
(d) Whether or not Landlord elects to terminate the Lease, Landlord may,
but shall be under no obligation to, relet all or any part of the Project for
such rent and upon such terms as shall be satisfactory to Landlord (including
the right to relet the Project as a part of a larger area, the right to change
the character or use of the Project and the right to restrict prospective
tenants to those whose merchandise and business is compatible with the nature
and character of the Project or such larger area, if any). For the purpose of
such reletting, Landlord may decorate or may make any repairs, changes,
alterations or additions in or to the Project that may be necessary or
convenient. If the Lease is not terminated and if the Project is not relet, or
if it is relet and a sufficient sum shall not be realized from such reletting
after paying all of the expenses of any such decorations, repairs, changes,
alterations and additions, the expenses of such reletting and the collection of
the rent accruing therefrom (including, but not limited to, reasonable
attorneys' fees and brokers' commissions), to satisfy the Rent and other charges
herein provided to be paid for remainder of the term of this Lease, Tenant shall
pay to Landlord promptly any deficiency, and Tenant agrees that Landlord may
file suit to recover and recover any sum falling due under the terms of this
Subsection from time to time.
(e) Landlord may, at Landlord's election, withdraw any or all amounts on
deposit pursuant to Sections 3.3(d), 3.7 and 9.6 hereof and apply such amounts
to Tenant's obligations hereunder.
(f) The term "Rent" as used in this Section 12.2 shall be deemed to be and
to mean Base Rent, Additional Rent and such other sums, if any, required to be
paid by Tenant pursuant to the terms of this Lease.
(g) Notwithstanding anything in this Article XII to the contrary, Tenant
shall not be liable to Landlord for consequential, punitive or exemplary damages
12.3 LANDLORD MAY PERFORM. Landlord shall have the right at any time,
after ten (10) days notice to Tenant (or without notice with respect to matters
described in Article 9, and in case of emergency or a hazardous condition or in
case any fine, penalty, interest or cost may otherwise be imposed or incurred),
to make any payment or perform any act required of Tenant under any provision in
this Lease which Tenant has failed to make or to perform beyond the expiration
of any notice or cure period, and in exercising such right, to incur necessary
and incidental costs and expenses, including reasonable attorneys' fees.
Nothing herein shall obligate Landlord to make any payment or perform any act
required of Tenant, and this exercise of the right to so do shall not constitute
a release of any obligation or a waiver of any Default. All payments made and
all costs and expenses incurred in connection with any exercise of such right
shall be reimbursed to Landlord by Tenant as Additional Rent.
ARTICLE XIII
ASSIGNMENT AND SUBLETTING
13.1 ASSIGNMENT BY TENANT AND SUBLEASES.
(a) Provided that Tenant shall remain liable under all of the terms
and conditions of this Lease for the full remainder of the Lease Term, and
provided further that any sublessee shall consent to use the Project for
Permitted Uses only and said sublessee's use does not increase the risk of
Hazardous Substances being used, generated, manufactured, stored, treated,
released or disposed of on, under or about the Project or transported to or from
the Project, Tenant shall have the absolute right to sublet the Project, in
whole or in part, without the consent of Landlord. Except as expressly
permitted below, Tenant shall not assign its interest in this Lease without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Assignment of this Lease by Tenant to a Related Party of
Tenant, who remains a Related Party of Tenant, shall not require the consent of
Landlord. A change of ownership of 51% or more of Tenant shall be deemed an
assignment of this Lease for purposes of this paragraph.
(b) No assignment or subletting shall serve to release Tenant of any
obligations hereunder or alter the primary liability of Tenant for the payment
of Base Rent, Additional Rent and other sums due Landlord hereunder or for the
performance of or compliance with each and every term, covenant, condition and
obligation to be performed or observed by Tenant under this Lease unless
Landlord, in its reasonable discretion, elects to release Tenant of its
obligations or liability hereunder.
(c) Landlord may accept any rent or performance of Tenant's
obligations from any person other than Tenant and such acceptance of any rent or
performance shall not constitute a waiver or estoppel of Landlord's rights to
exercise its remedies for the default or breach by Tenant of any of the terms,
covenants or conditions of this Lease.
(d) In the event of any default or breach of Tenant's obligations
under this Lease, Landlord may proceed directly against Tenant, or any one else
responsible for the performance of Tenant's obligations under this Lease,
including the sublessee, without first exhausting Landlord's remedies against
any other person or entity responsible thereof, or any security held by Landlord
or Tenant.
(e) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed for the
benefit of Landlord, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Tenant during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of the
assignment or sublease.
(f) Each sublease of the Project or any part thereof shall be subject
and subordinate to the provisions of this Lease. Tenant agrees that in the case
of an assignment, Tenant shall, within fifteen (15) days after the execution and
delivery of any such assignment, deliver to Landlord (i) a duplicate original of
such assignment in recordable form and (ii) an agreement executed and
acknowledged by the assignee in recordable form wherein the assignee shall agree
to assume and agree to observe and perform all of the terms and provisions of
this Lease on the part of the Tenant to be observed and performed from and after
the date of such assignment, and, in the case of a sublease, Tenant shall,
within fifteen (15) days after the execution and delivery of such sublease,
deliver to Landlord a duplicate original of such sublease.
(g) The following terms and conditions shall apply to any subletting
by Tenant of all or any part of the Project and shall be deemed included in all
subleases, under this Lease whether or not expressly incorporated therein:
Tenant hereby assigns and transfers to Landlord all of Tenant's interest in all
rents and income arising from any sublease of all or a portion of the Project
heretofore or hereafter made by Tenant, and Landlord may collect such rent and
income and apply same toward Tenant's obligation under this Lease; provided
however, that except during any period in which a breach has occurred in the
performance of Tenant's obligations under this Lease, and remains uncured Tenant
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Landlord shall not, by reason of this
assignment of rents or any other assignment of sublease to Landlord, nor by
reason of the collection of the rents from a sublessee, be deemed liable to the
sublessee for any failure of Tenant to perform and comply with any of Tenant's
obligations to such sublessee under such sublease. Tenant hereby irrevocably
authorizes and directs any such sublessee, upon the receipt of a written notice
from Landlord stating that a default exists in the performance of Tenant's
obligation under this Lease, to pay to Landlord the rents and other charges due
and to become due under the sublease. Sublessee shall rely upon any such
statement and request from Landlord and shall pay such rents and other charges
to Landlord without any obligation or right to inquire as to whether such
default exists and notwithstanding any notice from or claim from Tenant to the
contrary, Tenant shall have no right or claim against said sublessee, or, until
the default has been cured, against Landlord, for any such rents and other
charges so paid by sublessee to Landlord.
(h) In the event of a breach by Tenant in the performance of its
obligations under this Lease, and a resulting termination of Lease by Landlord,
Landlord, at its option and without any obligation to do so, may require any
sublessee to attorn (i.e., agree to become tenant to a new owner or landlord of
the same property) to Landlord, in which event Landlord shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Landlord
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior defaults or breaches of such
sublessor under such sublease.
(i) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Landlord herein, if Landlord's
consent is required under this Lease.
(j) Each sublease shall provide that (i) it is subject and subordinate
to this Lease and any mortgage covering the Project; (ii) Landlord may enforce
the provisions of the sublease, including collection of rent; (iii) if this
Lease is terminated for any reason, Landlord may, at its option, either (A)
terminate the sublease, or (B) takeover all of the rights and interest of
Tenant, as sublessor, under such sublease, in which case such sublessee shall
attorn to Landlord. If Landlord elects to takeover the rights and interest of
Tenant, Landlord shall not (i) be liable for any previous act or omission of
Tenant under the sublease, (ii) be subject to any defense or offset in favor of
the sublessee against Tenant, or (iii) be bound by any modification to the
sublease made without Landlord's written consent or by any prepayment by
sublease of more than one month's rent.
(k) Landlord agrees for itself, its successors and assigns, promptly
upon Tenant's request, to enter into a nondisturbance and attornment agreement
with any Qualified Subtenant, as defined below, of the Project upon the terms
described below, pursuant to which Landlord shall agree, for so long as such
Qualified Subtenant is not in default under its Qualified Sublease, as defined
below, that the Qualified Sublease shall not be terminated as a result of any
termination of this Lease and such Qualified Subtenant's use and occupancy of
the premises demised pursuant to the Qualified Sublease shall not be disturbed
by Landlord, and pursuant to which such Qualified Subtenant shall agree to
attorn to Landlord or its successor as landlord under the Qualified Sublease
upon any termination of this Lease. Said agreement shall further provide that
nothing therein contained shall impose any obligation on the Landlord, the then
owner or any mortgagee of Landlord or their respective successors to (i) return
or apply any security deposit under such sublease, such security shall be
transferred and turned over to the Landlord, such then owner or any mortgagee of
Landlord, (ii) expend any sums to make any installations or alterations provided
to be made by the sublessor under said sublease or reimburse the subtenant under
said sublease for any installations or alterations made by it, (iii) be liable
for any act or omission of any prior sublessor, (iv) be subject to any offsets
or defense which such subtenant might have against any prior sublessor, (v) be
bound by any rent or additional rent which such subtenant might have paid for
more than the current rent to any prior landlord, or (vi) be bound by any
amendment or modification of the sublease made without the prior written consent
of Landlord, the terms of which amendment or modification if included in the
original sublease would have prevented such sublease from meeting the criteria
for a Qualified Sublease. Any subtenant under a Qualified Sublease is a
"Qualified Subtenant." A "Qualified Sublease" shall be any absolute net
sublease (that is, a subleases that requires the uninterrupted payment of rent
without offset or diminution, that confers all rights to condemnation awards
[other than a separate award for moving expenses and subtenant's fixtures] upon
the sublessor, and that places no obligations upon the sublessor thereunder
other than those of the type placed upon Landlord hereunder) of the entire
Project with a subtenant whose creditworthiness is reasonably acceptable to
Landlord and pursuant to which the subtenant thereunder is required to fulfill
all of the obligations of Tenant hereunder, including, without limitation,
payment of rent which shall at all times be equal to or greater than the rent
which Tenant is required to pay hereunder.
(l) Upon the occurrence of an Event of Default under this Lease,
Landlord shall have the right to collect and enjoy all rents and other sums of
money payable under any sublease of any of the Project, and Tenant hereby
irrevocably and unconditionally assigns such rents and money to Landlord, which
assignment may be exercised upon and after (but not before) the occurrence of an
Event of Default.
13.2 TENANT OWNERSHIP. For the purposes of this Article XIII, an
assignment shall be deemed to include any of the following transactions: (i) the
issuance or sale by Tenant or the sale by any stockholder of Tenant of a
controlling interest in Tenant to persons or entities other than Amerihost
Properties, Inc. and any Related Party; (ii) the sale, conveyance or other
transfer of all or substantially all of the assets of Tenant (whether by
operation of law or otherwise); (iii) any transaction pursuant to which Tenant
is merged with or consolidated into another entity where Tenant or a Related
Party of Amerihost Properties, Inc. is not the surviving entity; and (iv) any
other transaction or series of transactions, which results in Amerihost
Properties Inc. or a Related Party of Amerihost Properties, Inc., no longer
having control of Tenant.
13.3 ASSIGNMENT DUE TO BANKRUPTCY.
(a) In the event a petition is filed by or against Tenant under the
Bankruptcy Code, Tenant, as debtor and debtor in possession, and any trustee who
may be appointed, agree to adequately protect Landlord as follows:
1. to pay monthly in advance on the first day of each month
as reason-able compensation for use and occupancy of the
Project an amount equal to all Rent due pursuant to this
Lease; and
2. to perform each and every obligation of Tenant under
this Lease until such time as this Lease is either rejected
or assumed by order of a court of competent jurisdiction; and
3. to determine within sixty (60) days after the filing of
such petition whether to assume or reject this Lease; and
4. to give Landlord at least thirty (30) days prior written
notice, unless a shorter notice period is agreed to in
writing by the parties, of any proceeding relating to any
assumption of this Lease; and
5. to do all other things of benefit to Landlord otherwise
required under the Bankruptcy Code.
Tenant shall be deemed to have rejected this Lease in the event of the
failure to comply with any of the above.
(b) If Tenant or a trustee elects to assume this Lease subsequent to the
filing of a petition under the Bankruptcy Code, Tenant, as debtor and as debtor
in possession, and any trustee who may be appointed agree as follows:
1. to cure each and every existing breach by Tenant within
not more than thirty (30) days of assumption of this Lease;
and
2. to compensate Landlord for any actual pecuniary loss
resulting from any existing breach, including without
limitation, Landlord's reasonable costs, expenses and
attorney's fees incurred as a result of the breach, as
determined by a court of competent jurisdiction, within
thirty (30) days of assumption of this Lease; and
3. in the event of an existing breach, to provide adequate
assurance of Tenant's future performance, including without
limitation:
(i) the production to Landlord of written
documentation establishing that Tenant has sufficient
present and anticipated financial ability to perform
each and every obligation of Tenant under this Lease;
and
(ii) assurances, in form acceptable to Landlord,
as may be required under any applicable provision of
the Bankruptcy Code; and
4. the assumption will not breach any provision of this
Lease; and
5. the assumption will be subject to all of the provisions
of this Lease unless the prior written consent of Landlord is
obtained; and
6. the prior written consent to the assumption of any
mortgagee to which this Lease has been assigned as collateral
security is obtained.
(c) If Tenant assumes this Lease and proposes to assign the same pursuant
to the provisions of the Bankruptcy Code to any person or entity who shall have
made a bona fide offer to accept any assignment of this Lease on terms
acceptable to Tenant, then notice of such proposed assignment shall be furnished
by Tenant to Landlord, setting forth:
1. the name and address of such person; and
2. all the terms and conditions of such offer; and
3. the adequate assurance to be provided Landlord to
assure such person's future performance under the Lease,
including without limitation, the assurances referred to in
any applicable provision of the Bankruptcy Code, shall be
given to Landlord by Tenant no later than twenty (20) days
after receipt by Tenant, but in any event no later than ten
(10) days prior to the date that Tenant shall make
application to a court of competent jurisdiction for
authority and approval to enter into such assignment and
assumption, and Landlord shall thereupon have the prior
right and option, to be exercised by notice to Tenant given
at any time prior to the effective date of such proposed
assignment, to accept (or to cause its designee to accept)
an assignment of this Lease upon the same terms and
conditions and for the same consideration, if any, as the
bona fide offer made by such person, less any brokerage
commissions which may be payable out of the consideration to
be paid by such person for the assignment of this Lease.
The adequate assurance to be provided Landlord to assure the
assignee's future performance under the Lease shall include
without limitation:
(i) a written demonstration that the assignee
meets all reasonable financial and other criteria of
Landlord as did Tenant and its business at the time of
execution of this Lease, including the production of
the most recent audited financial statement of the
assignee prepared by a certified public accountant;
and
(ii) the assignee's use of the Project will be a
Permitted Use; and
(iii) assurances, in form acceptable to Landlord,
as to all matters identified in any applicable
provision of the Bankruptcy Code.
13.4 TRANSFER OF LANDLORD'S RIGHTS. Subject to Landlord's compliance with
Article XIV hereof, Landlord shall have the right to transfer and assign, in
whole or in part, all and every feature of its rights and obligations hereunder
and in the Project. Such transfers or assignments, howsoever made, are to be
fully binding upon and recognized by Tenant provided the transferee assumes all
of Landlord's obligations hereunder and Landlord delivers to Tenant notice of
such transfer within ten (10) days following its effective date. Upon such
transfer or assignment and the assumption of Landlord's obligations by the
transferee, and subject to the provisions of Section 15.2 hereof, Landlord shall
be relieved of all obligations under the Lease accruing subsequent to the date
of transfer.
13.5 LICENSES AND LEASEHOLD MORTGAGES.
(a) Tenant shall have the right during the Lease Term to grant licenses
of portions of the Project, provided that no such license shall be for the use
and operation of the entire Project without compliance by Tenant with the
provisions of Section 13.1 nor be valid for a period of more than thirty (30)
days. In the event the term of any license shall extend beyond the fixed date
for the expiration of the Lease Term, such license shall be subject to the
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. In the event of the termination or expiration of the Lease Term, any
existing license shall remain in effect notwithstanding the termination of this
Lease. Tenant shall assign such license agreement to Landlord by an instrument
mutually satisfactory to Landlord and Tenant, and any such licensee's use,
occupancy and enjoyment of its premises shall not be disturbed, subject however
to the terms and conditions of any such license agreement.
(b) Tenant may grant a mortgage, deed of trust or other financing
instrument that constitutes or creates a lien on Tenant's interest in this Lease
or the leasehold estate created hereby (such mortgage, deed of trust or other
financing instrument hereinafter a "Leasehold Mortgage"). Landlord will
promptly provide to the holder of the Leasehold Mortgage ("Leasehold Lender")
copies of any material notice or other material correspondence, including,
without limitation, any notice of default or breach under this Lease that
Landlord gives to Tenant, but Landlord's failure to give any such notice shall
not constitute a default by Landlord on this Lease or constitute a waiver of any
such default or breach of Tenant or grant Tenant any additional time to cure any
such default or breach. Landlord hereby grants Leasehold Lender the right to
cure any default or breach under this Lease, the exercise of which shall be at
the sole option of Leasehold Lender. Leasehold Lender shall have the right to
enter upon the Project at any time to cure any such default.
(c) Notwithstanding any contrary provisions of this Lease, Landlord
agrees not to terminate this Lease or Tenant's right of possession of the
Project or to exercise any of Landlord's other remedies under this Lease or to
interfere with Tenant's occupancy, use or enjoyment of the Project for any
default under this Lease unless (x) Landlord has given to Leasehold Lender
notice of such default, which notice shall be set forth in reasonable detail the
nature of such default and (y) if such default constitutes a default under
Section 12.1 (b) of this Lease, the same is not cured within two (2) days after
notice of such default to Leasehold Lender, or if such default constitutes a
default under any other subsection of Section 12.1 of this Lease, which default
is curable by Leasehold Lender, and such default shall not have been cured by
Tenant or Leasehold Lender within the greater of the cure period provided
therefor under the terms of this Lease or a period of ten (10) days following
Leasehold Lender's receipt of such notice. If any non-monetary default that is
curable by Leasehold Lender is of such nature that it cannot be cured within ten
(10) days, Leasehold Lender shall be entitled to such additional period of time
as may be reasonably necessary to cure such default if Leasehold Lender proceeds
promptly to remedy the same. In the event of the bankruptcy of Tenant, or a
general assignment by Tenant for the benefit of its creditors, Landlord will not
terminate this Lease or exercise its other remedies under this Lease so long as
Leasehold Lender continues to pay all rent and other sums and performs or causes
to be performed all other obligations of Tenant under this Lease reasonably
susceptible of performance by Leasehold Lender. If any default cannot be cured
by Leasehold Lender because such cure requires possession of the Project,
Landlord agrees that it will not exercise its rights and remedies under this
Lease as a result thereof, so long as Leasehold Lender cures all other curable
defaults, including payment of past due Base Rent and Additional Rent within the
cure periods provided in this paragraph. It is expressly understood and agreed
by Landlord that Leasehold Lender has right to cure Tenant's defaults under this
Lease, but shall not have the obligation to do so. Upon compliance with the
foregoing provisions, any notice of breach or default given by Landlord or any
action of Landlord to terminate or exercise any remedies under this Lease or to
otherwise interfere with the occupancy, use or enjoyment of the Project by
reason thereof, shall be deemed rescinded without any further action by
Landlord, Tenant or Leasehold Lender.
(d) Upon written notice from Leasehold Lender, Landlord, in its
reasonable discretion, agrees to recognize Leasehold Lender or any assignee or
designee of Leasehold Lender approved by Landlord as tenant under this Lease,
provided (i) Leasehold Lender or such assignee or designee assumes this Lease
and all of Tenant's obligations hereunder, (ii) such assignee or designee is a
financially responsible party (which shall be determined by Landlord, such
determination not to be unreasonably withheld or delayed), and (iii) all Base
Rent and Additional Rent payments are then current. In such event, Leasehold
Lender or any assignee or designee of Leasehold Lender shall thereafter be
entitled to all the rights and privileges of the Tenant under this Lease.
Landlord will not unreasonably interfere with the enforcement by Leasehold
Lender of its liens and security interests on Tenant's assets. Leasehold
Lender is permitted to act through its employees or agents.
(e) If Leasehold Lender or its assignee or designee succeeds to
the interest of Tenant under this Lease, upon Landlord's consent, Landlord
agrees to recognize Leasehold Lender or its assignee or designee as the tenant
under this Lease, and if Leasehold Lender so requests, Landlord agrees to enter
into a new lease with Leasehold Lender or its assignee or designee for the
remainder of the Lease Term at the rents and upon the same covenants,
agreements, terms and provisions contained in this Lease, including, without
limitation, any options to renew and rights of first refusal contained herein.
If Leasehold Lender or its assignee or designee succeeds to the interest of
Tenant under this Lease or enters into a new lease with Landlord, Leasehold
Lender or its assignee or designee shall have the right, with Landlord's
consent, to sublease the Project or assign this Lease or new lease to an entity
designated by Leasehold Lender, provided that in the case of an assignment such
entity assumes in writing all of Tenant's obligations under this Lease or new
lease from and after the effective date of such assignment and such entity is a
financially responsible party (which shall be determined by Landlord, such
determination not to be unreasonably withheld or delayed), and all Base Rent and
Additional Rent payments are then current.
ARTICLE XIV
RIGHT OF FIRST REFUSAL
14.1 RIGHT OF FIRST REFUSAL. During the Lease Term when no Default or
Event of Default exists and for a period of thirty (30) days following the
expiration of the Lease Term, Landlord may not sell, transfer, assign, convey,
pledge, or otherwise dispose of all or any portion of the Project or Landlord's
interest in this Lease, other than a sale, assignment or conveyance in
connection with a securitization or structured financing of the Project, without
having first complied with the provisions of this Article XIV and the following
terms and conditions:
(a) Prior to any transfer or to entering into any contract to sell,
transfer, assign, or convey all or any portion of the Project or Landlord's
interest in this Lease to a third party, or prior to accepting any bona fide
offer to purchase, buy, or acquire all or any portion of the Project or
Landlord's interest in this Lease from a third party, Landlord shall give
written notice of all the terms, provisions, and conditions with respect to such
offer, including a copy of the proposed offer, to Tenant and Landlord shall
offer to sell or to transfer to the Tenant the Project or Landlord's interest in
the Lease which is the subject of such offer on the same terms, provisions, and
conditions as are set forth in such third party offer.
(b) Tenant shall have a period of ten (10) days from the date of its
receipt of the written notice from Landlord to accept such offer on the same
terms, provisions, and conditions stated in such written notice, which
acceptance must be in writing and be received by Landlord prior to the
expiration of such ten (10) day period. Any purported acceptance made orally
shall be ineffective, and any purported acceptance which varies the terms of
such offer shall be deemed a rejection thereof for all purposes. The closing of
the purchase by Tenant shall be held at the time and place specified in the
written notice from Landlord, or such earlier date as is specified by Tenant,
but in no event later than the day the original offer would have been closed.
(c) In the event Tenant delivers written notice of rejection to Landlord,
or in the event Tenant fails to accept the offer in the manner required by
Section 14.1(b) hereof, the offer made by Landlord shall be deemed to have been
rejected by Tenant, and Landlord shall be free to sell, transfer, assign, or
convey such interest to the third party on the terms, provisions, and conditions
set forth in the written notice to Tenant.
(d) In the event that such transaction is not consummated as provided in
Section 14.1(c) hereof on or before thirty (30) days after the closing date
specified in the notice from Landlord to Tenant, or in the event any material
terms and provisions of such transaction are changed following a rejection by
Tenant, no sale, transfer, assignment, or conveyance of such interest in the
Project or the Lease may be made unless the provisions of this Article XIV are
again complied with.
14.2 CONDITIONS OF OFFER. Landlord shall not be entitled to exercise its
rights under Section 14.1(a) hereof with respect to any offer to purchase or
offer to sell any interest in the Project or the Lease unless such offer
complies with all of the following requirements:
(a) the proposed purchase price (which shall be net of any debts or
liabilities which the proposed purchaser will assume) is payable in its entirety
in cash;
(b) the offer contains provisions whereby the proposed purchaser is
obligated to comply with the provisions of Section 14.2(e) prior to or at
closing;
(c) it is an offer by or to a principal, identified in the offer, and not
an agent acting on behalf of an undisclosed principal; and such principal shall
not be a person or entity with respect to which Landlord has any direct or
indirect ownership or control or from whom Landlord shall receive any form of
undisclosed rebate, commission or other consideration in connection with the
transaction;
(d) the sale is subject to the rights of Tenant under this Lease; and
(e) The prospective purchaser shall provide to Tenant a statement signed
by such prospective purchaser to the effect that (i) such purchaser is a
principal acting on its own behalf and not an agent acting on behalf of an
undisclosed principal, (ii) such principal is not a person or entity with
respect to which Landlord has any direct or indirect ownership or control, and
(iii) that such purchaser is not paying any rebate, commission or other
consideration not disclosed in the offer.
Notwithstanding any term or provision of Sections 14.1 or 14.2 to the contrary,
Landlord, subject to rights of Tenant under the Lease, may (i) sell, assign or
convey the Project in connection with a securitization or structured financing
of the Project (ii) assign or pledge the Project and its interest in and to this
Lease as security for any loan secured by a mortgage or deed of trust on the
Project, and (iii) sell, assign and convey the Project and its interest in the
Lease to any Related Party of Landlord or any party into which Landlord merges
whether or not Landlord is the surviving entity.
14.3 RESTRAINING ORDER. In the event that Landlord shall at any time
transfer or attempt to transfer the Project or any portion thereof or its
interest in the Lease in violation of the provisions of this Article XIV, then
Tenant shall, in addition to all rights and remedies hereunder and at law and in
equity, be entitled to a decree or order restraining and enjoining such transfer
and Landlord shall not plead in defense thereto that there would be an adequate
remedy at law; it being hereby expressly acknowledged and agreed that damages at
law will be an inadequate remedy for a breach or a threatened breach or
violation of the provisions concerning transfers set forth in this Article XIV.
14.4 EXCLUSION FROM RIGHT OF FIRST REFUSAL. Notwithstanding any other
provision of this Article XIV to the contrary, unless the use or operation of
the Project for its intended purpose would be materially adversely affected,
based upon a reasonable determination of such affect, the Landlord may sell,
transfer, assign, lease, convey, pledge or otherwise dispose of all or any
portion of the Land on which none of the Improvements or requisite parking are
located without complying with any of the other terms and provisions of this
Article XIV.
ARTICLE XV
GENERAL PROVISIONS
15.1 ESTOPPEL CERTIFICATE. Either party hereto (the "Certifying Party")
shall at any time, upon not less than ten (10) days after the giving of written
notice by the other party (the "Requesting Party"), execute, acknowledge and
deliver to the Requesting Party or to such person designated by the Requesting
Party, a statement in writing (i) certifying that this Lease is unmodified and
in full force and effect (or if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, (ii) acknowledging that there are not, to the Certifying
Party's knowledge, any uncured defaults on the part of the Requesting Party
hereunder, or specify such defaults if they are claimed, (iii) acknowledging
that there are no offsets, counterclaims or defenses to the obligations of the
Certifying Party under the Lease, and (iv) certifying as to any other matters as
may be reasonably requested by the Requesting Party. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer or Tenant
of any portion of the Project. If the Certifying Party does not execute,
acknowledge and deliver the statement referred to in this Section within time
set forth above, the information set forth therein shall be deemed true and
correct.
15.2 LANDLORD'S LIABILITY. The term "Landlord," as used in this Lease,
shall mean only the owner or owners at the time in question of the Improvements,
FF&E and the fee title to the Land. In the event of any transfer of such title
or interest, Landlord shall be released from all liability as respects
Landlord's obligations thereafter to be performed, provided that: (a) Landlord's
obligations are assumed by Landlord's transferee; and (b) any funds held by
Landlord at the time of such transfer in which Tenant has an interest, shall be
delivered to such transferee. Specifically, Landlord's delivery of the Capital
Expenditure Reserve Account, and the deposits contemplated in Sections 3.3 and
9.6 hereof to any purchaser of Landlord's interest in the Project, and the
acknowledgment by such purchaser of the receipt of such funds, shall discharge
Landlord from any liability to Tenant for the Capital Expenditure Reserve
Account, and the deposits contemplated in Sections 3.3 and 9.6 hereof.
15.3 SEVERABILITY. The invalidity of any provision of this Lease, or
of its application to any person or circumstance as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other
provision hereof and each term, covenant, condition and provision of this Lease
shall be valid and be enforced to the fullest extent permitted by law.
15.4 CAPTIONS. Article and Section captions are not a part of this Lease.
15.5 COMPLETE AGREEMENT. This Lease and the attached exhibits set forth
all the agreements, terms, covenants and conditions between Landlord and Tenant
concerning the Project and there are no agreements, terms, covenants or
conditions, oral or written, between them other than those herein contained. No
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless it is in writing and signed by each party.
15.6 TENANT'S REMEDIES. If Landlord shall fail to perform any covenant,
term or condition of this Lease required to be performed by Landlord, if any,
and if as a consequence of such default, Tenant shall recover a money judgment
against Landlord, such judgment shall be satisfied only out of the proceeds of
sale, and condemnation or insurance proceeds, received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Project and out of Rents receivable by Landlord, or out of the consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Project or this Lease, and neither
Landlord nor its officers, directors, shareholders and lenders, nor their
respective successors and assigns, shall be personally liable for any
deficiency, provided that in the event a deficiency exists after application of
the foregoing assets relating to the Project, Landlord shall be personally
liable for such deficiency to the extent of the amount of all undisbursed sums
in the Capital Expenditure Reserve Account, and the accounts provided for in
Sections 3.3 and 9.6 provided to and held by Landlord hereunder and required to
be returned to Landlord.
15.7 FRANCHISE OBLIGATIONS. Initially the Project will be operated by
Tenant or a Related Party under the Name. Thereafter Tenant may elect to enter
into a Franchise Agreement with a Related Party of AmeriHost Inns, Inc., and
continue to operate under the Name or with another Franchisor, however, it is
expressly agreed that at all times during the term of this Lease the Project
will be operated under the Name or terms of a Franchise Agreement and all costs
of maintaining, renewing, assigning or obtaining any Franchise Agreement shall
be borne by Tenant. So long as the Franchise Agreement with a Related Party of
AmeriHost Inns, Inc. or with any other Franchisor contains industry standard
terms, including standard franchisee rights upon transfer of the Project and
termination, Landlord's consent to such Franchise Agreement shall not be
unreasonably withheld or delayed.
15.8 NOTICES. All notices and demands hereunder shall be in writing, and
shall be deemed to have been properly given or served as of (a) the date of
personal delivery with acknowledgment of receipt; (b) three (3) business days
after the same is deposited in the United States mail, prepaid, for delivery by
registered or certified mail, return receipt requested; or (c) the first
business day after the date delivered to a reputable overnight courier service
providing proof of delivery. The initial addresses of Landlord and Tenant are
set forth below:
If to Landlord:
PMC Commercial Trust
Attention: Dept. 101
17290 Preston Road, Third Floor
Dallas, Texas 75252
With a copy to: Lance B. Rosemore, Chief Executive Officer
If to Tenant:
c/o Amerihost Properties, Inc.
2400 East Devon Avenue
Suite 280
Des Plaines, Illinois 60018
Attention: Mike Holtz, President
With a copy to:
McDermott Will & Emery
227 West Monroe Street
Suite 4400
Chicago, IL 60606-5096
Attention: Helen R. Friedli, Esq.
Tele: (312)984-7563
Fax: (312)984-3669
Such addresses may be changed at any time or from time to time or additional
notice parties added, by notice as above provided. If any mortgagee of Landlord
shall have advised Tenant by notice in the manner aforesaid that it is the
holder of a mortgage against the Project and stating in said notice its address
for the receipt of notices, then simultaneously with the giving of any notice by
Tenant to Landlord, Tenant shall serve one or more copies of such notice upon
such mortgagee in the manner aforesaid.
15.9 WAIVERS. No waiver by Landlord of any provision of this Lease shall
be deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision. Landlord's consent to or approval of
any act shall not be deemed to render unnecessary the obtaining of Landlord's
consent to or approval of any subsequent act by Tenant. No payment by Tenant or
receipt by Landlord of a lesser amount than the amount then due shall be deemed
to be other than on account of the earliest rent due, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment as
payment be deemed an accord and satisfaction, and Landlord shall accept such
check or payment without prejudice to Landlord's right to recover the balance of
such payment or pursue any other remedy in this Lease provided.
15.10 RECORDING. Landlord agrees, upon Tenant's request, to execute a
short form of this Lease, entitled Memorandum of Lease, a copy of which is
annexed hereto as EXHIBIT B, and Tenant may record the Memorandum of Lease at
its expense following the date on which Landlord acquires fee simple title to
the Land. The provisions of this Lease shall control, however, in regard to any
omissions from the Memorandum of Lease, or with respect to any provisions hereof
which may be in conflict with the Memorandum of Lease.
15.11 HOLDING OVER. Tenant shall surrender the Project upon the
expiration of the Lease Term or earlier termination of the Lease. Any holdover
not consented to by Landlord in writing shall not result in a new tenancy or
interest and, in such case, Landlord may treat Tenant as a trespasser. If
Tenant remains in possession of the Project or any part thereof after the
expiration of the Lease Term or the earlier termination hereof without the
express written consent of Landlord, Tenant shall pay rent (for such holdover
period) equal to the amount of 150% of the amount of Base Rent payable by Tenant
under Article 3 during the last month of the Term.
15.12 COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Tenant and Landlord shall be deemed both a covenant and a
condition.
15.13 BINDING EFFECT. This Lease shall bind and inure to the benefit
of Landlord and Tenant and their respective permitted successors and assigns.
15.14 SUBORDINATION AND ATTORNMENT.
(a) This Lease, at the option of Landlord or any of its lenders, shall be
subordinate to any ground lease, mortgage or any other hypothecation for
security and any renewals, future advances, modifications, consolidations,
replacements and extensions thereof, provided Tenant's rights hereunder continue
to be recognized and Tenant's possession of the Project is not disturbed so long
as no Event of Default has occurred and is continuing. Landlord agrees for
itself, its successors and assigns, promptly upon Tenant's request, to enter
into or cause to be entered into by its lender a nondisturbance agreement in
such regard for the benefit of Tenant on terms reasonably satisfactory to Tenant
and Landlord.
(b) Provided Tenant's rights hereunder continue to be recognized and its
right of possession is not disturbed so long as no Event of Default has occurred
and is continuing, Tenant shall execute any documents required to effectuate
such subordination or to make this Lease prior to the lien of any mortgage,
ground lease or other security device, as the case may be, and failing to do so
within twenty (20) days after written demand, does hereby make, constitute and
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to do so and any out-of-pocket expenses incurred by Tenant in
connection therewith shall be paid by Landlord upon Tenant's request.
(c) In the event of (a) a sale, assignment, ground lease, mortgage or
other transfer of Landlord's interest in the Project or any portion thereof or
in this Lease; or (b) any proceedings brought for the foreclosure of, the
granting of a deed in lieu of foreclosure of or the exercise of the power of
sale under any mortgage or security agreement made by Landlord covering the
Project or any portion thereof or this Lease, and provided that such mortgagee
or other transferee shall agree to recognize Tenant's rights hereunder and not
disturb Tenant's possession of the Project so long as an Event of Default has
not occurred and is continuing, Tenant shall attorn to the mortgagee or other
transferee and recognize such mortgagee or other transferee as Landlord under
this Lease.
15.15 NO JOINT VENTURE. Landlord and Tenant, by entering into this
Lease or consummating the transactions contemplated hereby, shall not be
considered partners or joint venturers.
15.16 QUIET ENJOYMENT. Provided Tenant pays the Rent herein recited
and performs all of Tenant's other covenants and agreements herein contained,
Landlord covenants that Tenant shall peacefully have, hold and enjoy the
Project, subject to all the other provisions herein contained.
15.17 EXPANSION OF PROJECT. Tenant acknowledges and agrees that the
Project may, from time to time and with Landlord's approval, be modified,
including expansion to include additional land, buildings and improvements.
Upon any such expansion, Base Rent payable hereunder and other affected
obligations shall be equitably adjusted. The term "Project," as used in this
Lease, refers to the Project and any such modification thereof.
15.18 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute and be construed as one and the same instrument.
15.19 BROKERS. In connection with this Lease, Landlord and Tenant each
warrant and represent that they know of no person who is or might be entitled to
a commission, finder's fee or other like payment in connection herewith, and
each party hereto does hereby indemnify and agree to hold the other harmless
from and against any and all loss, liability and expenses that such other party
may incur should such warranty and representation prove incorrect.
15.20 TENANT'S RIGHT TO CURE. If Landlord breaches any covenant to be
performed by it under this Lease, Tenant, after notice to and demand upon
Landlord, without waiving or releasing any obligation hereunder, and in addition
to all other remedies available to Tenant, may (but shall be under no obligation
at any time thereafter to) make such payment or perform such act for the account
and at the expense of Landlord. All sums so paid by Tenant and all costs and
expenses (including, without limitation, reasonable attorneys' fees) so
incurred, together with interest thereon at the Default Rate from the date on
which such sums or expenses are paid or incurred by Tenant, shall be paid by
Landlord to Tenant on demand. The rights of Tenant hereunder to cure and to
secure payment from Landlord in accordance with this Section 15.20 shall survive
the termination of this Lease with respect to the Project.
15.21 BREACH BY LANDLORD. It shall be a breach of this Lease if
Landlord fails to observe or perform any term, covenant or condition of this
Lease on its part to be performed and such failure continues for a period of 30
days after notice thereof from Tenant, unless such failure cannot with due
diligence be cured within a period of 30 days, in which case such failure shall
not be deemed to continue if Landlord, within such 30-day period, proceeds
promptly and with due diligence to cure the failure and diligently completes the
curing thereof. The time within which Landlord shall be obligated to cure any
such failure also shall be subject to extension of time due to the occurrence of
any delays beyond the reasonable control of Landlord. If Landlord does not cure
any such failure within the applicable time period as aforesaid, Tenant may
declare the existence of a "Landlord Default" by a second notice to Landlord.
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 Default Rate.
15.22 LANDLORD TO GRANT EASEMENTS, ETC. Landlord will, from time to
time, so long as no Event of Default has occurred and is continuing, at the
request of Tenant and at Tenant's cost and expense (but subject to the approval
of Landlord, which approval shall not be unreasonably withheld or delayed), (a)
grant easements and other rights in the nature of easements with respect to the
Project to third parties, (b) release existing easements or other rights in the
nature of easements which are for the benefit of the Project, (c) dedicate or
transfer unimproved portions of the Project for road, highway or other public
purposes, (d) execute petitions to have the Project annexed to any municipal
corporation or utility district, (e) execute amendments to any covenants and
restrictions affecting the Project, and (f) execute and deliver to any person
any instrument appropriate to confirm or effect such grants, releases,
dedications, transfers, petitions and amendments (to the extent of its interests
in the Project), but only upon delivery to Landlord of an officer's certificate
stating that such grant, release, dedication, transfer, petition or amendment
does not interfere with the proper conduct of the business of Tenant on the
Project and does not materially reduce the value of the Project.
15.23 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Lease is or will
be made and delivered in the State and shall be governed by and construed and
interpreted in accordance with the laws of the United States of America and the
State, without regard to principles of conflict of laws. All judicial actions,
suits or proceedings brought by or against Landlord or Tenant with respect to
its rights, obligations, liabilities or any other matter under or arising out of
or in connection with this Lease or any transaction contemplated hereby or for
recognition or enforcement of any judgment rendered in any such proceedings
shall be brought in any state or federal court in the State. By execution and
delivery of this Lease, Landlord and Tenant accept, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agree to be bound by any final judgment rendered thereby in
connection with this Lease or any transaction contemplated hereby from which no
appeal has been taken or is available. Tenant and Landlord each hereby
irrevocably waive any objections, including without limitation any objection to
the laying of venue or based on the grounds of forum non conveniens, which
either may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Tenant and Landlord acknowledge that final
judgment against it in any action, suit or proceeding referred to in this
Section shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the same.
15.24 REIT COMPLIANCE. Tenant acknowledges that Landlord is or intends
to qualify as a real estate investment trust under the Tax Code. Tenant agrees
that it will not knowingly or intentionally take or omit any action, or permit
any status to exist at the Project, which Tenant knows would or could result in
Landlord being disqualified from treatment as a real estate investment trust
under the Tax Code as the provisions exist on the date hereof.
15.25 FINANCINGS. Notwithstanding any other provisions of this
agreement, to the extent that any trustee, rating agency or purchaser in
connection with a contemplated structured finance or securitization requires
amendment to the Lease for purposes of such structured finance or
securitization, Tenant will not unreasonably withhold approval of such
modification or amendment and any out-of-pocket expenses incurred by Tenant in
connection therewith shall be paid by Landlord upon Tenant's request.
15.26 LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and
its authorized representatives as frequently as reasonably requested by Landlord
to inspect the Project and Tenant's accounts and records pertaining thereto and
make copies thereof, during usual business hours upon reasonable advance notice,
subject only to any business confidentiality requirements reasonably requested
by Tenant.
15.27 "AS IS" LEASE. Notwithstanding anything to the contrary herein
contained, Tenant expressly understands, acknowledges and agrees that the lease
of the Project shall be made by Landlord to Tenant on an "as is, where is"
basis, and "with all faults," and Tenant acknowledges that Tenant has agreed to
lease the Project in its present condition and that Tenant is relying solely on
its own examination and inspections of the Project and not on any statements or
representations made by Landlord or any agents or representatives of Landlord.
Additionally, Tenant hereby acknowledges that, Landlord makes no warranty or
representation, express or implied, or arising by operation of law, including,
but in no way limited to, any warranty of condition, habitability,
merchantability, or fitness for a particular purpose of the Project or any
portion thereof. Landlord hereby specifically disclaims any warranty, guaranty
or representation, oral or written, past, present or future, of, as to, or
concerning: (a) the nature and condition of the Project or any part thereof,
including but not by way of limitation, as to its water, soil or geology, or the
suitability thereof, for any and all activities and uses which Tenant may elect
to conduct thereon, or any improvements Tenant may elect to construct thereon,
or any income to be derived therefrom or expenses to be incurred with respect
thereto, or any obligations or any other matter or thing relating to or
affecting the same; (b) the absence of any hazardous substances on, in or under
the Land or Improvements or on, in or under any land adjacent to or abutting the
Land; (c) the manner of construction or condition or state of repair or lack of
repair of the Improvements; (d) the nature or extent of any easement,
restrictive covenant, right-of-way, lease, possession, lien, encumbrance,
license, reservation, condition or other similar matter pertaining to the
Project or any portion thereof; and (e) the compliance of the Project or the
operation of the Project or portion thereof with any Legal Requirements.
15.28 THIRD PARTY BENEFICIARY. The provisions of this Lease are solely
for the benefit of, and may be enforced solely by, the parties hereto and their
respective successors and assign and none of the provisions of this Lease are
intended to, nor shall they be construed so as to create any rights in any third
parties not party to this Lease.
15.29 NO MERGER OF TITLE. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person
or entity may acquire, own or hold, directly or indirectly: (a) this Lease or
the leasehold estate created hereby or any interest in this Lease or such
leasehold estate and (b) the fee estate in the Project.
IN WITNESS WHEREOF, Tenant and Landlord have executed this instrument
as of the date set forth above.
"LANDLORD"
PMC COMMERICAL TRUST
a Texas real estate investment trust
By: ____________________
Name: Lance B. Rosemore
Title: President
"TENANT"
AMERIHOST INNS, INC.
a Delaware corporation
By: ______________________
Name:Michael P. Holtz
Title: President
EXHIBIT A
Legal Description of Land
EXHIBIT B
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made and entered into this ____ day of
_______, 1998, by and between PMC COMMERCIAL TRUST, a ___________ _________
having an office at 17290 Preston Road, Third Floor, Dallas, Texas 75252
("Landlord"), and AMERIHOST INNS, INC., a Delaware corporation, having an office
at 2400 East Devon Avenue, Des Plaines, Illinois 60018 ("Tenant").
W I T N E S S E T H :
1. Landlord, in consideration of the rents reserved and agreed to be paid
by Tenant, and of the covenants, agreements, conditions and
understandings to be performed and observed by Tenant all as more
fully set out in a lease (the "Lease"), executed by Landlord and
Tenant, and dated the ____ day of __________, 1998, has let, leased
and demised to Tenant certain land described in Exhibit "A" attached
hereto (the "Land") together with the improvements thereon
(collectively, the "Premises") in the building located thereon.
2. The term of the Lease shall commence on the date hereof and terminate
on __________.
3. The Lease grants to Tenant a right of first refusal with respect to a
sale or other conveyance by Landlord of any interest in the Premises
or any portion thereof or of Landlord's interest in the Lease, as more
particularly set forth in the Lease.
4. This Memorandum of Lease is subject to all of the terms, conditions
and understandings set forth in the Lease between the Landlord and
Tenant, which agreement is incorporated herein by reference and made a
part hereof, as though copied verbatim herein. In the event of a
conflict between the terms and conditions of this Memorandum of Lease
and the terms and conditions of the Lease, the terms and conditions of
the Lease shall prevail.
IN WITNESS WHEREOF, the parties hereto caused this Memorandum to be duly
executed as of the day and year above written.
LANDLORD:
PMC COMMERCIAL TRUST
By: _______________________
Name: Lance B. Rosemore
Title: President
TENANT:
AMERIHOST INNS, INC.
By: ________________________
Name: Michael P. Holtz
Title: President