<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 1996
REGISTRATION NO. 333-1433
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
----------------
HOSPITALITY PROPERTIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENTS)
----------------
400 CENTRE STREET
NEWTON, MASSACHUSETTS 02158
(617) 964-8389
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
----------------
JOHN G. MURRAY
HOSPITALITY PROPERTIES TRUST
400 CENTRE STREET
NEWTON, MASSACHUSETTS 02158
(617) 964-8389
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------
COPIES TO:
ALEXANDER A. NOTOPOULOS, JR., ESQ. WINTHROP B. CONRAD, JR., ESQ.
SULLIVAN & WORCESTER LLP DAVIS POLK & WARDWELL
ONE POST OFFICE SQUARE 450 LEXINGTON AVENUE
BOSTON, MASSACHUSETTS 02109 NEW YORK, NEW YORK 10017
(617) 338-2800 (212) 450-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
----------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [_] .
----------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_] .
----------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 30. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes the expenses incurred by the Registrant in
connection with the offering of the Shares being registered. All the amounts
shown are estimates except the Securities and Exchange Commission registration
fee and the National Association of Securities Dealers, Inc. fee.
<TABLE>
<CAPTION>
ITEM AMOUNT
<S> <C>
SEC Registration Fee......................................... $ 127,293
NASD Fee..................................................... 30,500
Transfer Agent's and Registrar's Fees........................ 40,000
Printing Fees................................................ 125,000
Legal Fees and Expenses (other than Blue Sky)................ 500,000
Accounting Fees and Expenses................................. 250,000
Blue Sky Fees and Expenses (including fees of counsel)....... 50,000
Miscellaneous Expenses....................................... 77,207
-----------
Total...................................................... $ 1,200,000
===========
</TABLE>
- ---------------------
ITEM 35. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
A list of exhibits included as part of this Registration Statement is set
forth in the Index to Exhibits which immediately precedes such exhibits.
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-11 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF
MASSACHUSETTS ON MARCH 29, 1996.
Hospitality Properties Trust
/s/ John G. Murray
By: _________________________________
JOHN G. MURRAY, PRESIDENT
SIGNATURE TITLE DATE
/s/ John G. Murray President & Chief March 29, 1996
- ------------------------------------- Operating Officer
JOHN G. MURRAY (Principal
Executive Officer)
/s/ Thomas M. O'Brien* Treasurer & Chief March 29, 1996
- ------------------------------------- Financial Officer
THOMAS M. O'BRIEN (Principal
Accounting and
Financial Officer)
/s/ Barry M. Portnoy* Managing Trustee March 29, 1996
- -------------------------------------
BARRY M. PORTNOY
/s/ Gerard M. Martin* Managing Trustee March 29, 1996
- -------------------------------------
GERARD M. MARTIN
/s/ John L. Harrington* Trustee March 29, 1996
- -------------------------------------
JOHN L. HARRINGTON
/s/ William J. Sheehan* Trustee March 29, 1996
- -------------------------------------
WILLIAM J. SHEEHAN
/s/ Arthur G. Koumantzelis* Trustee March 29, 1996
- -------------------------------------
ARTHUR G. KOUMANTZELIS
- ---------------------
* Signed by Power of Attorney
II-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DOCUMENT DESCRIPTION PAGE NO.
<S> <C> <C>
1.1 Form of Underwriting Agreement
3.1* Declaration of Trust of the Registrant
3.2* Bylaws of the Registrant
4.1* Form of Share Certificate
5.1 Opinion of Sullivan & Worcester LLP
5.2 Opinion of Piper & Marbury L.L.P.
8.1 Opinion of Sullivan & Worcester LLP as to certain tax
matters
10.1* Purchase-Sale and Option Agreement dated as of February
3, 1995 by and among HMH Courtyard Properties, Inc., HMH
Properties, Inc. and Hospitality Properties, Inc., as
amended
10.2** Fifth Amendment to Purchase-Sale and Option Agreement
dated February 26, 1996, by and between HPT and HMH
Properties, Inc.
10.3* Form of Courtyard Management Agreement between HMH
Courtyard Properties, Inc., d/b/a HMH Properties, Inc.
and Courtyard Management Corporation
10.4* Form of First Amendment to Courtyard Management Agreement
between Courtyard Management Corporation and Hospitality
Properties, Inc. and Consolidation Letter Agreement by
and between Courtyard Management Corporation and
Hospitality Properties, Inc.
10.5* Form of Lease Agreement between Hospitality Properties,
Inc. and HMH HPT Courtyard, Inc.
10.6* Form of Assignment and Assumption of Leases, Contracts
and Agreements in favor of Hospitality Properties, Inc.
10.7** Purchase and Sale Agreement, by and between Garden Hotel
Associates Limited Partnership and Hospitality Properties
Trust
10.8 Form of Agreement to Lease by and between Garden Hotel
Associates II Limited Partnership and Hospitality Properties
Trust
10.9 Form of Lease Agreement between Garden Hotel Associates
II Limited Partnership and Hospitality Properties Trust
10.10** Purchase, Sale and Exchange Agreement dated February 26,
1996 by and between HMH Properties, Inc. and Hospitality
Properties Trust
10.11** Agreement to Lease dated February 26, 1996 by and between
HMH HPT Residence Inn Inc., and Hospitality Properties
Trust
10.12** Form of Lease Agreement between HMH HPT Residence Inn,
Inc. and Hospitality Properties Trust
10.13* Advisory Agreement
10.14** Amended and Restated Revolving Credit Agreement, dated as
of December 29, 1995 by and between DLJ Mortgage Capital,
Inc. and Hospitality Properties Trust
10.15** Amendment No. 1 to Acquisition Line Credit Agreement, as
amended and restated to such date
10.16** Revolving Credit Agreement, dated as of February 28,
1996, by and between DLJ Mortgages Capital, Inc. and
Hospitality Property Trust
10.17** Form of Residence Inn Management Agreement between HMH
Properties, Inc. and Residence Inn by Marriott(R), Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DOCUMENT DESCRIPTION PAGE NO.
<S> <C> <C>
10.18* Hospitality Properties Trust 1995 Incentive Share Award
Plan
23.1** Consent of Arthur Andersen LLP
23.2** Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Sullivan & Worcester LLP (to be included in
Exhibit 5.1 to this Registration Statement)
23.4 Consent of Piper & Marbury L.L.P. (to be included in
Exhibit 5.2 to this Registration Statement)
99.1** Power of Attorney of Thomas M. O'Brien
</TABLE>
- ---------------------
Each exhibit marked by an (*) is incorporated by reference to the
corresponding document or instrument filed as an exhibit to the Company's
Registration on Form S-11 (File No. 33-93330) in the form in which it was
declared effective by the Securities and Exchange Commission on August 16,
1995.
Previously filed exhibits are marked by an (**).
2
<PAGE>
Exhibit 1.1
12,000,000 Shares
Hospitality Properties Trust
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
----------------------
April __, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
LEGG MASON WOOD WALKER, INCORPORATED
McDONALD & COMPANY SECURITIES, INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Hospitality Properties Trust, a Maryland real estate investment trust (the
"Company"), proposes to issue and sell 12,000,000 common shares of beneficial
interest, par value $0.01 per share (the "Firm Shares"), to the several
underwriters named in Schedule I hereto (the "Underwriters"). The Company also
proposes to issue and sell to the several Underwriters not more than 1,800,000
additional common shares of beneficial interest, par value $0.01 per share (the
"Additional Shares"), if requested by the Underwriters as provided in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter
<PAGE>
collectively referred to as the "Shares". The common shares of beneficial
interest, par value $0.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Shares".
It is understood that (i) upon completion of its initial public offering of
Common Shares on August 22, 1995, the Company owned 37 hotel properties (the
"Initial Hotels") and (ii) pursuant to purchase agreements among the Company and
each of the applicable sellers (the "Additional Purchase Agreements"), the
Company (x) has recently acquired or (y) proposes to acquire substantially
contemporaneously with the Closing Date (as hereinafter defined) or as
expeditiously as possible thereafter, as the case may be, an additional 45 hotel
properties (consisting of the 18 Residence Inn by Marriott(R) hotels (the
"Residence Inn Additional Hotels"), the 16 Courtyard by Marriott(R) hotels (the
"Courtyard Additional Hotels") and the 11 Wyndham Garden(R) hotels (the "Wyndham
Garden Additional Hotels") described in the Prospectus referred to below, and
collectively referred to herein as the "Additional Hotels"; the Additional
Hotels and the Initial Hotels collectively referred to herein as the "Hotels")
for an aggregate net cash purchase price of approximately $435 million. It is
further understood that in connection with the acquisition of the Additional
Hotels, the Company has entered into or will enter into, as the case may be, a
series of related transactions (together with the hotel acquisitions, the
"Acquisition Transactions") generally described in the Prospectus referred to
below under the captions "Prospectus Summary", "The Company", "Use of Proceeds",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- The Company", "Business --
Lessees, Managers, Leases and Management Agreements" and "-- Purchase
Agreements", pursuant to which the Company shall (i) acquire the Additional
Hotels, (ii) lease the Additional Hotels to hotel operating companies pursuant
to separate operating leases (the "Additional Leases"), (iii) obtain and assign
rights arising under separate management agreements with hotel management
companies (the "Additional Management Agreements") in respect of the Residence
Inn Additional Hotels and the Courtyard Additional Hotels, (iv) to the extent
necessary to finance the pending acquisitions, borrow funds under (x) a $200
million Amended and Restated Revolving Credit Agreement dated December 29, 1995
with DLJ Mortgage Capital, Inc. ("DLJMC") (as further amended to date, the "Line
of Credit") or (y) an additional $250
2
<PAGE>
million Revolving Credit Agreement dated February 29, 1996 with DLJMC (the
"Expanded Credit Facility") and (v) with the proceeds of the offering
contemplated hereby, acquire certain of the Additional Hotels or repay all or a
portion of borrowings made under the Line of Credit and the Expanded Credit
Facility in connection with the acquisition of Additional Hotels.
The principal documents required to be executed and delivered by the
Company or its subsidiaries in order to consummate the Acquisition Transactions
(including, without limitation, this Agreement, the Additional Purchase
Agreements, the Additional Leases, the Additional Management Agreements and the
Expanded Credit Facility) are hereinafter collectively referred to as the
"Transaction Documents" and singly as a "Transaction Document". Each
Transaction Document constituting an agreement is hereinafter referred to as a
"Transaction Agreement". Capitalized terms used herein and not otherwise
defined herein have the meanings given to them in the Prospectus referred to
below under the caption "Glossary".
1. Registration Statement and Prospectus. The Company has prepared and
-------------------------------------
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-11 (File No. 333-1433) including a
prospectus relating to the Shares, which may be amended. The registration
statement as amended at the time when it becomes effective, including a
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as
the "Registration Statement"; and the prospectus in the form first used to
confirm sales of Shares is hereinafter referred to as the "Prospectus".
2. Agreements to Sell and Purchase. On the basis of the representations
-------------------------------
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell, and each Underwriter agrees,
severally and not jointly, to purchase from the Company at a price per share of
$ (the "Purchase
-----
3
<PAGE>
Price") the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 1,800,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date specified
in any such notice shall be a business day (i) no earlier than the Closing Date,
(ii) no later than ten business days after such notice has been given and (iii)
no earlier than two business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
The Company hereby agrees not to, and agrees to cause its trustees and
officers not to, offer, sell, contract to sell, grant any option to purchase, or
otherwise dispose of any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares or in any other manner transfer
all or a portion of the economic consequences associated with the ownership of
any Common Shares, except to the Underwriters pursuant to this Agreement, for a
period of 90 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC").
Notwithstanding the foregoing, during such period the Company may issue Common
Shares pursuant to its Incentive Share Award Plan in accordance with the terms
and conditions
4
<PAGE>
of, and for the number of Common Shares authorized under, such Plan on the date
hereof.
3. Terms of Public Offering. The Company is advised by you that the
------------------------
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and payment for
--------------------
the Firm Shares shall be made at 10:00 A.M., New York City time, on the third or
fourth business day (unless otherwise permitted by the Commission pursuant to
Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (the "Closing Date") following the date of the initial public offering,
at such place as you shall designate. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company. Simultaneously with the payment for the
Firm Shares in New York, the Company shall have previously caused to occur, or
will cause to contemporaneously occur, closings of Acquisition Transactions in
respect of Additional Hotels with an aggregate net cash purchase price in excess
of $300 million at the offices of Sullivan & Worcester LLP in Boston,
Massachusetts.
In addition, on the Closing Date, in connection with the offering
contemplated hereby, the Company will pay a fee of $1 million to DLJSC for
financial advisory services rendered in connection with the acquisition by the
Company of the Wyndham Garden Additional Hotels; provided that in the event such
--------
Additional Hotels are not acquired by the Company on or prior to the Closing
Date, such fee shall be deemed to have been satisfied and shall be payable at
such time after the Closing Date as such Additional Hotels are acquired by the
Company. In addition, on the Closing Date, in connection with the establishment
of the Expanded Credit Facility and the offering contemplated hereby, the
Company will pay a combined structuring and facility fee to DLJSC as follows:
(i) $625,000 as an initial structuring fee and (ii) an amount equal to 1% of
borrowings made under the Expanded Credit Facility as an additional structuring
fee; provided that (x) the obligation set forth in clause (i) above shall be
--------
deemed to have been satisfied by payment by the Company to DLJSC on February 29,
1996 of $625,000 and
5
<PAGE>
(y) the obligation set forth in clause (ii) above shall be deemed to have been
satisfied by payments by the Company to DLJSC contemporaneously with borrowings
made under the Expanded Credit Facility of amounts equal to 1% of such
borrowings.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at such place as you shall designate
at 10:00 A.M., New York City time, on the date specified in the applicable
exercise notice given by you pursuant to Section 2 (an "Option Closing Date").
Any such Option Closing Date and the location of delivery of and the form of
payment for such Additional Shares may be varied by agreement between you and
the Company.
Certificates for the Shares shall be registered in such names and issued in
such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or an Option Closing Date, as the case
may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the applicable Option Closing Date, as the case may be,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the several Underwriters, against payment of the Purchase Price
therefor by wire or certified or official bank checks payable in Federal (same
day) funds to the order of the Company.
5. Agreements of the Company. The Company agrees with you:
-------------------------
(a) To use its best efforts to cause the Registration Statement to
become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment to it becomes effective, (ii) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order
6
<PAGE>
suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes, and
(iv) of the happening of any event during the period referred to in
paragraph (e) below which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(c) To furnish to you, without charge, eight signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it, without
exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
to make any amendment or supplement to the Prospectus of which you shall
not previously have been advised or to which you shall reasonably object;
and to prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause the
same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the opinion of Davis
Polk & Wardwell a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as such Underwriter or dealer
may reasonably request.
7
<PAGE>
(f) If, during the period specified in paragraph (e), any event shall
occur as a result of which, in the opinion of Davis Polk & Wardwell, it
becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will
comply with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Shares, (i) to effect the
registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state securities, Blue Sky or
real estate syndication laws of such jurisdictions as you may request, (ii)
to continue such qualification in effect so long as required for
distribution of the Shares, (iii) to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification and (iv) to cooperate with you and Davis Polk
& Wardwell in connection with the review of the offering of the Shares
contemplated hereby by the National Association of Securities Dealers, Inc.
("NASD").
(h) To make generally available to its shareholders as soon as
reasonably practicable an earnings statement covering a period of at least
twelve months after the effective date of the Registration Statement which
shall satisfy the provisions of Section 11(a) of the Act, and to advise you
in writing when such statement has been so made available.
(i) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each fiscal
year to the record holders of its Common Shares a financial report of the
Company and its subsidiaries, if any, on a consolidated basis (and a
similar
8
<PAGE>
financial report of all unconsolidated subsidiaries, if any), all such
financial reports to include a consolidated balance sheet, a consolidated
statement of operations, a consolidated statement of cash flows and a
consolidated statement of shareholders' equity as of the end of and for
such fiscal year, together with comparable information as of the end of and
for the preceding year, certified by independent certified public
accountants, and (ii) to make generally available as soon as practicable
after the end of each quarterly period (except for the last quarterly
period of each fiscal year) to such holders, a consolidated balance sheet,
a consolidated statement of operations and a consolidated statement of cash
flows (and similar financial reports of all unconsolidated subsidiaries, if
any) as of the end of and for such period, and for the period from the
beginning of such year to the close of such quarterly period, together with
comparable information for the corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish to you
as soon as available a copy of each report or other publicly available
information of the Company mailed to the holders of Common Shares or filed
with the Commission and such other publicly available information
concerning the Company and its subsidiaries, if any, as you may reasonably
request.
(k) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits), each
preliminary prospectus and all amendments and supplements to any of them
prior to or during the period specified in paragraph (e), (ii) the printing
and delivery of the Prospectus and all amendments or supplements to it
during the period specified in paragraph (e), (iii) the printing and
delivery of this Agreement, the Preliminary and Final Blue Sky Memoranda
and all other agreements, memoranda, correspondence and other documents
printed and delivered in connection with the offering of the Shares
(including in each case any disbursements of counsel to the Company or
counsel for the Underwriters relating to such printing and delivery), (iv)
the registration or qualification of the Shares for offer and sale under
the securities, Blue Sky or real estate syndication
9
<PAGE>
laws of the several states (including in each case the fees and
disbursements of counsel for the Company or counsel for the Underwriters
relating to such registration or qualification and memoranda relating
thereto), (v) filings and clearance with the NASD in connection with the
offering of the Shares contemplated hereby, (vi) the listing of the Shares
on the New York Stock Exchange ("NYSE") and (vii) furnishing such copies of
the Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with the
offering or sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold.
(l) To use its best efforts to maintain the listing of its Common
Shares on the NYSE for a period of five years after the Closing Date
hereunder.
(m) To use its best efforts to qualify for the year ended December
31, 1995 and to continue to meet the requirements to qualify as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986,
as amended (the "Code").
(n) To apply the net proceeds of the offering of Shares contemplated
hereby substantially in accordance with the description set forth under the
caption "Use of Proceeds" in the Prospectus. In connection therewith, the
Company will use its best efforts to acquire any Additional Hotels not
owned or acquired by it as of the Closing Date as expeditiously as possible
after the Closing Date.
(o) Not to take any action prohibited by Rule 10b-6 under the Exchange
Act in connection with the distribution of the Shares contemplated hereby.
(p) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company
prior to the Closing Date or any Option Closing Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Shares.
6. Representations and Warranties. The Company represents and
------------------------------
warrants to each Underwriter that:
10
<PAGE>
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Act and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act; and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Company has been duly organized and is validly existing as a
real estate investment trust in good standing under the laws of the State
of Maryland and has the power and authority to acquire and own the Hotels
and to lease such Hotels to others and to conduct its business, all as
described in the Prospectus, and is duly qualified and in good standing as
a foreign trust authorized to do business in each
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jurisdiction in which the Hotels are located and such qualification and
authorization is required.
(e) Each of the Company's subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification. All of the outstanding
shares of capital stock of, or other ownership interests in, each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of
any nature.
(f) All the outstanding Common Shares of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights; and the Shares have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights. The Company has no
outstanding Preferred Shares of Beneficial Interest. There are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens related to or entitling any person
to purchase or otherwise to acquire any Common Shares of, or other
ownership interest in, the Company except as otherwise disclosed in the
Registration Statement.
(g) The authorized capital of the Company, including the Common
Shares, conforms as to legal matters to the description thereof contained
in the Prospectus.
(h) The Company and each of its subsidiaries is not in violation of
its Declaration of Trust, Certificate of Incorporation or Bylaws, as the
case may be, or in default in the performance of any obligation,
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agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which any of them or their respective
property is bound.
(i) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws affecting
the enforceability of creditor's rights and general principles of equity.
(j) Each Transaction Document to which the Company or any of its
subsidiaries is a party (other than this Agreement and any such Transaction
Documents relating to acquisition closings for Additional Hotels to be
acquired by the Company after the Closing Date) has been or will be, as the
case may be, duly authorized, executed and delivered by the Company and
each of its subsidiaries on or prior to the Closing Date and each
Transaction Agreement (except as aforesaid) constitutes or will constitute,
as the case may be, a valid and binding agreement of the Company or the
applicable subsidiary, as the case may be, enforceable against it in
accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws affecting the enforceability of
creditor's rights and general principles of equity.
(k) The execution by the Company or any of its subsidiaries of each
Transaction Document to which it is a party and the delivery by the Company
or any of its subsidiaries of, and the performance by the Company or any of
its subsidiaries of its obligations under, each Transaction Document to
which it is a party, as the case may be, and the consummation of the
transactions contemplated hereby and thereby will not contravene any
provision of applicable law or (i) the Declaration of Trust, Certificate of
Incorporation or
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Bylaws of the Company or any of its subsidiaries, (ii) any agreement or
other instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries, taken as a whole, or (iii)
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any of its subsidiaries, except
such as would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(l) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency and no consent, approval or
authorization of any person other than the Company or any of its
subsidiaries is required for the execution, delivery or performance by the
Company or any of its subsidiaries of its obligations under each
Transaction Document to which it is a party or the consummation of the
transactions contemplated hereby and thereby, except such as may be
required and will be obtained on or prior to the Closing Date and such as
may be required by the securities or Blue Sky laws or real estate
syndication laws of the various states in connection with the offer and
sale of the Shares and, in the case of the performance thereof, except as
are contemplated by the express terms of such Transaction Document to occur
after the Closing Date and except (x) such as are otherwise described in
the Prospectus and (y) such that the failure to obtain would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or business
prospects of the Company from that set forth in the Prospectus.
(n) There are no legal or governmental proceedings pending or, to the
knowledge of the Company after due inquiry, threatened to which the Company
or any of its subsidiaries is a party or to which any of the Hotels is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the
14
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Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(o) The Company and each of its subsidiaries has, and as of the
Closing Date and after giving effect to the Acquisition Transactions
occurring on or prior to such date will have, all necessary consents,
authorizations, approvals, orders, certificates, licenses, franchises and
permits of and from, and has made, or as of the Closing Date and after
giving effect to the Acquisition Transactions occurring on or prior to such
date will have made, all declarations and filings with all federal, state,
local and other governmental authorities, all self-regulatory organizations
and all courts and other tribunals having jurisdiction over the Company or
its properties, necessary to own, lease, license and use its properties and
assets, and the properties and assets proposed to be acquired by it in the
Acquisition Transactions occurring on or prior to such date, and to conduct
its business in the manner described in the Prospectus, except to the
extent that the failure to obtain or file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(p) Host II, as lessee of the Initial Hotels, is not in default under
the initial leases relating thereto (the "Initial Leases") and there has
not occurred any event which, but for the passage of time or the giving of
notice or both, would constitute an event of default under such Initial
Leases. To the best knowledge of the Company, Marriott II, as manager of
the Initial Hotels, is not in default under the management agreements
relating thereto (the "Initial Management Agreements") and there has not
occurred any event which, but for the passage of time or the giving of
notice or both, would constitute an event of default under such Initial
Management Agreements.
(q) To the best knowledge of the Company, Wyndham I, Wyndham II, Host
I, Marriott I, Host II and Marriott II have, and as of the Closing Date and
after giving effect to the Acquisition Transactions occurring on or prior
to such date will have, all permits, licenses, approvals, certificates,
franchises and authorizations of governmental or regulatory authorities
("Approvals") as may be necessary to lease, operate or manage the
15
<PAGE>
Hotels owned by the Company on or prior to such date in the manner
described in or contemplated by the Prospectus, except for those Approvals
the absence of which would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(r) The Company has received and reviewed certain environmental
reports on each Hotel's property, has obtained certain representations and
warranties relating to environmental matters from the sellers of the Hotels
set forth in purchase agreements therefor and has conducted physical
inspections of each Hotel's property. Except as described in the
Prospectus, (i) the Company, and, to its knowledge, each Hotel's property,
is, and as of the Closing Date and after giving effect to the Acquisition
Transactions occurring or or prior to such date will be, in compliance with
all applicable federal, state and local laws and regulations relating to
the protection of human health and safety, the environment, hazardous toxic
substances and wastes, pollutants and contaminants ("Environmental Laws"),
(ii) the Company, or, to its knowledge, Wyndham I, Wyndham II, Host I,
Marriott I, Host II and Marriott II have received, or as of the Closing
Date and after giving effect to the Acquisition Transactions occurring on
or prior to such date will receive, all permits, licenses or other
approvals required under applicable Environmental Laws to conduct the
respective hotel businesses presently conducted at each such property and
(iii) the Company or, to its knowledge, Wyndham I, Wyndham II, Host I,
Marriott I, Host II and Marriott II are, or as of the Closing Date and
after giving effect to the Acquisition Transactions occurring on or prior
to such date will be, in compliance with all terms and conditions of any
such permit, license or approval, except, in respect of clauses (i), (ii)
and (iii), as otherwise disclosed in the Prospectus or as would not, singly
or in the aggregate, have a material adverse effect on the Company or any
individual Hotel's property.
(s) To the best knowledge of the Company, except as described in the
Prospectus, there are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, remediation or closure of properties or compliance
with Environmental Laws and any potential liabilities to
16
<PAGE>
third parties) that, as of the date hereof, would, or as of the Closing
Date and after giving effect to the Acquisition Transactions occurring on
or prior to such date will, singly or in the aggregate, have a material
adverse effect on the Company or any individual Hotel's property.
(t) The Company has received and reviewed engineering reports on each
Hotel's property, has obtained certain representations and warranties from
the sellers of the Hotels set forth in the purchase agreements therefor and
has conducted physical inspections of each Hotel's property. (1) Each
Hotel is not in violation of any applicable building code, zoning ordinance
or other law or regulation, except where such violation of any applicable
building code, zoning ordinance or other law or regulation would not,
singly or in the aggregate, have a material adverse effect on such Hotel;
(2) the Company has not received notice of any proposed material special
assessment or any proposed change in any property tax, zoning or land use
laws or availability of water affecting any Hotel that would have, singly
or in the aggregate, a material adverse effect on such Hotel; (3) there
does not exist any material violation of any declaration of covenants,
conditions and restrictions with respect to any Hotel that would have,
singly or in the aggregate, a material adverse effect on such Hotel, or any
state of facts or circumstances or condition or event which could, with the
giving of notice or passage of time, or both, constitute such a violation;
(4) the improvements comprising any portion of each Hotel (the
"Improvements") are free of any and all material physical, mechanical,
structural, design and construction defects that would have, singly or in
the aggregate, a material adverse effect on such Hotel and the mechanical,
electrical and utility systems servicing the Improvements (including,
without limitation, all water, electric, sewer, plumbing, heating,
ventilation, gas and air conditioning) are in good condition and proper
working order and are free of defects that would have, singly or in the
aggregate, a material adverse effect on such Hotel; and (5) the Company has
taken reasonable steps to determine, and has determined (based on its due
diligence review, including a review of accounting records prepared by the
sellers of the Additional Hotels), that (i) each of the Residence Inn
Additional Hotels and Courtyard
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Additional Hotels is not a "Defective Property" for purposes of Section 2.3
and Section 2.5, respectively, of the Additional Purchase Agreements
relating to such Additional Hotels and (ii) no Wyndham Garden Additional
Hotel or Hotels is a "Defective Property" for purposes of Section 2.3 of
the Additional Purchase Agreement relating to the Wyndham Garden Additional
Hotels and the Company has not terminated and, as of the Closing Date, does
not expect to terminate such agreement pursuant to such Section 2.3.
(u) Subsequent to the respective dates as of which financial
information is given in the Registration Statement and the Prospectus, (1)
the Company and each subsidiary of the Company has not incurred any
material liability or obligation, direct or contingent, nor entered into
any material transaction not in the ordinary course of business; (2) the
Company has not purchased any of its outstanding Common Shares, nor has it
declared, paid or otherwise made any dividend or distribution of any kind
on its Common Shares; and (3) there has not been any material change in the
capital, short-term debt or long-term debt of the Company, except, in
respect of clauses (1), (2) or (3) above, as described in or contemplated
by the Prospectus.
(v) (1) As of the Closing Date and after giving effect to the
Acquisition Transactions occurring on or prior to such date, the Company
and each of its subsidiaries will have good and marketable title in fee
simple to all real property (or good and marketable leasehold interests
with respect to the real property ground leased by the Company or its
subsidiaries) and good and marketable title to all personal property then
owned by them, in each case free and clear of all liens, encumbrances and
defects, except (w) liens or other security interests arising under the
Line of Credit or Expanded Credit Facility, (x) the Initial Leases and
Additional Leases, (y) such as would not have a material adverse effect on
the Company or any Hotel or (z) in the case of personal property located at
certain Hotels, such as are subject to equipment lease financing
arrangements which have been entered into in the ordinary course of
business and have an aggregate outstanding balance not in excess of $1
million; and (2) real property held under ground lease by the Company or
any subsidiary is, and as of the
18
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Closing Date and after giving effect to the Acquisition Transactions
occuring on or prior to such date will be, held by it under valid,
subsisting and enforceable ground leases with such exceptions as would not
have a material adverse effect on the Company or any Hotel.
(w) The Company and its Hotels are, and as of the Closing Date and
after giving effect to the Acquisition Transactions occurring on or prior
to such date will be, insured in the manner described in the Prospectus by
insurers of recognized financial responsibility (including in the case of
Marriott I and Marriott II, certain of their affiliates) against such
losses and risks and in such amounts as are customary in the businesses in
which the Company is engaged and proposes to engage and the Company has no
reason to believe that it will not be able to renew such insurance coverage
as and when such coverage expires or to obtain similar coverage as may be
necessary to continue its business at economically viable rates, except as
described in or contemplated by the Prospectus.
(x) The Company has complied with all provisions of Section 517.075
Florida Statutes (Chapter 92-198) Laws of Florida.
(y) The assets of the Company do not constitute, and as of the Closing
Date and after giving effect to the Acquisition Transactions will not
constitute, "plan assets" under the Employee Retirement Income Security Act
of 1974, as amended.
(z) The Company is, and as of the Closing Date and after giving effect
to the Acquisition Transactions will be, organized to operate in a manner
so as to qualify as a REIT under Sections 856 through 860 of the Code, and
the Company will elect to be taxed as a REIT under the Code effective for
the year ending December 31, 1995.
(aa) Except as provided by this Agreement, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finders fee or other like payment with respect to the
consummation of the transactions contemplated by this Agreement.
19
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(bb) The financial statements of the Company, the financial statements
and schedules of the Hotels (consisting of separate financial statements
for the Combined Residence Inn Hotels, the Combined Courtyard Hotels and
for Garden Hotels Associates Limited Partnership, a Texas limited
partnership (in respect of the Wyndham Garden Additional Hotels),
respectively) included in the Registration Statement and the Prospectus
fairly present the financial position of the Company and the applicable
Hotels (as set forth in such separate financial statements), respectively,
and their results of operations and changes in financial condition,
respectively, as of the dates and periods therein specified. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved (except as otherwise noted therein). The selected
financial and other data set forth under the caption "Selected and Pro
Forma Financial and Operating Data" in the Prospectus fairly present, on
the basis stated in the Prospectus, the information included therein. The
unaudited pro forma financial statements included in the Registration
Statement comply in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X of the Commission and the pro
forma adjustments have been properly applied to the historical amounts in
the compilation of that data.
(cc) On or prior to the Closing Date, the Company shall have
consummated Acquisition Transactions relating to Additional Hotels with an
aggregate net cash purchase price in excess of $300 million.
(dd) As of the Closing Date, the Company will have obtained an ALTA
Extended Coverage Owner's Policy of Title Insurance (or an irrevocable
commitment to issue such a policy) on all of the Additional Hotels owned or
to be owned by the Company as of the Closing Date and such title insurance
is or will be in full force and effect.
(ee) On the Closing Date after giving effect to Acquisition
Transactions occurring on or prior to such date, the Company will have no
indebtedness for money borrowed except (i) equipment financing arrangements
in respect of personal property located at certain Hotels which have been
entered into in the ordinary course of
20
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business and have an aggregate outstanding balance not in excess of $1
million and (ii) borrowings outstanding under the Line of Credit and the
Expanded Credit Facility made to fund the costs of acquisition of certain
of the Additional Hotels.
(ff) The Shares have been approved for listing on the NYSE, subject to
official notice of issuance.
(gg) Except as otherwise contemplated by this Agreement, the Company
has not directly or indirectly, (i) taken any action designed to cause or
to result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or
(ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(hh) Arthur Andersen LLP and Coopers & Lybrand L.L.P., are each
independent public accountants with respect to the Company as required by
the Act.
(ii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(jj) No holder of any security of the Company has any right to
require registration of Common Shares or any other security of the Company.
(kk) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(ll) The Additional Purchase Agreements pursuant to which the Company
expects to acquire the Additional Hotels (including any Additional Hotels
which the Company may determine to acquire after the Closing Date) are in
full force and effect. The Company intends and reasonably expects to
consummate the acquisition of all Additional Hotels not owned or
21
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acquired by it as of the Closing Date (i) in the case of the Wyndham Garden
Additional Hotels, not later than April 30, 1996 and (ii) in the case of
the Additional Courtyard Hotels located in Willow Grove, Pennsylvania and
Torrance-South Bay, California, as expeditiously as possible after the
Closing Date.
7. Indemnification. (a) The Company agrees to indemnify and hold
---------------
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use therein; provided
--------
that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages, liabilities or judgments purchased the Shares if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus and a copy of
the Prospectus shall not have been furnished to such person at or prior to the
written confirmation of the sale of such Shares to such person.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against the Company,
such Underwriter shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses.
Any Underwriter or any
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such controlling person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company shall have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such controlling
person shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in writing
by Donaldson, Lufkin & Jenrette Securities Corporation and that all such fees
and expenses shall be reimbursed as they are incurred). The Company shall not
be liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the immediately preceding sentence, if in any case where the
fees and expenses of counsel are at the expense of the indemnifying party and an
indemnified party shall have requested the indemnifying party to reimburse the
indemnified party for such fees and expenses of counsel as incurred, such
indemnifying party agrees that it shall be liable for any settlement of any
action effected without its written consent if (i) such settlement is entered
into more than ten business days after the receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall have failed to
reimburse the indemnified party in accordance with such request for
reimbursement prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in
23
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respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and its trustees or officers who sign the
Registration Statement (or any person named in the Registration Statement as
having agreed to become a trustee of the Company) and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through you
expressly for use in the Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought against the
Company, its trustees (or a named proposed trustee) or officers or persons
controlling the Company based on the Registration Statement, the Prospectus or
any preliminary prospectus and in respect of which indemnity may be sought
against any Underwriter, the Underwriter shall have the rights and duties given
to the Company (except that if the Company shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its trustees (or a named proposed trustee) or officers and persons
controlling the Company shall have the rights and duties given to the
Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the
24
<PAGE>
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the public
of the Shares, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7(d) are several in
25
<PAGE>
proportion to the respective number of Shares purchased by each of the
Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase the Firm Shares under this Agreement are subject
to the satisfaction of each of the following conditions:
(a) All the representations and warranties set forth in Section 6 of
this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective not later
than 5:00 P.M. (and in the case of a Registration Statement filed under
Rule 462(b) of the Act, not later than 10:00 P.M.), New York City time, on
the date of this Agreement or at such later date and time as you may
approve in writing, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c)(i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of the Company; (ii) since the date of the
latest balance sheet included in the Registration Statement and the
Prospectus, there shall not have been any change, or any development
involving a prospective material adverse change, in the capital or in the
long-term debt of the Company from that set forth in the Registration
Statement and Prospectus (other than in connection with the Acquisition
Transactions as described in and contemplated by the Registration Statement
and the Prospectus); (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the
Company and its subsidiaries, taken as a whole, other than those reflected
in the Registration Statement and the Prospectus; (iv) since the date of
the latest balance sheet included in the Registration
26
<PAGE>
Statement and the Prospectus, none of the Hotels owned or to be owned by
the Company as of the Closing Date shall have sustained any material loss
or casualty due to fire, flood, earthquake, hurricane, tornado, accident or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and (v) on the
Closing Date you shall have received a certificate dated the Closing Date,
signed by the President and Chief Financial Officer of the Company,
confirming the matters set forth in paragraphs (a), (b) and (c) of this
Section 8.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Sullivan & Worcester LLP, counsel for the Company, to the effect
that:
(i) the Company has been duly organized and is validly existing
as a real estate investment trust in good standing under the laws of
the State of Maryland and has the power and authority to acquire and
own the Hotels owned by it and to lease such Hotels to others and to
conduct its business, all as described in the Prospectus;
(ii) each of the Company's subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has the power and authority to own
the Hotels owned by it and to lease such Hotels to others and to
conduct its business, all as described in the Prospectus;
(iii) all of the outstanding shares of capital stock of each of
the Company's subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable, and are owned by the
Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature;
(iv) all the outstanding Common Shares have been duly authorized
and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights;
27
<PAGE>
(v) the Shares have been duly authorized, and, when issued and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will have been validly issued and will be fully paid
and non-assessable, and the issuance of such Shares is not subject to
any preemptive or similar rights;
(vi) the Company has no outstanding Preferred Shares of
Beneficial Interest;
(vii) to the best of such counsel's knowledge, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any Common
Shares of, or other ownership interest in, the Company except as
otherwise disclosed in the Registration Statement;
(viii) the authorized capital of the Company, including the Common
Shares, conforms as to legal matters to the description thereof
contained in the Prospectus;
(ix) the statements under the captions "The Company",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations --Liquidity and Capital Resources -- The
Company", "Business -- Lessees, Managers, Leases and Management
Agreements", "--Purchase Agreements", "-- Ground Leases" and "--
Damage, Destruction or Condemnation", "Management -- Incentive Share
Award Plan" and "--Advisors and the Advisory Agreement", "Description
of the Shares" and "Summary of the Declaration of Trust" and Items 32
and 33 of Part II of the Registration Statement, insofar as such
statements constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings;
(x) the statements under the captions "Federal Income Tax
Considerations", "Certain United States Tax Considerations for Non-
U.S. Holders of Shares" and "ERISA Plans, Keogh Plans and Individual
Retirement Accounts" in the
28
<PAGE>
Prospectus, insofar as such statements constitute a summary of legal
matters or documents referred to therein, fairly present the
information called for with respect to such legal matters, documents
and proceedings;
(xi) the Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
suspending its effectiveness has been issued and no proceedings for
that purpose are, to the knowledge of such counsel, pending before or
contemplated by the Commission;
(xii) the Company and each of its subsidiaries is not in
violation of its Declaration of Trust, Certificate of Incorporation or
Bylaws and, to such counsel's knowledge, the Company and each of its
subsidiaries is not in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and
its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which any of them or their respective
property is bound;
(xiii) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company, enforceable against it in accordance with its terms, except
as enforceability of any indemnification or contribution provisions
contained therein may be limited under federal or state securities
laws or public policy;
(xiv) each Transaction Document executed by the Company or any of
its subsidiaries as of the date of such opinion has been duly
authorized, executed and delivered by it;
(xv) no consent, approval, authorization or order of, or
qualification with, any United States federal, Massachusetts, Delaware
or Maryland governmental body or agency (other than any Massachusetts,
Delaware or Maryland body or agency
29
<PAGE>
dealing with securities laws, as to which such counsel need not
express an opinion) is required for the execution, delivery or
performance by the Company or any of its subsidiaries of its
obligations under each Transaction Document to which it is a party or
the consummation of the transactions contemplated thereby;
(xvi) to the best of such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the Hotels is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described, nor any
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required;
(xvii) and (1) to such counsel's knowledge, the Company or its
subsidiaries, as current or proposed owners of the Hotels, have all
permits, licenses, approvals, certificates, franchises and
authorizations of governmental or regulatory authorities ("Approvals")
as may be necessary to own the Hotels in the manner described in or
contemplated by the Prospectus and (2) based solely on such counsel's
participation in the acquisition by the Company of Hotels owned or to
be owned as of the date of such opinion, to such counsel's knowledge,
(x) Wyndham I, Host I and Host II, as current or proposed lessees of
such Hotels, and (y) Wyndham II, Marriott I and Marriott II, as
current and proposed managers of such Hotels, have all Approvals as
may be necessary to lease or manage, as the case may be, such Hotels
in the manner described in or contemplated by the Prospectus, except
in respect of both clause (1) and (2) above, for those Approvals the
absence of which would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(xviii) the Company is not an "investment company" or a company
"controlled" by an
30
<PAGE>
"investment company" within the meaning of the Investment Company Act
of 1940, as amended;
(ix) such counsel confirms as of the Closing Date its opinions
filed as Exhibits 5.1 and 8.1 to the Registration Statement;
(xx) (1) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for financial statements and
schedules as to which no opinion need be expressed) comply as to form
in all material respects with the Act, and (2) such counsel believes
that (except for financial statements and schedules, as aforesaid) the
Registration Statement and the prospectus included therein at the time
the Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or supplemented, if
applicable (except for financial statements and schedules, as
aforesaid) does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of Piper & Marbury LLP as to matters governed by the laws
of the State of Maryland.
The opinions of Sullivan & Worcester LLP and Piper & Marbury LLP
described in paragraph (d) above shall be rendered to you at the request of
the Company and shall so state therein.
31
<PAGE>
You also shall have received on the Closing Date an opinion, dated the
Closing Date, of Sherin & Lodgen, special counsel for the Company, as to
the matters referred to in clause (ix) above (but only with respect to the
statements under the caption "Business - Legal Proceedings").
(e) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Davis Polk & Wardwell, counsel for the Underwriters, as to
the matters referred to in clauses (v), (ix) (but only with respect to the
statements under the caption "Underwriting"), (xiii) (but only as to due
authorization, execution and delivery) and clause (xx) of the foregoing
paragraph (d).
In giving such opinion with respect to the matters covered by clause
(xx), such counsel may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
In rendering their opinion, such counsel may rely on an opinion dated
the Closing Date of Piper & Marbury LLP as to matters governed by the laws
of the State of Maryland. In addition, in rendering their opinion, such
counsel may state that their opinion as to laws of the State of Delaware is
limited to the Delaware General Corporation Law.
(f) You shall have received separate letters dated on and as of the
Closing Date, in form and substance satisfactory to you, from Arthur
Andersen LLP, independent public accountants, and Coopers & Lybrand L.L.P.,
independent public accountants, respectively, with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus, each in substantially the form and substance
of the letters delivered to you by Arthur Andersen LLP and Coopers &
Lybrand L.L.P., respectively, on the date of this Agreement.
(g) The Company shall have delivered to you the "lock up" agreements
specified in Section 2 hereof and
32
<PAGE>
such agreements and certain other continuing "lock up" agreements expiring
August 16, 1997 which were entered into by HRP and Advisors with DLJSC in
August 1995 shall be in full force and effect.
(h) You and your counsel shall have received copies of current
commitments for title insurance with respect to each Additional Hotel
containing the irrevocable commitment of the issuing title insurance
company to issue an owner (or leasehold owner) policy of title insurance to
the Company with respect to each such Additional Hotel, in an amount not
less than the purchase price to be paid by the Company for the real
property comprising such Additional Hotel, insuring that the Company will
be vested with good and marketable title in fee simple to each such
Additional Hotel (or with respect to ground leased Additional Hotels
described in the Prospectus, good and marketable leasehold interests) free
and clear of all liens, encumbrances and defects, except (w) liens or
security interests arising under the Line of Credit or the Expanded Credit
Facility, (x) the Additional Leases or (y) such as would not have a
material effect on the Company.
(i) All of the Transaction Documents (other than Transaction
Documents relating to acquisition closings of Additional Hotels occurring
after the Closing Date) shall have been executed and, if applicable,
delivered contemporaneously with or prior to the sale of the Firm Shares.
(j) Acquisition Transactions relating to the acquisition of
Additional Hotels with an aggregate net cash purchase price in excess of
$300 million shall have been consummated by the Company prior to or
contemporaneously with the issuance and sale of the Firm Shares hereunder.
(k) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents
33
<PAGE>
as you may reasonably request with respect to the good standing of the Company,
the due authorization and issuance of such Additional Shares and other matters
related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This Agreement
-------------------------------------------
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company or the earnings, affairs, or business
prospects of the Company, whether or not arising in the ordinary course of
business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities on the NYSE, the
American Stock Exchange or the NASDAQ National Market System or limitation on
prices for securities on any such exchange or National Market System, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company, (v) the declaration
of a banking moratorium by either federal or New York State authorities or (vi)
the taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the
34
<PAGE>
Underwriters shall fail or refuse to purchase the Firm Shares or Additional
Shares, as the case may be, which it or they have agreed to purchase hereunder
on such date and the aggregate number of Firm Shares or Additional Shares, as
the case may be, which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase is not more than one-tenth of
the total number of Shares to be purchased on such date by all Underwriters,
each non-defaulting Underwriter shall be obligated severally, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule I bears
to the total number of Firm Shares which all the non-defaulting Underwriters, as
the case may be, have agreed to purchase, or in such other proportion as you may
specify, to purchase the Firm Shares or Additional Shares, as the case may be,
which such defaulting Underwriter or Underwriters, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
--------
the number of Firm Shares or Additional Shares, as the case may be, which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such number of
Firm Shares or Additional Shares, as the case may be, without the written
consent of such Underwriter. If on the Closing Date or on an Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares, or Additional Shares, as the case may be, and the
aggregate number of Firm Shares or Additional Shares, as the case may be, with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the Company.
In any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date or the
applicable Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
35
<PAGE>
10. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (a) if to the Company, to Hospitality
Properties Trust, 400 Centre Street, Newton, MA 02158, Attention: President and
(b) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The parties hereto agree, for purposes of Section 6(b), Section 7 and
any other provision of this Agreement, that the only information relating to any
Underwriter furnished to the Company in writing by such Underwriter expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto is the information furnished
by the Representatives included in the Prospectus, (i) in the legend relating to
stabilization on the inside front cover page, (ii) listing the names of each
Underwriter under the caption "Underwriting" and (iii) in the third paragraph
under the caption "Underwriting" in the Prospectus.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and trustees and of
the several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter or by or on behalf
of the Company, or its officers or trustees, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this
36
<PAGE>
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
37
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
HOSPITALITY PROPERTIES TRUST
By___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
LEGG MASON WOOD WALKER, INCORPORATED
McDONALD & COMPANY SECURITIES, INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By____________________________
Name: Steven L. Kantor
Title: Managing Director
38
<PAGE>
SCHEDULE I
----------
Number of Firm Shares
Underwriters to be Purchased
- ------------ ---------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Prudential Securities Incorporated
Smith Barney Inc.
Legg Mason Wood Walker, Incorporated
McDonald & Company Securities, Inc.
------------
Total 12,000,000
============
39
<PAGE>
EXHIBIT 5.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
March 29, 1996
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Ladies and Gentlemen:
In connection with the registration by Hospitality Properties Trust, a
Maryland real estate investment trust (the "Company"), of 13,800,000 Common
Shares of Beneficial Interest, $.01 per share, of the Company (the "Shares"),
the following opinion is furnished to you to be filed with the Securities and
Exchange Commission (the "Commission") as Exhibit 5.1 to the Company's
Registration Statement and amendments thereto (the "Registration Statement") on
Form S-11, File No. 333-1433, under the Securities Act of 1933, as amended (the
"Act").
We have acted as counsel for the Company in connection with preparation of
the Registration Statement, and we have examined originals or copies, certified
or otherwise identified to our satisfaction, of the Registration Statement,
corporate records, certificates and statements of officers and accountants of
the Company and of public officials, and such other documents as we have
considered necessary in order to furnish the opinion hereinafter set forth. We
have also examined the form of underwriting agreement between the Company and
Donaldson, Lufkin & Jenrette Securities Corporation, Dean Witter Reynolds Inc.,
A.G. Edwards & Sons, Inc., Prudential Securities Incorporated, Smith Barney
Inc., Legg Mason Wood Walker, Incorporated and McDonald & Company Securities,
Inc., as representatives (in such capacity, the "Representatives") of the
underwriters to be named therein (the "Underwriters") being filed herewith as
Exhibit 1.1 to the Registration Statement. For purposes of this opinion, the
term "Underwriting Agreement" refers to an underwriting agreement in the form
and containing the terms and conditions of said form of underwriting agreement
which has been duly completed in a manner consistent with the resolutions
heretofore adopted by the Board of Trustees of the Company and approved by such
Board of Trustees or the Pricing Committee thereof and which has been duly
executed and delivered by the Company and the Representatives.
We are members of the bar of The Commonwealth of Massachusetts.
Accordingly, we do not purport to be expert on or generally familiar with and we
express no opinion with respect to the laws of any state other than The
Commonwealth of Massachusetts or of any country other than The United States of
America. We have, with your consent, rendered our opinions herein in regard to
certain matters of Maryland law relating to the Shares solely in reliance on,
and solely
<PAGE>
to the extent covered by, the opinion of Piper & Marbury, dated March 29, 1996,
a copy of which is being filed herewith as Exhibit 5.2 to the Registration
Statement.
Based on and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized for issuance, and when the Registration
Statement has become effective under the Act and, upon issuance and delivery of
the Shares to the Underwriters against full payment therefor in accordance with
the terms of the Underwriting Agreement, the Shares will be validly issued,
fully paid and non-assessable by the Company.
In connection with the foregoing, we note the information with respect to
potential liabilities of shareholders of non-corporate entitites such as the
Company contained in the prospectus forming a part of the Registration Statement
under the heading "Summary of the Declaration of Trust -- Limitation of
Liability; Shareholder Liability."
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the prospectus
forming a part of the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Act or under the rules and regulations of the
Commission promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
<PAGE>
EXHIBIT 5.2
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201
March 29, 1996
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Re: Offering of Common Shares of Beneficial Interest of Hospitality
---------------------------------------------------------------
Properties Trust
- ----------------
Ladies and Gentlemen:
Hospitality Properties Trust, a Maryland real estate investment trust (the
"Company"), has filed with the Securities and Exchange Commission a Registration
Statement on Form S-11 (Registration No. 33-1433) and amendments thereto (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"). The Registration Statement relates to the sale by the Company of an
aggregate of 12,000,000 shares of the Company's common shares of beneficial
interest, par value $0.01 per share, plus an additional 1,800,000 common shares
of beneficial interest, par value $0.01 per share, subject to the exercise of an
over-allotment option to be granted by the Company (collectively, the "Shares").
We have acted as special Maryland counsel to the Company in connection with
matters of Maryland law relevant to the preparation of the Registration
Statement and we have examined originals or copies, certified or otherwise
identified to our satisfaction, of (i) the Declaration of Trust of the Company
dated May 12, 1995; (ii) By-laws of the Company, as amended; (iii) copies of
resolutions of the Board of Trustees of the Company authorizing the offering and
issuance of the Shares and related matters; (iv) a draft form of underwriting
agreement dated March 10, 1996 among the Company and Donaldson, Lufkin &
Jenrette Securities Corporation, Dean Witter Reynolds Inc., A.G. Edwards & Sons,
Inc., Prudential Securities Incorporated, Smith Barney Inc., Legg Mason Wood
Walker Incorporated and McDonald & Company, as representatives of the
underwriters (the "Underwriters"), (the "Underwriting Agreement"); (v) the
Registration Statement; (vi) a certificate of good standing issued by the
Maryland State Department of Assessments and Taxation dated March 12, 1996;
(vii) the Officer's Certificate of the Company dated the date hereof (the
"Certificate"); and (viii) such other documents as we have considered necessary
in order to furnish the opinion hereinafter set forth.
In such examination we have assumed, without independent investigation, the
genuineness of all signatures, the legal capacity of all individuals who have
executed any of the
<PAGE>
aforesaid documents, the authenticity of all documents submitted to us as
originals, and the conformity with originals of all documents submitted to us as
copies (and the authenticity of the originals of such copies) and the accuracy
and completeness of all public records reviewed. We have assumed that all
representations as to factual matters set forth in the Certificate are true and
correct, and we have not independently verified the matters stated therein.
The opinions expressed below are limited to the law of Maryland, provided,
however, that we express no opinion as the application of Maryland securities
laws.
Based upon the foregoing, we are of the opinion that the Shares to be
issued by the Company in the offering, as described in the Registration
Statement, have been duly and validly authorized for issuance, and, when the
Registration Statement has become effective under the Act, upon issuance and
delivery of the Shares to the Underwriters against payment therefor in
accordance with the terms of the Underwriting Agreement, the Shares will be
validly issued, fully paid and non-assessable by the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus forming part of the Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Act or under the rules
and regulations of the Securities and Exchange Commission promulgated
thereunder. We further consent to the reliance on this opinion by your firm in
rendering its opinion to the Company.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
EXHIBIT 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
March 29, 1996
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Ladies and Gentlemen:
In connection with the registration by Hospitality Properties Trust, a
Maryland real estate investment trust (the "Company") of 13,800,000 Common
Shares of Beneficial Interest, $.01 per share, of the Company (the "Shares"),
the following opinion is furnished to you to be filed with the Securities and
Exchange Commission as Exhibit 8.1 to the Company's Registration Statement on
Form S-11, File No. 333-1433 and amendments thereto (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act").
We have acted as counsel for the Company in connection with the
Registration Statement and we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement, the
draft Underwriting Agreement among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc.,
Prudential Securities Incorporated, Smith Barney Inc., Legg Mason Wood Walker,
Incorporated, and McDonald & Company Securities, Inc., as representatives of the
underwriters, filed as Exhibit 1.1 to the Registration Statement (the
"Underwriting Agreement"), corporate records, certificates and statements of
officers and accountants of the Company and of public officials, and such other
documents as we have considered relevant and necessary in order to furnish the
opinion hereinafter set forth. Specifically, and without limiting the generality
of the foregoing, we have reviewed Amendment No. 1 to the Registration Statement
dated March 13, 1996 and the prospectus dated March 13, 1996 (the "Prospectus")
which forms a part of the Registration Statement, the Company's Declaration of
Trust and By-Laws, and the Advisory Agreement (as defined in the Prospectus). We
have reviewed the sections in the Prospectus captioned "Federal
<PAGE>
Income Tax Considerations," "Certain United States Tax Considerations for Non-
U.S. Holders of Shares" and "ERISA Plans, Keogh Plans and Individual Retirement
Accounts", and we have prepared the opinions of counsel referred to in such
sections. With respect to all questions of fact on which such opinions are
based, we have assumed the accuracy and completeness of and have relied on the
information set forth in the Prospectus and in the documents incorporated
therein by reference, and on representations made to us by the Trustees. We
have not independently verified such information; nothing has come to our
attention, however, which would lead us to believe that we are not entitled to
rely on such information.
The opinion set forth below is based upon the Internal Revenue Code of
1986, as amended, the Treasury Regulations issued thereunder, administrative
interpretations thereof and judicial decisions with respect thereto, all as of
the date hereof (collectively the "Tax Laws") and upon the Employee Retirement
Income Security Act of 1974, as amended, the Department of Labor regulations
issued thereunder, administrative interpretations thereof and judicial decisions
with respect thereto, all as of the date hereof (collectively, the "ERISA
Laws"). No assurance can be given that the Tax Laws or the ERISA Laws will not
change.
Based upon and subject to the foregoing, we are of the opinion that the
discussions with respect to federal income tax matters in the sections of the
Prospectus captioned "Federal Income Tax Considerations", "Certain United States
Tax Considerations for Non-U.S. Holders of Shares" and "ERISA Plans, Keogh Plans
and Individual Retirement Accounts", in all material respects are accurate and
fairly summarize the Tax Laws issues and ERISA Laws issues which are material to
an investment in the Shares, and hereby confirm that the opinions of counsel
referred to in said sections represent our opinions on the subject matter
thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus
forming a part of the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Act or under the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
<PAGE>
EXHIBIT 10.8
AGREEMENT TO LEASE
------------------
THIS AGREEMENT TO LEASE (this "Agreement") is entered into as of the ____
---------
day of March, 1996, by and between HOSPITALITY PROPERTIES TRUST, a Maryland real
estate investment trust ("HPT"), and GARDEN HOTEL ASSOCIATES II LIMITED
---
PARTNERSHIP, a Texas limited partnership ("Tenant").
------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to a Purchase and Sale Agreement, dated as of March 5,
1996 (the "Purchase Agreement"), by and between HPT and Garden Hotel Associates
------------------
Limited Partnership, a Texas limited partnership ("GHALP"), HPT, either directly
-----
or through a wholly owned subsidiary, is planning to acquire those certain
properties, as more particularly described in the Purchase Agreement; and
WHEREAS, subject to and upon the terms and conditions set forth in this
Agreement, pursuant to a Lease Agreement in the form attached hereto as Exhibit
-------
A (the "Lease"), HPT has agreed to lease to Tenant, and Tenant has agreed to
- - -----
lease from HPT, all of the Properties (this and other capitalized terms used and
not otherwise defined herein having the meanings ascribed to such terms in the
Purchase Agreement and/or the Lease);
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Agreement to Lease. Subject to and upon the terms and conditions
------------------
hereinafter set forth, on the date on which HPT acquires fee simple title to
each of the Fee Properties and the ground tenant's interest with respect to the
Ground Lease Properties, HPT and Tenant shall each execute and deliver a Lease
with respect to each of the Properties and such date shall be the Commencement
Date under each such Lease.
2. Base Rent. The base rent payable under all of the Leases shall be a
---------
monthly aggregate amount equal to One Million One Hundred Thirty-Three Thousand
Three Hundred Thirty-Four Dollars ($1,133,334). Prior to execution of the
Leases, HPT and Tenant shall agree on an allocation of such base rent among the
Properties based on the Allocable Purchase Prices thereof.
3. Representations of Tenant, Etc. As an inducement to HPT to enter into
-------------------------------
this Agreement, Tenant hereby represents and warrants to HPT that, as of the
Closing Date:
<PAGE>
(1) Status and Authority of Tenant. Tenant is a limited partnership duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Texas. Each of the general partner of Tenant and its general partner is a
corporation duly organized, validly existing and in corporate good standing
under the laws of its state of incorporation. Each of Tenant, the general
partner of Tenant and its general partner has all requisite power and authority
under the laws of its state of formation and its respective charter documents to
enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. Each of Tenant, the general partner of
Tenant and its general partner has duly qualified to transact business in each
jurisdiction in which the nature of the business conducted by it requires such
qualification.
(2) Action of Tenant. Each of Tenant, the general partner of Tenant and
----------------
its general partner has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, and upon the execution and delivery
of any document to be delivered by Tenant on or prior to the Closing Date, such
document shall constitute the valid and binding obligation and agreement of
Tenant, enforceable against Tenant and such general partners in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors and except to the extent that the availability
of equitable relief may be subject to the discretion of the court before which
any proceeding may be brought.
(3) No Violations of Other Agreements, Etc. Except as otherwise disclosed
---------------------------------------
in writing to HPT prior to the end of the Review Period under the Purchase
Agreement, neither the execution and delivery of this Agreement or the Leases by
Tenant, nor compliance with the terms and provisions hereof or thereof, will
result in any breach of the terms, conditions or provisions of, or conflict with
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Tenant pursuant to the terms of any
other indenture, mortgage, deed of trust, note, evidence of indebtedness,
agreement or other instrument to which such entity may be a party or by which it
or any of its properties may be bound, or violate any provisions of laws, or any
applicable order, writ, injunction, judgment or decree of any court, or any
order or other public regulation of any governmental commission, bureau or
administrative agency.
(4) Judgments; Litigation. Except as disclosed to HPT in writing prior to
---------------------
the end of the Review Period under the Purchase Agreement, there are no
judgments presently outstanding and unsatisfied against Tenant or any of its
properties, and neither Tenant nor any of its properties are involved in any
material litigation at law or in equity, or any proceeding before any
- 2 -
<PAGE>
court, or by or before any governmental or administrative agency, which
litigation or proceeding could materially adverse effect on Tenant, and no such
material litigation or proceeding is, to the knowledge of Tenant, threatened
against Tenant, and no investigation looking toward such a proceeding has begun
or is contemplated.
(5) Disclosure. To the knowledge of Tenant, neither this Agreement nor any
----------
other document, certificate or statement furnished to HPT by or on behalf of
Tenant, or any Affiliated Person as to Tenant, in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. To the knowledge of Tenant, there
is no fact or condition which materially and adversely affects the business,
operations, affairs, properties or condition of Tenant which has not been set
forth in this Agreement or in the other documents, certificates or statements
furnished to HPT in connection with the transactions contemplated hereby.
Tenant's liability with respect to the representations and warranties set
forth in this Agreement shall survive the Commencement Date for a period of one
(1) year.
4. Representations of HPT. As an inducement to Tenant to enter into this
----------------------
Agreement, HPT hereby represents that, as of the Closing Date, HPT is a real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland, having all requisite power and
authority to carry on its business as such business is presently being conducted
and to enter into this Agreement and to consummate the transactions contemplated
hereby and thereby. HPT's liability with respect to the representations and
warranties set forth in this Agreement shall survive the Commencement Date for a
period of one (1) year.
5. Additional Tenant Obligations. On or before the Commencement Date,
-----------------------------
Tenant shall cause each of the following to be delivered to HPT (the obligation
of HPT to enter into the Leases being subject to such delivery):
(1) A pledge and security agreement with respect to all tangible personal
property used in connection with the operation of the Properties, including,
without limitation, the FF&E Reserve, such pledge and security agreement to
create a first lien and security interest in such property and to be otherwise
in form and substance reasonably acceptable to HPT;
(2) Such financing statements as HPT may reasonably require to perfect the
interests and liens granted pursuant to the pledge and security agreement
described in paragraph (a) above;
- 3 -
<PAGE>
(3) A pledge and security agreement with respect to all of partnership
interests of Tenant, which lien Landlord agrees to subordinate to the lien of a
Lending Institution therein as provided in the Leases;
(4) Such financing statements as HPT may reasonably require to perfect the
interests and liens granted pursuant to the pledge and security agreement
described in paragraph (c) above; and
(5) Any other Incidental Documents required by the Lease.
6. Condition Precedent. The obligations of the parties hereunder shall be
-------------------
subject to the consummation of the transactions contemplated by the Purchase
Agreement.
7. Notices. All notices required or desired to be given hereunder shall
-------
be given in the manner provided in Section 11.4 of the Purchase Agreement.
8. Assignment. Except as would otherwise be permitted pursuant to the
----------
Lease, Tenant shall not assign or transfer, directly or indirectly, its rights
under this Agreement without the prior written consent of HPT, which consent may
be given or withheld by HPT in HPT's sole discretion. HPT shall not assign or
transfer, directly or indirectly, its rights under this Agreement other than to
a wholly owned subsidiary of HPT without the prior written consent of Tenant,
which consent may be given or withheld by Tenant in Tenant's sole discretion.
9. Default.
-------
(1) Default by Tenant. If Tenant shall have made any representation or
-----------------
warranty herein which shall be untrue or misleading in any material respect, or
if Tenant shall fail to perform any of the covenants and agreements contained
herein to be performed by Tenant and such failure continues for a period of ten
(10) days after notice thereof from HPT, HPT may terminate this Agreement and/or
pursue any and all remedies available to HPT at law or in equity, including, but
not limited to, a suit for specific performance or other equitable relief;
provided, however, that (i) any termination by HPT of this Agreement shall, at
- -------- -------
GHALP's option, cause a termination of the Purchase Agreement and (ii) Tenant's
liability for a breach of this Agreement shall terminate one year following the
Commencement Date. A default by Tenant under this Agreement shall be deemed a
default by GHALP under the Purchase Agreement.
(2) Default by HPT. If HPT shall have made any representation or warranty
--------------
herein which shall be untrue or misleading in any material respect, or if HPT
shall fail to perform any of the covenants and agreements contained herein to be
performed by it and such failure shall continue for a period of ten (10) days
after notice thereof from Tenant, Tenant may terminate this Agreement and/or
pursuant any and all remedies
- 4 -
<PAGE>
available to Tenant at law or in equity, including, but not limited to, a suit
for specific performance or other equitable relief; provided, however, that (i)
-------- -------
any termination by Tenant of this Agreement shall, at HPT's option, cause a
termination of the Purchase Agreement and (ii) HPT's liability for a breach of
this Agreement shall terminate one year following the Commencement Date. A
default by HPT under this Agreement shall be deemed a default by HPT under the
Purchase Agreement.
10. Miscellaneous.
-------------
(1) Expenses. Tenant shall pay its and HPT's expenses incident to the
--------
negotiation, preparation and carrying out of this Agreement, including, without
limitation, all fees and expenses of counsel, other than the fees of Sullivan &
Worcester. Tenant shall also pay the cost of all recording fees, transfer fees
and other like costs and expenses incident to this Agreement.
(2) Publicity. The parties agree that no party shall, with respect to this
---------
Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated to any third party without the consent of the other
party. No party or its employees shall trade in the securities of any parent or
Affiliated Person of HPT or Tenant until a public announcement of the
transactions contemplated by this Agreement has been made.
(3) Performance on Business Days. In the event the date on which
----------------------------
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.
11. Applicable Law, Etc. This Agreement shall be interpreted, construed,
-------------------
applied and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts which
are to be performed entirely within Massachusetts, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than The Commonwealth of Massachusetts; or
(vii) any combination of the foregoing.
To the maximum extent permitted by applicable law, any action to enforce,
arising out of, or relating in any way to, any
- 5 -
<PAGE>
of the provisions of this Agreement may be brought and prosecuted in such court
or courts located in The Commonwealth of Massachusetts as is provided by law;
and the parties consent to the jurisdiction of said court or courts located in
The Commonwealth of Massachusetts and to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
12. Modification of Agreement. No modification or waiver of any provision
-------------------------
of this Agreement, nor any consent to any departure by any party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the other, and such modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or
demand on any party in any case shall entitle such party to any other or further
notice or demand in the same, similar or other circumstances.
13. Waiver of Rights. Neither any failure nor any delay on the part of
----------------
any party in exercising any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any right,
power or privilege.
14. Severability. In case any one or more of the provisions contained in
------------
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and this
Agreement shall thereupon be reformed and construed and enforced to the maximum
extent permitted by laws.
15. Entire Contract. This Agreement, including all annexes and exhibits
---------------
hereto, constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and thereof and shall supersede and take the place
of any other instruments purporting to be an agreement of the parties hereto
relating to the transactions contemplated hereby, including, without limitation,
any letter of intent or commitment letter.
16. Counterparts; Headings. This Agreement may be executed in two or more
----------------------
counterparts, each of which shall constitute an original, but which, when taken
together, shall constitute but one instrument and shall become effective as of
the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.
17. Binding Effect. All the terms and provisions of this Agreement shall
--------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
- 6 -
<PAGE>
18. Nonliability of Trustees, Etc. THE DECLARATION OF TRUST ESTABLISHING
------------------------------
HPT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"),
-----------
IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE
TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, HPT. ALL PERSONS DEALING WITH HPT, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF HPT FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
19. Nonrecourse. Nothing contained in this Agreement shall be construed
-----------
to impose any liabilities or obligations on Wyndham or any of its shareholders
for the payment or performance of the obligations or liabilities of Tenant
hereunder or under the Leases.
IN WITNESS WHEREOF, HPT and Tenant have executed this Agreement under seal
as of the date above first written.
HOSPITALITY PROPERTIES TRUST
By:
-----------------------------------
Its:
-----------------------------
GARDEN HOTEL ASSOCIATES II LIMITED PARTNERSHIP
By: Garden Hotel Partners L.P.,
General Partner
By: Garden Hotel Corporation
No. 2, General Partner
By:
---------------------------
Its:
-----------------------
- 7 -
<PAGE>
EXHIBIT A
---------
Form of Lease
-------------
[See attached copy.]
- 8 -
<PAGE>
Exhibit 10.9
LEASE AGREEMENT
DATED AS OF , 1996
------ --
BY AND BETWEEN
HOSPITALITY PROPERTIES TRUST,
AS LANDLORD
AND
GARDEN HOTEL ASSOCIATES II LIMITED PARTNERSHIP,
AS TENANT
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE 1 DEFINITIONS.................................................... 1
1.1 Additional Rent..................................................... 1
1.2 Additional Charges.................................................. 1
1.3 Affiliated Person................................................... 2
1.4 Agreement........................................................... 2
1.5 Applicable Laws..................................................... 2
1.6 Award............................................................... 2
1.7 Base Total Hotel Sales.............................................. 3
1.8 Base Year........................................................... 3
1.9 Business Day........................................................ 3
1.10 Capital Addition.................................................... 4
1.11 Capital Expenditure................................................. 4
1.12 Claim............................................................... 4
1.13 Code................................................................ 4
1.14 Collective Leased Properties........................................ 4
1.15 Commencement Date................................................... 4
1.16 Condemnation........................................................ 4
1.17 Condemnor........................................................... 4
1.18 Consolidated Financials............................................. 4
1.19 Date of Taking...................................................... 4
1.20 Default............................................................. 5
1.21 Disbursement Rate................................................... 5
1.22 Distribution........................................................ 5
1.23 Encumbrance......................................................... 5
1.24 Entity.............................................................. 5
1.25 Environment......................................................... 5
1.26 Environmental Obligation............................................ 5
1.27 Environmental Notice................................................ 5
1.28 Event of Default.................................................... 5
1.29 Excess Total Hotel Sales............................................ 5
1.30 Extended Terms...................................................... 5
1.31 FF&E Estimate....................................................... 6
1.32 FF&E Reserve........................................................ 6
1.33 Financial Officer's Certificate..................................... 6
1.34 Fiscal Year......................................................... 6
1.35 Fixed Term.......................................................... 6
1.36 Fixtures............................................................ 6
1.37 GAAP................................................................ 6
[1.38 Ground Lease....................................................... 6
1.39 Government Agencies................................................. 6
1.40 Hazardous Substances................................................ 6
1.41 Hotel............................................................... 7
1.42 Hotel Mortgage...................................................... 7
1.43 Hotel Mortgagee..................................................... 7
1.44 Immediate Family.................................................... 8
1.45 Impositions......................................................... 8
1.46 Incidental Documents................................................ 9
1.47 Indebtedness........................................................ 9
1.48 Insurance Requirements.............................................. 9
1.49 Interest Rate....................................................... 9
1.50 Land................................................................ 9
<PAGE>
- ii -
1.51 Landlord............................................................ 9
1.52 Landlord Liens...................................................... 9
1.53 Lease Year.......................................................... 9
1.54 Leased Improvements................................................. 9
1.55 Leased Intangible Property.......................................... 9
1.56 Leased Personal Property............................................ 10
1.57 Leased Property..................................................... 10
1.58 Leasehold Mortgage.................................................. 10
1.59 Leasehold Mortgagee................................................. 10
1.60 Legal Requirements.................................................. 10
1.61 Lending Institution................................................. 10
1.62 Lien................................................................ 11
1.63 Management Agreement................................................ 11
1.64 Manager............................................................. 11
1.65 Minimum Rent........................................................ 11
1.66 Notice.............................................................. 11
1.67 Officer's Certificate............................................... 11
1.68 Other Leases........................................................ 11
1.69 Overdue Rate........................................................ 11
1.70 Parent.............................................................. 11
1.71 Partnership Pledge Agreement........................................ 11
1.72 Permitted Encumbrances.............................................. 11
1.73 Permitted Liens..................................................... 12
1.74 Permitted Use....................................................... 12
1.75 Person.............................................................. 12
1.76 Pledge and Security Agreement....................................... 12
1.77 Purchase Agreement.................................................. 12
1.78 Records............................................................. 12
1.79 Rent................................................................ 12
1.80 SEC................................................................. 12
1.81 State............................................................... 12
1.82 Stock Pledge Agreement.............................................. 12
1.83 Subordinated Creditor............................................... 12
1.84 Subordination Agreement............................................. 12
1.85 Subsidiary.......................................................... 13
1.86 Successor Landlord.................................................. 13
1.87 Tangible Net Worth.................................................. 13
1.88 Tenant.............................................................. 13
1.89 Tenant's Personal Property.......................................... 13
1.90 Term................................................................ 13
1.91 Total Hotel Sales................................................... 13
1.92 Uniform System of Accounts.......................................... 14
1.93 Unsuitable for Its Permitted Use.................................... 14
1.94 WHC................................................................. 14
1.95 Work................................................................ 15
1.96 Wyndham............................................................. 15
ARTICLE 2 LEASED PROPERTY AND TERM....................................... 15
2.1 Leased Property...................................................... 15
2.2 Condition of Leased Property......................................... 16
2.3 Fixed Term........................................................... 17
2.4 Extended Term........................................................ 17
ARTICLE 3 RENT........................................................... 18
<PAGE>
- iii -
3.1 Rent............................................................... 18
3.1.1 Minimum Rent....................................................... 18
3.1.2 Additional Rent.................................................... 19
3.1.3 Additional Charges................................................. 21
3.2 Late Payment of Rent, Etc............................................ 23
3.3 Net Lease............................................................ 23
3.4 No Termination, Abatement, Etc....................................... 23
3.5 Security for Tenant's Performance.................................... 24
ARTICLE 4 USE OF THE LEASED PROPERTY..................................... 25
4.1 Permitted Use........................................................ 25
4.1.1 Permitted Use...................................................... 25
4.1.2 Necessary Approvals................................................ 26
4.1.3 Lawful Use, Etc.................................................... 26
4.2 Compliance with Legal/Insurance Requirements, Etc.................... 26
4.3 Environmental Matters................................................ 26
4.3.1 Restriction on Use, Etc............................................ 26
4.3.3 Survival........................................................... 28
ARTICLE 5 MAINTENANCE AND REPAIRS........................................ 28
5.1 Maintenance and Repair............................................... 28
5.1.1 Tenant's General Obligations....................................... 28
5.1.2 FF&E Reserve....................................................... 29
5.1.3 Landlord's Obligations............................................. 31
5.1.4 Nonresponsibility of Landlord, Etc................................. 32
5.2 Tenant's Personal Property........................................... 32
5.3 Yield Up............................................................. 32
5.4 Management Agreement................................................. 33
ARTICLE 6 IMPROVEMENTS, ETC.............................................. 34
6.1 Improvements to the Leased Property.................................. 34
6.2 Salvage.............................................................. 35
ARTICLE 7 LIENS.......................................................... 35
7.1 Liens................................................................ 35
7.2 Landlord's Lien...................................................... 35
ARTICLE 8 PERMITTED CONTESTS............................................. 36
ARTICLE 9 INSURANCE AND INDEMNIFICATION.................................. 37
9.1 General Insurance Requirements....................................... 37
9.2 Replacement Cost..................................................... 38
9.3 Waiver of Subrogation................................................ 38
9.4 Form Satisfactory, Etc............................................... 39
9.5 Blanket Policy....................................................... 39
9.6 No Separate Insurance................................................ 40
9.7 Indemnification of Landlord.......................................... 40
ARTICLE 10 CASUALTY...................................................... 41
10.1 Insurance Proceeds.................................................. 41
10.2 Damage or Destruction............................................... 41
10.2.1 Damage or Destruction of Leased Property.......................... 41
10.2.2 Partial Damage or Destruction..................................... 41
10.2.3 Insufficient Insurance Proceeds................................... 42
<PAGE>
- iv -
10.2.4 Disbursement of Proceeds.......................................... 42
10.3 Damage Near End of Term............................................. 43
10.4 Tenant's Property................................................... 43
10.5 Restoration of Tenant's Property.................................... 43
10.6 No Abatement of Rent................................................ 44
10.7 Waiver.............................................................. 44
10.8 Effect on Other Leases.............................................. 44
ARTICLE 11 CONDEMNATION.................................................. 44
11.1 Total Condemnation, Etc............................................. 44
11.2 Partial Condemnation................................................ 44
11.3 Abatement of Rent................................................... 45
11.4 Temporary Condemnation.............................................. 46
11.5 Allocation of Award................................................. 46
11.6 Effect on Other Leases.............................................. 46
ARTICLE 12 DEFAULTS AND REMEDIES......................................... 47
12.1 Events of Default................................................... 47
12.2 Remedies............................................................ 49
12.3 Tenant's Waiver..................................................... 51
12.4 Application of Funds................................................ 51
12.5 Landlord's Right to Cure Tenant's Default........................... 51
ARTICLE 13 HOLDING OVER.................................................. 52
ARTICLE 14 LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT............... 52
14.1 Landlord Notice Obligation.......................................... 52
14.2 Landlord's Default.................................................. 52
ARTICLE 15 PURCHASE RIGHTS............................................... 53
ARTICLE 16 SUBLETTING AND ASSIGNMENT..................................... 54
16.1 Subletting and Assignment........................................... 54
16.2 Required Sublease Provisions........................................ 55
16.3 Permitted Sublease.................................................. 56
16.4 Sublease Limitation................................................. 57
16.5 Required Assignment................................................. 57
ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS................ 57
17.1 Estoppel Certificates............................................... 57
17.2 Financial Statements................................................ 58
17.3 General Operations.................................................. 59
ARTICLE 18 LANDLORD'S RIGHT TO INSPECT................................... 60
ARTICLE 19 LEASEHOLD MORTGAGES........................................... 60
19.1 Leasehold Mortgages Authorized...................................... 60
19.2 Notices to Landlord................................................. 60
ARTICLE 20 HOTEL MORTGAGES............................................... 61
20.1 Landlord May Grant Liens............................................ 61
20.2 Subordination of Lease.............................................. 61
20.3 Notice to Mortgagee and Ground Landlord............................. 63
<PAGE>
- v -
ARTICLE 21 ADDITIONAL COVENANTS OF TENANT................................ 63
21.1 Prompt Payment of Indebtedness...................................... 63
21.2 Conduct of Business................................................. 64
21.3 Maintenance of Accounts and Records................................. 64
21.4 Notice of Litigation, Etc........................................... 64
21.5 Indebtedness of Tenant.............................................. 65
21.6 Financial Condition of Tenant....................................... 66
21.7 Distributions, Payments to Affiliated
Persons, Etc....................................................... 66
21.8 Prohibited Transactions............................................. 66
21.9 Liens and Encumbrances.............................................. 66
21.10 Merger; Sale of Assets; Etc......................................... 66
ARTICLE 22 MISCELLANEOUS................................................. 67
22.1 Limitation on Payment of Rent....................................... 67
22.2 No Waiver........................................................... 67
22.3 Remedies Cumulative................................................. 67
22.4 Severability........................................................ 68
22.5 Acceptance of Surrender............................................. 68
22.6 No Merger of Title.................................................. 68
22.7 Conveyance by Landlord.............................................. 68
22.8 Quiet Enjoyment..................................................... 68
22.9 Memorandum of Lease................................................. 69
22.10 Notices............................................................. 69
22.11 Trade Area Restriction.............................................. 70
22.12 Construction........................................................ 71
22.13 Counterparts; Headings.............................................. 71
22.14 Applicable Law, Etc................................................. 71
22.15 Right to Make Agreement............................................. 72
22.16 Non-Liability of Trustees........................................... 72
EXHIBITS
- --------
A - Annual Minimum Rent
B - Other Leases
C - The Land
D - Restricted Trade Area
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT is entered into as of this day of , 1996,
--- ---------
by and between HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment
trust, as landlord ("Landlord"), and GARDEN HOTEL ASSOCIATES II LIMITED
--------
PARTNERSHIP, a Texas limited partnership, as tenant ("Tenant").
------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Landlord owns fee simple title to the Leased Property [holds the
tenant's interest under the Ground Lease] (this and other capitalized terms used
and not otherwise defined herein having the meanings ascribed to such terms in
Article 1); and
- ---------
WHEREAS, Landlord wishes to lease the Leased Property to Tenant and Tenant
wishes to lease the Leased Property from Landlord, all subject to and upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the mutual receipt and legal
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, (i) the terms defined in this Article
shall have the meanings assigned to them in this Article and include the plural
as well as the singular, (ii) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Additional Rent" shall have the meaning given such term in Section
--------------- -------
3.1.2(a).
- --------
1.2 "Additional Charges" shall have the meaning given such term in Section
------------------ -------
3.1.3.
- -----
<PAGE>
- 2 -
1.3 "Affiliated Person" shall mean, with respect to any Person, in the
-----------------
case of any such Person which is a partnership, any partner in such partnership,
in the case of any such Person which is a limited liability company, any member
of such company, any other Person which is a Parent, a Subsidiary, or a
Subsidiary of a Parent with respect to such Person or to one or more of the
Persons referred to in the preceding clauses (a) and (b), any other Person who
is an officer, director, trustee or employee of, or partner in or member of,
such Person or any Person referred to in the preceding clauses (a), (b) and (c),
and any other Person who is a member of the Immediate Family of such Person or
of any Person referred to in the preceding clauses (a) through (d).
1.4 "Agreement" shall mean this Lease Agreement, including Exhibits A to D
--------- ---------------
hereto, as it and they may be amended from time to time as herein provided.
1.5 "Applicable Laws" shall mean all applicable laws, statutes,
---------------
regulations, rules, ordinances, codes, licenses, permits and orders, from time
to time in existence, of all courts of competent jurisdiction and Government
Agencies, and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations, relating
to injury to, or the protection of, real or personal property or human health
(except those requirements which, by definition, are solely the responsibility
of employers) or the Environment, including, without limitation, all valid and
lawful requirements of courts and other Government Agencies pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or emissions, discharges, releases or
threatened releases of Hazardous Substances, chemical substances, pesti cides,
petroleum or petroleum products, pollutants, contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or gaseous in nature, into
the Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.
1.6 "Award" shall mean all compensation, sums or other value awarded, paid
-----
or received by virtue of a total or partial Condemnation of the Leased Property
(after deduction of all reasonable legal fees and other reasonable costs and
expenses, including, without limitation, expert witness fees, incurred by
Landlord, in connection with obtaining any such award).
<PAGE>
- 3 -
1.7 "Base Total Hotel Sales" shall mean Total Hotel Sales for the Base
----------------------
Year; provided, however, that in the event that, with respect to any Lease Year,
-------- -------
or portion thereof, for any reason (including, without limitation, a casualty or
Condemnation) there shall be, for two hundred seventy (270) days or more in any
Lease Year, a reduction in the number of rooms at the Hotel or any other Hotel
(as defined in the Other Leases) or a change in the services provided at the
Hotel or such other Hotels (including, without limitation, closing of
restaurants or the discontinuation of food or beverage services) from the number
of rooms or the services provided during the Base Year, in determining
Additional Rent payable with respect to such Lease Year, Base Total Hotel Sales
shall be reduced as follows: (a) in the event of the termination of any of the
Other Leases and following application of any business interruption or Award
proceeds collected with respect thereto, all Total Hotel Sales attributable to
the Leased Property demised thereunder during the Base Year shall be subtracted
from Base Total Hotel Sales; (b) in the event of a complete closing of a Hotel
and following application of any business interruption or Award proceeds
collected with respect thereto, all Total Hotel Sales attributable to such Hotel
during the Base Year shall be subtracted from Base Total Hotel Sales throughout
the period of such closing; (c) in the event of a partial closing of a Hotel
affecting any number of guest rooms in such Hotel and following application of
any business interruption or Award proceeds collected with respect thereto,
Total Hotel Sales attributable to guest room occupancy or guest room services at
such Hotel during the Base Year shall be ratably allocated among all guest rooms
in service at such Hotel during the Base Year and all such Total Hotel Sales
attributable to rooms no longer in service shall be subtracted from Base Total
Hotel Sales throughout the period of such closing; (d) in the event of a closing
of a restaurant and following application of any business interruption or Award
proceeds collected with respect thereto, all Total Hotel Sales attributable to
such restaurant during the Base Year shall be subtracted from Base Total Hotel
Sales throughout the period of such closing; and (e) in the event of any other
change in circumstances affecting any Hotel, Base Total Hotel Sales shall be
equitably adjusted in such manner as Landlord and Tenant shall reasonably agree.
1.8 "Base Year" shall mean the 1996 calendar year.
---------
1.9 "Business Day" shall mean any day other than Saturday, Sunday, or any
------------
other day on which banking institutions in The Commonwealth of Massachusetts or
the State of Texas are authorized by law or executive action to close.
<PAGE>
- 4 -
1.10 "Capital Addition" shall mean any renovation, repair or improvement
----------------
to the Leased Property (or portion thereof), the cost of which constitutes a
Capital Expenditure.
1.11 "Capital Expenditure" shall mean any expenditure treated as capital
-------------------
in nature in accordance with GAAP.
1.12 "Claim" shall have the meaning given such term in Article 8.
----- ---------
1.13 "Code" shall mean the Internal Revenue Code of 1986 and, to the
----
extent applicable, the Treasury Regulations promulgated thereunder, each as from
time to time amended.
1.14 "Collective Leased Properties" shall mean, collectively, the Leased
----------------------------
Property and every other Leased Property (as defined therein) under the Other
Leases.
1.15 "Commencement Date" shall mean the date of this Agreement.
-----------------
1.16 "Condemnation" shall mean (a) the exercise of any governmental power
------------
with respect to the Leased Property, whether by legal proceedings or otherwise,
by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of
the Leased Property by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending, or (c) a
taking or voluntary conveyance of all or part of the Leased Property, or any
interest therein, or right accruing thereto or use thereof, as the result or in
settlement of any Condemnation or other eminent domain proceeding affecting the
Leased Property, whether or not the same shall have actually been commenced.
1.17 "Condemnor" shall mean any public or quasi-public authority, or
---------
private corporation or individual, having the power of Condemnation.
1.18 "Consolidated Financials" shall mean, for any Fiscal Year or other
-----------------------
accounting period of Tenant, annual audited and quarterly unaudited financial
statements of Wyndham prepared on a consolidated basis, including Wyndham's
consolidated balance sheet and the related statements of income and cash flows,
all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal Year,
and prepared in accordance with GAAP throughout the periods reflected.
1.19 "Date of Taking" shall mean the date the Condemnor has the right to
--------------
possession of the Leased Property, or any portion thereof, in connection with a
Condemnation.
<PAGE>
- 5 -
1.20 "Default" shall mean any event or condition which with the giving of
-------
notice and/or lapse of time may ripen into an Event of Default.
1.21 "Disbursement Rate" shall mean an annual rate of interest equal to
-----------------
the greater of, as of the date of determination, (i) the Interest Rate and (ii)
the per annum rate for ten (10) year U.S. Treasury Obligations as published in
The Wall Street Journal plus three hundred fifty (350) basis points.
- -----------------------
1.22 "Distribution" shall mean (a) any declaration or payment of any
------------
dividend (except dividends payable in common stock of Tenant) on or in respect
of any shares of any class of capital stock of Tenant, (b) any purchase,
redemption retirement or other acquisition of any shares of any class of capital
stock of a corporation, (c) any other distribution on or in respect of any
shares of any class of capital stock of a corporation, or (d) any return of
capital to shareholders.
1.23 "Encumbrance" shall have the meaning given such term in Section 20.1.
----------- ------------
1.24 "Entity" shall mean any corporation, general or limited partnership,
------
limited liability company or partnership, stock company or association, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, cooperative, any government or agency or political subdivision thereof or
any other entity.
1.25 "Environment" shall mean soil, surface waters, ground waters, land,
-----------
stream, sediments, surface or subsurface strata and ambient air.
1.26 "Environmental Obligation" shall have the meaning given such term in
------------------------
Section 4.3.1.
- -------------
1.27 "Environmental Notice" shall have the meaning given such term in
--------------------
Section 4.3.1.
- -------------
1.28 "Event of Default" shall have the meaning given such term in Section
---------------- -------
12.1.
- ----
1.29 "Excess Total Hotel Sales" shall mean, with respect to any Lease
------------------------
Year, or portion thereof, the amount of Total Hotel Sales for such Lease Year
with respect to the Collective Leased Properties, or portion thereof, in excess
of Base Total Hotel Sales with respect to the Collective Leased Properties for
the equivalent period.
<PAGE>
- 6 -
1.30 "Extended Terms" shall have the meaning given such term in Section
-------------- -------
2.4.
- ---
1.31 "FF&E Estimate" shall have the meaning given such term in Section
------------- -------
5.1.2(c).
- --------
1.32 "FF&E Reserve" shall have the meaning given such term in Section
------------ -------
5.1.2(a).
- --------
1.33 "Financial Officer's Certificate" shall mean, as to any Person, a
-------------------------------
certificate of the chief financial officer or chief accounting officer (or such
officers' authorized designee) of such Person, duly authorized, accompanying the
financial statements required to be delivered by such Person pursuant to Section
-------
17.2, in which such officer shall certify (a) that such statements have been
- ----
properly prepared in accordance with GAAP and are true, correct and complete in
all material respects and fairly present the consolidated financial condition of
such Person at and as of the dates thereof and the results of its and their
operations for the periods covered thereby, and (b) certify that no Event of
Default has occurred and is continuing hereunder.
1.34 "Fiscal Year" shall mean the calendar year.
-----------
1.35 "Fixed Term" shall have the meaning given such term in Section 2.3.
---------- -----------
1.36 "Fixtures" shall have the meaning given such term in Section 2.1(d).
-------- --------------
1.37 "GAAP" shall mean generally accepted accounting principles
----
consistently applied.
1.38 "Ground Lease" shall mean .]
------------ --------------
1.39 "Government Agencies" shall mean any court, agency, authority, board
-------------------
(including, without limitation, environmental protection, planning and zoning),
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or the State or any county or any political subdivision of any of the foregoing,
whether now or hereafter in existence, having jurisdiction over Tenant or the
Leased Property or any portion thereof or the Hotel operated thereon.
1.40 "Hazardous Substances" shall mean any substance:
--------------------
(a) the presence of which requires or may hereafter require notification,
investigation or remediation under any
<PAGE>
- 7 -
federal, state or local statute, regulation, rule, ordinance, order, action or
policy; or
(b) which is or becomes defined as a "hazardous waste", "hazardous
material" or "hazardous substance" or "pollutant" or "contaminant" under any
present or future federal, state or local statute, regulation, rule or ordi
nance or amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. et seq.) and
-- ---
the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and
-- ---
the regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of the United States, any state of the United States,
or any political subdivision thereof; or
(d) the presence of which on the Leased Property causes or materially
threatens to cause an unlawful nuisance upon the Leased Property or to adjacent
properties or poses or materially threatens to pose a hazard to the Leased
Property or to the health or safety of persons on or about the Leased Property;
or
(e) without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds; or
(f) without limitation, which contains polychlorinated biphenyls (PCBs) or
asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive particles,
waves or material; or
(h) without limitation, constitutes materials which are now or may
hereafter be subject to regulation pursuant to the Material Waste Tracking Act
of 1988, or any Applicable Laws promulgated by any Government Agencies.
1.41 "Hotel" shall mean the Wyndham Garden Hotel being operated on the
-----
Leased Property.
1.42 "Hotel Mortgage" shall mean any Encumbrance placed upon the Leased
--------------
Property in accordance with Article 20.
----------
<PAGE>
- 8 -
1.43 "Hotel Mortgagee" shall mean the holder of any Hotel Mortgage.
---------------
1.44 "Immediate Family" shall mean, with respect to any individual, such
----------------
individual's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law,
sisters-in-law, nephews and nieces.
1.45 "Impositions" shall mean collectively, all taxes (including, without
-----------
limitation, all taxes imposed under the laws of the State, as such laws may be
amended from time to time, and all ad valorem, sales and use, or similar taxes
as the same relate to or are imposed upon Landlord, Tenant or the business
conducted upon the Leased Property), assessments (including, without limitation,
all assessments for public improvements or benefit, whether or not commenced or
completed prior to the date hereof), water, sewer or other rents and charges,
excises, tax levies, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), and all other governmental charges,
in each case whether general or special, ordinary or extraordinary, or foreseen
or unforeseen, of every character in respect of the Leased Property or the
business conducted thereon by Tenant (including all interest and penalties
thereon due to any failure in payment by Tenant), which at any time prior to,
during or in respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Landlord's interest in the Leased Property, (b)
the Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Leased Property or the leasing or use of the Leased Property or any part
thereof by Tenant; provided, however, that nothing contained herein shall be
-------- -------
construed to require Tenant to pay (i) any tax based on net income imposed on
Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee or other
tax imposed with respect to the sale, exchange or other disposition by Landlord
of the Leased Property or the proceeds thereof, (iv) any single business, gross
receipts tax, transaction privilege, rent or similar taxes as the same relate to
or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord
as a result of the failure of Landlord to file any return or report timely and
in the form prescribed by law or to pay any tax or imposition, except to the
extent such failure is a result of a breach by Tenant of its obligations
pursuant to Section 3.1.3, (vi) any Impositions imposed on Landlord that are a
-------------
result of Landlord not being considered a "United States person" as defined in
Section 7701(a)(30) of the Code, (vii) any Impositions that are enacted or
adopted by their express terms as a substitute for any tax that would not have
been payable by Tenant pursuant to the terms
<PAGE>
- 9 -
of this Agreement or (viii) any Impositions imposed as a result of a breach of
covenant or representation by Landlord in any agreement governing Landlord's
conduct or operation or as a result of the gross negligence or willful
misconduct of Landlord.
1.46 "Incidental Documents" shall mean the Pledge and Security Agreement,
--------------------
the Stock Pledge Agreement and the Partnership Interest Pledge Agreement.
1.47 "Indebtedness" shall mean all obligations, contingent or otherwise,
------------
which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.
1.48 "Insurance Requirements" shall mean all terms of any insurance policy
----------------------
required by this Agreement and all requirements of the issuer of any such policy
and all orders, rules and regulations and any other requirements of the National
Board of Fire Underwriters (or any other body exercising similar functions)
binding upon Landlord, Tenant or the Leased Property.
1.49 "Interest Rate" shall mean ten percent (10%) per annum.
-------------
1.50 "Land" shall have the meaning given such term in Section 2.1(a).
---- --------------
1.51 "Landlord" shall have the meaning given such term in the preambles to
--------
this Agreement.
1.52 "Landlord Liens" shall mean liens on or against the Leased Property
--------------
or any payment of Rent (a) which result from any act of, or any claim against,
Landlord or any owner of a direct or indirect interest in the Leased Property,
or which result from any violation by Landlord of any terms of this Agreement or
the Purchase Agreement, or (b) which result from liens in favor of any taxing
authority by reason of any tax owed by Landlord or any fee owner of a direct or
indirect interest in the Leased Property; provided, however, that "Landlord
-------- ------- --------
Lien" shall not include any lien resulting from any tax for which Tenant is
obligated to pay or indemnify Landlord against until such time as Tenant shall
have already paid to or on behalf of Landlord the tax or the required indemnity
with respect to the same.
1.53 "Lease Year" shall mean any Fiscal Year or portion thereof,
----------
commencing with the 1996 Fiscal Year, during the Term.
1.54 "Leased Improvements" shall have the meaning given such term in
-------------------
Section 2.1(b).
- --------------
1.55 "Leased Intangible Property" shall mean all hotel licensing
--------------------------
agreements and other service contracts, equipment
<PAGE>
- 10 -
leases, booking agreements and other arrangements or agreements affecting the
ownership, repair, maintenance, management, leasing or operation of the Leased
Property to which Landlord is a party; all books, records and files relating to
the leasing, maintenance, management or operation of the Leased Property
belonging to Landlord; all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone exchange numbers identified with the Leased
Property, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character belonging to Landlord with
respect to the Leased Property.
1.56 "Leased Personal Property" shall have the meaning given such term in
------------------------
Section 2.1(e).
- --------------
1.57 "Leased Property" shall have the meaning given such term in Section
--------------- -------
2.1.
- ---
1.58 "Leasehold Mortgage" shall mean a mortgage, a deed to secure debt, or
------------------
other security instrument by which the leasehold estate or any other rights of
Tenant created by this Agreement is mortgaged, conveyed, assigned, or otherwise
transferred by Tenant, to secure a loan or loans obtained, or obligations
incurred or guaranteed, by Tenant to a Lending Institution.
1.59 "Leasehold Mortgagee" shall mean the holder of any Leasehold
-------------------
Mortgage.
1.60 "Legal Requirements" shall mean all federal, state, county, municipal
------------------
and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Leased Property or the
maintenance, construction, alteration or operation thereof, whether now or
hereafter enacted or in existence, including, without limitation, (a) all
permits, licenses, authorizations, certificates and regulations necessary to
operate the Leased Property for its Permitted Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force affecting the Leased Property, including those which may (i)
require material repairs, modifications or alterations in or to the Leased
Property or (ii) in any way materially and adversely affect the use and
enjoyment thereof, but excluding any requirements arising as a result of
Landlord's status as a real estate investment trust.
1.61 "Lending Institution" shall mean any United States insurance company,
-------------------
banking corporation, federally insured commercial or savings bank, national
banking association, United
<PAGE>
- 11 -
States savings and loan association, employees' welfare, pension or retirement
fund or system, corporate profit sharing or pension trust, college or
university, or real estate investment trust, including any corporation qualified
to be treated for federal tax purposes as a real estate investment trust, such
trust having a net worth of at least $100,000,000 and shall also mean and
include Bankers Trust Company and any Person participating in a loan syndicate
with Bankers Trust Company.
1.62 "Lien" shall mean any mortgage, security interest, pledge, collateral
----
assignment, or other encumbrance, lien or charge of any kind, or any transfer of
property or assets for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors.
1.63 "Management Agreement" shall mean , together with all
-------------------- ---------------
amendments, modifications and supplements thereto.
1.64 "Manager" shall mean Wyndham or an Affiliated Person with respect to
-------
Wyndham and permitted assignees.
1.65 "Minimum Rent" shall mean, with respect to each calendar year, the
------------
sum set forth on Exhibit A.
---------
1.66 "Notice" shall mean a notice given in accordance with Section 22.10.
------ -------------
1.67 "Officer's Certificate" shall mean a certificate signed by an officer
---------------------
of the certifying Entity duly authorized by the board of directors of the
certifying Entity.
1.68 "Other Leases" shall mean, collectively, the Lease Agreements between
------------
Landlord and Tenant described on Exhibit B.
---------
1.69 "Overdue Rate" shall mean, on any date, a per annum rate of interest
------------ --- -----
equal to the lesser of fifteen percent (15%) and the maximum rate then permitted
under applicable law.
1.70 "Parent" shall mean, with respect to any Person, any Person which
------
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, five percent (5%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.
1.71 "Partnership Pledge Agreement" shall mean the Partnership Interest
----------------------------
Pledge Agreement, dated as of the date hereof, made by the partners of Tenant to
Landlord.
<PAGE>
- 12 -
1.72 "Permitted Encumbrances" shall mean all rights, restrictions, and
----------------------
easements of record set forth on Schedule B to the applicable owner's or
leasehold title insurance policy issued to Landlord on the date hereof, plus any
other such encumbrances as may have been consented to in writing by Landlord
from time to time.
1.73 "Permitted Liens" shall mean any Liens granted in accordance with
---------------
Section 21.9(a).
- ---------------
1.74 "Permitted Use" shall mean any use of the Leased Property permitted
-------------
pursuant to Section 4.1.1.
-------------
1.75 "Person" shall mean any individual or Entity, and the heirs,
------
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.
1.76 "Pledge and Security Agreement" shall mean the Pledge and Security
-----------------------------
Agreement, dated as of the date hereof, made by Tenant for the benefit of
Landlord.
1.77 "Purchase Agreement" shall mean the Purchase and Sale Agreement,
------------------
dated as of March 5, 1996, by and between Landlord and Garden Hotel Associates
Limited Partnership, as amended.
1.78 "Records" shall have the meaning given such term in Section 7.2.
------- -----------
1.79 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent
----
and Additional Charges.
1.80 "SEC" shall mean the Securities and Exchange Commission.
---
1.81 "State" shall mean the state or commonwealth or district in which the
-----
Leased Property is located.
1.82 "Stock Pledge Agreement" shall mean the Stock Pledge Agreement made
----------------------
by Wyndham to Landlord with respect to the stock of the required assignee of
Tenant pursuant to Section 16.5.
------------
1.83 "Subordinated Creditor" shall mean any creditor of Tenant which is a
---------------------
party to a Subordination Agreement in favor of Landlord.
1.84 "Subordination Agreement" shall mean any agreement executed by a
-----------------------
Subordinated Creditor pursuant to which the payment and performance of Tenant's
obligations to such Subordinated Creditor are subordinated to the payment and
performance of Tenant's obligations to Landlord under this Agreement.
<PAGE>
- 13 -
1.85 "Subsidiary" shall mean, with respect to any Person, any Entity (a)
----------
in which such Person owns directly, or indirectly through one or more
Subsidiaries, forty-nine percent (49%) or more of the voting or beneficial
interest or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).
1.86 "Successor Landlord" shall have the meaning given such term in
------------------
Section 20.2.
- ------------
1.87 "Tangible Net Worth" shall mean the excess of total assets over total
------------------
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (b) all
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the Commencement Date; (g) deferred gain; and (h) any items not
included in clauses (a) through (g) above that are treated as intangibles in
conformity with GAAP; and excluding, however, from the determination of total
liabilities deferred fees payable to the Manager in accordance with the
Management Agreement.
1.88 "Tenant" shall have the meaning given such term in the preambles to
------
this Agreement.
1.89 "Tenant's Personal Property" shall mean all motor vehicles and
--------------------------
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other tangible personal property of
Tenant, if any, acquired by Tenant on and after the date hereof and located at
the Leased Property or used in Tenant's business at the Leased Property and all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, other than any items included within the
definition of Fixtures or Leased Personal Property.
1.90 "Term" shall mean, collectively, the Fixed Term and the Extended
----
Terms, to the extent properly exercised pursuant to the provisions of Section
-------
2.4, unless sooner terminated pursuant to the provisions of this Agreement.
- ---
<PAGE>
- 14 -
1.91 "Total Hotel Sales" shall mean, for each Fiscal Year during the Term,
-----------------
all revenues and receipts of every kind derived by Tenant from operating the
Leased Property and parts thereof, including, but not limited to: income (from
both cash and credit transactions), after deductions for bad debts, and
discounts for prompt or cash payments and refunds, from rental of rooms, stores,
offices, meeting, exhibit or sales space of every kind; license, lease and
concession fees and rentals (not including gross receipts of licensees, lessees
and concessionaires); income from vending machines; health club membership fees;
food and beverage sales; wholesale and retail sales of merchandise (other than
proceeds from the sale of furnishings, fixture and equipment no longer necessary
to the operation of the Hotel, which shall be deposited in the FF&E Reserve);
service charges, to the extent not distributed to the employees at the Hotel as
gratuities; and proceeds, if any, from business interruption or other loss of
income insurance; provided, however, that Total Hotel Sales shall not include
-------- -------
the following: gratuities to Hotel employees; federal, state or municipal
excise, sales, use or similar taxes collected directly from patrons or guests or
included as part of the sales price of any goods or services; insurance proceeds
(other than proceeds from business interruption or other loss of income
insurance); Award proceeds (other than for a temporary Condemnation); any
proceeds from any sale of the Leased Property or from the refinancing of any
debt encumbering the Leased Property; proceeds from the disposition of
furnishings, fixture and equipment no longer necessary for the operation of the
Hotel; and interest which accrues on amounts deposited in the FF&E Reserve.
1.92 "Uniform System of Accounts" shall mean A Uniform System of Accounts
-------------------------- ----------------------------
for Hotels, Eighth Revised Edition, 1986, as published by the Hotel Association
- ----------
of New York City, as the same may be further revised from time to time.
1.93 "Unsuitable for Its Permitted Use" shall mean a state or condition of
--------------------------------
the Hotel such that (a) following any damage or destruction involving the Hotel,
the Hotel cannot be operated in the good faith judgment of Tenant on a
commercially practicable basis for its Permitted Use and it cannot reasonably be
expected to be restored to substantially the same condition as existed
immediately before such damage or destruction, and as otherwise required by
Section 10.2.4, within twelve (12) months following such damage or destruction
- --------------
or such shorter period of time as to which business interruption insurance is
available to cover Rent and other costs related to the Leased Property following
such damage or destruction, or (b) as the result of a partial taking by
Condemnation, the Hotel cannot be operated, in the good faith judgment of Tenant
or the Manager on a commercially practicable basis for its Permitted Use.
<PAGE>
- 15 -
1.94 "WHC" shall mean Wyndham Hotel Corporation, a Delaware corporation,
---
which it is currently contemplated will, directly or indirectly, succeed to
substantially all of the business and assets of Wyndham Hotel Company, Ltd.,
certain shares of which will be publicly traded on a nationally recognized
exchange and all permitted successors and assigns of such corporation.
1.95 "Work" shall have the meaning given such term in Section 10.2.4.
---- --------------
1.96 "Wyndham" shall mean, prior to the assignment described in Section
------- -------
16.5, Wyndham Hotel Company, Ltd., a Texas limited partnership, and following
- ----
the assignment described in Section 16.5, WHC.
------------
ARTICLE 2
---------
LEASED PROPERTY AND TERM
------------------------
2.1 Leased Property. Upon and subject to the terms and conditions
---------------
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
---------------
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit C, attached hereto and made a part hereof
---------
(the "Land");
----
(b) all buildings, structures and other improvements of every kind
including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently situated
upon the Land (collectively, the "Leased Improvements");
-------------------
(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of property,
now or hereafter permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the
<PAGE>
- 16 -
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically
excluding all items included within the category of Tenant's Personal
Property (collectively, the "Fixtures");
--------
(e) all machinery, equipment, furniture, furnishings, moveable walls
or partitions, computers or trade fixtures or other personal property of
any kind or description used or useful in Tenant's business on or in the
Leased Improvements, and located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such personal
property, except items, if any, included within the category of Fixtures,
but specifically excluding all items included within the category of
Tenant's Personal Property (collectively, the "Leased Personal Property");
------------------------
(f) all of the Leased Intangible Property; and
(g) any and all leases of space (including any security deposits held
by Tenant or the Manager pursuant thereto) in the Leased Improvements to
tenants thereof.
2.2 Condition of Leased Property. Tenant acknowledges receipt and
----------------------------
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Leased Property, all applicable
Legal Requirements, the lien of any financing instruments, mortgages and deeds
of trust existing prior to the Commencement Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an inspection
of the Leased Property and the record title thereto or by an accurate survey
thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF
THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR
EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law,
however, Landlord hereby assigns to Tenant all of Landlord's rights to proceed
against any predecessor in title for breaches of warranties or
<PAGE>
- 17 -
representations or for latent defects in the Leased Property. Landlord shall
fully cooperate with Tenant in the prosecution of any such claims, in Landlord's
or Tenant's name, all at Tenant's sole cost and expense. Tenant shall
indemnify, defend, and hold harmless Landlord from and against any loss, cost,
damage or liability (including reasonable attorneys' fees) incurred by Landlord
in connection with such cooperation.
2.3 Fixed Term. The initial term of this Agreement (the "Fixed
---------- -----
Term") shall commence on the Commencement Date and shall expire December 31,
2012.
2.4 Extended Term. Provided that no Event of Default shall have
-------------
occurred and be continuing, this Agreement shall be in full force and effect,
and the term of all of the Other Leases shall be simultaneously extended (unless
any such Other Leases shall have been terminated pursuant to the provisions of
Articles 10 or 11 thereof), the Term shall be automatically extended for four
- -----------------
(4) consecutive renewal terms of twelve (12) years each (collectively, the
"Extended Terms"), unless Tenant shall give Landlord Notice, not later than two
- ---------------
(2) years prior to the scheduled expiration of the then current Term of this
Agreement (Fixed or Extended, as the case may be), that Tenant elects not so to
extend the term of this Agreement and the Other Leases (and time shall be of the
essence with respect to the giving of such Notice). It is expressly understood
and agreed that such Notice from Tenant shall be void and of no effect and the
Term shall be automatically extended unless Tenant shall simultaneously elect
not to extend the term of the Other Leases.
Each Extended Term shall commence on the day succeeding the expiration of
the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it
elects not to extend the Term in accordance with this Section 2.4, this
-----------
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement.
Otherwise, the extension of this Agreement shall be automatically effected
without the execution of any additional documents; it being understood and
agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.
[Notwithstanding the foregoing, if Landlord has the right, under the
provisions of the Ground Lease, to elect to renew or extend the term of the
Ground Lease, unless Tenant shall notify Landlord at least one hundred eighty
(180) days prior to the expiration of the period within which Landlord is
obligated to
<PAGE>
- 18 -
notify the landlord under the Ground Lease of its election to renew or extend
the term of the Ground Lease that Tenant intends not to renew the Term, Landlord
shall extend the Ground Lease and the Term of this Agreement shall be deemed to
be automatically extended to the expiration of the term of the Ground Lease, as
renewed or extended.
ARTICLE 3
---------
RENT
----
3.1 Rent. Tenant shall pay, in lawful money of the United States of
----
America which shall be legal tender for the payment of public and private debts,
without offset, abatement, demand or deduction (unless otherwise expressly
provided in this Agreement), Minimum Rent and Additional Rent to Landlord and
Additional Charges to the party to whom such Additional Charges are payable,
during the Term. All payments to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord in
its sole discretion. Rent for any partial Accounting Period shall be prorated on
a per diem basis.
3.1.1 Minimum Rent.
------------
(a) Minimum Rent shall be paid in advance on the first Business Day of
each month; provided, however, that the first payment of Minimum Rent shall
-------- -------
be payable on the Com mencement Date (and, if applicable, such payment
shall be prorated as provided in the last sentence of the first paragraph
of Section 3.1).
-----------
(b) Adjustments of Minimum Rent Following Disbursements Under Sections
------------------------------------------------------------------
5.1.3(b), 10.2.4 or 11.2. Effective on the date of each disbursement to
------------------------
pay for the cost of any repairs, maintenance, renovations or replacements
pursuant to Sections 5.1.3(b), 10.2.4 or 11.2, the Minimum Rent shall be
---------------------------------
increased by a per annum amount equal to the Disbursement Rate times the
---------
amount so disbursed. If any such disbursement is made during any month on a
day other than the first day of a month, Tenant shall pay to Landlord on
the first day of the immediately following month (in addition to the amount
of Minimum Rent payable with respect to such month, as adjusted pursuant to
this paragraph (b)) the amount by which Minimum Rent for the preceding
month, as adjusted for such disbursement on a per diem basis, exceeded the
amount of Minimum Rent paid by Tenant for such preceding month.
<PAGE>
- 19 -
3.1.2 Additional Rent.
--------------
(a) Amount. Commencing with the Second Lease Year, for each Lease
------
Year or portion thereof, Tenant shall pay an aggregate amount of additional
rent ("Additional Rent") with respect to such Lease Year, pursuant to this
-----------------
Agreement and the Other Leases, in an amount, not less than zero, equal to
eight percent (8%) of Excess Total Hotel Sales.
(b) Monthly Installments. Commencing with the Second Lease Year,
--------------------
installments of Additional Rent for each Lease Year or portion thereof
shall be calculated and paid monthly in arrears, together with an Officer's
Certificate setting forth the calculation of Additional Rent due and
payable for such month.
(c) Reconciliation of Additional Rent. In addition, on or before
---------------------------------
April 30, of each year, commencing April 30, 1997, Tenant shall deliver to
Landlord an Officer's Certificate setting forth the Total Hotel Sales for
the Collective Leased Properties for such preceding Lease Year, together
with an audit of Tenant's revenues for the preceding Lease Year, conducted
by Arthur Anderson and Co., or another "Big Six", so-called, firm of
independent certified public accountants proposed by Tenant and approved by
Landlord (which approval shall not be unreasonably withheld or delayed).
If the annual Additional Rent for such preceding Lease Year as shown
in the Officer's Certificate exceeds the amount previously paid with
respect thereto by Tenant, Tenant shall pay such excess to Landlord at such
time as the Officer's Certificate is delivered, together with interest at
the Interest Rate, which interest shall accrue from the close of such
preceding Lease Year until the date that such certificate is required to be
delivered and, thereafter, such interest shall accrue at the Overdue Rate,
until the amount of such difference shall be paid or otherwise discharged.
If the annual Additional Rent for such preceding Lease Year as shown in the
Officer's Certificate is less than the amount previously paid with respect
thereto by Tenant, provided that no Event of Default shall have occurred
and be continuing, Landlord shall grant Tenant a credit against the Rent
next coming due in the amount of such difference, together with interest at
the Interest Rate, which interest shall accrue from the date of payment by
Tenant until the date such credit is applied or paid, as the case may be.
If such credit cannot be made because the Term has expired prior to
application in full thereof, provided no Event of Default has occurred and
is continuing, Landlord shall pay the unapplied balance of such credit to
<PAGE>
- 20 -
Tenant, together with interest at the Interest Rate, which interest shall
accrue from the date of payment by Tenant until the date of payment by
Landlord.
(d) Confirmation of Additional Rent. Tenant shall utilize, or cause
-------------------------------
to be utilized, an accounting system for the Collective Leased Properties
in accordance with its usual and customary practices and in accordance with
GAAP, which will accurately record all Total Hotel Sales and Tenant shall
retain, for at least three (3) years after the expiration of each Lease
Year, reasonably adequate records conforming to such accounting system
showing all Total Hotel Sales for such Lease Year. Landlord, at its own
expense, except as provided hereinbelow, shall have the right, exercisable
by Notice to Tenant within one (1) year after receipt of the applicable
Officer's Certificate, by its accountants or representatives to audit the
information set forth in the Officer's Certificate referred to in
subparagraph (c) above and, in connection with such audits, to examine
Tenant's and the Manager's books and records with respect thereto
(including supporting data and sales and excise tax returns). If any such
audit discloses a deficiency in the payment of Additional Rent and, either
Tenant agrees with the result of such audit or the matter is otherwise
compromised with Landlord, Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as agreed upon or
compromised as aforesaid, is more than four percent (4%) of the Total Hotel
Sales reported by Tenant for such Lease Year and, as a result, Landlord did
not receive at least ninety-five percent (95%) of the Additional Rent
payable with respect to such Lease Year, Tenant shall pay the reasonable
cost of such audit and examination. If any such audit discloses that Tenant
paid more Additional Rent for any Lease Year than was due hereunder, and
either Landlord agrees with the result of such audit or the matter is
otherwise determined, provided no Event of Default has occurred and is
continuing, Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate, which interest shall accrue from the time of payment by
Tenant until the date such credit is applied or paid, as the case may be.
If such a credit cannot be made because the Term has expired before the
credit can be applied in full, provided no Event of Default has occurred
and is continuing, Landlord shall pay the unapplied balance of such credit
to Tenant, together with interest at the
<PAGE>
- 21 -
Interest Rate, which interest shall accrue from the date of payment by
Tenant until the date of payment from Landlord.
Any proprietary information obtained by Landlord with respect to
Tenant pursuant to the provisions of this Agreement shall be treated as
confidential, except that such information may be used, subject to
appropriate confidentiality safeguards, in any litigation between the
parties and except further that Landlord may disclose such information to
its prospective lenders, provided that Landlord shall direct and obtain the
agreement of such lenders to maintain such information as confidential. The
obligations of Tenant and Landlord contained in this Section 3.1.2 shall
-------------
survive the expiration or earlier termination of this Agreement.
3.1.3 Additional Charges. In addition to the Minimum Rent and
------------------
Additional Rent payable hereunder, Tenant shall pay to the appropriate
parties and discharge as and when due and payable the following
(collectively, "Additional Charges"):
-------------------
(a) Impositions. Subject to Article 8 relating to permitted contests,
----------- ---------
Tenant shall pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost (other than any opportunity cost as a result of a
failure to take advantage of any discount for early payment) may be added
for non-payment, such payments to be made directly to the taxing
authorities where feasible, and shall promptly, upon request, furnish to
Landlord copies of official receipts or other reasonably satisfactory proof
evidencing such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may exercise the
option to pay the same (and any accrued interest on the unpaid balance of
such Imposition) in installments and, in such event, shall pay such
installments during the Term as the same become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Landlord,
at its expense, shall, to the extent required or permitted by Applicable
Law, prepare and file all tax returns and pay all taxes due in respect of
Landlord's net income, gross receipts, sales and use, single business,
transaction privilege, rent, ad valorem, franchise taxes and taxes on its
capital stock, and Tenant, at its expense, shall, to the extent required or
permitted by Applicable Laws and regulations, prepare and file all other
tax returns and reports in respect of any Imposition as may be required by
Government Agencies. Provided no Event of Default shall have occurred and
be continuing, if any refund shall be due from any taxing authority in
respect of any Imposition paid by Tenant, the same shall be paid over to or
<PAGE>
- 22 -
retained by Tenant. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event Government Agencies classify any
property covered by this Agreement as personal property, Tenant shall file
all personal property tax returns in such jurisdictions where it may
legally so file. Each party shall, to the extent it possesses the same,
provide the other, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Landlord is legally required to file personal property tax
returns for property covered by this Agreement, Landlord shall provide
Tenant with copies of assessment notices in sufficient time for Tenant to
file a protest. All Impositions assessed against such personal property
shall be (irrespective of whether Landlord or Tenant shall file the
relevant return) paid by Tenant not later than the last date on which the
same may be made without interest or penalty.
Landlord shall give prompt Notice to Tenant of all Impositions payable
by Tenant hereunder of which Landlord at any time has knowledge; provided,
--------
however, that Landlord's failure to give any such notice shall in no way
-------
diminish Tenant's obligation hereunder to pay such Impositions, unless such
failure continues for more than twelve (12) months after the date Landlord
learned of such Imposition.
(b) Utility Charges. Tenant shall pay or cause to be paid all charges
---------------
for electricity, power, gas, oil, water and other utilities used in
connection with the Leased Property.
(c) Insurance Premiums. Tenant shall pay or cause to be paid all
------------------
premiums for the insurance coverage required to be maintained pursuant to
Article 9.
---------
(d) Other Charges. Tenant shall pay or cause to be paid all other
-------------
amounts, liabilities and obligations, including, without limitation,
[ground rents and other sums payable under the Ground Lease] and all
amounts payable under any equipment leases and all agreements to indemnify
Landlord under Sections 4.3.2 and 9.7.
----------------------
(e) Reimbursement for Additional Charges. If Tenant pays or causes
------------------------------------
to be paid property taxes or similar or other Additional Charges
attributable to periods after the end of the Term, whether upon expiration
or sooner termination of this Agreement (other than termination by reason
of an Event of Default), Tenant may, within a reasonable time after the end
of the Term, provide Notice to Landlord of its estimate
<PAGE>
- 23 -
of such amounts. Landlord shall promptly reimburse Tenant for all payments
of such taxes and other similar Additional Charges that are attributable to
any period after the Term of this Agreement.
3.2 Late Payment of Rent, Etc., If any installment of Minimum Rent,
--------------------------
Additional Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Landlord) shall not be paid within ten (10) days
after its due date, Tenant shall pay Landlord, on demand, as Additional Charges,
a late charge (to the extent permitted by law) computed at the Overdue Rate on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that Tenant pays any Additional Charges
directly to Landlord or any Hotel Mortgagee pursuant to any requirement of this
Agreement, Tenant shall be relieved of its obligation to pay such Additional
Charges to the Entity to which they would otherwise be due. If any payments due
from Landlord to Tenant shall not be paid within ten (10) days after its due
date, Landlord shall pay to Tenant, on demand, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such installment
from the due date of such installment to the date of payment thereof.
In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every fine,
penalty, interest and cost which is added for non-payment or late payment of
such items. Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the case of non-payment of the Additional Charges as in the case of non-
payment of the Minimum Rent and Additional Rent.
3.3 Net Lease. The Rent shall be absolutely net to Landlord so that this
---------
Agreement shall yield to Landlord the full amount of the installments or amounts
of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise, including those provisions for
adjustment or abatement of such Rent.
3.4 No Termination, Abatement, Etc. Except as otherwise specifically
-------------------------------
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off against
the Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise
<PAGE>
- 24 -
affected by reason of (a) any damage to or destruction of the Leased Property or
any portion thereof from whatever cause or any Condemnation, (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any portion thereof, or the interference with such use by any
Person or by reason of eviction by paramount title; (c) any claim which Tenant
may have against Landlord by reason of any default (other than a monetary
default) or breach of any warranty by Landlord under this Agreement or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties; (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord; or (e) for any
other cause whether similar or dissimilar to any of the foregoing (other than a
monetary default by Landlord); provided, however, that the foregoing shall not
-------- -------
apply or be construed to restrict Tenant's rights in the event of any act or
omission by Landlord constituting gross negligence or willful misconduct.
Except as otherwise specifically provided in this Agreement, Tenant hereby
waives all rights arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law (a) to modify, surrender or terminate this
Agreement or quit or surrender the Leased Property or any portion thereof, or
(b) which would entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable or other obligations to be performed
by Tenant hereunder. The obligations of each party hereunder shall be separate
and independent covenants and agreements, and the Rent and all other sums
payable by Tenant hereunder shall continue to be payable in all events unless
the obligations to pay the same shall be terminated pursuant to the express
provisions of this Agreement. In any instance where, after the occurrence of an
Event of Default, Landlord retains funds which, but for the occurrence of such
Event of Default, would be payable to Tenant, Landlord shall refund such funds
to Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
3.5 Security for Tenant's Performance. Tenant acknowledges that the
---------------------------------
Retained Funds (as defined in the Purchase Agreement) constitute security for
the faithful observance and performance by Tenant of all the terms, covenants
and conditions of this Agreement by Tenant to be observed and performed. If any
Event of Default shall occur and be continuing, Landlord may, at its option and
without prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply so much of the Retained Funds as may be necessary
to compensate Landlord toward the payment of the Rent or other sums or loss or
damage sustained by Landlord due to such breach by Tenant. It is understood and
agreed that the amount of the Retained Funds is not to be considered as prepaid
rent, nor shall damages be limited to the
<PAGE>
- 25 -
amount of the amount of the Retained Funds. Provided this Agreement shall not
be terminated as a result of an Event of Default, the Retained Funds shall be
paid as provided in the Purchase Agreement.
ARTICLE 4
---------
USE OF THE LEASED PROPERTY
--------------------------
4.1 Permitted Use.
-------------
4.1.1 Permitted Use.
-------------
(a) Tenant shall, at all times during the Term and at any other time
that Tenant shall be in possession of the Leased Property, continuously use
and operate, and cause the Manager to use and operate, the Leased Property
as a Wyndham Garden hotel and any uses incidental thereto. Tenant shall not
use (and shall direct the Manager not to use) the Leased Property or any
portion thereof for any other use without the prior written consent of
Landlord. No use shall be made or permitted to be made of the Leased
Property and no acts shall be done thereon which will cause the
cancellation of any insurance policy covering the Leased Property or any
part thereof (unless another adequate policy is available), nor shall
Tenant sell or otherwise provide or permit to be kept, used or sold in or
about the Leased Property any article which may be prohibited by law or by
the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriter's
regulations. Tenant shall, at its sole cost (except as expressly provided
in Section 5.1.2(b)), comply (or direct the Manager to comply) with all
----------------
Insurance Requirements. Tenant shall not take or omit to take (and Tenant
shall direct the Manager not to take or omit to take) any action, the
taking or omission of which materially impairs the value or the usefulness
of the Leased Property or any part thereof for its Permitted Use.
(b) In the event that, in the reasonable determination of Tenant, it
shall no longer be economically practical to operate the Leased Property as
a Wyndham Garden hotel, Tenant shall give Landlord Notice thereof, which
Notice shall set forth in reasonable detail the reasons therefor.
Thereafter, Landlord and Tenant shall negotiate in good faith to agree on
an alternative use for the Leased Property, appropriate adjustments to the
Additional Rent and other related matters; provided, however, in no such
-------- -------
event shall the Minimum Rent be reduced or abated.
<PAGE>
- 26 -
4.1.2 Necessary Approvals. Tenant shall proceed with all due
-------------------
diligence and exercise best efforts to obtain and maintain, and shall
direct the Manager to obtain and maintain, all approvals necessary to use
and operate, for its Permitted Use, the Leased Property and the Hotel
located thereon under applicable law.
4.1.3 Lawful Use, Etc. Tenant shall not, and shall direct the
----------------
Manager not to, use or suffer or permit the use of the Leased Property or
Tenant's Personal Property, if any, for any unlawful purpose. Tenant shall
not, and shall direct the Manager not to, commit or suffer to be committed
any waste on the Leased Property, or in the Hotel, nor shall Tenant cause
or permit any unlawful nuisance thereon or therein. Tenant shall not, and
shall direct the Manager not to, suffer nor permit the Leased Property, or
any portion thereof, to be used in such a manner as (i) might reasonably
impair Landlord's title thereto or to any portion thereof, or (ii) may
reasonably allow a claim or claims for adverse usage or adverse possession
by the public, as such, or of implied dedication of the Leased Property or
any portion thereof.
4.2 Compliance with Legal/Insurance Requirements, Etc. Subject to the
--------------------------------------------------
provisions of Article 8 and Section 5.1.3(b), Tenant, at its sole expense, shall
------------------------------
(or shall direct the Manager to) (i) comply with all material Legal Requirements
and Insurance Requirements in respect of the use, operation, maintenance,
repair, alteration and restoration of the Leased Property and with the terms and
conditions of any ground lease affecting the Leased Property and (ii) procure,
maintain and comply with all appropriate licenses, and other authorizations and
agreements required for any use of the Leased Property and Tenant's Personal
Property, if any, then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof.
4.3 Environmental Matters.
---------------------
4.3.1 Restriction on Use, Etc. During the Term and any other time
------------------------
that Tenant shall be in possession of the Leased Property, Tenant shall not
(and shall direct the Manager not to) store, spill upon, dispose of or
transfer to or from the Leased Property any Hazardous Substance, except in
compliance with all Applicable Laws. During the Term and any other time
that Tenant shall be in possession of the Leased Property, Tenant shall
maintain (and shall direct the Manager to maintain) the Leased Property at
all times free of any Hazardous Substance (except in compliance with all
Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or
knowledge and shall direct the Manager upon receipt of notice or knowledge
promptly to, notify Landlord in writing of any material change in the
nature or
<PAGE>
- 27 -
extent of Hazardous Substances at the Leased Property, (b) transmit to
Landlord a copy of any Community Right to Know report which is required to
be filed by Tenant or the Manager with respect to the Leased Property
pursuant to SARA Title III or any other Applicable Law, (c) transmit to
Landlord copies of any citations, orders, notices or other governmental
communications received by Tenant or the Manager or their respective
agents or representatives with respect thereto (collectively,
"Environmental Notice"), which Environmental Notice requires a written
--------------------
response or any action to be taken and/or if such Environmental Notice
gives notice of and/or presents a material risk of any material violation
of any Applicable Law and/or presents a material risk of any material
cost, expense, loss or damage (an "Environmental Obligation"), (d)
------------------------
observe and comply (and direct the Manager to observe and comply) with all
Applicable Laws relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any of ficial, court or
agency of competent jurisdiction relating to the use or maintenance or
requiring the removal, treatment, contain ment or other disposition
thereof, and (e) pay or otherwise dispose of any fine, charge or
Imposition related thereto, unless Tenant or the Manager shall contest the
same in good faith and by appropriate proceedings and the right to use and
the value of the Leased Property is not materially and adversely affected
thereby.
If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws)
are discovered on the Leased Property, subject to Tenant's and the
Manager's right to contest the same in accordance with Article 8, Tenant
---------
shall take (and shall direct the Manager to take) all actions and incur any
and all expenses, as are required by any Government Agency and by
Applicable Law, (i) to clean up and remove from and about the Leased
Property all Hazardous Substances thereon, (ii) to contain and prevent any
further release or threat of release of Hazardous Substances on or about
the Leased Property and (iii) to use good faith efforts to eliminate any
further release or threat of release of Hazardous Substances on or about
the Leased Property.
4.3.2 Indemnification of Landlord. Tenant shall protect, indemnify
---------------------------
and hold harmless Landlord and each Hotel Mortgagee, their trustees,
officers, agents, employees and beneficiaries, and any of their respective
successors or assigns with respect to this Agreement (collectively, the
"Indemnitees" and, individually, an "Indemnitee") for, from and against any
----------- ----------
and all debts, liens, claims, causes of action, administrative orders or
notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorney's fees and expenses) imposed upon, incurred
by or asserted against any Indemnitee resulting from, either directly or
indirectly, the presence during the Term (or any other time Tenant shall be
possession of
<PAGE>
- 28 -
the Leased Property) in, upon or under the soil or ground water of the
Leased Property or any properties surrounding the Leased Property of any
Hazardous Substances in violation of any Applicable Law or otherwise,
provided that any of the foregoing arises by reason of any failure by
Tenant, the Manager or any Person claiming by, through or under Tenant or
the Manager to perform or comply with any of the terms of this Section 4.3,
-----------
except to the extent the same arise from the acts or omissions of Landlord
or any other Indemnitee or during any period that Landlord or a Person
designated by Landlord (other than Tenant) is in possession of the Leased
Property. Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a result of
the presence prior to the expiration or sooner termination of the Term and
the surrender of the Leased Property to Landlord in accordance with the
terms of this Agreement of Hazardous Substances in, upon or under the soil
or ground water of the Leased Property in violation of any Applicable Law.
Upon Notice from Landlord and any other of the Indemnitees, Tenant shall
undertake the defense, at Tenant's sole cost and expense, of any
indemnification duties set forth herein, in which event, Tenant shall not
be liable for payment of any duplicative attorneys' fees incurred by any
Indemnitee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge,
any cost, expense, loss or damage (including, without limitation,
reasonable attorneys' fees) reasonably incurred by Landlord and arising
from a failure of Tenant to observe and perform the requirements of this
Section 4.3, which amounts shall bear interest from the date ten (10) days
-----------
after written demand therefor is given to Tenant until paid by Tenant to
Landlord at the Overdue Rate.
4.3.3 Survival. The provisions of this Section 4.3 shall survive the
-------- -----------
expiration or sooner termination of this Agreement.
ARTICLE 5
---------
MAINTENANCE AND REPAIRS
-----------------------
5.1 Maintenance and Repair.
----------------------
5.1.1 Tenant's General Obligations. Tenant shall, at its sole cost
----------------------------
and expense (except as expressly provided in Section 5.1.3(b)), or shall
----------------
direct the Manager to, keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto (and Tenant's Personal Property) in
good order and repair, reasonable wear and tear excepted (whether or not
the need for such repairs occurs as a result of Tenant's or
<PAGE>
- 29 -
the Manager's use, any prior use, the elements or the age of the Leased
Property or Tenant's Personal Property or any portion thereof), and shall
promptly make (or cause the Manager to make) all necessary and appropriate
repairs and replacements thereto of every kind and nature, whether interior
or exterior, structural or nonstructural, ordinary or extraordinary,
foreseen or unforeseen or arising by reason of a condition existing prior
to the commencement of the Term (concealed or otherwise). All repairs shall
be made in a good, workmanlike manner, consistent with the Manager's and
industry standards for like hotels in like locales, in accordance with all
applicable federal, state and local statutes, ordinances, by-laws, codes,
rules and regulations relating to any such work. Tenant shall not take or
omit to take (and shall direct the Manager not to take or omit to take) any
action, the taking or omission of which would materially and adversely
impair the value or the usefulness of the Leased Property or any part
thereof for its Permitted Use. Tenant's obligations under this Section
-------
5.1.1(a) shall be limited in the event of any casualty or Condemnation as
--------
set forth in Sections 10.2 and 11.2 and also as set forth in Section
---------------------- -------
5.1.3(b) and Tenant's obligations with respect to Hazardous Substances
--------
are as set forth in Section 4.3.
-----------
5.1.2 FF&E Reserve.
------------
(a) Upon execution of this Agreement, the FF&E Funded Amount (as
defined in the Purchase Agreement) has been deposited in a reserve account
(the "FF&E Reserve") in a bank designated by Tenant and approved by
------------
Landlord. The purpose of the FF&E Reserve is to cover the cost of:
(i) Replacements and renewals to the Hotel's furnishings, fixtures
and equipment;
(ii) Certain routine repairs and maintenance to the Hotel building
which are normally capitalized under GAAP such as exterior and
interior repainting, resurfacing building walls, floors, roofs
and parking areas, and replacing folding walls and the like; and
(iii) Major repairs, alterations, improvements, renewals or
replacements to the Hotel's buildings' structure, roof, or
exterior facade, or to its mechanical, electrical, heating,
ventilating, air conditioning, plumbing or vertical
transportation systems.
Tenant agrees that it will, from time to time, execute such reasonable
documentation as may be requested by Landlord and any Hotel Mortgagee to
assist Landlord and such
<PAGE>
- 30 -
Hotel Mortgagee in establishing or perfecting its security interest in
Landlord's residual interest in the funds which are in the FF&E Reserve, it
being acknowledged and agreed that the funds in the FF&E Reserve are the
property of Tenant; provided, however, that no such documentation shall
-------- -------
contain any amendment or modification of any of the provisions of this
Agreement. It is understood and agreed that, during the Term, the FF&E
Reserve may not be applied against debts secured by a Hotel Mortgage nor
shall any Hotel Mortgagee have the right to approve the release of such
funds pursuant to the terms of this Agreement unless and until Landlord
shall default in its obligations to such Hotel Mortgagee.
(b) Throughout the Term, Tenant shall transfer (as of the end of each
month of the Term) into the FF&E Reserve an amount equal to five percent
(5%) of Total Hotel Sales for such month. Together with the documentation
provided to Landlord pursuant to Section 3.1.2(c), Tenant shall deliver to
----------------
Landlord an Officer's Certificate setting forth the total amount of
deposits made to and expenditures from the FF&E Reserve for the preceding
Fiscal Year, together with a reconciliation of such expenditures with the
applicable FF&E Estimate.
(c) Each year, on or before December 1 of the preceding year, Tenant
shall prepare an estimate (the "FF&E Estimate") of FF&E Reserve
-------------
expenditures necessary during the ensuing Fiscal Year, and shall submit
such FF&E Estimate to Landlord for its review and approval, which approval
shall not be unreasonably withheld or delayed. In the event Landlord shall
fail to respond within thirty (30) days after receipt of the FF&E Estimate,
such FF&E Estimate shall be deemed approved by Landlord. All expenditures
from the FF&E Reserve shall be (as to both the amount of each such
expenditure and the timing thereof) both reasonable and necessary, given
the objective that the Hotel will be maintained and operated to a standard
comparable to competitive hotels.
(d) Tenant shall, consistent with the FF&E Estimate approved by
Landlord, from time to time make expenditures from the FF&E Reserve as it
deems necessary provided that Tenant shall not materially deviate from the
FF&E Estimate approved by Landlord without the prior approval of Landlord,
except in the case of emergency where immediate action is necessary to
prevent imminent danger to person or property.
(e) Upon the expiration or sooner termination of this Agreement, funds
in the FF&E Reserve and all property purchased with funds from the FF&E
Reserve during the Term
<PAGE>
- 31 -
shall be paid, granted and assigned to Landlord as Additional Charges.
(f) It is understood and agreed that the FF&E Reserve pursuant to this
Agreement and the Other Leases shall be maintained on a consolidated basis.
5.1.3 Landlord's Obligations.
----------------------
(a) Except as otherwise expressly provided in this Agreement, Landlord
shall not, under any circumstances, be required to build or rebuild any
improvement on the Leased Property, or to make any repairs, replacements,
alterations, restorations or renewals of any nature or description to the
Leased Property, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or, except as provided in Section
-------
5.1.3(b), to make any expenditure whatsoever with respect thereto, or to
--------
maintain the Leased Property in any way. Except as otherwise expressly
provided in this Agreement, Tenant hereby waives, to the maximum extent
permitted by law, the right to make repairs at the expense of Landlord
pursuant to any law in effect on the date hereof or hereafter enacted.
Landlord shall have the right to give, record and post, as appropriate,
notices of nonresponsibility under any mechanic's lien laws now or
hereafter existing.
(b) If, at any time, funds in the FF&E Reserve shall be insufficient
for necessary and permitted expenditures thereof or, pursuant to the terms
of this Agreement, Tenant is required to make any expenditures in
connection with any repair, maintenance or renovation with respect to the
Leased Property and the amount of such disbursements or expenditures
exceeds the amount on deposit in the FF&E Reserve or such repair,
maintenance or renovation is not a permitted expenditure from the FF&E
Reserve as described in Section 5.1.2(a)(i) and (ii), Tenant may, at its
----------------------------
election, give Landlord Notice thereof, which Notice shall set forth, in
reasonable detail, the nature of the required repair, renovation or
replacement, the estimated cost thereof and such other information with
respect thereto as Landlord may reasonably require. Provided that no Event
of Default shall have occurred and be continuing and Tenant shall otherwise
comply with the applicable provisions of Article 6, Landlord shall, within
---------
ten (10) Business Days after such Notice, subject to and in accordance with
the applicable provisions of Article 6, disburse such required funds to
---------
Tenant (or, if Tenant shall so elect, directly to the Manager or any other
Person performing the required work) and, upon such disbursement, the
Minimum Rent shall be adjusted as provided in Section 3.1.1(b); provided,
---------------- --------
however, that, in the event
-------
<PAGE>
- 32 -
that Landlord shall elect not to disburse any funds pursuant to this
Section 5.1.3(b), Tenant's sole recourse shall be to elect not to make the
----------------
applicable repair, maintenance or renovation.
5.1.4 Nonresponsibility of Landlord, Etc. All materialmen,
-----------------------------------
contractors, artisans, mechanics and laborers and other persons contracting
with Tenant with respect to the Leased Property, or any part thereof, are
hereby charged with notice that liens on the Leased Property or on
Landlord's interest therein are expressly prohibited and that they must
look solely to Tenant to secure payment for any work done or material
furnished by Tenant, the Manager or for any other purpose during the term
of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in
any way as constituting the consent or request of Landlord, express or
implied, by inference or otherwise, to any contractor, subcontractor,
laborer or materialmen for the performance of any labor or the furnishing
of any materials for any alteration, addition, improvement or repair to the
Leased Property or any part thereof or as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to the filing of any lien
against the Leased Property or any part thereof nor to subject Landlord's
estate in the Leased Property or any part thereof to liability under any
Mechanic's Lien Law of the State in any way, it being expressly understood
Landlord's estate shall not be subject to any such liability.
5.2 Tenant's Personal Property. Tenant shall provide and maintain
--------------------------
throughout the Term all such Tenant's Personal Property as shall be necessary in
order to operate in compliance with applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Permitted Use and all of such Personal Property shall, upon the
expiration or earlier termination of this Agreement, shall become the property
of Landlord. If, from and after the Commencement Date, Tenant acquires an
interest in any item of tangible personal property (other than motor vehicles)
on, or in connection with, the Leased Property which belongs to anyone other
than Tenant, Tenant shall require the agreements permitting such use to provide
that Landlord or its designee may assume Tenant's rights and obligations under
such agreement upon the termination of this Agreement and the assumption of
management or operation of the Hotel by Landlord or its designee.
5.3 Yield Up. Upon the expiration or sooner termination of this
--------
Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in
substantially the same condition in which the Leased Property was in on the
Commencement Date, except as
<PAGE>
- 33 -
repaired, rebuilt, restored, altered or added to as permitted or required by the
provisions of this Agreement, reasonable wear and tear excepted (and casualty
damage and Condemnation, in the event that this Agreement is terminated
following a casualty or total Condemnation in accordance with Article 10 or
----------
Article 11 excepted).
- ----------
In addition, upon the expiration or earlier termination of this Agreement,
Tenant shall, at Landlord's sole cost and expense, use its good faith efforts to
transfer to and cooperate with Landlord or Landlord's nominee in connection with
the processing of all applications for licenses, operating permits and other
governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental Entities which may be necessary for the use
and operation of the Hotel as then operated. If requested by Landlord, Tenant
will direct the Manager to continue to manage the Hotel after the expiration of
the Term and for up to one hundred twenty (120) days, on such reasonable terms
(which shall include a market rate management fee and an agreement to reimburse
the Manager for its reasonable out-of-pocket costs and expenses, and reasonable
administrative costs), as Landlord shall reasonably request.
5.4 Management Agreement. Tenant shall not, without Landlord's prior
--------------------
written consent, amend or modify the provisions of the Management Agreement
which provide (i) that, from and after the occurrence of any Default or Event of
Default, all amounts due from Tenant to the Manager shall be subordinate to all
amounts due from Tenant to Landlord, (ii) for operation of the Leased Property
under the "Wyndham" and "Wyndham Garden" names, (iii) that Wyndham, the Manager
and their Affiliated Persons are prohibited from operating, managing or
franchising another Wyndham Gardens hotel within the designated area on Exhibit
-------
D and (iv) for termination thereof, at Landlord's option, upon the termination
- -
of this Agreement. Tenant shall not take any action, grant any consent or
permit any action under the Management Agreement which might have a material
adverse effect on Landlord, without the prior written consent of Landlord;
provided, however, that Landlord's consent shall not be required in connection
- -------- -------
with any assignment of the Manager's rights under the Management Agreement to
(x) any Affiliated Person of Wyndham having the full power, right and authority
to provide all services and organizational expertise as contemplated and
required by the Management Agreement or (y) any Person (including, but not
limited to, any Lending Institution) who acquires all or substantially all of
the management contracts of Wyndham (including, without limitation, all of the
Management Agreements with respect to the Collective Leased Properties that have
not been theretofore cancelled or terminated pursuant to the terms thereof),
provided that, in either such case, the Leased Property will retain the right to
use the "Wyndham" and "Wyndham
<PAGE>
- 34 -
Garden" names. In the event of an assignment pursuant to clause (y) preceding,
provided that the successor Manager (i) assumes, in writing all obligations of
the Manager under the Management Agreement, and (ii) has a Tangible Net Worth,
as of the date of assignment, equal to the greater of the Tangible Net Worth of
Wyndham as of the date of this Agreement, and the Tangible Net Worth of Wyndham
as of the date of such assignment, Wyndham shall be released from all
liabilities arising under the Management Agreement from and after the effective
date of such assignment. Tenant shall not agree to any change in the Manager
(except as provided in the preceding sentences), to any change in the Management
Agreement (except as provided in the preceding sentences), terminate the
Management Agreement or permit the Manager to assign the Management Agreement
(except as provided in the preceding sentences) without the prior written
approval of Landlord in each instance; provided, however, that the Manager may
-------- -------
grant a security interest in its right to receive payments under the Management
Agreement without Landlord's prior written approval.
ARTICLE 6
---------
IMPROVEMENTS, ETC.
------------------
6.1 Improvements to the Leased Property. Tenant shall not make, construct
-----------------------------------
or install (and shall direct the Manager not to construct or install) any
Capital Additions (other than Capital Additions of the type described in Section
-------
5.1.2(a)(ii) and approved pursuant to Section 5.1.2(c)) without, in each
- ------------ ----------------
instance, obtaining Landlord's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned provided that (a) construction or
installation of the same would not adversely affect or violate any Legal
Requirement or Insurance Requirement applicable to the Leased Property and (b)
Landlord shall have received an Officer's Certificate certifying as to the
satisfaction of the conditions set out in clause (a) above; provided, however,
-------- -------
that no such consent shall be required in the event immediate action is required
to prevent imminent danger to person or property. Prior to commencing
construction of any Capital Addition, Tenant shall submit, or shall direct the
Manager to submit, to Landlord, in writing, a proposal setting forth, in
reasonable detail, any such proposed improvement and shall provide to Landlord
such plans and specifications, and such permits, licenses, contracts and such
other information concerning the same as Landlord may reasonably request.
Landlord shall have thirty (30) days to review all materials submitted to
Landlord in connection with any such proposal. Failure of Landlord to respond
to Tenant's or the Manager's proposal within thirty (30) days after receipt of
all information and materials requested by Landlord in connection with the
proposed improvement
<PAGE>
- 35 -
shall be deemed to constitute approval of the same. Without limiting the
generality of the foregoing, such proposal shall indicate the approximate
projected cost of constructing such proposed improvement and the use or uses to
which it will be put. No Capital Addition shall be made which would tie in or
connect any Leased Improvement with any other improvements on property adjacent
to the Leased Property (and not part of the Land) including, without limitation,
tie-ins of buildings or other structures or utilities. Tenant shall not
finance, and shall direct the Manager not to finance, the cost of any
construction of such improvement by the granting of a lien on or security
interest in the Leased Property or such improvement, or Tenant's interest
therein, without the prior written consent of Landlord, which consent may be
withheld by Landlord in Landlord's sole discretion. Any such improvements
shall, upon the expiration or sooner termination of this Agreement, remain or
pass to and become the property of Landlord, free and clear of all encumbrances
other than Permitted Encumbrances.
6.2 Salvage. All materials which are scrapped or removed in connection
-------
with the making of either Capital Additions or non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
---------
such work.
ARTICLE 7
---------
LIENS
-----
7.1 Liens. Subject to Article 8, Tenant shall not, directly or
----- ---------
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any attach
ment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) subleases permitted by Article 17,
----------
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet due and payable, or (ii) are
being contested in accordance with Article 8, (f) liens of mechanics, laborers,
---------
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable or are for sums that are being contested in
accordance with Article 8, (g) any Hotel Mortgages or other liens which are the
---------
responsibility of Landlord pursuant to the provisions of Article 21, (h)
----------
Landlord Liens and any other voluntary liens created by Landlord and (i)
Leasehold Mortgages.
<PAGE>
- 36 -
7.2 Landlord's Lien. In addition to any statutory landlord's lien and in
---------------
order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord a security interest in and an express contractual lien upon Tenant's
Personal Property (except motor vehicles and liquor licenses and permits), and
Tenant's interest in all ledger sheets, files, records, documents and
instruments (including, without limitation, computer programs, tapes and related
electronic data processing) relating to the operation of the Hotels (the
"Records") and all proceeds therefrom, subject to any Permitted Encumbrances;
- --------
and such Tenant's Personal Property shall not be removed from the Leased
Property at any time when a Default or an Event of Default has occurred and is
continuing.
Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with the provisions of the applicable laws of the State. Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in Tenant's name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
ARTICLE 8
---------
PERMITTED CONTESTS
------------------
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims") as
------
to the Leased Property, by appropriate legal proceedings, conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving, modifying or extending Tenant's obligation to pay any
Claims as finally determined, (b) such contest shall not cause Landlord or
Tenant to be in default under any mortgage or deed of trust encumbering the
Leased Property (Landlord agreeing that any such mortgage or deed of trust shall
permit Tenant to exercise the rights granted pursuant to this Article 8) or any
---------
interest therein or result in or reasonably be expected to result in a lien
attaching to the Leased Property, (c) no part of the Leased Property nor any
Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment
or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and
against any cost, claim, damage, penalty or reasonable expense, including
reasonable attorneys' fees, incurred by Landlord in connection therewith or as a
result
<PAGE>
- 37 -
thereof. Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be subjected to
any liability therefor (including, without limitation, for the payment of any
costs or expenses in connection therewith) unless Tenant agrees by agreement in
form and substance reasonably satisfactory to Landlord, to assume and indemnify
Landlord with respect to the same. Tenant shall be entitled to any refund of
any Claims and such charges and penalties or interest thereon which have been
paid by Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any
Claims when finally determined, (y) to provide reasonable security therefor, or
(z) to prosecute or cause to be prosecuted any such contest diligently and in
good faith, Landlord may, upon reasonable notice to Tenant (which notice shall
not be required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due with
respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as
Ad ditional Charges.
ARTICLE 9
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
9.1 General Insurance Requirements. Tenant shall, at all times during the
------------------------------
Term and at any other time Tenant shall be in possession of the Leased Property,
keep the Leased Property and all property located therein or thereon, insured
against the risks and in the amounts as follows and shall maintain the following
insurance:
(a) "All-risk" property insurance, including insurance against loss or
damage by fire, vandalism and malicious mischief, earthquake, explosion of
steam boilers, pressure vessels or other similar apparatus, now or
hereafter installed in the Hotel located at the Leased Property, with the
usual extended coverage endorsements, in an amount equal to one hundred
percent (100%) of the then full Replacement Cost thereof (as defined in
Section 9.2);
------------
(b) Business interruption insurance covering risk of loss during the lesser
of the first twelve (12) months of reconstruction or the actual
reconstruction period necessitated by the occurrence of any of the hazards
described in subparagraph (a) above, in such amounts as may be customary
for comparable properties in the area and in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer;
<PAGE>
- 38 -
(c) Comprehensive general liability insurance, including bodily injury and
property damage in a form reasonably satisfactory to Landlord (and
including, without limitation, broad form contractual liability,
independent contractor's hazard and completed operations coverage) in an
amount not less than One Million Dollars ($1,000,000) per occurrence, Three
Million Dollars ($3,000,000) in the aggregate and umbrella coverage of all
such claims in an amount not less than Fifty Million Dollars ($50,000,000);
(d) Flood (if the Leased Property is located in whole or in part within an
area identified as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, as amended, or the Flood Disaster Protection Act of 1973, as amended
(or any successor acts thereto)) and such other hazards and in such amounts
as may be customary for comparable properties in the area;
(e) Worker's compensation insurance coverage if required by applicable law
for all persons employed by Tenant on the Leased Property with statutory
limits and otherwise with limits of and provisions in accordance with the
requirements of applicable local, State and federal law, and employer's
liability insurance as is customarily carried by similar employers; and
(f) Such additional insurance as may be reasonably required, from time to
time, by Landlord or any Hotel Mortgagee and which is customarily carried
by comparable lodging properties in the area.
9.2 Replacement Cost. "Replacement Cost" as used herein, shall mean the
---------------- ----------------
actual replacement cost of the property requiring replacement from time to time,
including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In the event either
party believes that the then full Replacement Cost has increased or decreased at
any time during the Term, such party, at its own cost, shall have the right to
have such full Replacement Cost redetermined by an independent accredited
appraiser approved by the other, which approval shall not be unreasonably
withheld or delayed. The party desiring to have the full Replacement Cost so
redetermined shall forthwith, on receipt of such determination by such
appraiser, give Notice thereof to the other. The determina tion of such
appraiser shall be final and binding on the parties hereto until any subsequent
determination under this Section 9.2, and Tenant shall forthwith conform the
-----------
amount of the insurance carried to the amount so determined by the appraiser.
<PAGE>
- 39 -
9.3 Waiver of Subrogation. Landlord and Tenant agree that (insofar as
---------------------
and to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in the State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a result
of this provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.
9.4 Form Satisfactory, Etc. All insurance policies and endorsements
-----------------------
required pursuant to this Article 9 shall be fully paid for, nonassessable and
---------
be issued by insurance carriers authorized to do business in the State, having a
general policy holder's rating of no less than B++ in Best's latest rating
guide. All such policies described in Sections 9.1(a) through (d) shall include
---------------------------
no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) and,
with the exception of the insurance described in Sections 9.1(e), shall name
---------------
Landlord and any Hotel Mortgagee as additional insureds, as their interests may
appear. All loss adjustments shall be payable as provided in Article 10.
----------
Tenant shall cause all insurance premiums to be paid and shall deliver policies
or certificates thereof to Landlord prior to their effective date (and, with
respect to any renewal policy, prior to the expiration of the existing policy).
All such policies shall provide Landlord (and any Hotel Mortgagee if required by
the same) thirty (30) days prior written notice of any material change or
cancellation of such policy. In the event Tenant shall fail to effect such
insurance as herein required, to pay the premiums therefor or to deliver such
policies or certificates to Landlord or any Hotel Mortgagee at the times
required, Landlord shall have the right, but not the obligation, subject to the
provisions of Section 12.5, to acquire such insurance and pay the premiums
therefor, which amounts shall be payable to Landlord, upon demand, as Additional
Charges, together with interest accrued thereon at the Overdue Rate from the
date such payment is made until (but excluding) the date repaid.
9.5 Blanket Policy. Notwithstanding anything to the contrary contained in
--------------
this Article 9, Tenant's obligation to maintain the insurance herein required
---------
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant, provided, that (a) the coverage
thereby afforded will not be reduced or diminished from that which would exist
under a separate policy meeting all other requirements of this Agreement, and
(b) the requirements of this
<PAGE>
- 40 -
Article 9 are otherwise satisfied. Without limiting the foregoing, the amounts
- ---------
of insurance that are required to be maintained pursuant to Section 9.1 shall be
-----------
on a Hotel by Hotel basis, and shall not be subject to an aggregate limit,
except for flood, earthquake and umbrella coverages.
9.6 No Separate Insurance. Tenant shall not take out separate insurance,
---------------------
concurrent in form or contributing in the event of loss with that required by
this Article 9, or increase the amount of any existing insurance by securing an
---------
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of such insurance, including Landlord and all
Hotel Mortgagees, are included therein as additional insureds and the loss is
payable under such insurance in the same manner as losses are payable under this
Agreement. In the event Tenant shall take out any such separate insurance or
increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the existence of any
---------------------------
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks or rights of
way, (b) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant or anyone claiming under Tenant of
the Leased Property or Tenant's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Landlord is
made a party or participant relating to the Leased Property or Tenant's Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any Impositions
that are the obligations of Tenant to pay pursuant to the applicable provisions
of this Agreement, and (d) any failure on the part of Tenant or anyone claiming
under Tenant to perform or comply with any of the terms of this Agreement.
Tenant, at its expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Landlord (and shall not be
responsible for any duplicative attorneys' fees incurred by Landlord) or may
compromise or otherwise dispose of the same, with Landlord's prior written
consent (which consent may not be unreasonably withheld or delayed). In the
event Landlord shall unreasonably withhold or delay its consent, Tenant shall
not be
<PAGE>
- 41 -
liable pursuant to this Section 9.7 for any incremental increase in costs or
-----------
expenses resulting therefrom. The obligations of Tenant under this Section 9.7
-----------
are in addition to the obligations set forth in Section 4.3 and shall survive
-----------
the termination of this Agreement.
ARTICLE 10
-----------
CASUALTY
--------
10.1 Insurance Proceeds. Except as provided in the last clause of this
------------------
sentence, all proceeds payable by reason of any loss or damage to the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article 9 (other than the proceeds of any business interruption
---------
insurance) shall be paid directly to Landlord (subject to the provisions of
Section 10.2) and all loss adjustments with respect to losses payable to
- ------------
Landlord shall require the prior written consent of Landlord; provided, however,
-------- -------
that, so long as no Event of Default shall have occurred and be continuing, all
such proceeds less than or equal to Two Hundred Fifty Thousand Dollars
($250,000) shall be paid directly to Tenant and such losses may be adjusted
without Landlord's consent. If Tenant is required to reconstruct or repair the
Leased Property as provided herein, such proceeds shall be paid out by Landlord
from time to time for the reasonable costs of reconstruction or repair of the
Leased Property necessitated by such damage or destruction, subject to and in
accordance with the provisions of Section 10.2.4. Provided no Default or Event
--------------
of Default has occurred and is continuing, any excess proceeds of insurance
remaining after the completion of the restoration shall be paid to Tenant. In
the event that the provisions of Section 10.2.1 are applicable, the insurance
--------------
proceeds shall be retained by the party entitled thereto pursuant to Section
-------
10.2.1. All salvage resulting from any risk covered by insurance shall belong
- ------
to Landlord, provided any rights to the same have been waived by the insurer.
10.2 Damage or Destruction.
---------------------
10.2.1 Damage or Destruction of Leased Property. If, during the
----------------------------------------
Term, the Leased Property shall be totally or partially destroyed and the Hotel
located thereon is thereby rendered Unsuitable for Its Permitted Use, either
Landlord or Tenant may, by the giving of Notice thereof to the other, terminate
this Agreement, whereupon, this Agreement shall terminate and Landlord shall be
entitled to retain the insurance proceeds payable on account of such damage.
10.2.2 Partial Damage or Destruction. If, during the Term, the
-----------------------------
Leased Property shall be totally or partially destroyed
<PAGE>
- 42 -
but the Hotel is not rendered Unsuitable for Its Permitted Use, Tenant shall,
subject to Section 10.2.3, promptly restore the Hotel as provided in Section
-------------- -------
10.2.4.
- ------
10.2.3 Insufficient Insurance Proceeds. If this Agreement is not
-------------------------------
otherwise terminated pursuant to this Article 10 and the cost of the repair or
----------
restoration of the Leased Property exceeds the amount of insurance proceeds
received by Landlord and Tenant pursuant to Article 9(a), (c), (d) or, if
-----------------------------
applicable, (e), Tenant shall give Landlord Notice thereof which notice shall
- ---------------
set forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that, if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant, given within sixty
(60) days after Tenant's notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; provided, however, in such event, upon any disbursement by Landlord
-------- -------
thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In
----------------
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement by Notice to the other, whereupon, this Agreement shall terminate as
provided in Section 10.2.1. It is expressly understood and agreed, however,
--------------
that, notwithstanding anything in this Agreement to the contrary, Tenant shall
be strictly liable and solely responsible for the amount of any deductible and
shall, upon any insurable loss, pay over the amount of such deductible to
Landlord at the time and in the manner herein provided for payment of the
applicable proceeds to Landlord.
10.2.4 Disbursement of Proceeds. In the event Tenant is required to
------------------------
restore the Leased Property pursuant to Section 10.2, Tenant shall (or shall
------------
direct the Manager to) commence promptly and continue diligently to perform the
repair and restoration of the Leased Property (hereinafter called the "Work"),
----
so as to restore the Leased Property in compliance with all Legal Requirements
and so that the Leased Property shall be, to the extent practicable,
substantially equivalent in value and general utility to its general utility and
value immediately prior to such damage or destruction. Subject to the terms
hereof, Landlord shall advance the insurance proceeds and any additional amounts
payable by Landlord pursuant to Section 10.2.3 to Tenant regularly during the
--------------
repair and restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than monthly
within ten (10) Business Days after Tenant submits to Landlord a
<PAGE>
- 43 -
written requisition and substantiation therefor on AIA Forms G702 and G703 (or
on such other form or forms as may be reasonably acceptable to Landlord).
Landlord may, at its option, condition advancement of said insurance proceeds
and other amounts on (i) the absence of any Event of Default, (ii) its approval
of plans and specifications of an architect satisfactory to Landlord (which
approval shall not be unreasonably withheld, delayed or conditioned), (iii)
general contractors' estimates, (iv) architect's certificates, (v) unconditional
lien waivers of general contractors, if available, (vi) evidence of approval by
all governmental authorities and other regulatory bodies whose approval is
required and (vii) such other certificates as Landlord may, from time to time,
reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article 10
----------
during the last two (2) years of the Term shall be subject to the release of
such proceeds by any Hotel Mortgagee to Landlord. If any Hotel Mortgagee shall
be unwilling to disburse insurance proceeds in accordance with this Agreement,
Tenant shall have the right to terminate this Agreement.
Tenant's obligation to restore the Leased Property pursuant to this Article
-------
10 shall be subject to the release of available insurance proceeds by the
- --
applicable Hotel Mortgagee to Landlord or directly to Tenant and, in the event
such proceeds are insufficient, Landlord electing to make such deficiency
available therefor (and disbursement of such deficiency).
10.3 Damage Near End of Term. Notwithstanding any provisions of Section
----------------------- -------
10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property
- ------------
occurs during the last twelve (12) months of the Term (including any exercised
Extended Terms) and if such damage or destruction cannot reasonably be expected
to be fully repaired and restored prior to the date that is six (6) months prior
to the end of such Term, the provisions of Section 10.2.1 shall apply as if the
--------------
Leased Property had been totally or partially destroyed and the Hotel rendered
Unsuitable for its Permitted Use.
10.4 Tenant's Property. All insurance proceeds payable by reason of any
-----------------
loss of or damage to any of Tenant's Personal Property shall be paid to Tenant
and, to the extent necessary to repair or replace Tenant's Personal Property in
accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay
------------
the cost of repairing or replacing damaged Tenant's Personal Property.
10.5 Restoration of Tenant's Property. If Tenant is required to restore
--------------------------------
the Leased Property as hereinabove provided, Tenant shall either (a) restore all
alterations and improvements made by Tenant and Tenant's Personal Property, or
(b) replace
<PAGE>
- 44 -
such alterations and improvements and Tenant's Personal Property with
improvements or items of the same or better quality and utility in the operation
of the Leased Property.
10.6 No Abatement of Rent. This Agreement shall remain in full force and
--------------------
effect and Tenant's obligation to make all payments of Rent and to pay all other
charges as and when required under this Agreement shall remain unabated during
the Term notwithstanding any damage involving the Leased Property (provided that
Landlord shall credit against such payments any amounts paid to Landlord as a
consequence of such damage under any business interruption insurance obtained by
Tenant hereunder). The provisions of this Article 10 shall be considered an
----------
express agreement governing any cause of damage or destruction to the Leased
Property and, to the maximum extent permitted by law, no local or State statute,
laws, rules, regulation or ordinance in effect during the Term which provide for
such a contingency shall have any application in such case.
10.7 Waiver. Tenant hereby waives any statutory rights of termination
------
which may arise by reason of any damage or destruction of the Leased Property.
10.8 Effect on Other Leases. Any termination of this Agreement pursuant
----------------------
to this Article 10 shall not terminate or otherwise affect the Other Leases or
----------
Tenant's ability to extend the Other Leases pursuant to the terms and provisions
thereof.
ARTICLE 11
-----------
CONDEMNATION
------------
11.1 Total Condemnation, Etc. If either (i) the whole of the Leased
------------------------
Property shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of the Leased Property renders the Leased Property Unsuitable for Its
Permitted Use, this Agreement shall terminate and Tenant and Landlord shall seek
the Award for their interests in the Leased Property as provided in Section
-------
11.5.
- ----
11.2 Partial Condemnation. In the event of a Condemnation of less than
--------------------
the whole of the Leased Property such that the Leased Property is still suitable
for its Permitted Use, Tenant shall, to the extent of the Award actually
received by Tenant and any additional amounts disbursed by Landlord as
hereinafter provided, commence promptly and continue diligently to restore the
untaken portion of the Leased Improvements so that such Leased Improvements
shall constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
<PAGE>
- 45 -
Improvements existing immediately prior to such Condemnation, in full compliance
with all Legal Requirements, subject to the provisions of this Section 11.2. If
------------
the cost of the repair or restoration of the Leased Property exceeds the amount
of the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant given within sixty
(60) days after Tenant's Notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; provided, however, in such event, upon any disbursement by Landlord
-------- -------
thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In
----------------
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement and the entire Award shall be retained by Landlord.
Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any deficiency Landlord has agreed to disburse, to
Tenant regularly during the restoration period so as to permit payment for the
cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors' estimates, (iv) architect's certificates,
(v) unconditional lien waivers of general contractors, if available, (vi)
evidence of approval by all governmental authorities and other regulatory bodies
whose approval is required and (vii) such other certificates as Landlord may,
from time to time, reasonably require. Landlord's obligation under this Section
-------
11.2 to disburse the Award and such other amounts shall be subject to (x) the
- ----
collection thereof by Landlord and (y) during the last two (2) years of the
Term, the release of such Award by the applicable Hotel Mortgagee. Tenant's
obligation to restore the Leased Property shall be subject to the release of the
Award by the applicable Hotel Mortgagee to Landlord. If any Hotel Mortgagee
shall be unwilling to release such Award in accordance with this Agreement,
Tenant shall have the right to terminate this Agreement.
<PAGE>
- 46 -
11.3 Abatement of Rent. Other than as specifically provided in this
-----------------
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property. The provisions
of this Article 11 shall be considered an express agreement governing any
----------
Condemnation involving the Leased Property and, to the maximum extent permitted
by law, no local or State statute, law, rule, regulation or ordinance in effect
during the Term which provides for such a contingency shall have any application
in such case.
11.4 Temporary Condemnation. In the event of any temporary Condemnation
----------------------
of the Leased Property or Tenant's interest therein, this Agreement shall
continue in full force and effect and Tenant shall continue to pay, in the
manner and on the terms herein specified, the full amount of the Rent. Tenant
shall continue to perform and observe all of the other terms and conditions of
this Agreement on the part of the Tenant to be performed and observed. Provided
no Event of Default has occurred and is continuing, the entire amount of any
Award made for such temporary Condemnation allocable to the Term, whether paid
by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall,
promptly upon the termination of any such period of temporary Condemnation, at
its sole cost and expense, restore the Leased Property to the condition that
existed immediately prior to such Condemnation, in full compliance with all
Legal Requirements, unless such period of temporary Condemnation shall extend
beyond the expiration of the Term, in which event Tenant shall not be required
to make such restoration. For purposes of this Section 11.4, a Condemnation
------------
shall be deemed to be temporary if the period of such Condemnation is not
expected to, and does not, exceed twelve (12) months.
11.5 Allocation of Award. Except as provided in Section 11.4 and the
------------------- ------------
second sentence of this Section 11.5, the total Award shall be solely the
------------
property of and payable to Landlord. Any portion of the Award made for the
taking of Tenant's leasehold interest in the Leased Property, loss of business
during the remainder of the Term, the taking of Tenant's Personal Property, or
Tenant's removal and relocation expenses shall be the sole property of and
payable to Tenant (subject to the provisions of Section 11.2). In any
------------
Condemnation proceedings, Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.
11.6 Effect on Other Leases. Any termination of this Agreement pursuant
----------------------
to this Article 11 shall not terminate or otherwise affect the Other Leases or
----------
Tenant's ability to extend the Other Leases pursuant to the terms and provisions
thereof.
<PAGE>
- 47 -
ARTICLE 12
-----------
DEFAULTS AND REMEDIES
---------------------
12.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" hereunder:
----------------
(a) should Tenant fail to make any payment of the Rent or any other
sum (including, but not limited to, funding of the FF&E Reserve) payable
hereunder when due; or
(b) should Tenant fail to maintain the insurance coverages required
under Article 9 and such failure shall continue for ten (10) Business Days
---------
after Notice thereof (except that no Notice shall be required if any such
insurance coverages shall have lapsed); or
(c) should Tenant default in the due observance or performance of
any of the terms, covenants or agreements contained herein to be performed
or observed by it (other than as specified in clauses (a) and (b) above)
and such default shall continue for a period of fifteen (15) Business Days
after Notice thereof from Landlord to Tenant; provided, however, that if
-------- -------
such default is susceptible of cure but such cure cannot be accomplished
with due diligence within such period of time and if, in addition, Tenant
commences to cure or cause to be cured such default within fifteen (15)
Business Days after Notice thereof from Landlord and thereafter prosecutes
the curing of such default with all due diligence, such period of time
shall be extended to such period of time (not to exceed an additional one
hundred eighty (180) days in the aggregate) as may be necessary to cure
such default with all due diligence; or
(d) should an event of default by Tenant or any Affiliated Person as
to Tenant occur and be continuing beyond the expiration of any applicable
cure period under any of the Incidental Documents, the Other Leases or the
Management Agreement; or
(e) should there occur a final unappealable determination by
applicable state authorities of the revocation or limitation of any
material license, permit, certification or approval required for the lawful
operation of the Hotel in accordance with its Permitted Use or the loss or
material limitation of any material license, permit, certification or
approval under any other circumstances under which Tenant is required to
cease its operation of the
<PAGE>
- 48 -
Hotel in accordance with its Permitted Use at the time of such loss or
limitation; or
(f) should any material representation or warranty made by Tenant
or, at any time prior to the required assignment pursuant to Section 16.5,
------------
by the Seller (as defined in the Purchase Agreement) under or in connection
with this Agreement, any Incidental Document, the Other Leases or the
Purchase Agreement, or in any document, certificate or agreement delivered
in connection herewith or therewith prove to have been false or misleading
in any material respect on the date when made or deemed made and the same
shall continue for five (5) Business Days after Notice thereof from
Landlord; or
(g) should Tenant generally not be paying its debts as they become
due or should Tenant make a general assignment for the benefit of
creditors; or
(h) should any petition be filed by or against Tenant under the
Federal bankruptcy laws, or should any other proceeding be instituted by or
against Tenant seeking to adjudicate either a bankrupt or insolvent, or
seeking liquidation, reorganization, arrangement, adjustment or composition
of either or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for Tenant or for any substantial part of the property of
Tenant and such proceeding is not dismissed within ninety (90) days after
institution thereof, or should Tenant take any action to authorize or
effect any of the actions set forth above in this paragraph; or
(i) should Tenant cause or institute any proceeding for its
dissolution or termination, except as contemplated by or in connection with
the assignment contemplated by Section 16.5; or
------------
(j) should the estate or interest of Tenant in the Leased Property or
any part thereof be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of (x) one hundred and
twenty (120) days after commencement thereof, unless the amount in dispute
is less than $250,000, in which case Tenant shall give notice to Landlord
of the dispute but Tenant may defend in any suitable way, and (y) thirty
(30) days after receipt by Tenant of Notice thereof from Landlord (unless
Tenant shall be contesting such lien or attachment in good faith in
accordance with Article 8); or
---------
<PAGE>
- 49 -
(k) at any time after the assignment required by Section16.5, should
-----------
Tenant at any time cease to be a wholly owned direct or indirect
Subsidiary of Wyndham;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement by giving Notice thereof to Tenant
and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement shall
cease. Landlord shall have and may exercise all rights and remedies available
at law and in equity to Landlord as a result of Tenant's breach of this
Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to
any other remedies provided herein, enter upon the Leased Property or any
portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the Records, without liability for trespass or conversion
(Tenant hereby waiv ing any right to notice or hearing prior to such taking of
possession by Landlord) and sell the same at public or private sale, after
giving Tenant reasonable Notice of the time and place of any public or private
sale, at which sale Landlord or its assigns may purchase all or any portion of
Tenant's Personal Property, if any, unless otherwise prohibited by law. Unless
otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale. The
proceeds from any such disposition, less all expenses incurred in connection
with the taking of possession, holding and selling of such property (including,
reasonable attorneys' fees) shall be applied as a credit against the
indebtedness which is secured by the security interest granted in Section 7.2.
-----------
Any surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.
12.2 Remedies. None of (a) the termination of this Agreement pursuant to
--------
Section 12.1, (b) the repossession of the Leased Property or any portion
- ------------
thereof, (c) the failure of Landlord to re-let the Leased Property or any
portion thereof, nor (d) the reletting of all or any of portion of the Leased
Property, shall relieve Tenant of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or re-letting. In the
event of any such termination, Tenant shall forthwith pay to Landlord all Rent
due and payable with respect to the Leased Property through and including the
date of such termination. Thereafter, Tenant, until the end of what would have
been the Term of this Agreement in the absence of such termination, and whether
or not the Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current
<PAGE>
- 50 -
damages, the Rent and other charges which would be payable hereunder for the
remainder of the Term had such termination not occurred, less the net proceeds,
if any, of any re-letting of the Leased Property, after deducting all reasonable
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparation
for such reletting. Tenant shall pay such current damages to Landlord monthly
on the days on which the Minimum Rent would have been payable hereunder if this
Agreement had not been so terminated with respect to such of the Leased
Property.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the present value (discounted at the Interest Rate) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding twelve
calendar months, or if less than twelve calendar months have expired since the
Commencement Date, the payments required for such lesser period projected to an
annual amount) for what would be the then unexpired term of this Agreement if
the same remained in effect, over the fair market rental for the same period.
Nothing contained in this Agreement shall, however, limit or prejudice the right
of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the Leased Property or
any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms which may at Landlord's option, be equal to, less than or exceed
the period which would otherwise have constituted the balance of the Term and
may grant concessions or free rent to the extent that Landlord considers
advisable and necessary to relet the same, and (b) may make such reasonable
alterations, repairs and decorations in the Leased Property or any portion
thereof as Landlord, in its sole and absolute discretion, considers advisable
and necessary for the purpose of reletting the Leased Property; and the making
of such alterations, repairs and decorations shall not operate or be construed
to release Tenant from liability hereunder as aforesaid. Subject to the last
<PAGE>
- 51 -
sentence of this paragraph, Landlord shall in no event be liable in any way
whatsoever for any failure to relet all or any portion of the Leased Property,
or, in the event that the Leased Property is relet, for failure to collect the
rent under such reletting. To the maximum extent permitted by law, Tenant hereby
expressly waives any and all rights of redemption granted under any present or
future laws in the event of Tenant being evicted or dispossessed, or in the
event of Landlord obtaining possession of the Leased Property, by reason of the
occurrence and continuation of an Event of Default hereunder. Landlord
covenants and agrees, in the event of any termination of this Agreement as a
result of an Event of Default, to use reasonable efforts to mitigate its
damages.
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION
--------------- -------
12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A
- ------------
TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET
FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE
----------
EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT. IN ADDITION, TENANT
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT, IN THE EVENT THIS AGREEMENT IS
TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, NEITHER THE RETAINED FUNDS (AS SUCH
--------------------
TERM IS DEFINED IN THE PURCHASE AGREEMENT) SHALL NOT BE PAID OR PAYABLE (TENANT
WAIVING, ON BEHALF OF ITSELF AND ITS AFFILIATED PERSONS, ALL CLAIMS AND CAUSES
OF ACTION WITH RESPECT THERETO).
12.4 Application of Funds. Any payments received by Landlord under any of
--------------------
the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
due obligations under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of Default
-----------------------------------------
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Leased Property or any
portion thereof for such purpose and take all such action thereon as, in
Landlord's sole and absolute discretion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, together with interest thereon (to
the
<PAGE>
- 52 -
extent permitted by law) at the Overdue Rate from the date such sums are paid by
Landlord until repaid, shall be paid by Tenant to Landlord, on demand.
ARTICLE 13
-----------
HOLDING OVER
------------
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate equal
to two (2) times the Minimum Rent and other charges herein provided (prorated on
a daily basis). Tenant shall also pay to Landlord all damages (direct or
indirect) sustained by reason of any such holding over. Otherwise, such holding
over shall be on the terms and conditions set forth in this Agreement, to the
extent applicable. Nothing contained herein shall constitute the consent,
express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Agreement.
ARTICLE 14
-----------
LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT
-----------------------------------------------
14.1 Landlord Notice Obligation. Landlord shall give prompt Notice to
--------------------------
Tenant of any matters affecting the Leased Property of which Landlord receives
written notice or actual knowledge and, to the extent Tenant otherwise has no
notice or actual knowledge thereof, Landlord shall be liable for any liabilities
arising from the failure to deliver such Notice to Tenant.
14.2 Landlord's Default. If Landlord shall default in the performance or
------------------
observance of any of its covenants or obligations set forth in this Agreement or
any obligation of Landlord, if any, under any agreement affecting the Leased
Property, the performance of which is not Tenant's obligation pursuant to this
Agreement, and any such default shall continue for a period of ten (10) days
after Notice thereof with respect to monetary defaults and thirty (30) days
after Notice thereof with respect to non-monetary defaults from Tenant to
Landlord and any applicable Hotel Mortgagee, or such additional period as may be
reasonably required to correct the same, Tenant may declare the occurrence of a
"Landlord Default" by a second Notice to Landlord and to such Hotel Mortgagee.
----------------
Thereafter, Tenant may forthwith cure the same and, subject to the provisions of
the following paragraph, invoice Landlord for costs and expenses (including
reasonable attorneys' fees and court costs) incurred by Tenant in curing the
same, together with interest thereon from the date
<PAGE>
- 53 -
Landlord receives Tenant's invoice, at the Overdue Rate. Tenant shall have no
right to terminate this Agreement for any default by Landlord hereunder and no
right, for any such default, to offset or counterclaim against any Rent or other
charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof; provided, however, that in the event of any such adverse determination,
-------- -------
Landlord shall pay to Tenant interest on any disputed funds at the Interest
Rate, from the date demand for such funds was made by Tenant until the date of
final adverse determination and, thereafter, at the Overdue Rate until paid. If
Tenant and Landlord shall fail, in good faith, to resolve any such dispute
within ten (10) days after Landlord's Notice of dispute, either may submit the
matter for resolution to a court of competent jurisdiction.
ARTICLE 15
-----------
PURCHASE RIGHTS
---------------
15.1 First Refusal to Purchase. Provided, (a) no Default or Event of
-------------------------
Default shall have occurred and be continuing, (b) this Agreement shall be of
full force and effect, and (c) other than as expressly permitted by Section 16,
----------
Tenant shall not have assigned this Agreement (other than a collateral
assignment to or from a Leasehold Mortgagee or as contemplated by Section 16.5)
------------
or subleased all or any portion of the Leased Property, Tenant shall have a
first refusal option to purchase the Leased Property upon the same price, terms
and conditions as Landlord shall propose to sell the Leased Property, or upon
the same price, terms and conditions of any offer from a third party to purchase
the Leased Property which Landlord intends to accept (or has accepted subject to
Tenant's right of first refusal herein provided); provided, however, that, if
-------- -------
the proposed purchase price is for other than cash, Tenant shall have the right
to purchase the Leased Property on cash equivalent terms determined by the
agreement of the parties or, if they cannot agree within ten (10) Business Days,
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. If, during the Term, Landlord reaches such
agreement with a third party or proposes to offer the Leased Property for sale,
Landlord shall promptly give written notice to Tenant of the purchase price and
all other material terms and conditions of such agreement or proposed sale and
Tenant shall have sixty (60) days thereafter to
<PAGE>
- 54 -
exercise Tenant's option to purchase by written notice to Landlord thereof.
Failure of Tenant to respond within such 60-day period shall be deemed a waiver
of Tenant's right to purchase the Leased Property with respect to such offer
pursuant to this Section 15.1. If Tenant exercises its option, the sale to
------------
Tenant shall be consummated upon the same terms and conditions as contained in
such agreement or Landlord's notice of the proposed sale. If Tenant shall not
exercise its option to purchase within the time period and in the manner above
provided, Landlord shall be free to sell the Leased Property to such third party
at the price and upon terms substantially similar to those offered to Tenant.
The rights granted to Tenant pursuant to this Section 15.1 shall not apply to
------------
any financing or sale-leaseback transaction or any transaction pursuant to which
Landlord is merged or consolidated with another Person; provided, however, that
-------- -------
any Person who shall acquire the Leased Premises shall acquire them subject to,
and shall be bound by, the provisions of this Section 15.1.
------------
15.2 Landlord's Option to Purchase the Tenant's Personal Property;
-------------------------------------------------------------
Transfer of Licenses. Landlord shall have the option to purchase Tenant's
- --------------------
Personal Property, at the expiration or termination of this Agreement, for an
amount equal to the then net market value thereof (current replacement cost as
determined by appraisal less accumulated depreciation on Tenant's books
pertaining thereto), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, UCC-1 financing statements and
other encumbrances to which such Personal Property is subject. Upon the
expiration or sooner termination of this Agreement, Tenant shall use its best
efforts to transfer and assign to Landlord or its designee, or assist Landlord
or its designee in obtaining, any contracts, licenses, and certificates required
for the then operation of the Leased Property.
ARTICLE 16
-----------
SUBLETTING AND ASSIGNMENT
-------------------------
16.1 Subletting and Assignment. Except as provided in Section 16.3 and
------------------------- ------------
Article 19, Tenant shall not, without Landlord's prior written consent (which
- ----------
consent may be given or withheld in Landlord's sole and absolute discretion),
assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this
Agreement or sublease (which term shall be deemed to include the granting of
concessions, licenses and the like), all or any part of the Leased Property or
suffer or permit this Agreement or the leasehold estate created hereby or any
other rights arising under this Agreement to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
<PAGE>
- 55 -
voluntarily, involuntarily or by operation of law, or permit the use or
operation of the Leased Property by anyone other than Tenant and the Manager, or
the Leased Property to be offered or advertised for assignment or subletting.
From and after the assignment required by Section 16.5, for purposes of this
------------
Section 16.1, an assignment of this Agreement shall be deemed to include any
- ------------
direct or indirect transfer of any interest in Tenant such that Tenant shall
cease to be a wholly owned direct or indirect Subsidiary of Wyndham or any
transaction pursuant to which Tenant is merged or consolidated with another
Entity or pursuant to which all or substantially all of Tenant's assets are
transferred to any other Entity, as if such change in control or transaction
were an assignment of this Agreement; provided, however, that the foregoing
-------- -------
shall not be construed to prohibit collateral assignments or pledges of the
capital stock of Tenant to Lending Institutions otherwise permitted by this
Agreement.
If this Agreement is assigned or if the Leased Property or any part thereof
are sublet (or occupied by anybody other than Tenant, the Manager and their
respective employees or hotel guests) Landlord may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net amount
collected to the Rent herein reserved, but no such col lection shall be deemed a
waiver of the provisions set forth in the first paragraph of this Section 16.1,
------------
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
Tenant of its covenants, agreements or obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing primary
liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise
agree that Tenant shall be released from all obligations hereunder), and no
consent to any subletting or assignment in a particular instance shall be deemed
to be a waiver of the prohibition set forth in this Section 16.1. No assignment,
------------
subletting or occupancy shall affect any Permitted Use. Any subletting,
assignment or other transfer of Tenant's interest under this Agreement in
contravention of this Section 16.1 shall be voidable at Landlord's option.
------------
16.2 Required Sublease Provisions. Any sublease of all or any portion of
----------------------------
the Leased Property entered into on or after the date hereof shall provide (a)
that it is subject and subordinate to this Agreement and to the matters to which
this Agreement is or shall be subject or subordinate; (b) that in the event of
termination of this Agreement or reentry or dispossession of Tenant by Landlord
under this Agreement, Landlord may, at its option, terminate such sublease or
take over all of the right, title and interest of Tenant, as sublessor under
such sublease, and such subtenant shall, at Landlord's option, attorn to
<PAGE>
- 56 -
Landlord pursuant to the then executory provisions of such sublease, except that
neither Landlord nor any Hotel Mortgagee, as holder of a mortgage or as Landlord
under this Agreement, if such mortgagee succeeds to that position, shall (i) be
liable for any act or omission of Tenant under such sublease, (ii) be subject to
any credit, counterclaim, offset or defense which theretofore accrued to such
subtenant against Tenant, (iii) be bound by any previous modification of such
sublease not consented to in writing by Landlord or by any previous prepayment
of more than one (1) month's Rent, (iv) be bound by any covenant of Tenant to
undertake or complete any construction of the Leased Property or any portion
thereof, (v) be required to account for any security deposit of the subtenant
other than any security deposit actually delivered to Landlord by Tenant, (vi)
be bound by any obligation to make any payment to such subtenant or grant any
credits, except for services, repairs, maintenance and restoration provided for
under the sublease that are performed after the date of such attornment, (vii)
be responsible for any monies owing by Tenant to the credit of such subtenant,
or (viii) be required to remove any Person occupying any portion of the Leased
Property; and (c), in the event that such subtenant receives a written Notice
from Landlord or any Hotel Mortgagee stating that an Event of Default has
occurred and is continuing, such subtenant shall thereafter be obligated to pay
all rentals accruing under such sublease directly to the party giving such
Notice or as such party may direct. All rentals received from such subtenant by
Landlord or the Hotel Mortgagee, as the case may be, shall be credited against
the amounts owing by Tenant under this Agreement and such sublease shall provide
that the subtenant thereunder shall, at the request of Landlord, execute a
suitable instrument in confirmation of such agreement to attorn. An original
counterpart of each such sublease and assignment and assumption, duly executed
by Tenant and such subtenant or assignee, as the case may be, in form and
substance reasonably satisfactory to Landlord, shall be delivered promptly to
Landlord and (a) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Agreement on the
part of Tenant to be kept and performed and shall be, and become, jointly and
severally liable with Tenant for the performance thereof and (b) in case of
either an assignment or subletting, Tenant shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
------------
provisions set forth in the first paragraph of Section 16.1.
------------
16.3 Permitted Sublease. Notwithstanding the foregoing, including,
------------------
without limitation, Section 16.2, but subject to the
------------
<PAGE>
- 57 -
provisions of Section 16.4 and any other express conditions or limitations set
------------
forth herein, Tenant may, in each instance after Notice to Landlord, sublease
space at the Leased Property for newsstand, gift shop, parking garage, health
club, restaurant, bar or commissary purposes or similar concessions in
furtherance of the Permitted Use, so long as such subleases do not demise, in
the aggregate, in excess of two thousand (2,000) square feet, will not violate
or affect any Legal Requirement or Insurance Requirement, and Tenant shall
provide such additional insurance coverage applicable to the activities to be
conducted in such subleased space as Landlord and any Hotel Mortgagee may
reasonably require.
16.4 Sublease Limitation. For so long as Landlord or any Affiliated
-------------------
Person as to Landlord shall seek to qualify as a real estate investment trust,
anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by any sublessee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of such sublessee any other
formula such that any portion of such sublease rental would fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the Code, or
any similar or successor provision thereto or would otherwise disqualify
Landlord for treatment as a real estate investment trust.
16.5 Required Assignment. Upon the consummation of the initial public
-------------------
offering of the shares of WHC as currently contemplated for at least Twenty Five
Million Dollars ($25,000,000), the initial Tenant named herein shall be required
to assign its interest under this Agreement, directly or indirectly, to a
corporate subsidiary of WHC, wholly owned by WHC. Simultaneously with the
foregoing assignment, Wyndham shall execute and deliver to Landlord the Stock
Pledge Agreement, which pledge Landlord agrees to subordinate to the lien of a
Lending Institution as provided in this Agreement.
ARTICLE 17
-----------
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
----------------------------------------------
17.1 Estoppel Certificates. At any time and from time to time, upon
---------------------
not less than ten (10) Business Days prior Notice by either party, the party
receiving such Notice shall furnish to the other an Officer's Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to which the Rent has been paid, that no Default or
an Event of Default has occurred and is
<PAGE>
- 58 -
continuing or, if a Default or an Event of Default shall exist, specifying in
reasonable detail the nature thereof, and the steps being taken to remedy the
same, and such additional information as the requesting party may reasonably
request. Any such certificate furnished pursuant to this Section 17.1 may be
------------
relied upon by the requesting party, its lenders and any prospective purchaser
or mortgagee of the Leased Property or the leasehold estate created hereby.
17.2 Financial Statements.
--------------------
(a) Prior to the assignment contemplated by Section 16.5, Tenant shall
------------
furnish the following statements to Landlord:
(i) within ninety (90) days after the end of each Fiscal Year, an
audited balance sheet and operating statement for such year,
certified by an independent certified public accountant
reasonably satisfactory to Landlord and accompanied by a
Financial Officer's Certificate;
(ii) within thirty (30) days after the end of each month, an
unaudited operating statement prepared on a Hotel by Hotel
basis, including occupancy percentages and average rate,
accompanied by a Financial Officer's Certificate;
(iii) at any time and from time to time upon not less than twenty
(20) days Notice from Landlord, any financial reporting
information required to be filed by Landlord with any securities
and exchange commission, the SEC or any successor agency, or any
other governmental authority or required pursuant to any order
issued by any court, governmental authority or arbitrator in any
litigation to which Landlord is a party, for purposes of
compliance therewith; and
(iv) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of
Tenant and Wyndham as Landlord reasonably may request from time
to time.
(b) From and after the assignment contemplated by Section 16.5, Tenant
------------
shall furnish the following statements to Landlord:
(i) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Consolidated
Financials, accompanied by the Financial Officer's Certificate;
<PAGE>
- 59 -
(ii) within ninety (90) days after the end of each Fiscal Year, the
most recent Consolidated Financials for such year, certified by
an independent certified public accountant reasonably
satisfactory to Landlord and accompanied by a Financial
Officer's Certificate;
(iii) within thirty (30) days after the end of each month, an
unaudited operating statement prepared on a Hotel by Hotel
basis, including occupancy percentages and average rate,
accompanied by a Financial Officer's Certificate;
(iv) promptly after the sending or filing thereof, copies of all
reports which Tenant or Wyndham sends to its security holders
generally, and copies of all periodic reports which Tenant or
Wyndham files with the SEC or any stock exchange on which its
shares are listed or traded;
(v) at any time and from time to time upon not less than twenty (20)
days Notice from Landlord, any Consolidated Financials or any
other financial reporting information required to be filed by
Landlord with any securities and exchange commission, the SEC or
any successor agency, or any other governmental authority, or
required pursuant to any order issued by any court, governmental
authority or arbitrator in any litigation to which Landlord is a
party, for purposes of compliance therewith; and
(vi) promptly, upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of
Tenant and Wyndham as Landlord reasonably may request from time
to time.
Landlord may at any time, and from time to time, provide any Hotel Mortgagee
with copies of any of the foregoing statements.
In addition, Landlord shall have the right, from time to time at
Landlord's sole cost and expense, upon reasonable Notice, during Tenant's
customary business hours, to cause Tenant's books and records with respect to
the Leased Property to be audited by auditors selected by Landlord at the place
where such books and records are customarily kept.
17.3 General Operations. Tenant shall furnish to Landlord:
------------------
(a) Within thirty (30) days after receipt or modification thereof,
copies of all licenses authorizing
<PAGE>
- 60 -
Tenant and/or the Manager to operate the Hotel for its Permitted Use;
(b) Not less than thirty (30) days after the commencement of any
Fiscal Year, proposed annual income and ordinary expense and capital
improvement budgets setting forth projected income and costs and expenses
projected to be incurred by Tenant in managing, owning, maintaining and
operating the Hotel during the next succeeding Fiscal Year; and
(c) Promptly after receipt or sending thereof, copies of all notices
given or received by Tenant under the Management Agreement.
ARTICLE 18
----------
LANDLORD'S RIGHT TO INSPECT
---------------------------
Tenant shall permit, and shall direct the Manager to permit, Landlord
and its authorized representatives to inspect the Leased Property during usual
business hours upon not less than twenty-four (24) hours' notice and to make
such repairs as Landlord is permitted or required to make pursuant to the terms
of this Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant's use and operation
of the Leased Property and further provided that in the event of an emergency,
as determined by Landlord in its reasonable discretion, prior Notice shall not
be necessary.
ARTICLE 19
-----------
LEASEHOLD MORTGAGES
-------------------
19.1 Leasehold Mortgages Authorized. Notwithstanding anything to the
------------------------------
contrary contained herein, on one or more occasions, without Landlord's prior
consent, Tenant may grant one or more Leasehold Mortgages on its leasehold
interest to one or more Lending Institutions to secure Indebtedness permitted
hereunder.
19.2 Notices to Landlord. Promptly upon the granting of any
-------------------
Leasehold Mortgage, Tenant or the applicable Leasehold Mortgagee shall give
Notice thereof to Landlord, such notice to identify the name and address of the
Leasehold Mortgagee and to be accompanied by a copy of the applicable Leasehold
Mortgage, as recorded. In the event of a change of address of a Leasehold
Mortgagee or of any amendment to or assignment of a Leasehold Mortgage, Tenant
or the applicable Leasehold Mortgagee shall
<PAGE>
- 61 -
promptly provide notice of such new address, amendment or assignment to
Landlord, together with a copy of each such amendment or assignment.
19.3 Cure by Leasehold Mortgagee. Any Leasehold Mortgagee shall have
---------------------------
the right, at any time during the Term hereof, while this Agreement is in full
force and effect:
(a) To do any act required by Tenant hereunder, and all such acts done or
performed shall be effective as to prevent a forfeiture of Tenant's rights
hereunder as if the same had been done or performed by Tenant; and
(b) To rely on the security afforded by the leasehold estate, and to
acquire and to succeed to the interest of Tenant hereunder by foreclosure,
whether by judicial sale, by power of sale contained in any security
instrument, or by assignment of leasehold interest given in lieu of
foreclosure, and thereafter convey or assign title to the leasehold estate
so required to any other person, firm or corporation.
If the Leasehold Mortgagee or Tenant shall have furnished, in writing,
to Landlord a request for Notice of any Event of Default, in the event of any
Event of Default by Tenant, Landlord will not terminate this Lease by reason of
such Event of Default if the Leasehold Mortgagee shall, prior to the expiration
of the applicable cure period, cure any monetary Event of Default or, if such
Event of Default cannot be cured by the payment of money, provide Landlord with
a written undertaking, in form and substance satisfactory to Landlord, to
perform all covenants and obligations of Tenant under this Agreement upon
foreclosure and, thereafter, such Leasehold Mortgagee shall proceed in a timely
and diligent manner to accomplish the foreclosure of Tenant's interest under
this Agreement.
ARTICLE 20
----------
HOTEL MORTGAGES
---------------
20.1 Landlord May Grant Liens. Without the consent of Tenant,
------------------------
Landlord may, subject to the terms and conditions set forth in this Section
-------
20.1, from time to time, directly or indirectly, create or otherwise cause to
- ----
exist any lien, encumbrance or title retention agreement ("Encumbrance") upon
-----------
the Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. Notwithstanding
anything to the contrary set forth in Section 20.2, any such Encumbrance shall
------------
include the right to prepay (whether or not subject to a prepayment penalty) and
shall
<PAGE>
- 62 -
provide (subject to Section 20.2) that it is subject to the rights of Tenant
------------
under this Agreement.
20.2 Subordination of Lease. Subject to Section 20.1 and this
---------------------- ------------
Section 20.2, this Agreement, any and all rights of Tenant hereunder, are and
- ------------
shall be subject and subordinate to any ground or master lease, and all
renewals, extensions, modifications and replacements thereof, and to all
mortgages and deeds of trust, which may now or hereafter affect the Leased
Property or any improvements thereon and/or any of such leases, whether or not
such mortgages or deeds of trust shall also cover other lands and/or buildings
and/or leases, to each and every advance made or hereafter to be made under such
mortgages and deeds of trust, and to all renewals, modifications, replacements
and extensions of such leases and such mortgages and deeds of trust and all
consolidations of such mortgages and deeds of trust. This section shall be
self-operative and no further instrument of subordination shall be required
provided that Tenant has received a nondisturbance and attornment agreement from
each Superior Mortgagee, consistent with the provisions of this Section 20.2 and
------------
otherwise in form and substance reasonably satisfactory to Tenant, the benefits
of which agreement shall also extend to any Leasehold Mortgagee. In
confirmation of such subordination, Tenant shall promptly execute, acknowledge
and deliver any instrument that Landlord, the lessor under any such lease or the
holder of any such mortgage or the trustee or beneficiary of any deed of trust
or any of their respective successors in interest may reasonably request to
evidence such subordination. Any lease to which this Agreement is, at the time
referred to, subject and subordinate is herein called "Superior Lease" and the
--------------
lessor of a Superior Lease or its successor in interest at the time referred to,
is herein called "Superior Landlord" and any mortgage or deed of trust to which
-----------------
this Agreement is, at the time referred to, subject and subordinate, is herein
called "Superior Mortgage" and the holder, trustee or beneficiary of a Superior
-----------------
Mortgage is herein called "Superior Mortgagee". Tenant shall have no
------------------
obligations under any Superior Lease or Superior Mortgage other than those
expressly set forth in this Section 20.2.
------------
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement (any such person, "Successor Landlord"),
------------------
whether through possession or foreclosure action or delivery of a new lease or
deed, or otherwise, such Successor Landlord shall recognize Tenant's rights
under this Agreement as herein provided and Tenant shall attorn to and recognize
the Successor Landlord as Tenant's landlord under this Agreement and Tenant
shall promptly execute and deliver any instrument that such Successor Landlord
may reasonably request to evidence such attornment (provided that such
instrument does not alter the terms of this
<PAGE>
- 63 -
Agreement), whereupon, this Agreement shall continue in full force and effect as
a direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its
nominee or designee) shall not be (a) liable in any way to Tenant for any act or
omission, neglect or default on the part of any prior Landlord under this
Agreement, (b) responsible for any monies owing by or on deposit with any prior
Landlord to the credit of Tenant (except to the extent actually paid or
delivered to the Successor Landlord), (c) subject to any counterclaim or setoff
which theretofore accrued to Tenant against any prior Landlord, (d) bound by any
modification of this Agreement subsequent to such Superior Lease or Mortgage, or
by any previous prepayment of Minimum Rent or Additional Rent for more than one
(1) month in advance of the date due hereunder, which was not approved in
writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable
to Tenant beyond the Successor Landlord's interest in the Leased Property and
the rents, income, receipts, revenues, issues and profits issuing from the
Leased Property, (f) responsible for the performance of any work to be done by
the Landlord under this Agreement to render the Leased Property ready for
occupancy by Tenant (subject to Landlord's obligations under Section 5.1.2(b) or
----------------
with respect to any insurance or Condemnation proceeds), or (g) required to
remove any Person occupying the Leased Property or any part thereof, except if
such person claims by, through or under the Successor Landlord. Tenant agrees
at any time and from time to time to execute a suitable instrument in
confirmation of Tenant's agreement to attorn, as aforesaid and Landlord agrees
to provide Tenant with an instrument of nondisturbance and attornment from each
such Superior Mortgagee and Superior Landlord in form and substance reasonably
satisfactory to Tenant. Nothing contained in this Section 20.2 shall relieve
------------
Landlord from any liability to Tenant under this Agreement following the
exercise of remedies by a Superior Mortgage.
20.3 Notice to Mortgagee and Ground Landlord. Subsequent to the
---------------------------------------
receipt by Tenant of Notice from Landlord as to the identity of any Hotel
Mortgagee or ground lessor under a lease with Landlord, as ground lessee, which
includes the Leased Property as part of the demised premises and which complies
with Section 20.1 and 20.2 (which Notice shall be accompanied by a copy of the
---------------------
applicable mortgage or lease), no notice from Tenant to Landlord as to the
Leased Property shall be effective unless and until a copy of the same is given
to such Hotel Mortgagee or ground lessor at the address set forth in the above
described Notice, and the curing of any of Landlord's defaults by such Hotel
Mortgagee or ground lessor shall be treated as performance by Landlord.
<PAGE>
- 64 -
ARTICLE 21
----------
ADDITIONAL COVENANTS OF TENANT
------------------------------
21.1 Prompt Payment of Indebtedness. Tenant shall (a) pay or cause
------------------------------
to be paid when due all payments of principal of and premium and interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor and
rents with respect to the Leased Property, (c) pay or cause to be paid when due
all trade payables and (d) pay or cause to be paid when due all other of
Tenant's Indebtedness upon which it is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with Article 8
---------
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
21.2 Conduct of Business. Tenant shall not engage in any business
-------------------
other than the leasing and operation of the Collective Leased Properties and
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect and in good standing its corporate or partnership
existence, as applicable, and its rights and licenses necessary to conduct such
business.
21.3 Maintenance of Accounts and Records. Tenant shall keep true
-----------------------------------
records and books of account of Tenant in which full, true and correct entries
will be made of dealings and transactions in relation to the business and
affairs of Tenant in accordance with GAAP, where applicable, Tenant shall apply
accounting principles in the preparation of the financial statements of Tenant
which, in the judgment of and the opinion of its independent public accountants,
are in accordance with GAAP, where applicable, except for changes approved by
such independent public accountants. Tenant shall provide to Landlord either in
a footnote to the financial statements delivered under Section 17.2 which relate
------------
to the period in which such change occurs, or in separate schedules to such
financial statements, information sufficient to show the effect of any such
changes on such financial statements.
21.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to
--------------------------
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential uninsured liability equal to or greater than Two Hundred
Fifty Thousand Dollars ($250,000) or which, in Tenant's reasonable
<PAGE>
- 65 -
opinion, may otherwise result in any material adverse change in the business,
operations, property, prospects, results of operation or condition, financial or
other, of Tenant. Forthwith upon Tenant obtaining knowledge of any Default,
Event of Default or any default or event of default under any agreement relating
to Indebtedness for money borrowed in an aggregate amount exceeding, at any one
time, Two Hundred Fifty Thousand Dollars ($250,000), or any event or condition
that would be required to be disclosed in a current report filed by Tenant on
Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were
required to file such reports under the Securities Exchange Act of 1934, as
amended, Tenant shall furnish Notice thereof to Landlord specifying the nature
and period of existence thereof and what action Tenant has taken or is taking or
proposes to take with respect thereto.
21.5 Indebtedness of Tenant. Tenant shall not create, incur, assume
----------------------
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that payment
thereof shall not at the time be required to be made in accordance with the
provisions of Article 8;
---------
(c) Indebtedness of Tenant in respect of judgments or awards (i) which
have been in force for less than the applicable appeal period and in
respect of which execution thereof shall have been stayed pending such
appeal or review, or (ii) which are fully covered by insurance payable to
Tenant, or (iii) which are for an amount not in excess of $250,000 in the
aggregate at any one time outstanding and (x) which have been in force for
not longer than the applicable appeal period, so long as execution is not
levied thereunder or (y) in respect of which an appeal or proceedings for
review shall at the time be prosecuted in good faith in accordance with the
provisions of Article 8, and in respect of
---------
which execution thereof shall have been stayed pending such appeal or
review;
(d) unsecured borrowings of Tenant from its Affiliated Persons which
are by their terms expressly subordinate pursuant to a Subordination
Agreement to the payment and performance of Tenant's obligations under this
Agreement;
(e) Indebtedness for purchase money financing in accordance with
Section 21.9(a) and other operating
---------------
<PAGE>
- 66 -
liabilities incurred in the ordinary course of Tenant's business;
(f) Deferred fees to the Manager as provided in the Management
Agreement, provided that such fees shall be, from and after the occurrence
of a Default or Event of Default, subordinate to all amounts owing to
Landlord; or
(g) Indebtedness of any Affiliated Persons as to Tenant secured by a
Leasehold Mortgage or otherwise guaranteed by Tenant.
21.6 Financial Condition of Tenant. Tenant shall at all times
-----------------------------
maintain Tangible Net Worth (except as provided in the last clause of this
sentence) in an amount at least equal to the aggregate of one year's Minimum
Rent payable pursuant to this Agreement and the Other Leases in effect from time
to time; it being expressly understood and agreed that the sum of the Retained
Funds (as defined in the Purchase Agreement) may for such purpose be counted as
equity at the full amount thereof if such amounts are contributed to Tenant.
21.7 Distributions, Payments to Affiliated Persons, Etc. Tenant shall
---------------------------------------------------
not declare, order, pay or make, directly or indirectly, any Distributions or
any payment to any Affiliated Person of Tenant (including payments in the
ordinary course of business and payments pursuant to management agreements with
any such Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after giving
effect thereto, any Event of Default shall exist.
21.8 Prohibited Transactions. Tenant shall not permit to exist or
-----------------------
enter into any agreement or arrangement whereby it engages in a transaction of
any kind with any Affiliated Person as to Tenant, except on terms and conditions
which are commercially reasonable or as otherwise described in Wyndham's draft
prospectus for its initial public offering.
21.9 Liens and Encumbrances. Except as permitted by Section 7.1,
---------------------- -----------
Article 19 and Section 21.5, Tenant shall not create or incur or suffer to be
- ---------- ------------
created or incurred or to exist any Lien on this Agreement or any of Tenant's
assets, properties, rights or income, or any of its interest therein, now or at
any time hereafter owned, other than:
(a) Security interests securing the purchase price of equipment or
personal property whether acquired before or after the Commencement Date;
provided, however, that (i) such Lien shall at all times be confined solely
-------- -------
to the asset in question and (ii) the aggregate principal amount of
<PAGE>
- 67 -
Indebtedness secured by any such Lien shall not exceed the cost of
acquisition or construction of the property subject thereto;
(b) Permitted Encumbrances; and
(c) As permitted pursuant to Article 19 and Section 21.5.
---------- ------------
21.10 Merger; Sale of Assets; Etc. Except as otherwise permitted by
---------------------------
this Agreement, Tenant shall not (i) sell, lease (as lessor or sublessor),
transfer or otherwise dispose of, or abandon, all or any material portion of its
assets (including capital stock) or business to any Person, (ii) merge into or
with or consolidate with any other Entity, or (iii) sell, lease (as lessor or
sublessor), transfer or otherwise dispose of, or abandon, any personal property
or fixtures or any real property; provided, however, that, notwithstanding the
-------- -------
provisions of clause (iii) preceding, Tenant may dispose of equipment or
fixtures which have become inadequate, obsolete, worn-out, unsuitable,
undesirable or unnecessary, provided substitute equipment or fixtures having
equal or greater value and utility (but not necessarily having the same
function) have been provided.
ARTICLE 22
-----------
MISCELLANEOUS
-------------
22.1 Limitation on Payment of Rent. All agreements between Landlord
-----------------------------
and Tenant herein are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall
the Rent or any other amounts payable to Landlord under this Agreement exceed
the maximum permissible under applicable law, the benefit of which may be
asserted by Tenant as a defense, and if, from any circumstance whatsoever,
fulfillment of any provision of this Agreement, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, or if from any circumstances Landlord should ever receive as
fulfillment of such provision such an excessive amount, then, ipso facto, the
---- -----
amount which would be excessive shall be applied to the reduction of the
installment(s) of Minimum Rent next due and not to the payment of such excessive
amount. This provision shall control every other provision of this Agreement
and any other agreements between Landlord and Tenant.
22.2 No Waiver. No failure by Landlord or Tenant to insist upon the
---------
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the
<PAGE>
- 68 -
continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. To the maximum extent permitted by law, no waiver of any
breach shall affect or alter this Agreement, which shall continue in full force
and effect with respect to any other then existing or subsequent breach.
22.3 Remedies Cumulative. To the maximum extent permitted by law,
-------------------
each legal, equitable or contractual right, power and remedy of Landlord or
Tenant, now or hereafter provided either in this Agreement or by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.
22.4 Severability. Any clause, sentence, paragraph, section or
------------
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be invalid,
illegal or ineffective, and this Agreement shall be construed as if such
invalid, illegal or ineffective provisions had never been contained therein.
22.5 Acceptance of Surrender. No surrender to Landlord of this
-----------------------
Agreement or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing by
Landlord and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an acceptance
of any such surrender.
22.6 No Merger of Title. It is expressly acknowledged and agreed
------------------
that it is the intent of the parties that there shall be no merger of this
Agreement or of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly this Agreement
or the leasehold estate created hereby and the fee estate or ground landlord's
interest in the Leased Property.
22.7 Conveyance by Landlord. If Landlord or any successor owner of
----------------------
all or any portion of the Leased Property shall convey all or any portion of the
Leased Property in accordance with the terms hereof other than as security for a
debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall, provided such
<PAGE>
- 69 -
successor owner shall have a Tangible Net Worth of not less than Fifty Million
($50,000,000) Dollars thereupon be released from all future liabilities and
obligations of Landlord under this Agreement with respect to such of the Leased
Property arising or accruing from and after the date of such conveyance or other
transfer and all such future liabilities and obligations shall thereupon be
binding upon the new owner.
22.8 Quiet Enjoyment. Provided that no Event of Default shall have
---------------
occurred and be continuing, Tenant shall peaceably and quietly have, hold and
enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a)
any Encumbrance permitted under Article 20 or otherwise permitted to be created
----------
by Landlord hereunder provided that the holder of such Encumbrance has, to the
extent appropriate, executed a nondisturbance agreement pursuant to Section 20.2
------------
or a subordination agreement in form and substance reasonably acceptable to
Tenant, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord
that are either not yet due or which are being contested in good faith and by
proper proceedings, provided the same do not materially interfere with Tenant's
ability to operate the Hotel and (d) liens that have been consented to in
writing by Tenant. Except as otherwise provided in this Agreement, no failure
by Landlord to comply with the foregoing covenant shall give Tenant any right to
cancel or terminate this Agreement or abate, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Agreement, or to
fail to perform any other obligation of Tenant hereunder.
22.9 Memorandum of Lease. Neither Landlord nor Tenant shall record
-------------------
this Agreement. However, Landlord and Tenant shall promptly, upon the request
of the other, enter into a short form memorandum of this Agreement, in form
suitable for recording under the laws of the State in which reference to this
Agreement, and all options contained herein, shall be made. The parties shall
share equally all costs and expenses of recording such memorandum.
22.10 Notices.
-------
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall
be delivered either in hand, by telecopier with written acknowledgment of
receipt, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postpaid and registered
or certified with return
<PAGE>
- 70 -
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date
of acknowledged receipt, in the case of a notice by telecopier, and, in all
other cases, upon the date of receipt or refusal, except that whenever
under this Agreement a notice is either received on a day which is not a
Business Day or is required to be delivered on or before a specific day
which is not a Business Day, the day of receipt or required delivery shall
automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. John G. Murray
[Telecopier No. (617) 969-5730]
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Jennifer B. Clark, Esq.
[Telecopier No. (617) 338-2880]
if to Tenant to:
Wyndham Hotels and Resorts
2001 Bryan Street, Suite 2300
Dallas, Texas 75201
Attn: Ms. Anne L. Raymond
[Telecopier No. (214) 863-1262]
with a copy to:
Locke, Purnell, Rain, Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attn: Mitchell Bell, Esq.
[Telecopier No. (214) 740-8800]
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time and
at any time during the term
<PAGE>
- 71 -
of this Agreement to change their respective addresses effective upon
receipt by the other parties of such notice and each shall have the right
to specify as its address any other address within the United States of
America.
22.11 Trade Area Restriction. Neither Tenant nor any of its
----------------------
Affiliated Persons shall own, build, franchise, manage or operate any Wyndham
Garden hotel within the designated area on Exhibit D, at any time during the
---------
Term; it being expressly understood and agreed that hotels other than Wyndham
Garden hotels (e.g. full service hotels or resort hotels) are not subject to the
foregoing restriction.
22.12 Construction. Anything contained in this Agreement to the
------------
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such termination or
expiration. In no event shall Landlord be liable for any consequential damages
suffered by Tenant as the result of a breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each term or provision of this Agreement to be performed
by Tenant shall be construed as an independent covenant and condition. Time is
of the essence with respect to the exercise of any rights of Tenant under this
Agreement. Except as otherwise set forth in this Agreement, any obligations of
Tenant (including without limitation, any monetary, repair and indemnification
obligations) and Landlord shall survive the expiration or sooner termination of
this Agreement. Whenever it is provided in this Agreement that Tenant shall
direct the Manager to take any action, Tenant shall not be deemed to have
satisfied such obligation unless Tenant shall have exhausted all applicable
rights and remedies of Tenant as "Owner" under the Management Agreement.
22.13 Counterparts; Headings. This Agreement may be executed in two
----------------------
or more counterparts, each of which shall constitute an original, but which,
when taken together, shall constitute but one instrument and shall become
effective as of the date hereof when copies hereof, which, when taken together,
bear the signatures of each of the parties hereto shall have been signed.
Headings in this Agreement are for purposes of reference only and shall not
limit or affect the meaning of the provisions hereof.
22.14 Applicable Law, Etc. This Agreement shall be interpreted,
--------------------
construed, applied and enforced in accordance with
<PAGE>
- 72 -
the laws of the State applicable to contracts between residents of the State
which are to be performed entirely within the State, regardless of (i) where
this Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than the State; or (vii) any combination of the
foregoing.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State as is provided by law; and the parties consent to the jurisdiction of
said court or courts located in the State and to service of process by
registered mail, return receipt requested, or by any other manner provided by
law.
22.15 Right to Make Agreement. Each party warrants, with respect to
-----------------------
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken, or at the time of the transaction involved
shall not have been given or taken. Each party covenants that it has and will
continue to have throughout the term of this Agreement and any extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.
22.16 Non-Liability of Trustees. The Declaration of Trust of
-------------------------
Landlord, a copy of which is duly filed with the Department of Assessments and
Taxation of the State of Maryland, provides that the name "Hospitality
Properties Trust" refers to the trustees under the Declaration of Trust
collectively as trustees, but not individually or personally, and that no
trustee, officer, shareholder, employee or agent of Landlord shall be held to
any personal liability, jointly or severally, for any obligation of, or claim
against, Landlord. All persons dealing with Landlord, in any way, shall look
only to the assets of Landlord for the payment of any sum or the performance of
any obligation.
<PAGE>
- 73 -
22.17 Nonrecourse. Nothing contained in this Agreement shall be
-----------
construed to impose any liabilities or obligations on Wyndham or any of its
shareholders for the payment or performance of the obligations or liabilities of
Tenant under this Agreement.
22.18 Confidentiality. Except to prospective lenders and purchasers
---------------
or as may be required by law, the SEC or any securities and exchange commission,
Landlord shall not disclose any of Tenant's confidential or proprietary
information to any Person.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
HOSPITALITY PROPERTIES TRUST
By:
--------------------------
Its:
-------------------------
TENANT:
GARDEN HOTEL ASSOCIATES II LIMITED PARTNERSHIP
By: Garden Hotel Partners L.P.,
General Partner
By: Garden Hotel Corporation
No. 2, General Partner
By:
-------------------
Its:
---------------
<PAGE>
EXHIBIT A
---------
Annual Minimum Rent
-------------------
$ , of which $ is allocable to Leased Personal Property and
---- -----
$ of which is allocable to Leased Intangible Property.
-----
<PAGE>
EXHIBIT B
---------
Other Leases
------------
[See attached copy.]
<PAGE>
EXHIBIT C
---------
The Land
--------
[See attached copy.]
<PAGE>
EXHIBIT D
---------
Restricted Trade Area
---------------------
[See attached copy.]
