Exhibit 10.1
PROPERTY NAME
PROPERTY NUMBER
SECOND AMENDMENT
TO
LEASE AGREEMENT
This Second Amendment to Lease Agreement (the "Amendment") is entered into
as of August 15, 1999, by and between LANDLORD NAME AND ENTITY ("Landlord"),
and TENANT, a Delaware limited liability company ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into that certain Lease Agreement
dated as of December 31, 1998 (the "Original Lease"), pursuant to which Landlord
has leased to Tenant the Leased Property (as defined in the Original Lease),
which was amended by a First Addendum to Lease Agreement entered into effective
as of 11:59 p.m. on December 31, 1998 (the "First Addendum"), and by a First
Amendment to Lease Agreement dated as of January 1, 1999 (the "First
Amendment"); and
WHEREAS, the Original Lease, as amended by the First Addendum and First
Amendment, is herein collectively referred to as the "Lease"; and
WHEREAS, Landlord and Tenant desire to amend the Lease in the respects more
particularly set forth below.
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:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings ascribed such terms in the Lease.
2. Article I of the Lease is hereby amended by inserting the following
additional definitions:
"Renewal Notice" shall have the meaning given such term in Section
2.4.
"Renewal Option" shall have the meaning given such term in Section
2.4.
"Renewal Term" shall have the meaning given such term in Section 2.4.
3. Section 2.4 of the Lease is hereby deleted in its entirety and replaced
by the following:
2.4 Term.
2.4.1 Term. The term of this Lease (the "Term") shall commence on
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the Commencement Date and shall expire at 11:59 p.m. on the last day
of the ORIGINAL LEASE TERM Lease Year, unless sooner terminated
pursuant to the terms of this Lease; provided that, subject to the
terms of Article 13, the Term shall also include any period of holding
over by Tenant and any Renewal Term.
2.4.2 Renewal Option. Landlord hereby grants to Tenant the right,
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exercisable at Tenant's option, subject to Section 20.5(c) (a "Tenant
Renewal Option"), to renew the term of this Lease for RENEWAL OPTION
additional terms of seven (7) years each (each a "Renewal Term") at
the Fair Market Rental as of the commencement of each such Renewal
Term. If exercised, and if the conditions applicable thereto have been
satisfied, the first Renewal Term shall commence immediately upon the
expiration of the initial term hereof, and each succeeding Renewal
Term shall commence immediately upon the expiration of the preceding
term. The rights of renewal herein granted to Tenant shall be subject
to, and shall be exercised in accordance with, the following terms and
conditions:
(a) Tenant shall exercise its right with respect to each Renewal
Term by giving Landlord Notice thereof during the month of April of
the year immediately preceding the scheduled commencement of such
Renewal Term (the "Renewal Notice").
(b) If the Renewal Notice is not timely given with respect to
any Renewal Term, then Tenant's rights of renewal pursuant to this
Section 2.4.2 shall lapse and be of no further force or effect with
respect to all remaining Renewal Terms .
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(c) Landlord shall be entitled to terminate all unexercised
Tenant Renewal Options by providing Notice to Tenant thereof at any
time during the calendar month of March of the year immediately
preceding a year in which a Renewal Term is scheduled to commence.
(d) Landlord and Tenant shall use commercially reasonable
efforts to negotiate and jointly determine the Fair Market Rental to
be effective during any Renewal Term by no later than March 31st of
the year immediately preceding such Renewal Term. In the event
Landlord and Tenant are unable to agree on the Fair Market Rental for
a Renewal Term prior to Tenant's exercise of its Tenant Renewal
Option, the Fair Market Rental shall be determined in accordance with
the appraisal procedures set forth in Article 19 by no later than
August 1st of the year immediately preceding the applicable Renewal
Term.
(e) The components of Fair Market Rental, including Minimum Rent
and Revenue Percentages and Breakpoints, determined as set forth in
subparagraph (d), shall be set forth in revised Schedules 3.1.1 and
3.1.2, which Schedules shall, upon commencement of the applicable
Renewal Term, be attached to the Lease and shall supersede such
Schedules as were effective prior thereto.
4. A new Section 20.5 is hereby added to the Lease as follows:
20.5. Consent of Lender.
(a) Landlord shall, upon the request of Tenant at any time
during the year immediately preceding the year in which a Renewal Term
is to commence, exercise commercially reasonable efforts to obtain the
consent of any and all Facility Mortgagees, ground lessors, partners
or other third parties ("Consent Party") to the exercise of Tenant
Renewal Options, and to the change in the Rent for any Renewal Period,
if any, provided hereunder, to the extent such consent is reasonably
determined by Landlord to be required pursuant to the terms of any
Facility Mortgage, ground lease, partnership or joint venture
agreement or any other third party agreement ("Third Party
Agreement").
(b) Landlord shall exercise commercially reasonable efforts to
cause any and all Third Party Agreements hereafter entered into, as
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well as all other documents or agreements hereafter entered into in
connection with any such Third Party Agreements to permit the exercise
of Tenant Renewal Options without any Consent Party's consent.
(c) In the event that Landlord reasonably concludes and notifies
Tenant prior to the scheduled commencement of a Renewal Term that,
despite Landlord's commercially reasonable efforts to obtain the
consent of any Consent Party pursuant to this Section 20.5, the
exercise by Tenant of a Tenant Renewal Option or the change in the
Rent for any Renewal Period will cause Landlord to be in default under
the terms of the applicable Third Party Agreement, Tenant agrees that
it shall not elect to exercise a Tenant Renewal Option (and any prior
exercises shall be null and void).
5. Article 24 of the Lease is hereby deleted in its entirety and replaced
by the following:
ARTICLE 24
TERMINATION RIGHTS
24.1 Landlord's Right to Purchase or Cause an Affiliate to Purchase
Tenant's Leasehold Interest upon Sale or Tax Law Change.
(a) In the event (i) Landlord enters into a bona fide contract
to sell the Leased Property to a non-Affiliate, or (ii) of a Tax Law
Change, then, in either such event, Landlord may purchase or cause an
Affiliate to purchase Tenant's interest in this Lease by giving not
less than sixty (60) days prior Notice to Tenant of Landlord's
election to purchase or to cause an Affiliate to purchase Tenant's
interest in this Lease concurrently with or immediately prior to the
closing under such contract or upon a date specified by Landlord which
is on or after the effective date of the Tax Law Change. Landlord or
its Affiliate shall be entitled to purchase Tenant's interest in this
Lease by reason of a Tax Law Change only if Tenant's leasehold
interest in all other Pool Leases and Other Leases are concurrently
purchased, other than any other Pool Lease or Other Lease that relates
to a property that Host REIT, Host O.P. or any wholly owned Subsidiary
thereof cannot own, following such Tax Law Change, without incurring
potential adverse effects for Host REIT, Host O.P. or such Subsidiary,
unless such property is subject to a lease. (The term "Tax Law Change"
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shall mean any change in the Code (including, without limitation, a
change in the Treasury regulations promulgated thereunder), or in the
judicial or administrative interpretations of the Code, which in
Landlord's determination will permit Landlord, Host REIT, Host O.P. or
another entity in which Host REIT or Host O.P. owns substantially all
of the economic interests to operate the Facility as a hotel without
adversely affecting Host REIT's qualification for taxation as a real
estate investment trust under applicable Code provisions). Landlord,
in the event it enters into a bona fide contract to sell the Leased
Property to a non-Affiliate, and subject to the restrictions set forth
in Section 20.4, shall alternatively be permitted to transfer the
Leased Property subject to the Lease, provided, however, that the
parties shall make such reasonable modifications, if any, hereto as
shall be necessary or appropriate in connection with such transfer,
including, without limitation, termination or modification of the
Related Agreements and/or the Asset Management Agreement as they
relate to this Lease, but no amendment hereto shall (i) increase
Tenant's rental obligations or other financial obligations hereunder,
(ii) have a material adverse effect upon Tenant's rights hereunder,
(iii) materially increase Tenant's non-economic obligations hereunder,
or (iv) decrease Landlord's obligations hereunder; and provided
further that in such event Landlord shall not, without the consent of
Tenant, transfer the Leased Property or any interest therein to any
Person which (A) does not have sufficient financial resources and
liquidity to fulfill "Owner's" obligations under the Management
Agreement and Landlord's obligations under this Lease, or (B) who has
been, or is in control of, controlled by or under common control with
Persons who have been, convicted of felonies involving moral turpitude
in any state or federal court.
(b) The purchase price for Landlord's (or Landlord's
Affiliate's) purchase of Tenant's leasehold estate under this Article
24 shall be payable at closing in cash (or in the event Landlord
elects to purchase or to cause an Affiliate to purchase Tenant's
leasehold estate because of a Tax Law Change, at Landlord's option,
may also be payable in the form of stock in Host REIT) and shall be an
amount equal to the Fair Market Value of Tenant's leasehold estate
hereunder (excluding any Renewal Term, whether exercised or
unexercised) as of such closing. Alternatively, in lieu of payment of
the purchase price at such closing, at Landlord's election, Landlord
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shall have the right, exercisable not more than one (1) year prior to
the anticipated closing date and in any event not later than sixty
(60) days prior to the closing of such sale, to offer to lease to
Tenant, pursuant to one or more leases, one or more substitute hotel
facilities (a "Comparable Lease") that (A) are comparable, in Tenant's
commercially reasonable judgment, to the average quality of the
properties leased pursuant to the other Pool Leases and the Other
Leases, taking into consideration the age, physical condition,
location and other relevant factors, and (B) would create for Tenant
leasehold estates having an aggregate Fair Market Value as to that
portion of its term equal to the remaining Term (excluding any Renewal
Term, whether exercised or unexercised) hereunder of no less than the
Fair Market Value of the remaining Term hereunder (excluding any
Renewal Term, whether exercised or unexercised), both such values to
be determined as of the closing of the sale of the Leased Property. It
is the intent of the parties that the Comparable Lease shall result in
substantially the same ratio between Tenant's Operating Profit and
Rent as then exists under this Lease for the Fiscal Year immediately
preceding the sale. For the purposes of determining the Fair Market
Value for purposes of this Section 24.1 or pursuant to any other
Section of this Lease providing for such compensation of Tenant upon a
Lease termination or purchase of Tenant's leasehold estate, a discount
rate of twelve percent (12%) per annum will be used, and the annual
income for the remainder of the Term (excluding any Renewal Term,
whether exercised or unexercised) will be assumed to be equal to the
average Tenant Operating Profit generated during the three (3) Fiscal
Years immediately preceding the termination date or date of the
transfer of Tenant's leasehold estate, as applicable, or if three (3)
Fiscal Years have not elapsed since the Commencement Date, the average
during the preceding Fiscal Years that have elapsed (with the annual
income for each of such Fiscal Years escalated from the end of each
such Fiscal Year to the date of determination at the rate of inflation
before such average is determined), provided that this amount shall be
determined on a pro forma basis if the Leased Property has not
operated as a hotel for at least the preceding twelve (12) months. In
the event Landlord and Tenant are unable to agree upon the Fair Market
Value of the original leasehold estate (excluding any Renewal Term,
whether exercised or unexercised) or the proposed Comparable Lease
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leasehold estate, it shall be determined by arbitration pursuant to
the procedure set forth in Article 15. The parties agree that, if
Landlord elects to offer to enter into a Comparable Lease, to the
extent that the Fair Market Value of the Comparable Lease is less than
the Fair Market Value of the original leasehold estate, calculated as
set forth above, then Landlord shall compensate Tenant in cash for the
deficiency prior to the effective date of the transfer of Tenant's
leasehold estate.
(c) Notwithstanding the provisions of Section 24.1(b), Landlord
shall be entitled to terminate this Lease in connection with a sale or
other transfer of the Leased Property to an unrelated Person or a
Person in which Host O.P. owns, directly or indirectly, less than two-
thirds of the equity interests, without payment of any termination
fee, by giving not less than sixty (60) days prior written Notice to
Tenant, provided that the landlords under the Other Leases and the
other Pool Leases (excluding this Lease and the leases applicable to
properties commonly known as Minneapolis, MN (Airport/Bloomington),
Denver, CO (Southeast), and Saddle Brook, NJ) relating to an aggregate
of fewer than twelve (12) hotels have elected to terminate such Other
Leases or other Pool Leases (excluding this Lease and the leases
applicable to properties commonly known as Minneapolis, MN
(Airport/Bloomington) Denver, CO (Southeast) and Saddle Brook, NJ)
without payment of a termination fee.
(d) Host O.P. agrees to guarantee Landlord's obligation to pay
to Tenant the compensation for (i) termination by a Superior Mortgagee
or Superior Landlord under Section 20.2, (ii) termination of this
Lease following a Casualty pursuant to Section 10.2.3, or (iii)
termination of this Lease by Tenant by reason of Landlord's election
not to make an Award available to Tenant for restoration following a
Condemnation pursuant to Section 11.2; provided that at the time of
any such termination Landlord is a wholly owned direct or indirect
subsidiary of Host O.P., and if Landlord is then partially owned,
directly or indirectly, by Host O.P., Host O.P. shall guaranty that
portion of such compensation that represents the same percentage of
the total compensation payable as Host O.P.'s direct or indirect
percentage ownership interest in Landlord. Landlord agrees to be
exclusively responsible for (and shall reimburse Tenant for any
payment Tenant otherwise might be required to make) the Manager's
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termination fee (if any) payable to Manager because of the termination
of the Management Agreement in connection with the sale of the Leased
Property.
24.2 Tenant's Right to Terminate Lease upon Certain Events.
Notwithstanding any provision of this Lease to the contrary,
Tenant shall be entitled to terminate this Lease by giving not less
than 180 days' prior Notice to Landlord, without penalty, provided
that the Other Tenants have theretofore elected to terminate Other
Leases and other Pool Leases (excluding this Lease and the leases
applicable to the properties commonly known as Albuquerque, NM,
Greensboro, NC (High Point/Airport), Houston, TX (Medical Center),
Miami, FL (Biscayne Bay Hotel and Marina), Scottsdale, AZ (Mountain
Shadows), and Seattle, WA (SEA-TAC Airport) terminated pursuant to
Section 24.2(b) of such leases) relating to an aggregate of fewer than
twelve (12) hotels without penalty pursuant to a similar provision
contained in such Other Leases or other Pool Leases (excluding this
Lease and the leases applicable to the properties commonly known as
Albuquerque, NM, Greensboro, NC (High Point/Airport), Houston, TX
(Medical Center), Miami, FL (Biscayne Bay Hotel and Marina),
Scottsdale, AZ (Mountain Shadows), and Seattle, WA (SEA-TAC Airport)).
24.3 Termination of Lease Following Notice of Termination of
Guarantee.
At any time after a notice of termination has been given
pursuant to Section 10(a) of the Guarantee and the six-month period
specified in Section 10(a)(iii) of the Guarantee has commenced,
Landlord shall be entitled to terminate this Lease by giving Notice
thereof to Tenant, and upon expiration of the time, if any, fixed in
such Notice, this Lease shall terminate and except as otherwise
expressly provided herein the rights and obligations of the parties
under this Lease shall cease, subject to compliance with the
provisions of this Section 24.3. Landlord shall not be required to
pay any termination fee under this Article 24 if such termination
pursuant to this Section 24.3 occurs no later than twelve (12) months
after the date on which the six-month period specified in Section
10(a)(iii) of the Guarantee commenced; provided, however, that if the
termination occurs after such 12-month period, then Landlord shall be
required to pay Tenant a termination fee calculated as if it were the
purchase price for Tenant's leasehold interest in accordance with
Section 24.1(b). Notwithstanding the foregoing, in the event any other
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Pool Lease under which there does not then exist a default by the
Other Tenant thereunder beyond the applicable notice and cure period,
is terminated pursuant to a provision similar to the foregoing,
Landlord's right to terminate this Lease under this Section 24.3
without payment of a termination fee shall be conditioned upon
termination of this Lease and all other Pool Leases no later than four
(4) months after the earliest date on which termination of this Lease
or any other Pool Lease pursuant to this Section 24.3 becomes
effective. The provisions of this 24.3 shall be in addition to, and
not in lieu of, the right of Landlord to terminate this Lease by
reason of the occurrence of an Event of Default hereunder pursuant to
the provisions of Article 12, without regard to the time limits or
other provisions of this Section 24.3.
24.4 Effect of Termination.
Effective upon the date of closing of the sale of Tenant's
interest in this Lease or upon the termination date as set forth in
any Notice provided by the terminating party pursuant to this Article
24, Tenant's rights and obligations under this Lease shall terminate
and be of no further force and effect (and, if this Lease is
terminated, Landlord's rights and obligations hereunder shall likewise
terminate) except as to any obligations of the parties existing as of
such date that survive termination of this Lease or transfer of
Tenant's leasehold interest under this Lease, and all Rent, including
Percentage Rent and Additional Charges, shall be adjusted as of the
closing or termination date.
Wherever occurring in this Lease, the phrase "expiration or
earlier termination of this Lease," or the phrase "expiration or
earlier termination of the Term," or any similar language of
comparable effect, is hereby deemed to include the termination,
effective upon the date of closing, of Tenant's interest in the
leasehold estate evidenced by this Lease by virtue of a transfer of
Tenant's leasehold interest under this Lease to Landlord or Landlord's
affiliate under this Article 24.
6. To the extent that the execution and delivery of this Amendment violate
the terms of any Third Party Agreement (as defined herein) in existence on the
date hereof, neither Tenant nor Landlord shall be deemed to have any rights or
obligations created hereby unless and until the consent of the applicable
Consent Party is obtained, for so long as such Third Party Agreement remains in
effect.
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7. Except as amended hereby, the Lease remains unmodified and in full
force and effect in accordance with its terms.
8. This Amendment may be executed in counterpart copies, each complete set
of which shall constitute an original instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
LANDLORD:
LANDLORD NAME AND ENTITY
By: BY
By:
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Name: Donald D. Olinger
Title: Vice-President
TENANT:
TENANT,
a Delaware limited liability company
By:
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Name: John J. McMahon, Jr.
Title: Vice-President
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