SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1998
AMERIHOST PROPERTIES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-15291 36-3312434
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2400 East Devon Avenue, Suite 280 Des Plaines, Illinois 60018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 298-4500
(Former name or former address, if changed since last report)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Registrant completed the sale of 26 wholly-owned Amerihost Inn(R) hotels to
PMC Commercial Trust for $62.2 million, including the assumption of mortgage
debt, on June 30, 1998. Registrant also entered into an agreement to lease
back these hotels for 10 years at an initial fixed payment of $6.22 million
per year, with annual CPI increases beginning after the third year, at a
maximum of two percent. As a result of the transaction, Registrant will
realize an $11.8 million pre-tax gain which will be accounted for under
sale/lease back accounting. In addition, mortgage debt will be reduced by
approximately $37.5 million on its consolidated balance sheet and the Company
will realize pre-tax net proceeds of approximately $18.7 million.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information:
The following unaudited condensed consolidated pro forma balance sheet
at March 31, 1998, and the unaudited condensed consolidated pro forma
statements of operation for the three months ended March 31, 1998 and
the fiscal year ended December 31, 1997 give effect to the sale and
leaseback of 26 hotels with PMC Commercial Trust. The pro forma
statements of operation assume the transaction occurred on January 1,
1997. The pro forma balance sheet assumes the transaction occurred on
March 31, 1998. The unaudited pro forma financial information is based
on the historical financial statements of Amerihost Properties, Inc.,
giving effect to the sale and leaseback, and to the assumptions and
adjustments in the accompanying notes to the unaudited pro forma
financial information.
The unaudited pro forma financial statements are presented for
informational purposes only and do not purport to be indicative of the
financial position which would actually have existed or the results of
operations which would actually have been obtained if the transaction
had occurred in the periods indicated below or which may exist or be
obtained in the future. The ultimate use of the proceeds may differ
from the assumptions used herein. The unaudited pro forma financial
information should be read in conjunction with the notes thereto and the
historical Amerihost Properties, Inc. consolidated financial statements
and notes thereto included in Amerihost Properties, Inc. latest annual
report on Form 10-K and latest quarterly report on Form 10-Q.
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998 (UNAUDITED)
<CAPTION>
As Pro forma
ASSETS Reported Adjustments Pro forma
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,924,579 $ 18,735,893 (1) $ 21,660,472
Other current assets 9,819,922 (3,230,125) (2) 6,589,797
Total current assets 12,744,501 15,505,768 28,250,269
Investments in and advances to unconsolidated
hotel joint ventures 5,895,375 (41,207) (3) 5,854,168
Property and equipment 86,966,665 (47,221,850) (4) 39,744,815
Less: accumulated depreciation and amortization 10,732,697 (2,935,124) (4) 7,797,573
76,233,968 (44,286,726) 31,947,242
Other assets, net of accumulated amortization 5,430,332 (686,195) (5) 4,744,137
Deferred income taxes - 4,710,000 (6) 4,710,000
5,430,332 4,023,805 9,454,137
$ 100,304,176 $ (24,798,360) $ 75,505,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Other current liabilities $ 12,147,658 $ 1,368,035 (2) $ 13,515,693
Current portion of long-term debt 5,188,433 (860,593) (7) 4,327,840
Total current liabilities 17,336,091 507,442 17,843,533
Long-term debt, net of current portion 60,558,502 (36,633,335) (7) 23,925,167
Deferred income taxes 108,000 (108,000) (6) -
Deferred income 1,067,700 11,751,888 (8) 12,819,588
Minority interests 773,894 - 773,894
Shareholders' equity:
Common stock 31,061 - 31,061
Additional paid-in capital 17,856,880 - 17,856,880
Retained earnings 3,008,923 (316,355) 2,692,568
20,896,864 (316,355) 20,580,509
Less: Subscriptions receivable (436,875) - (436,875)
20,459,989 (316,355) 20,143,634
$ 100,304,176 $ (24,798,360) $ 75,505,816
See notes to pro forma condensed consolidated financial statements.
</TABLE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<CAPTION>
As Pro forma
Reported Adjustments Pro forma
<S> <C> <C> <C>
Revenue $ 14,037,709 $ - $ 14,037,709
Operating costs and expenses 12,801,115 - 12,801,115
1,236,594 - 1,236,594
Depreciation and amortization 1,253,489 (643,956) 609,533
Leasehold rents - hotels, net of amortization
of deferred gain on sale 393,612 1,122,898 1,516,510
Corporate general and administrative 342,260 - 342,260
Operating loss (752,767) (478,942) (1,231,709)
Interest expense (1,471,089) 816,354 (654,735)
Other income (expense), net 103,178 16,170 119,348
Loss before minority interests and income taxes (2,120,678) 353,582 (1,767,096)
Minority interests in (income) loss of
consolidated subsidiaries and partnerships 207,587 - 207,587
Loss from continuing operations before income tax (1,913,091) 353,582 (1,559,509)
Income tax benefit 784,000 (145,000) 639,000
Net loss from continuing operations $ (1,129,091) $ 208,582 $ (920,509)
Net loss from continuing operations per share:
Basic $ (0.18) $ (0.15)
Diluted $ (0.19) $ (0.15)
See notes to pro forma condensed consolidated financial statements.
</TABLE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<CAPTION>
As Pro forma
Reported Adjustments Pro forma
<S> <C> <C> <C>
Revenue $ 62,665,516 $ - $ 62,665,516
Operating costs and expenses 52,284,877 - 52,284,877
10,380,639 - 10,380,639
Depreciation and amortization 4,532,500 (1,757,442) 2,775,058
Leasehold rents - hotels, net of amortization
of deferred gain on sale 1,728,933 3,073,871 4,802,804
Corporate general and administrative 2,139,647 - 2,139,647
Operating loss 1,979,559 (1,316,429) 663,130
Interest expense (4,053,933) 2,307,934 (1,745,999)
Other income (expense), net 374,550 55,378 429,928
Gain on sale of property and equipment 1,697,999 - 1,697,999
Contractual termination expenses (1,874,492) - (1,874,492)
Loss before minority interests and income taxes (1,876,317) 1,046,883 (829,434)
Minority interests in (income) loss of
consolidated subsidiaries and partnerships 172,874 - 172,874
Loss from continuing operations before income tax (1,703,443) 1,046,883 (656,560)
Income tax benefit 737,000 (429,000) 308,000
Net loss from continuing operations $ (966,443) $ 617,883 $ (348,560)
Net loss from continuing operations per share:
Basic $ (0.15) $ (0.06)
Diluted $ (0.19) $ (0.10)
See notes to pro forma condensed consolidated financial statements.
</TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma condensed consolidated balance sheet pro forma adjustments
column at March 31, 1998 reflects the following:
(1) Represents the net cash proceeds from the sale of the hotels,
including estimated cash proceeds from the sale of two joint
venture hotels, after closing and other costs of approximately
$619,000, and the repayment of mortgage debt.
(2) Refundable income taxes included in other current assets at March
31, 1998 has been eliminated and income taxes payable have been set
up as a result of the estimated income taxes due upon the sale of
the hotels.
(3) Investments in and advances to unconsolidated hotel joint ventures
was increased by the Company's share of the gain on the sale of two
joint venture hotels, and reduced by the estimated cash
distribution assumed to be received.
(4) Property and equipment, as well as the related accumulated
depreciation and amortization, have been reduced for all hotels
which have been sold.
(5) Other assets have been reduced by the elimination of unamortized
deferred loan costs associated with the mortgage notes which have
been repaid from the proceeds of the sale.
(6) Deferred income taxes have been provided due to the current
recognition of the gain on sales for income tax purposes, and the
deferral of the gain on sales for book purposes based on sale
leaseback accounting.
(7) Current portion of long-term debt and long-term debt have been
reduced as a result of the repayment of the mortgage notes upon the
sale of the hotels.
(8) The gain on the sale of the hotels has been deferred pursuant to
sale leaseback accounting. This deferred gain will be recognized
over the ten year term of the lease as a reduction to leasehold
rent expense. The actual deferred gain recorded at June 30, 1998
will differ from the estimated deferred gain reflected on the
March 31, 1998 pro forma condensed consolidated balance sheet.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma condensed consolidated statements of operations for the three
months ended March 31, 1998, and for the year ended December 31, 1997, have
been adjusted for (i) the elimination of depreciation and amortization on the
property and equipment which has been assumed to be sold January 1, 1997;
(ii) the elimination of the amortization of deferred loan costs related to
the mortgage notes assumed to be repaid on January 1, 1997; (iii) the
additional leasehold rent expense associated with the leaseback of the sold
hotels, reduced by the amortization of the deferred gain on the sale; (iv)
the reduction of interest expense from mortgage notes assumed to be repaid
January 1, 1997; and (v) an adjustment to the equity in income of affiliates
from the sale and leaseback accounting for the two joint ventures sold.
(c) Exhibits.
(2) Agreement of Purchase and Sale dated May 21, 1998, with description
of omitted exhibits.
(99) Form of Property Lease dated June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERIHOST PROPERTIES, INC.
Date: July 15, 1998 By: /s/ Michael P. Holtz
Michael P. Holtz
Its: President and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Page Number
(2) Agreement of Purchase and Sale dated May 21, 1998, with
description of omitted exhibits. 10
(99) Form of Property Lease dated June 30, 1998. 53
EXHIBIT 2
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT, made as of the 21st day of May, 1998 (the "Effective
Date"), by and among the various corporations identified on Exhibit "A"
attached hereto and made part hereof (collectively "Seller"), each having an
address at 2400 E. Devon Avenue, Suite 280, Des Plaines, Illinois 60018, and
PMC COMMERCIAL TRUST, a Texas real estate investment trust, having an address
at 17290 Preston Road, 3rd Floor, Dallas, Texas 75252 ("Purchaser");
WITNESSETH:
ARTICLE ONE
PURCHASE AND SALE OF THE PROPERTY
Seller hereby agrees to assign, transfer, convey and sell to Purchaser,
and Purchaser hereby agrees to purchase from Seller, upon the terms and
conditions set forth in this Agreement, all of Seller's respective right,
title and interest in and to those certain thirty (30) motel/hotels commonly
known respectively by the street addresses set forth on Exhibit "B" attached
hereto and made a part hereof and as more particularly described below
(hereinafter referred to, collectively, as the "Property"). As used herein,
the term "Property" shall also refer to each and every one of the thirty (30)
individual motel/hotels, and the term "Seller" shall also refer to each and
every one of the signatories hereto, depending on the context in which the
defined term is utilized. Capitalized terms not defined in context are
defined in Article Eighteen hereof. Each Property shall include,
respectively:
1.1 those certain parcels of land located in the cities, counties and
states more particularly described on Exhibits "B-1" through "B-30"
(collectively, the "Land");
1.2 all buildings and improvements (the "Improvements") located on,
over or beneath the Land (the Land and Improvements hereinafter referred to,
collectively, as the "Real Estate");
1.3 all Personal Property, and
1.4 all Appurtenances and Appurtenant Easements.
ARTICLE TWO
PURCHASE PRICE
2.1 Purchase Price. The purchase price (the "Purchase Price") for the
Property shall be SEVENTY-THREE MILLION AND NO/100 DOLLARS ($73,000,000.00),
payable as follows:
(A) Five Hundred Thousand and No/100 Dollars ($500,000.00) (the "Deposit"),
by check, subject to collection, payable to the order of Escrow Agent (as
hereinafter defined) upon execution of this Agreement, to be held in escrow
pursuant to the provisions of Article Fifteen hereof; interest accruing
thereon, if any, shall follow the disposition of the principal sum; and;
(B) Seventy-two Million, Five Hundred Thousand and No/100 Dollars
($72,500,000.00), less any interest accrued on the Deposit as of the Closing
(as hereinafter defined), representing the balance of the Purchase Price,
shall be paid at the Closing, payable (1) by wire transfer of immediately
available federal funds to an account designated by Seller, or (2) in the
form of a credit equal to the amount of indebtedness secured by each Existing
Mortgage (as hereinafter defined) and assumed by Purchaser, or both.
Purchaser and Seller shall execute mutually acceptable escrow instructions,
consistent with the provisions of this Agreement, in connection with the
escrow to be created pursuant hereto.
2.2 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Property as set forth on Exhibit "C" attached hereto and
made part hereof, and the values so determined shall be reflected in the
documentary fee or transfer taxes, if any, paid at the Closing. 2.3
Assumption of Mortgages. Various mortgages, deeds of trust or deeds to
secure debt, as the case may be, encumber one or more of the motel/hotels
which comprise the Property (each an "Existing Mortgage"). To the extent
permissible under the terms and provisions of a particular Existing Mortgage,
Purchaser may assume the obligations of the mortgagor or grantor thereunder,
and the borrower under the note(s) secured thereby, and shall receive a
credit against the Purchase Price equal to the amount of indebtedness at the
date of Closing so assumed by Purchaser. Purchaser shall pay Seller at the
Closing, without credit against the Purchase Price, any and all prepayment
premiums or penalties payable upon the prepayment of any Existing Mortgage
not assumed by Purchaser. With respect to any Property encumbered by an
Existing Mortgage which Purchaser desires to assume, Seller and Purchaser
agree to cooperate with each other to effect the sale of such Property
hereunder in a manner, if possible, which would not violate the applicable
provisions of such Existing Mortgage regarding the sale or transfer of such
Property. In the event that Purchaser elects to assume the Existing Mortgage
with respect to any Property located in Marysville, Ohio, Plainfield,
Indiana, Sycamore, Illinois, Macomb, Illinois, or Tupelo, Mississippi but
such assumption cannot be consummated prior to the Closing Date stipulated in
Section 4.1, the Closing Date with respect to any such Property shall be
adjourned for a period ending no later than June 30, 1999; provided, however
that the Purchase Price will be reduced by an amount equal to Thirty-nine
Thousand Eight Hundred Three and No/100 Dollars ($39,803.00) multiplied by
the number of rooms for each such Property with respect to which the Closing
Date has been so adjourned, and the sum of Fifteen Thousand and No/100
Dollars ($15,000.00) shall remain in escrow with the Escrow Agent for each
Property with respect to which the Closing Date has been so adjourned. In
the event that any such assumption ultimately is not allowed by the mortgagee
under such Existing Mortgage, Purchaser or Seller may (i) elect to pay the
prepayment penalty which would be due upon the repayment of the loan secured
by such Existing Mortgage and consummate the transaction contemplated herein
with respect to the Property encumbered by such Existing Mortgage, or (ii)
reject such Property whereupon the Agreement shall terminate with respect to
such Property and the escrow funds attributable to such Property shall be
returned to Purchaser, and neither party hereto shall have any further claim
against the other by reason of this Agreement with respect to such Property.
Notwithstanding anything contained herein to the contrary, all due diligence
rights of Purchaser with respect to any such Property are expressly reserved
upon any such adjournment of the Closing Date with respect to any such
Property.
ARTICLE THREE
SURVEY AND TITLE
3.1 Surveys. As soon as practical after the Effective Date, Seller
shall deliver or cause to be delivered to Purchaser an as-built, ALTA survey
(collectively, the "Surveys") of each Property. The Surveys shall be
sufficient to permit the Title Insurance Company to delete the standard
printed survey exception in the title policy or otherwise obtain the ALTA
survey endorsement. The Surveys shall indicate the location and dimensions
of all of the Improvements.
3.2 Title Commitments. As soon as practical after the Effective Date,
Purchaser shall obtain the title commitment (collectively, the "Title
Commitments") for each property, together with copies of all documents
(collectively, the "Title Documents") constituting exceptions to Seller's
title as reflected in the Title Commitments.
3.3 Review Period. Purchaser shall have the Inspection Period (as
hereinafter defined) in which to review the Title Commitments, Title
Documents, UCC Searches (as hereinafter defined) and Phase I Audits (as
hereinafter defined) and to deliver to Seller in writing such reasonable
objections as Purchaser may have to anything contained or set forth in such
documents. Each item to which Purchaser does not accept in writing within
such period shall not be deemed to be a Permitted Exception. Seller shall
have and be entitled to a reasonable period of time within which to clear
such objection(s) and shall cure title or remove said exceptions or defect
which may be removed by the payment of money at the expense of Seller of up
to (a) $50,000.00 in the aggregate with respect to each property and (b)
$500,000.00 as an aggregate for all of the Property. Notwithstanding
anything to the contrary, Seller shall have no obligation to cure title or
remove said objection(s) which may be removed by the payment of money at an
expense to Seller in excess of (a) $50,000.00 with respect to each Property,
and (b) $500,000.00 in the aggregate for all of the Property. If Seller (I)
is unable or unwilling to remove any such objection and fails to cause the
Title Insurance Company to remove the same from Purchaser's title insurance
policies (collectively, the "Title Policies"), or affirmatively insure
against the same, or (II) is unable to convey the Property as herein agreed
to be conveyed, then Purchaser shall have the option of either (A) waiving
such objection(s) and proceeding with the Closing, accepting title subject to
such objection(s) without any abatement or reduction of the Purchase Price;
or (B) excluding each such Property from the transaction contemplated by this
Agreement, subject to the terms and conditions and with a credit against the
Purchase Price for each Property as set forth in Section 6.6 hereof. Without
limiting the generality of the foregoing, Seller shall not be obligated to
bring any action or proceeding to remove any title objection(s).
3.4 Liens or Encumbrances. Any lien or encumbrance, or apparent lien
or encumbrance, appearing of record against the Property, which can be
discharged by the payment of money, shall not be an objection to title,
provided Seller allows the amount thereof to be credited to Purchaser as an
adjustment to the Purchase Price at the time of the Closing. A lien or
encumbrance dischargeable by satisfaction shall not be deemed an objection to
title, if, at the time of the Closing, Seller shall cause to be delivered to
the Title Insurance Company either (A) a duly executed and acknowledged
satisfaction, along with the filing fee, or (B) a payoff letter and the
appropriate funds to satisfy the lien or encumbrance. Seller shall apply the
proceeds of the sale to the satisfaction of any or all liens or encumbrances.
Notwithstanding anything to the contrary contained within this Article Three,
no matter shall be an objection to title if the Title Insurance Company is
willing to insure the Property without exception therefor or affirmatively
insure against collection out of the Property by reason thereof. The
provisions of this Section 3.4 are subject to the terms and conditions set
forth in Section 2.3 above.
3.5 Title Policy. At the Closing, Seller shall cause the Title
Insurance Company to modify (by interlineation or otherwise) the Title
Commitments so as to then reflect a current commitment by a duly licensed
title insurance company to issue to Purchaser the Title Policies, insuring
good and indefeasible title to the Land and the Improvements in Purchaser,
subject only to the Permitted Exceptions and the standard printed exceptions,
except that:
(a) The exception relating to restrictions against the
Property shall be deleted, except for such restrictions which are Permitted
Exceptions;
(b) the exception relating to ad valorem taxes and assessments
shall except only standby fees, taxes and assessments owing for the current
and subsequent years; and
(c) Purchaser shall receive the ALTA survey endorsement.
3.6 Title Charges. The cost for the Title Policies shall be paid
by Seller at the Closing, and the additional costs for endorsements, if any,
selected by Purchaser (or its lenders) shall be paid by Purchaser.
ARTICLE FOUR
CLOSING DATE
4.1 Closing Date. The closing of title under this Agreement (the
"Closing") shall take place on or about June 30, 1998 (the "Closing Date), at
the offices of the Title Insurance Company, 18333 Preston Road, Suite 410,
Dallas, Texas 75252, or at such other location as may be reasonably agreeable
to the parties.
ARTICLE FIVE
SPECIAL CONDITIONS
5.1 Conditions Precedent. The obligation of Seller to sell the
Property to Purchaser is subject to the satisfaction on or before the Closing
of the following conditions:
(A) Seller shall have received the prior written consent of Seller's Board
of Directors to the sale of the Property to Purchaser upon the terms and
conditions set forth in this Agreement, which consent shall be in the form of
a duly authorized resolution from each member of Seller's Board of Directors,
and shall be provided to Purchaser within seven (7) days after the Effective
Date.
(B) Purchaser, Amerihost Properties, Inc. and AmeriHost Inns, Inc. shall
enter into a master agreement (the "Master Agreement"), and Purchaser and
AmeriHost Inns, Inc. shall enter into a lease for each Property (the
"Property Leases"), on terms and conditions substantially as set forth on
Exhibits "D" and "E", respectively, attached hereto and made part hereof.
(C) Purchaser shall have complied with all of its obligations herein
provided.
(D) Purchaser shall cooperate with Seller in the consummation of tax-free
exchanges with respect to the Property, including, without limitation, the
assignment of this Agreement by Purchaser to a tax-free exchange trust in
order to accomplish the foregoing, provided Purchaser shall receive customary
indemnities from Seller and reimbursement of costs therefor.
5.2 Covenants.
(A) From and after the Effective Date, up to the Closing Date,
Seller may enter into agreements with respect to the Property
which are necessary or desirable in connection with the
operation of the Property in the ordinary course of business,
so long as no such agreements relate to the sale of any
portion of the Personal Property.
(B) Any liquor licenses or permits utilized in the operation of
the business at the Property presently held by Seller or its
affiliates shall continue without assignment or transfer in
Seller's name or its affiliate's name through the Closing
Date.
(C) The repairs and improvements at the Plainfield and Marysville
properties as referenced on Exhibit "F", attached hereto and
made a part hereof, must be either completed or funds must be
placed in escrow for such purpose prior to Closing.
ARTICLE SIX
PURCHASER'S INSPECTIONS AND APPROVALS
6.1 Submittal to Purchaser. Seller agrees that Purchaser shall be
entitled to enter upon the Property and to conduct such inspections, audits
and reviews of any and all information and materials it deems necessary to
effect a complete analysis of the proposed purchase and sale. The Purchaser
shall complete its due diligence before the expiration of the Inspection
Period. The following items (the "Due Diligence Items") will be delivered to
Purchaser prior to the Closing or will be delivered to Purchaser within the
time period after the date hereof as prescribed in Article Three. The cost
and expense of obtaining and delivering the Due Diligence Items to Purchaser
shall be paid by Seller, unless otherwise stated below:
(A) The Surveys;
(B) Any appraisals of the Property in the possession of Seller or its agent
or employees;
(C) The architectural plans and specifications for the Property.
(D) The Books and Records. Subject to the provisions of Section 17.10
hereof, Seller specifically permits Purchaser to disclose information
revealed in the Books and Records to its lenders, if any, and professional
advisors, and in any document (and amendments and supplements thereto) which
Purchaser may be obligated to file with the Securities and Exchange
Commission. Upon reasonable advance notice, Seller shall make available to
the accountants of Purchaser such financial information as Purchaser's
accountants reasonably require for investigation of the financial history of
the operations of the Property. Seller has also provided monthly statements
of operations for fiscal year 1997 and 1998 through the month of the Closing
(the statement of operations for the month of the Closing to be made
available after the Closing);
(E) A UCC secured transactions search (collectively, the "UCC Searches")
from each of the applicable recording offices with respect to the Property,
together with a litigation search related to Seller and the Property for the
county in which the Property is located;
(F) Phase I Audits for each Property. Seller, at its sole cost and
expense, shall provide to Purchaser an update of the Phase I Audit for each
Property listed on Exhibit "G" attached hereto and made a part hereof.
(G) Policies of title insurance for the Property, if any, in the possession
of Seller or its agents or employees, together with the Title Commitments
and the Title Documents, which shall be delivered to Purchaser by the Title
Insurance Company;
(H) A descriptive summary of all pending litigation, if any, affecting the
Property, and of any written notice of violation of any of the Legal
Requirements applicable to the Property;
(I) Copies of all of Seller's insurance policies for the Property or
certificates thereof; and
(J) All other documents and information in the possession of Seller or its
agents or employees, or reasonably available to Seller, relating to the
Property, which Purchaser reasonably requests.
6.2 Authorization for Inspection. Upon reasonable request by
Purchaser, Seller will grant authority to Purchaser and any of Purchaser's
representatives to obtain information provided for or contemplated in
Section 6.1 hereof from any third parties. Said authorization will be
provided in writing if requested by Purchaser. All such information shall be
subject to the provisions of Section 17.10.
6.3 Adverse Phase I Audit. If any Phase I Audit states that Hazardous
Materials may be in or under the Land or within the Improvements, or
otherwise evidences any adverse environmental matter at the Property,
Purchaser shall have the right to reject such Property pursuant to Section
6.4 by giving written notice to Seller of its intention to do so prior to the
end of the Inspection Period. If, notwithstanding such adverse Phase I
Audit, Purchaser desires to proceed with the transaction contemplated hereby
with respect to such Property, then Purchaser shall have the right to order
promptly, at its expense, a Phase II Site Assessment of the Land and the
Improvements directed and certified to Purchaser and its lender, including
materials samplings on and adjacent to the Land, to determine the extent and
nature of any contamination by Hazardous Materials. If such Phase II Site
Assessment reveals the necessity for material environmental clean-up of for
the Property, then Purchaser may reject such Property pursuant to Section 6.4
by giving written notice to Seller of its intention to do so within five (5)
business days after receipt by Purchaser of such Phase II Site Assessment.
6.4 Purchaser's Acceptance or Rejection; Cure or Waiver. If Purchaser
disapproves of any matter relating to any Property arising from Purchaser's
review of the Surveys, the Title Commitments, the UCC Searches or the Phase I
Audits, it shall give Seller written notice of such disapproval not later
than the expiration of the Inspection Period, or such later date as
referenced in Section 6.3, Section 11.1 or Section 11.2. If any matter is
disapproved upon the foregoing notice, then Purchaser may elect in such
notice either to (a) request that Seller cure specific matters disapproved;
or (b) reject such Property from the terms and conditions of this Agreement
subject to Section 6.6. If Purchaser requests Seller to cure any such
matter, Seller shall, within four (4) business days, indicate in writing to
Purchaser whether it shall elect to cure any such matter disproved under
clause (a) above. If Seller is unwilling to cure such matter prior to the
Closing, then Purchaser may, in its sole discretion, within four (4) business
days of written notice of Seller's refusal to cure, elect, by written notice
to Seller of its intention to do so, to (i) waive all matters disapproved and
not cured, accept all matters relating to the Property which have been cured,
and proceed with the acquisition of the Property; or (ii) reject such
Property from the terms and conditions of this Agreement subject to Section
6.6.
6.5 Effect of Termination. If this Agreement shall be terminated by
Purchaser in the exercise of its rights of termination as provided hereunder,
the Deposit, and all interest earned thereon, if any, shall be promptly
returned to Purchaser by Escrow Agent, this Agreement shall be null and void,
and neither party shall have any further obligation or liability to the other
party, except as expressly herein provided.
6.6 Partial Exclusion. Seller agrees to close the sale of the Property
on the terms and conditions herein contemplated, provided that not more than
six (6) motel/hotels shall have been rejected by Purchaser pursuant to the
provisions of Section 6.4., other than any Property rejected as allowed
pursuant to Section 11.1 and Section 11.2 hereof. Notwithstanding the
foregoing, Seller may, at its sole discretion, elect to close the sale of the
Property on the terms and conditions herein contemplated if more than six (6)
motels/hotels have been rejected by Purchaser pursuant to the provisions of
Section 6.4. In any event, however, the Purchase Price shall be reduced by
an amount equal to Thirty-nine Thousand Eight Hundred Three and No/100
Dollars ($39,803.00) multiplied by the number of rooms for each such Property
rejected. Upon rejection in accordance with the provisions of this Article
Six, such Property shall be deemed deleted from the terms and conditions of
this Agreement and this Agreement shall be deemed so modified and amended as
to give effect to such rejection.
ARTICLE SEVEN
SELLER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Seller represents, warrants and agrees that the following facts and
conditions exist on the date of execution hereof by Seller and shall exist as
of the Closing Date, subject to updating by Seller to the Closing Date and to
limitations otherwise set forth in this Article Seven:
7.1 Title. Seller owns fee simple title to the Real Estate, including
the Land described in Exhibit "A", which, as of the Closing, shall be free
and clear of all mortgages, except those Existing Mortgages which are assumed
by Purchaser, certain of which Existing Mortgages contain the assumption fees
as set forth on Exhibit "H"attached hereto and made a part hereof (those
Properties being the only Properties whose mortgages or related promissory
notes contain prepayment penalties upon prepayment of the respective notes),
and all liens, encumbrances, subleases, tenancies, security interests,
covenants, conditions, restrictions, rights-of-way, easements, judgments, and
title defects, other than the Permitted Exceptions. To the Knowledge of
Seller, there are no pending or deferred Impositions of Governmental
Authorities affecting the Property, except for real property and personal
property taxes for the year of the Closing. To the Knowledge of Seller, no
easements materially burdening the Property interfere with the use,
maintenance, repair, or operation of the Property, and all easements
necessary for the lawful operation of the Property, including all access,
ingress, support and mechanical easements necessary or incident thereto, are
in full force and effect and are not subject to termination, cancellation or
rescission. Seller will assist in obtaining lender estoppel letters in a
form reasonably satisfactory to Purchaser.
7.2 Zoning and Land Use Matters. To the Knowledge of Seller, all
permanent certificates of occupancy for the Real Estate have been issued, and
all conditions thereof, if any, have been fully complied with and require no
further action. Seller has received no written notice of any requirements
for obtaining necessary licenses, permits, authorizations or approvals with
respect to the Property which Seller does not now possess or maintain, and
Seller has received no written notice of any unwillingness of Governmental
Authorities to renew any Permits and Licenses. To the Knowledge of Seller,
the Property, as constructed and operated, is substantially in compliance
with the terms, conditions and requirements imposed upon the Property by the
Permitted Exceptions. To the Knowledge of Seller, the acquisition of the
Property by Purchaser will not cause a violation, default or breach of any
such Permitted Exceptions and there is no event of default currently in
existence under any such instrument which constitutes, and there is no event
which, but for the giving of notice or the passage of time, or both, will
constitute, an event of default thereunder.
7.3 Health, Environmental and Fire Codes. To the Knowledge of Seller,
there are no Hazardous Materials in, on or under the Property, except for
Permitted Hazardous Materials, and Seller has received no written notice that
the Property is not substantially in compliance with applicable fire codes,
building codes, health codes or other Legal Requirements which presently
apply to the Property or the operation of all businesses thereon which remain
unresolved.
7.4 No Adverse Action. There are no pending (and Seller has received
no written notice from Governmental Authorities threatening) condemnation or
other similar proceedings affecting the Property or any portion thereof, or
pending public improvements in, about or outside the Property, which will
affect access or create additional cost to Seller. There is no claim, legal
action, tax audit, or other proceeding of any type, including, without
limitation, any action of a civil or criminal nature, or any action or
proceeding before any arbitration board or tribunal, pending against or
affecting the Property which will materially adversely affect Purchaser upon
the consummation of this acquisition. To the Knowledge of Seller, there are
no pending claims against Seller arising out of injury to persons or property
occurring in or on the Property as a result of any accident or occurrence on
the Property thereon during the period of ownership of the Property by Seller
which will materially adversely affect Purchaser upon consummation of this
acquisition or are not covered by insurance. There is no pending claim or
legal action of any type related to any employment matter related to the
operation of the Property which will materially adversely affect Purchaser
upon consummation of this acquisition or is not covered by insurance.
7.5 Authorization. Seller has all requisite corporate power and
authority to perform its obligations under this Agreement, and the execution,
delivery and performance of this Agreement by Seller has been duly and
validly authorized by all officers and directors whose approval is required
under the corporate documentation of Seller. Each person executing and
delivering this Agreement, and all documents to be executed and delivered in
regard to the consummation of the transaction herein, has due and proper
authority to execute and deliver those documents. This Agreement, and all
documents executed and delivered by Seller in connection with the transaction
herein, shall constitute valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms.
7.6 Organization. Each Seller is a duly organized and validly existing
corporation under the laws of the state of its formation, authorized to
transact business in each state where the Property owned by such Seller is
situated, with full power to enter into and perform this Agreement and to
convey, assign, transfer and lease the Property.
7.7 Legal Requirements. To the Knowledge of Seller, there are no
outstanding citations or violations of Legal Requirements in connection with
the operation of the Property or the sale or provision of food or beverages
thereon.
7.8 Business Records. All documents, items and information, including,
without limitation, the Books and Records, which have been or will be made
available by Seller to Purchaser as Review Items in accordance with the terms
of this Agreement, have been maintained in the ordinary course of business,
fairly reflect the financial condition of the applicable Property in all
material respects, and are true and accurate.
7.9 No Breach of Prohibition. The transactions contemplated by this
Agreement are not restrained or prohibited by any injunction, order or
judgment rendered by any court or other governmental agency of competent
jurisdiction. To the Knowledge of Seller, no proceedings have been initiated
or are pending in which any creditor of Seller or any other person seeks to
restrain such transactions or otherwise attach the applicable Property.
Neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (a) be in material violation of
any agreements, or (b) conflict with or result in the material breach or
violation of any law, regulation, writ, injunction, decree of any court or
governmental body or agreement of any nature, applicable to Seller and the
Property.
7.10 No Adverse Notices. Seller has received, within the past year, no
notice from any insurance company which has issued a policy with respect to
any portion of the Property, from any board of fire underwriters, or from any
Governmental Authority, requesting or requiring the performance of any
repairs, alterations, renovations or other physical work on the Property,
which has not been substantially completed.
7.11 No Union Contracts; Other Employee Matters. Seller warrants that
there are no union contracts in effect with respect to the Employees, and
that Purchaser shall incur no liability to the Employees arising out of
Purchaser's acquisition of the Property.
7.12 Easements. Seller will cooperate fully with Purchaser, but at no
expense to Seller, in seeking any corrective documents reasonably deemed
necessary by Purchaser to clarify the location and validity of any
Appurtenant Easement benefiting the Property.
7.13 Tax Matters. Seller has duly filed all federal, state, county and
municipal, excise, sales, hotel occupancy and other tax returns and reports,
or timely extensions thereof, required to be filed up to the date hereof with
respect to the Property. To the Knowledge of Seller, all such returns are
true and correct in all material respects, and Seller has paid all taxes,
interest and penalties shown on such returns or reports, or claimed to be due
to any federal, state, county and municipal or other taxing authority.
7.14 Property Condition. Seller warrants that each Property not yet
inspected by Purchaser is in substantially the same general condition, normal
wear and tear excepted, as those motel/hotels previously inspected by
Purchaser, and Seller will maintain each Property in such same general
condition until the Closing.
7.15 Bulk Transfers. Seller will take all actions necessary to comply
with any bulk transfer laws applicable to this transaction and Purchaser will
cooperate with any such actions at no cost to Purchaser..
7.16 Representations and Warranties of Seller. All of the
representations and warranties of Seller are true and correct in all material
respects, to the Knowledge of Seller, and do not contain untrue statements of
a material fact or omit any material fact that would make the representations
and warranties misleading. All representations and warranties of Seller
shall survive the Closing and continue in full force and effect for a period
of two (2) years after the Closing.
ARTICLE EIGHT
PURCHASER'S REPRESENTATIONS AND WARRANTIES
8.1 Purchaser's Duty of Review. Purchaser is entering into this
Agreement in reliance on its own knowledge and familiarity with the
motel/hotel industry and its inspection of the Property. Purchaser is not
relying on any representation of Seller, or its officers, shareholders or
agents, except as expressly set forth in this Agreement or the Exhibits
attached to this Agreement.
8.2 Warranties and Representations. Purchaser represents, warrants and
agrees that the following facts and conditions exist on the date of execution
hereof and shall exist as of the Closing Date:
(A) Organization. Purchaser is a Texas real estate investment trust duly
organized and validly existing and in good standing under the laws of the
State of Texas, and has power and authority to own its properties and to
transact the business in which it is engaged. Purchaser has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and all of the documents executed and delivered by Purchaser in
connection with the transaction described herein, all of which constitute
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their terms.
(B) Authority. Purchaser has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement,
and no approvals or consents of any persons other than Purchaser are
required in connection with this Agreement. The execution of this
Agreement and the consummation of the transactions contemplated hereby will
not result in or continue any default or event that, with the giving of
notice or lapse of time, or both, would be a default, breach or violation
of the organizational instruments or laws governing Purchaser or any lease,
license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which Purchaser is a party or by which Purchaser is bound.
8.3 Representations and Warranties of Purchaser. All of the
representations and warranties of Purchaser are true and correct in all
material respects and do not contain untrue statements of a material fact or
omit any material fact that would make any of the representations and
warranties misleading. The representations and warranties herein contained
shall survive the Closing and shall continue in full force and effect for a
period of two (2) years.
ARTICLE NINE
DEFAULTS; FAILURE TO PERFORM; LIQUIDATED DAMAGES
9.1 Default of Purchaser. IN THE EVENT (A) ALL OF THE CONDITIONS TO
THIS AGREEMENT SHALL HAVE BEEN SATISFIED OR WAIVED; (B) SELLER SHALL HAVE
FULLY PERFORMED OR TENDERED PERFORMANCE OF ITS OBLIGATIONS HEREUNDER: (C)
PURCHASER SHALL FAIL TO PERFORM ITS OBLIGATION HEREUNDER; AND (D) THE CLOSING
SHALL FAIL TO OCCUR SOLELY AS A RESULT OF PURCHASER'S DEFAULT HEREUNDER,
THEN, AS SELLER'S SOLE AND EXCLUSIVE REMEDY FOR PURCHASER'S FAILURE TO CLOSE,
THE ENTIRE AMOUNT OF THE DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON, IF ANY)
SHALL BE IMMEDIATELY PAID TO SELLER. PURCHASER AND SELLER HEREBY ACKNOWLEDGE
AND AGREE THAT SELLER'S DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE
AND THE AMOUNT OF THE DEPOSIT (PLUS ALL INTEREST ACCRUED THEREON, IF ANY) IS
THE PARTIES' BEST AND MOST ACCURATE ESTIMATE OF DAMAGES SELLER WOULD SUFFER
IN THE EVENT THE TRANSACTION PROVIDED FOR IN THIS AGREEMENT FAILS TO CLOSE.
PURCHASER AND SELLER AGREE THAT SELLER'S RIGHT TO RETAIN THE DEPOSIT (PLUS
ALL INTEREST ACCRUED THEREON IF ANY) SHALL BE THE SOLE AND EXCLUSIVE REMEDY
OF SELLER IN THE EVENT OF A BREACH OF THIS AGREEMENT BY PURCHASER AS
PROVIDED ABOVE.
9.2 Default of Seller. If Seller defaults in its obligations hereunder
after the expiration of any notice and cure periods, if applicable,
Purchaser may, as its sole remedy, at its option, either: (A) terminate this
Agreement and receive a refund of the Deposit, whereupon the obligations of
the parties hereto, other than those expressly set forth to survive
termination hereof, shall terminate, and neither shall have any further claim
against the other by reason of this Agreement or (B) seek an action for
specific performance under this Agreement. Purchaser agrees that it shall
not record this Agreement or any memorandum hereof unless Seller has
defaulted in its obligations hereunder. This Section 9.2 shall survive
Closing or other termination of this Agreement.
9.3 Failed Funds. If a payment made on account of the Purchase
Price, whether the Deposit or otherwise, is by check, and if said check fails
due collection, Purchaser shall be deemed in default hereunder, and Seller,
at its sole option, may declare this Agreement terminated pursuant to Section
9.1 hereof and may pursue its remedies against Purchaser upon said check
and/or this Agreement or in any other manner permitted by law, such remedies
being cumulative, but in no event shall Seller have any obligations to
Purchaser hereunder.
ARTICLE TEN
CLOSING DOCUMENTS
10.1 Closing Documents of Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser the following:
(A) A special, limited warranty deed, as customarily provided on a
state-by-state basis, conveying good and indefeasible title in the Property
(the "Deed") to Purchaser, duly executed and acknowledged by Seller subject
only to the Permitted Exceptions.
(B) A bill of sale, duly executed and acknowledged by Seller, conveying
title to the Personal Property to Purchaser.
(C) A certificate stating that Seller is not a "Foreign Person" within the
meaning of IRC Section 1445(f)(3).
(D) The Title Policies, issued at Seller's sole cost and expense, by the
Title Insurance Company, insuring Purchaser as owner of the Property, subject
only to the Permitted Exceptions.
(E) An Indemnity Agreement, duly executed and acknowledged by Seller,
pursuant to which Seller agrees to indemnify, defend and hold harmless
Purchaser, and its shareholders, directors and officers, from any and all
claims, losses, damages and expenses which shall have arisen from any
violation of the Americans for Disabilities Act at the Property prior to the
Closing.
(F) An Indemnity Agreement duly executed and acknowledged by Seller,
pursuant to which Seller agrees to indemnify, defend and hold harmless
Purchaser, and its shareholders, directors and officers, from any and all
claims, losses, damages and expenses which shall have arisen from an
"Environmental Problem" (as hereinafter defined) before the Closing.
"Environmental Problem" shall mean the presence or release of any Hazardous
Materials from, onto, on or under any portion of the Property, or the
violation of any environmental law with respect to the Property or any part
thereof, or the failure to abide by the terms of any permit or approval
required under any environmental law with respect to the Property or any part
thereof.
(G) Such other instruments and documents as may be reasonably required to
consummate the transaction herein contemplated, including but not limited to,
the Property Lease, the Master Agreement and related guaranty of Amerihost
Properties, Inc.
10.2 Closing Documents of Purchaser. At the Closing, Purchaser shall
deliver or cause to be delivered to Seller the following:
(A) The balance of the cash portion of the Purchase Price provided in
Article One hereof, less any interest accrued on the Deposit.
(B) The Property Leases, executed by Purchaser, as lessor, in each
instance.
(C) The Master Agreement, executed by Purchaser.
(D) Evidence of Purchaser's power and authority to enter into the subject
transaction, and evidence of the signatories' authority to sign on behalf of
Purchaser.
(E) A letter addressed to Escrow Agent directing Escrow Agent to deliver
the Deposit and any interest thereon, if any, to Seller, and releasing Escrow
Agent from any and all liability in connection with the subject transaction.
(F) An Indemnity Agreement duly executed and acknowledged by Purchaser,
pursuant to which Purchaser agrees to indemnify, defend and hold harmless
Seller, and its shareholders, directors and officers, from any and all
claims, losses, damages and expenses which shall have arisen from an
"Environmental Problem" (as hereinafter defined) after the Closing, where the
Environmental Problem is caused by Purchaser. "Environmental Problem" shall
mean the presence or release of any Hazardous Materials from, onto, on or
under any portion of the Property, or the violation of any environmental law
with respect to the Property or any part thereof, or the failure to abide by
the terms of any permit or approval required under any environmental law with
respect to the Property or any part thereof.
(G) Such other instruments and documents as may be reasonably required to
consummate the transaction herein contemplated.
ARTICLE ELEVEN
RISK OF LOSS
11.1 Casualty Loss. The risk of loss or damage to the Property by fire
or other casualty, until the Closing, is assumed by Seller, but without any
liability or obligation of Seller to repair same, except Seller, at Seller's
sole option, shall have the right to repair or replace such loss or damage to
the Property. If Seller elects (such election to be made within twenty (20)
days after Seller shall have actual knowledge of such damage) to make such
repair or replacement, and such repair or replacement can be fully complete
prior to the Closing, this Agreement shall continue in full force and effect.
If Seller does not elect to repair or replace any such loss or damage or such
repair or replacement damage cannot be completed prior to the Closing, the
following shall control:
If the Improvements on any motel/hotels comprising the Property shall be
materially damaged or destroyed by fire, storm or other casualty before the
Closing, Purchaser shall have the right to reject any such Property pursuant
to Section 6.4 by giving written notice thereof to Seller within fourteen
(14) days after receiving written notice of such material destruction and
Purchaser shall receive a reduction in the Purchase Price as set forth in
Section 6.6. If Purchaser shall not elect to reject such Property, or if
said destruction is immaterial, this Agreement shall continue in full force
and effect without any modification or abatement of the Purchase Price, and
Purchaser shall be entitled to receive an absolute assignment (without
representation or warranty by or recourse against Seller) from Seller of any
interest Seller may have otherwise had in the proceeds of any insurance on
the Property (including any rent loss or business interruption insurance
proceeds allocable to the period from and after the Closing), except for any
expense theretofore incurred by Seller for restoration or safety in
connection therewith, which sum shall be reimbursed by Purchaser to Seller at
the Closing.
11.2 Eminent Domain. If notice of any action, suit or proceeding shall
be given after the date hereof, but prior to the Closing, for the purpose of
taking by eminent domain or condemning any material part of the Property,
then Purchaser and Seller shall each have the right to reject any such
Property pursuant to Section 6.4 by written notice to the other party given
within fourteen (14) days after receiving notice of such condemnation or
taking and Purchaser shall receive a reduction in the Purchase Price as set
forth in Section 6.6. If neither Purchaser nor Seller elects to reject such
Property as above provided, or if the taking or condemnation is of an
immaterial part of the Property, or in the event of a change of legal grade,
the award with respect to such condemnation, taking or change, except for any
expense theretofore incurred by Seller for restoration or safety in
connection therewith, which sum shall be reimbursed by Purchaser to Seller at
the Closing, shall be assigned (without representation or warranty by or
recourse against Seller) to Purchaser without further consideration, and this
Agreement shall continue in full force and effect without any modification or
abatement of the Purchase Price or any liability or obligation on the part of
Seller by reason of such taking, and the definition of "Property" shall be
accordingly amended. Any taking of any portion of an Improvement shall be
considered "material" for purposes of this Section 11.2.
ARTICLE TWELVE
CONDITION "AS IS"; NO FURTHER REPRESENTATIONS
12.1 Condition of Property. Purchaser represents that it has inspected
the Property and is thoroughly acquainted with its condition, and it is
agreed and understood that neither Seller nor any person purporting to act
for Seller has made or now makes any representations as to the physical
condition (including, without limitation, the presence of any Hazardous
Materials, or any condition which would violate any laws regarding
environmental matters), layout, leases, footage, rent, income, expense,
operation or any other matter or thing affecting or relating to the Property
or to this Agreement, except as specifically set forth in this Agreement, and
that no party hereto is relying on any statement or representation made by
any other which is not embodied in this Agreement. Purchaser hereby
expressly acknowledges that no representation has been made which is not
expressly set forth in this Agreement, and Purchaser further agrees to take
and accept the Property "as is" and in its condition at the Closing. This
Article shall survive the Closing and delivery of the Deed or other
termination of this Agreement.
ARTICLE THIRTEEN
FINANCIAL MATTERS; COSTS
13.1 Sales Tax. Although it is not anticipated that any sales tax shall
be due and payable in connection with this transaction, Purchaser agrees that
Purchaser shall indemnify, defend and hold Seller harmless from and against
any and all liability for any sales tax regardless of jurisdiction which may
now or hereafter be imposed upon Seller with respect to this transaction.
This provision shall survive the Closing and delivery of the Deed.
13.2 Other Changes. Purchaser and Seller shall each pay one-half of all
escrow charges. The parties shall be responsible for all transfer taxes or
documentary taxes which are payable upon the delivery and/or recording of the
Deed or of any document contemplated by this Agreement, and the charges
incurred in connection with the recording of any instrument contemplated
hereby on the basis of custom in the jurisdiction in which the Property is
situated. Notwithstanding the foregoing, costs related to endorsements to
the Title Policies or to Surveys shall be borne by Purchaser.
13.3 Closing Statements. The Title Insurance Company shall prepare
customary settlement or closing statements (the "Closing Statements") which
shall include the items set forth in Section 13.2, at least two (2) days
before the Closing Date, and each party shall cause its designated
representatives to assist the Title Insurance Company in doing so. All ad
valorem, personal property and hotel occupancy taxes, if applicable, shall
be pro rated as of the Closing Date.
ARTICLE FOURTEEN
BROKERAGE
14.1 Broker. Seller and Purchaser represent and warrant to each other
that they have not dealt with any broker in connection with this transaction.
Seller agrees to indemnify and hold Purchaser harmless from all loss, damage,
cost and expense (including reasonable attorney's fees and disbursements)
that Purchaser may suffer as a result of any claim for a fee, commission or
payment of any description brought by any person with whom Seller may have
dealt in connection with this transaction. Purchaser agrees to indemnify and
hold Seller harmless from all loss, damage, cost and expense (including
reasonable attorneys' fees and disbursements) that Seller may suffer as a
result of any claim for a fee, commission or payment of any description
brought by any person with whom Purchaser may have dealt in connection with
this transaction. The representations and covenants set forth in this
Section 14.1 shall survive delivery of the Deed and the Closing or other
termination of this Agreement.
ARTICLE FIFTEEN
THE DEPOSIT - ESCROW
15.1 Deposit.
(A) The Deposit shall be delivered to the Title Insurance Company
("Escrow Agent"), and Escrow Agent shall hold the proceeds thereof in
escrow and dispose of such sums only in accordance with the provisions
of this Agreement.
(B) Escrow Agent shall place the Deposit in (I) certificates of
deposit issued by a bank with a Texas office, (II) money market funds in
a bank with a Texas office, or a company such as Dreyfus Liquid Assets,
Inc., or as otherwise approved in writing by Purchaser and Seller, (III)
U.S. Treasury bills or other similar securities, or (IV) a segregated,
interest bearing bank account. Any interest earned thereon shall be
paid to the party entitled to receive the Deposit simultaneously with
disbursement of the Deposit. The party receiving such interest shall
pay any income taxes thereon. At the Closing, the Deposit and the
interest thereon, if any, shall be paid by Escrow Agent to Seller. If
for any reason the Closing has not occurred, and either party makes a
written demand upon Escrow Agent for payment of such amount stating the
basis for such demand, Escrow Agent shall give written notice to the
other party of such demand along with a copy thereof. If Escrow Agent
does not receive a written objection from the other party to the
proposed payment within 15 days after the giving of such notice by
Escrow Agent, which objection states the basis therefor, Escrow Agent is
hereby authorized to make such payment to the demanding party. If
Escrow Agent does receive such written objection within such 15-day
period, or, if for any other reason, Escrow Agent in good faith shall
elect not to make such payment, Escrow Agent shall continue to hold such
amount until otherwise directed by written instructions from the parties
to this Agreement or a final judgment of a court, and shall disburse
said funds accordingly. Escrow Agent shall send a copy of any objection
to the original demanding party. However, Escrow Agent shall have the
right at any time to deposit the escrowed proceeds and interest thereon,
if any, with the clerk of the court of the county in which any Property
is located, or with the clerk of the court in which any litigation
between Seller and Purchaser is pending, or in any other court which
Escrow Agent may select in the Chicago metropolitan area, in an action
for interpleader, all costs thereof to be borne by whichever of Seller
or Purchaser is the losing party. Escrow Agent shall give written
notice of such deposit to Seller and Purchaser. Upon such deposit or
payment pursuant to this Agreement, Escrow Agent shall be relieved and
discharged of all obligations and responsibilities hereunder.
(C) The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience; that Escrow
Agent shall not be deemed to be the agent of either of the parties; and
that Escrow Agent shall not be liable to either party for any act or
omission on its part unless taken or suffered in willful disregard of
this Agreement. Escrow Agent may act upon any instrument or writing
believed by Escrow Agent to be genuine and to be signed and presented by
the proper party. Seller and Purchaser shall jointly and severally
indemnify and hold Escrow Agent harmless from and against all costs,
claims and expenses, including reasonable attorneys' fees (including
the value of same if Escrow Agent represents itself), incurred in
connection with the performance of Escrow Agent's duties hereunder.
Escrow Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement. Escrow Agent shall not be bound
by any modification of this Agreement, unless the Same is in writing,
signed by Seller and Purchaser and delivered to Escrow Agent, and if
Escrow Agent's duties are affected thereby, unless Escrow Agent shall
have given prior written consent thereto. If Escrow Agent shall be
uncertain as to its duties or rights hereunder, or shall receive
instructions from Purchaser or Seller, which, in Escrow Agent's opinion,
are in conflict with any of the provisions hereof, Escrow Agent shall be
hold or apply the Deposit pursuant to subparagraph (b) hereof and may
decline to take any other action.
ARTICLE SIXTEEN
MERGER OF UNDERSTANDINGS
16.1 Merger. It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto are hereby merged into
this Agreement, which alone fully and completely expresses their agreement,
and that this Agreement is entered into after full investigation, neither
party relying upon any statement or representation made by Seller or
Purchaser or anyone else not embodied in this Agreement. This paragraph
shall survive the Closing and delivery of the Deed or other termination of
this Agreement.
ARTICLE SEVENTEEN
MISCELLANEOUS
17.1 Entire Agreement. This Agreement and the exhibits attached hereto
embody the entire agreement between the parties in connection with this
transaction, and there are no oral agreements existing between the parties
relating to this transaction which are not expressly set forth herein. This
Agreement may not be modified or, except as expressly provided to the
contrary herein, canceled or terminated, except in a writing signed by all
parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
17.2 Waiver. Failure of either party to object to any act or omission
on the part of the other party, no matter how long the same may continue,
shall not be deemed to be a waiver by such party of any of its rights
hereunder, unless expressly provided to the contrary herein. No waiver by
any party at any time, express or implied, of any breach of any provision of
this Agreement, shall be deemed a waiver of a breach of any other provision
of this Agreement or a consent to any subsequent breach of the same or any
other provision. If any action by any party shall require the consent or
approval of another party, such consent or approval of such action on any one
occasion shall not be deemed a consent to or approval of said action on any
subsequent occasion.
17.3 Assignment. Purchaser may not assign any of its right, title or
interest in this Agreement, or its right to the Deposit and any interest
thereon, without the prior written consent of Seller, which consent shall be
at Seller's sole discretion.
17.4 Headings. The captions, section numbers and article numbers
appearing in this Agreement are inserted only as a matter of convenience, and
do not define, limit, construe or describe the scope or intent of such
sections or articles of this Agreement. Furthermore, as used in this
Agreement, any gender shall include any other gender, the singular shall
include the plural, and the plural shall include the singular, wherever
applicable.
17.5 Third Parties. No party other than Seller, Purchaser and their
respective successors and permitted assigns, shall have any rights to enforce
or rely upon this Agreement. This Agreement is binding upon and made solely
for the benefit of Seller, Purchaser and their respective heirs, personal
representatives, successors and permitted assigns.
17.6 Notices.
(A) Except as expressly provided to the contrary in this
Agreement, notices which must or may be given by any party hereto must be in
writing and shall be deemed as given hereunder upon actual receipt, if by
personal delivery to the addresses set forth below, or, if properly
addressed, if sent by certified or registered mail, return receipt requested,
four (4) days after depositing such notice with postage prepaid at the rates
and with the status certified or registered in a United States mailbox, or
one (1) day after depositing such notice, with proper payment or credit
arrangement, in the custody of a nationally recognized overnight delivery
service. Notice shall be deemed properly addressed if sent to the following
addresses:
If to Seller: Amerihost Properties, Inc.
2400 E. Devon Street
Suite 280
Des Plaines, IL 60018
Attn: Michael P. Holtz,
President and Chief Executive
Officer
With copies to: Helen R. Friedli, P.C.
c/o McDermott Will & Emery
227 West Monroe Street
Chicago, IL 60606-5096
Attn: Helen R. Friedli, Esq.
If to Escrow Agent: Stewart Title Guaranty Corporation
18333 Preston Road, Suite 410
Dallas, TX 75252
Attn: Tom Irons, Esq.
If to Purchaser: PMC Commercial Trust
17290 Preston Road
Dept. 101
3rd Floor
Dallas, TX 75252
Attn: Jan F. Salit,
Executive Vice President and
Chief Investment Officer, and
Andrew S. Rosemore, Executive
Vice President
With a copy to: PMC Commercial Trust
17290 Preston Road
3rd Floor
Dallas, TX 75252
Attn: Cheryl T. Murray, Esq.
General Counsel
(B) Except as set forth to the contrary herein, any party may
designate, by notice in writing as above provided, a new or other address to
which such notice or demand shall thereafter be so given, made or mailed.
(C) The respective attorneys for the parties are hereby
authorized (i) to give any notice which the party is required to give or
may give under this Agreement; and (ii) to agree to adjournments of the
Closing. It is understood that Seller's attorney is McDermott, Will &
Emery, and Purchaser's attorney is Cheryl T. Murray, Esq.
17.7 Governing Law. This Agreement shall be governed by the laws of the
State of Illinois, without cognizance to conflicts of laws rules.
17.8 Survival. The provisions, representations, warranties, covenants
and agreements of this Agreement shall survive the Closing of the transaction
contemplated hereby, unless expressly provided herein to the contrary.
17.9 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they are entitled at law or in equity.
17.10 Satisfaction. The acceptance of a Deed by Purchaser for each
Property shall be deemed to be a full performance of and discharge of any and
all agreements and obligations on the part of Seller to be performed pursuant
to the provisions of this Agreement, except those, if any, which are herein
specifically stated to survive delivery of such Deed.
17.11 Confidentiality. All of the information heretofore or
hereafter supplied by Seller to Purchaser shall be deemed confidential and
shall not be revealed by Purchaser other than to a bank or other financial
institution or investment banker or rating agency which shall provide
Purchaser with financing in connection with the purchase of the Property,
provided that this provision shall not apply to disclosure or utilization
necessary or appropriate under applicable securities laws. In the event that
the transaction herein shall not close, all such information shall be
returned to Seller, and copies thereof shall not be retained by Purchaser or
any lending institution. This Section shall survive the Closing and
delivery of the Deed or other termination of this Agreement.
17.12 Mutuality. This Agreement has been executed after negotiation
and the opportunity by both parties to have this Agreement reviewed and
revised by legal counsel of their choice.
17.13 Marketing. Seller agrees not to market the Property or
solicit or accept any offer for the purchase and sale of the Property from
the date hereof through the earlier to occur of (a) the Closing Date, and
(b) the earlier termination of this Agreement.
ARTICLE EIGHTEEN
DEFINITIONS
Wherever used in this Agreement, the following terms have the meanings
set forth in this Article Eighteen:
"Appurtenances" shall mean all of Seller's right, title and interest in
all rights of way, drives, rights in adjoining streets, sidewalks, alleyways,
passages, curbs, berms and similar rights and areas used in connection with
the Property; all development rights for the Land or Improvements, whether
vested or not; all planned unit development (PUD) plans and other development
approvals for the Land and the Improvements; all appurtenant rights of
lateral support and encroachment rights; and all leases of property situated
off-site, but used in connection with the operation of the Improvements.
"Appurtenant Easements" shall mean all easements and licenses on or over
land or improvements, other than the Land and Improvements, which benefit the
Land or Improvements, including, but not limited to, all easements providing
access to the Land from public streets, roads and ways, all easements,
licenses and agreements for location, maintenance and replacement of off-
premises signs of the business and utility service lines, and all easements
for parking and storage on adjoining property.
"Books and Records" shall mean all books of account and annual
statements of operations for 1996 and 1997 with respect to the Property
(including audited statements to the extent the same have been audited); the
1998 budgets and all books of account and preliminary statements of the
operations for the current 1998 fiscal year for the Property to date, which
are kept by Seller in the ordinary course of business of operating the
Property, and monthly statements of operations of the Property for 1997 and
1998 through the month of the Closing (the statement of operations for the
month of the Closing to be provided after the Closing).
"Employees" shall mean all persons employed by Seller in connection with
the management and operation or possession of the Property during the
pendency of this Agreement.
"Excepted Items" shall mean the following property which is excluded
from the definition of "Personal Property" hereunder: (a) items owned by
independent contractors and business entities and not used in the operation
of the Property; (b) all items (prepaid or otherwise) stored, maintained, or
operated at the Property and consumed in the ordinary course of business,
(c) cash in bank accounts and petty cash maintained at the Property, checks
and money orders; (d) room reservation deposits of any kind or nature, (e)
receivables, if any, (f) utility deposits, if any, of every type and nature,
including any interest accrued thereon, and (g) all accounts payable with
respect to the Property, whether owing or accruing prior to, on or after the
Closing Date.
"Governmental Authorities" shall mean all federal, state, county,
municipal and local governments, administrative agencies and quasi-
governmental authorities having jurisdiction over the Property.
"Hazardous Materials" shall mean any and all substances which are or
become defined as a "hazardous waste," "hazardous substance" pollutant or
contaminant under any Legal Requirements, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act (42
U.S.C. Section 9601 et seq.), as amended, and/or the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), as amended, and/or the
federal regulations implementing such Acts; "Hazardous Materials" shall
include, but are not limited to, petroleum products and asbestos.
"Impositions" shall mean all real estate, personal property and hotel
occupancy taxes, general and special assessments imposed by Governmental
Authorities, water and sewer charges, and fees and charges assessed or
imposed by Governmental Authorities upon all or part of the Property and
which are or may become a lien on the Property.
"Improvements" shall mean all buildings and structures erected or
located on the Land and Appurtenant Easements at the date of this Agreement,
or at any time between the date of this Agreement and the Closing Date,
including all machinery, equipment and fixtures owned by Seller and attached
to such buildings and structures and used for operation or maintenance of the
buildings and structures, all parking area and driveway surfaces, and curbs
and drainage features, all landscaping, pool areas, all utility lines and
appurtenances and all signs and structural supports for signs.
"Inspection Period" shall mean the period of time beginning on the date
of receipt of the last Survey, Title Commitment (including Title Documents),
UCC Search or Phase I Audit, and/or updates thereto, and ending thirty (30)
days thereafter, however, in no event shall this Inspection Period extend
beyond the Closing Date.
"Knowledge of Seller" shall mean the actual knowledge of Seller.
"Legal Requirements" shall mean all laws, codes, ordinances, rules,
regulations, and requirements of all Governmental Authorities existing at the
date of this Agreement or at any time between the date of this Agreement and
the Closing Date applicable to all or part of the Property or the ownership,
operation, management, maintenance, development, improvements, repair,
renovation, lease, sale, encumbering, transfer, use or manner of use of all
or part of the property (including, without limitation, any law, code,
ordinance, rule, regulation or requirement relating to Hazardous Materials).
"Permits and Licenses" shall mean all permits, licenses, certificates of
occupancy, sales tax permits, and renewals thereof, which are material to the
normal operation of the Property.
"Permitted Exceptions" shall mean any defects, liens, encumbrances,
covenants, restrictions, easements, reservations, agreements and other
matters affecting title to the Property to which Purchaser does not object
prior to the expiration of the Inspection Period.
"Permitted Hazardous Materials" shall mean Hazardous Materials in
ordinary quantities which are customarily used in the operation, maintenance
and repair of hotels and lodging facilities similar to the Property and which
are stored and handled according to manufacturers' standards and guidelines
and in compliance with all applicable Legal Requirements, and prepackaged
office supplies, cleaning materials, personal grooming items and other
similar items sold for consumer use.
"Personal Property" excludes the Excepted Items and shall mean all
fixtures, furnishings and equipment located at the Property and required for
the operation of the Improvements as a motel/hotel, including, without
limitation, office furnishings and equipment (exclusive of all of the
vehicles used in the operation of the Improvements); fittings, machinery,
heating and cooling systems, tools, maintenance equipment, appliances, wires
and installed telephones, televisions, pictures, rugs, kitchen equipment, and
all other fixtures and personal property of every kind and nature, other than
the Excepted Items, which are located on, attached to, appurtenant to or used
in the operation, maintenance, management or security of the Property or any
portion of the Property, and which are owned by Seller, including Personal
Property (other than Excepted Items) acquired by Seller between the date of
this Agreement and the Closing Date, and all replacements, substitutions and
additions of and to all of the foregoing. Personal Property does not include
assignable trade names and goodwill. Seller does not lease any Personal
Property, but rather, owns all Personal Property used in operation of the
Property.
"Phase I Audit" shall mean a Phase I environmental site assessment
of the Property with respect to Hazardous Materials from a qualified
environmental audit firm experienced in Phase I environmental site
assessments, as selected by Purchaser, to be made within the Inspection
Contingency Period and pursuant to the ASTM Standard Practice for
Environmental Site Assessments.
"Phase II Site Assessment" shall mean a phase II environmental site
assessment of the Property with respect to Hazardous Materials from a
qualified environmental audit firm experienced with Phase II environmental
site assessments, as selected by Purchaser, to be made pursuant to ASTM
Standard Practice for Environmental Site Assessments.
"Title Insurance Company" shall mean Stewart Title Guaranty Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER:
[AMERIHOST PROPERTIES SUBSIDIARIES
to be listed as signatories]
By: /s/ Michael P. Holtz
Michael P. Holtz
President and Chief Executive Officer
PURCHASER:
PMC COMMERCIAL TRUST,
a Texas Real Estate Investment Trust
By: /s/ Lance B. Rosemore
Name: Lance B. Rosemore
Title: President
The undersigned, Amerihost Properties, Inc., a Delaware corporation, and the
sole shareholder of Seller, hereby joins this Agreement solely for the
purpose of performing its duties and obligations as set forth in Section 5.1
(b) and Section 6.6, if applicable.
AMERIHOST PROPERTIES, INC.
By: /s/ Michael P. Holtz
Michael P. Holtz, President
The undersigned, AmeriHost Inns, Inc., a Delaware corporation, hereby joins
this Agreement solely for the purpose of performing its duties and
obligations as set forth in Section 5.1 (b).
AMERIHOST INNS, INC.
By: /s/ Michael P. Holtz
Michael P. Holtz, President
SCHEDULE OF EXHIBITS
A . . . . . . . . Property-Owning Subsidiaries
B . . . . . . . . Street Addresses
B-1 to B-30 . . . Land
C . . . . . . . . Price Allocation per Property
D . . . . . . . . Form of Master Agreement
E . . . . . . . . Form of Property Lease
F . . . . . . . . Repairs for Marysville, Ohio and Plainfield, Indiana
G . . . . . . . . Phase I Audit Update Property
H . . . . . . . . Assumption Fees
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
