MASTER LEASE CHARACTERIZATION Clause Samples
The Master Lease Characterization clause defines how the master lease agreement is to be interpreted for legal and practical purposes. Typically, it clarifies whether the lease is to be treated as a true lease or as a financing arrangement, which can affect the rights and obligations of the parties, especially in the event of bankruptcy or default. By establishing the intended legal characterization, this clause helps prevent disputes over the nature of the agreement and ensures that both parties understand the implications for ownership, risk, and control of the leased assets.
MASTER LEASE CHARACTERIZATION. A. Lessor and Lessee intend that:
(i) this Lease constitutes a single master lease of all, but not less than all, of the Properties and Equipment and that Lessor and Lessee have executed and delivered this Lease with the understanding that this Lease constitutes a unitary, unseverable instrument pertaining to all, but not less than all, of the SCS Finance II, L.P. Properties, and that neither this Lease nor the duties, obligations or rights of Lessee may be allocated or otherwise divided among the Properties and Equipment by Lessee;
(ii) this Lease is a "true lease" and not a financing lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Lease are those of a true lease; and
(iii) the business relationship created by this Lease and any related documents is solely that of a long-term commercial lease between landlord and tenant and has been entered into by both parties in reliance upon the economic and legal bargains contained herein.
B. Lessor and Lessee acknowledge and agree that the Lease Term, incl▇▇▇▇▇ ▇▇▇ term extensions provided for in this Lease, is less than the remaining economic life of each of the Properties and of the Equipment.
C. Lessee waives any claim or defense based upon the characterization of this Lease as anything other than a true lease and irrevocably waives any claim or defense which asserts that this Lease is anything other than a true lease. Lessee covenants and agrees that it will not assert that this Lease is anything but a true lease. Lessee stipulates and agrees not to challenge the validity, enforceability or characterization of the lease of the Properties and Equipment as a true lease and further stipulates and agrees that nothing contained in this Lease creates or is intended to create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like. Lessee shall support the intent of the parties that the lease of the Properties and Equipment pursuant to this Lease is a true lease and does not create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs.
D. Lessee waives any claim or defense based upon the characterization of this Lease as anything other than a master lease of all of the Pro...