Exhibit 10(qq)
LEASE AGREEMENT
Dated as of February 14, 2002
between
State Street Bank and Trust Company of Connecticut, National Association,
as owner trustee of
ZSF/Dallas Tower Trust,
a Delaware grantor trust,
as Lessor
and
TXU Properties Company,
a Texas corporation,
as Lessee
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Property:
Energy Plaza, Dallas, Texas
And Associated Garage
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS.............................................................................................1
Section 1.1. Definitions..........................................................................................1
ARTICLE 2 LEASE OF PROPERTY.......................................................................................1
Section 2.1. Demise and Lease.....................................................................................1
ARTICLE 3 RENT....................................................................................................2
Section 3.1. Base Rent............................................................................................2
Section 3.2. Supplemental Rent....................................................................................3
Section 3.3. Method of Payment....................................................................................3
Section 3.4. Late Payment.........................................................................................3
Section 3.5. Net Lease, No Setoff, Etc............................................................................3
Section 3.6. Federal Income Tax Allocation of Base Rent and Interest..............................................5
Section 3.7. True Lease...........................................................................................6
ARTICLE 4 RIGHT OF OFFER..........................................................................................6
Section 4.1. Right of Offer.......................................................................................6
Section 4.2. Non-Applicability of Section 4.1.....................................................................8
Section 4.3. Miscellaneous........................................................................................9
ARTICLE 5 RENEWAL OPTIONS.........................................................................................9
Section 5.1. Renewal Options......................................................................................9
Section 5.2. Lease Provisions Applicable During Renewal..........................................................10
ARTICLE 6 LESSEE'S ACCEPTANCE OF PROPERTY, ENFORCEMENT OF WARRANTIES.............................................10
Section 6.1. Waivers.............................................................................................10
Section 6.2. Lessee's Right to Enforce Warranties................................................................11
ARTICLE 7 LIENS..................................................................................................12
Section 7.1. Liens...............................................................................................12
ARTICLE 8 USE AND REPAIR.........................................................................................13
Section 8.1. Use.................................................................................................13
Section 8.2. Maintenance.........................................................................................13
Section 8.3. Alterations.........................................................................................14
Section 8.4. Title to Alterations................................................................................16
Section 8.5. Compliance with Law; Environmental Compliance.......................................................17
Section 8.6. Payment of Impositions..............................................................................18
Section 8.7. Adjustment of Impositions...........................................................................19
Section 8.8. Utility Charges.....................................................................................20
Section 8.9. Engineering Reports.................................................................................20
Section 8.10. Litigation; Zoning; Joint Assessment...............................................................20
Section 8.11. Fees...............................................................................................20
ARTICLE 9 INSURANCE..............................................................................................21
Section 9.1. Coverage............................................................................................21
ARTICLE 10 RETURN OF PROPERTY TO LESSOR..........................................................................22
Section 10.1. Return of Property to Lessor.......................................................................22
ARTICLE 11 ASSIGNMENT BY LESSEE..................................................................................23
Section 11.1. Assignment by Lessee...............................................................................23
ARTICLE 12 LOSS; DESTRUCTION; CONDEMNATION OR DAMAGE.............................................................24
Section 12.1. Event of Loss......................................................................................24
Section 12.2. Application of Payments Upon an Event of Loss When Lease Continues.................................29
Section 12.3. Application of Payments Not Relating to an Event of Loss...........................................29
Section 12.4. Other Dispositions.................................................................................30
Section 12.5. Negotiations.......................................................................................32
ARTICLE 13 INTENTIONALLY OMITTED.................................................................................32
ARTICLE 14 SUBLEASE..............................................................................................32
Section 14.1. Subleasing Permitted; Lessee Remains Obligated.....................................................32
Section 14.2. Provisions of Subleases............................................................................33
Section 14.3. Assignment of Sublease Rents.......................................................................33
ARTICLE 15 INSPECTION............................................................................................34
Section 15.1. Inspection.........................................................................................34
ARTICLE 16 LEASE EVENTS OF DEFAULT...............................................................................35
Section 16.1. Lease Events of Default............................................................................35
ARTICLE 17 ENFORCEMENT...........................................................................................36
Section 17.1. Remedies...........................................................................................36
Section 17.2. Survival of Lessee's Obligations...................................................................38
Section 17.3. Remedies Cumulative; No Waiver; Consents; Mitigation of Damages....................................39
ARTICLE 18 RIGHT TO PERFORM FOR LESSEE...........................................................................39
Section 18.1. Right to Perform for Lessee........................................................................39
ARTICLE 19 NDEMNITIES............................................................................................40
Section 19.1. General Indemnification............................................................................40
Section 19.2. General Tax Indemnification........................................................................42
Section 19.3. Withholdings of Rent...............................................................................52
ARTICLE 20 LESSEE REPRESENTATIONS AND COVENANTS..................................................................53
Section 20.1. Representations and Warranties.....................................................................53
ARTICLE 21 EARLY TERMINATION.....................................................................................55
Section 21.1. Early Termination..................................................................................55
ARTICLE 22 PURCHASE PROCEDURE....................................................................................57
Section 22.1. Purchase Procedure.................................................................................57
ARTICLE 23 TRANSFER OF LESSOR'S INTEREST.........................................................................58
Section 23.1. Permitted Transfer.................................................................................58
Section 23.2. Effects of Transfer................................................................................58
ARTICLE 24 PERMITTED FINANCING...................................................................................59
Section 24.1. Financing During Term..............................................................................59
Section 24.2. Lessee's Consent to Assignment for Indebtedness....................................................59
ARTICLE 25 MISCELLANEOUS.........................................................................................61
Section 25.1. Memorandum.........................................................................................61
Section 25.2. Binding Effect; Successors and Assigns; Survival...................................................61
Section 25.3. Quiet Enjoyment....................................................................................62
Section 25.4. Notices............................................................................................62
Section 25.5. Severability.......................................................................................62
Section 25.6. Amendments, Complete Agreements....................................................................62
Section 25.7. Headings...........................................................................................63
Section 25.8. Counterparts.......................................................................................63
Section 25.9. Governing Law......................................................................................63
Section 25.10. Surety Privity Agreement..........................................................................63
Section 25.11. Estoppel Certificates.............................................................................64
Section 25.12. Easements.........................................................................................64
Section 25.13. No Joint Venture..................................................................................65
Section 25.14. No Accord and Satisfaction........................................................................65
Section 25.15. No Merger.........................................................................................65
Section 25.16. Lessor Bankruptcy.................................................................................65
Section 25.17. Naming and Signage of the Property................................................................65
Section 25.18. Expenses..........................................................................................65
Section 25.19. Investments.......................................................................................66
Section 25.20. Further Assurances................................................................................66
Section 25.21. Conveyance Expenses...............................................................................66
Section 25.22. Independent Covenants.............................................................................66
Section 25.23. Lessor Exculpation................................................................................66
Section 25.24. Remedies Cumulative...............................................................................67
Section 25.25. Holding Over......................................................................................67
Section 25.26. Survival..........................................................................................67
Section 25.27. State Specific Provisions.........................................................................67
Section 25.28. Lease Subordinate.................................................................................68
Section 25.29. Lessor Representations............................................................................68
Section 25.30. Servicer Acting on Behalf of Indenture Trustee....................................................68
Appendix A -- Definitions
Schedule 3.1 -- Rental Payments
Schedule 9.1 -- Insurance Requirements
Schedule 12.1 -- Stipulated Loss Values
Schedule 14.1 -- Existing Subleases
Schedule 20.1(m) Local Law Compliance
Schedule 21.1 -- Termination Values
Schedule 25.26 -- State Specific Provisions
Exhibit A -- Description of Land
Exhibit B -- Form of Estoppel Agreement
THIS LEASE AGREEMENT (this "Agreement") is made and entered into as of
February 14, 2002, by and between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee of ZSF/Dallas Tower Trust, a
Delaware grantor trust, as Lessor ("Lessor"), having its principal place of
business at c/o State Street Bank and Trust Company, 0 Xxxxxx xx Xxxxxxxxx, 0xx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and TXU Properties Company, a Texas
corporation ("Lessee"), having a place of business at 0000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxx 00000.
RECITALS
A. Lessor is the current owner of the Property, having acquired the
Property from Lessee;
X. Xxxxxx desires to let and lease to Lessee, and Lessee desires to
hire and take from Lessor, the Property;
X. Xxxxxx desires to grant and delegate to Lessee, and Lessee desires
to accept and assume from Lessor, certain rights and duties as described in this
Agreement;
TERMS
NOW THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. The capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof.
ARTICLE 2
LEASE OF PROPERTY
Section 2.1. Demise and Lease. (a) Lessor hereby demises and leases the
Property to Lessee, and Lessee does hereby rent and lease the Property from
Lessor, for the Base Term and, subject to the exercise by Lessee of its renewal
options as provided in Article 5 hereof, for the Renewal Terms.
(b) Lessee may from time to time own or hold under lease or license,
from Persons other than Lessor, Lessee's Equipment and Personalty, located on or
about the Property, which shall not be subject to this Lease. Lessor shall from
time to time, upon the reasonable request of Lessee, and at Lessee's cost,
promptly acknowledge in writing to Lessee or other Persons that Lessor does not
own or, except as provided in Article 10, have any other right or interest in or
to such furniture, equipment and personal property, including Lessee's Equipment
and Personalty, and Lessor hereby waives any such right, title or interest.
ARTICLE 3
RENT
Section 3.1. Base Rent. Lessee shall pay to Lessor Base Rent on each Rent
Payment Date during the Base Term in the amount set forth in the "Base Rent"
column on Schedule 3.1 attached hereto and incorporated herein, and shall pay to
Lessor Base Rent on each Rent Payment Date during any Renewal Term as prescribed
by Article 5. Notwithstanding the payment schedule for Base Rent for the Base
Term as set forth on Schedule 3.1, the amounts of rent (other than Supplemental
Rent) on account of the use of the Property which are allocated to each
semi-annual period ending on August 14 or February 14 (for purposes of this
Section 3.1 and Section 3.6, a "semi annual period") during the Base Term shall
equal the amounts set forth in the column of Schedule 3.1 titled "Allocated
Rent" for such period. To the extent the Base Rent payable in any semi-annual
period exceeds the Allocated Rent for such period, the amount of such excess
shall be treated as a reduction in the cumulative Deferred Rent ( as defined
below) for all prior semi-annual periods, and to the extent such excess exceeds
the cumulative Deferred Rent for all prior semi-annual periods (the "Prepaid
Rent"), the amount of such Prepaid Rent shall thereafter be treated as a
reduction in the amount by which the Allocated Rent for future semi-annual
periods exceeds the Base Rent payable in such semi-annual periods. To the extent
that the Allocated Rent for any semi-annual period exceeds the Base Rent payable
in such semi-annual period, the amount of such excess shall be treated as a
reduction in cumulative Prepaid Rent (as defined above) for all prior
semi-annual periods, and to the extent such excess exceeds the cumulative
Prepaid Rent for all prior semi-annual periods (the "Deferred Rent"), the amount
of such Deferred Rent shall thereafter be treated as a reduction in the amount
by which the Base Rent payable in future semi-annual periods exceeds the
Allocated Rent for such semi-annul periods. Neither the Prepaid Rent nor the
Deferred Rent will bear interest. Lessor shall have no obligation to apply the
Prepaid Rent to offset any obligation of Lessee other than Lessee's liability
for Allocated Rent. Lessee shall have no obligation to make any payment to
Lessor on account of Allocated Rent other than the scheduled payments of Base
Rent. The allocation of Allocated Rent is intended to constitute a specific
allocation of rent under Treasury Regulation Section 1.467-1(c)(2)(ii)(A), and
the existence, timing, and amount of, and any adjustments to, Allocated Rent,
Prepaid Rent and Deferred Rent are intended to be utilized solely for such
purpose. Notwithstanding anything herein to the contrary, neither the existence
or amount of, or timing of adjustments to, Allocated Rent, Prepaid Rent or
Deferred Rent shall in any way affect the timing, amount or unconditional nature
of Lessee's obligations to pay Base Rent or any other amounts payable under this
Lease Agreement.
In the event of any other termination of the Lease prior to the
scheduled expiration of the Base Term, regardless of whether caused by the acts
or omissions of Lessee or otherwise, then in addition to (and not in
substitution for) any other rights and remedies to which Lessor may be entitled
under this Agreement or otherwise, Lessor shall be entitled to retain the then
unapplied portion of the Prepaid Rent in consideration for the loss incurred by
Lessor as a result of such early termination of the Lease, it being agreed by
the parties hereto that such portion of the Prepaid Rent and such other rights
and remedies to which Lessor is then entitled reflect the loss incurred by
Lessor as a result of such early termination.
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Section 3.2. Supplemental Rent. Lessee shall pay to Lessor, or to such other
Person as shall be entitled thereto in the manner contemplated herein or as
otherwise required by Lessor after written notice from Lessor, any and all
Supplemental Rent as the same shall become due and payable. In the event of
Lessee's failure to pay when due and payable any Supplemental Rent, Lessor shall
have all rights, powers and remedies provided for herein or by law or in equity
or otherwise in the case of nonpayment of Rent. Lessee shall pay as Supplemental
Rent in the manner contemplated in Section 3.3 hereof amounts equal to the
Additional Interest, if any, payable by Lessor, as Issuer, under the Secured
Notes.
Section 3.3. Method of Payment. All Base Rent and Supplemental Rent (other
than Excepted Payments which are not Base Rent) payable to Lessor shall, until
such time as the Indenture Trustee shall otherwise instruct Lessee (on at least
ten (10) Business Days' prior written notice), be paid in immediately available
funds as of the relevant payment date to the Indenture Trustee to the Rent
Collection Account as defined in the Indenture, or such other account or
accounts in the continental United States as the Indenture Trustee may from time
to time designate (on at least ten (10) Business Days' prior written notice) to
Lessee. Upon payment in full of all amounts due to the Indenture Trustee, as
reasonably evidenced to Lessee, Lessee shall accept instructions from Lessor (or
its new lender, if so instructed by Lessor) as to the payment of Base Rent and
Supplemental Rent otherwise payable to Lessor. Additional Interest to the extent
payable, shall be paid as and when Base Rent is due and payable. Each such
payment of Rent shall be made by Lessee by wire or other transfer of funds
consisting of lawful currency of the United States of America which shall be
immediately available no later than 3:00 PM at the place of receipt on the
scheduled date when such payment shall be due, unless such scheduled date shall
not be a Business Day, in which case such payment shall be made at such time on
the next succeeding Business Day, with the same force and effect as though made
on such scheduled dates. If any payment of Base Rent or Supplemental Rent is
received after 3:00 PM (at the place of receipt) on the dates when such rent is
due, such rent shall be deemed received on the next succeeding Business Day.
Section 3.4. Late Payment. If any payment of any Supplemental Rent payable to
Lessor shall be delinquent, Lessee shall pay interest thereon from the date such
payment became due and payable to the date of receipt thereof by Lessor at a
rate per annum equal to the Default Rate. If any payment of Base Rent or
Supplemental Rent (payable to anyone other than Lessor) shall be delinquent,
Lessee shall pay to the Indenture Trustee, or in the case of Supplemental Rent,
to the Person entitled thereto, as Supplemental Rent, an amount equal to the
late charges (if any) and delinquent interest actually due and payable thereon,
including any amounts due as late charges under any of the Debt Documents.
Lessee acknowledges its responsibility to pay late charges, delinquent interest
and other amounts owed to any third party by reason of Lessee's failure to pay
when due Base Rent, or Supplemental Rent owed to such party.
Section 3.5. Net Lease, No Setoff, Etc. It is the intention of the parties
hereto that the obligations of Lessee hereunder shall be separate and
independent covenants and agreements, and that Base Rent, Supplemental Rent and
all other sums payable by Lessee hereunder shall continue to be payable in all
events, and that the obligations of Lessee hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated
3
pursuant to an express provision of this Lease. This Lease is a net lease and it
is agreed and intended that Base Rent, Supplemental Rent and any other amounts
payable hereunder by Lessee shall be paid without notice, demand, counterclaim,
setoff, deduction, defense, abatement, diminution or reduction, except in the
case of notices and demands as expressly provided herein to the contrary, and
that Lessee's obligation to pay all such amounts, throughout the Base Term and
all applicable Renewal Terms, is absolute and unconditional. Under no
circumstances shall Lessor be obligated to repay Lessee, refund to Lessee, or
return to Lessee, any Base Rent, except for manifest error.
Lessee acknowledges that it accepts full risk of its being unable to occupy the
Property, by virtue of an Event of Loss, early termination or a Lease Event of
Default, or, except as set forth below in this Section 3.5, by any other reason,
despite having paid Base Rent for such period. This Lease shall not terminate
and Lessee shall not have any rights to terminate this Lease, during the Base
Term and any Renewal Terms (except as otherwise expressly provided in Section
12.1 and Article 21). Except to the extent otherwise expressly specified in
Section 12.1 and Article 21, Lessee shall not take any action to terminate,
rescind or void this Lease and the obligations and liabilities of Lessee
hereunder shall in no way be released, discharged or otherwise affected for any
reason, including without limitation: (a) any defect in the condition,
merchantability, design, quality or fitness for use of the Property or any part
thereof, or the failure of the Property to comply with all Applicable Laws,
including any inability to occupy or use the Property by reason of such
noncompliance; (b) any damage to, removal, abandonment, salvage, loss,
condemnation (except as set forth in Section 12.2 and 12.3 below), theft,
scrapping or destruction of or any requisition or taking of the Property or any
part thereof, or any environmental conditions on the Property or any property in
the vicinity of the Property; (c) any restriction, prevention or curtailment of
or interference with any use of the Property or any part thereof including
lawful eviction; (d) any defect in title to or rights to the Property or any
Lien on such title or rights to the Property other than Lessor Liens materially
adversely affecting Lessee's right to quiet enjoyment, provided that in no event
shall any such adverse effect in any way affect Lessee's obligation to pay Base
Rent so long as the Secured Notes are outstanding or to pay Supplemental Rent to
any Person other than Lessor; (e) any change, waiver, extension, indulgence or
other action or omission or breach in respect of any obligation or liability of
or by any Person; (f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to
Lessee, Lessor or any other Person, or any action taken with respect to this
Lease by any trustee or receiver of Lessee or any other Person, or by any court,
in any such proceeding; (g) any right or claim that Lessee has or might have
against any Person, including without limitation Lessor, the Indenture Trustee,
any Holder, or any vendor, manufacturer, contractor of or for the Property; (h)
any failure on the part of Lessor or any other Person to perform or comply with
any of the terms of this Lease, any other Operative Document or of any other
agreement; (i) any invalidity, unenforceability, rejection or disaffirmance of
this Lease by operation of law or otherwise against or by Lessee or Lessor or
any provision hereof or any of the other Operative Documents or any other
agreement, or any provision of any thereof; (j) the impossibility of performance
by Lessee or Lessor, or both; (k) any action by any court, administrative agency
or other Governmental Authority; (l) any interference, interruption or cessation
in the use, possession or quiet enjoyment of the Property; (m) the exercise of
any remedy, including foreclosure, under the Mortgage; (n) any action with
4
respect to this Lease (including the disaffirmance or rejection hereof) which
may be taken by Lessor or Lessee under the Federal Bankruptcy Code or by any
trustee, receiver or liquidator of Lessor or Lessee or by any court under the
Federal Bankruptcy Code or otherwise; (o) the prohibition or restriction of
Lessee's use of the Property under any Applicable Laws or otherwise; (p) the
lawful eviction of Lessee from possession of the Property, by paramount title or
otherwise; (q) any breach or default by Lessor hereunder or under any other
agreement between Lessor and Lessee; or (r) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether foreseeable or
unforeseeable, and whether or not Lessee shall have notice or knowledge of any
of the foregoing. Except as specifically set forth in Articles 12 and 21 of this
Lease, this Lease shall be noncancellable by Lessee for any reason whatsoever
and, except as expressly provided in Article 12 of this Lease, Lessee, to the
extent now or hereafter permitted by Applicable Laws, waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or surrender this
Lease or to any diminution, abatement or reduction of Rent payable hereunder.
Under no circumstances or conditions shall Lessor be expected or required to
make any payment of any kind hereunder (other than for any Lessor Liens) or have
any obligations with respect to the use, possession, control, maintenance,
alteration, rebuilding, replacing, repair, restoration or operation of all or
any part of the Property, so long as the Property or any part thereof is subject
to this Lease, and Lessee expressly waives the right to perform any such action
at the expense of Lessor whether hereunder or pursuant to any law. Lessee waives
all rights which are not expressly stated herein but which may now or hereafter
otherwise be conferred by law (i) to quit, terminate or surrender this Lease or
any of the Property; (ii) to have any setoff, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense of
or to Base Rent, Supplemental Rent, or any other sums payable under this Lease,
except as otherwise expressly provided herein; and (iii) to have any statutory
lien or offset right against Lessor or its property, provided, however, that
nothing in the foregoing disclaimer shall interfere with any claims Lessee may
now or hereafter have against Lessor in connection with a breach by Lessor of
its covenant of quiet enjoyment set forth herein.
Section 3.6. Federal Income Tax Allocation of Base Rent and Interest. Lessee
and Lessor agree and acknowledge their belief and intention that (A) the Lease
is and will be classified as a "true lease" for Federal income tax purposes, and
(B)(i) rent for the Base Term will be specifically allocated for Federal income
tax purposes as "fixed rent" within the meaning of Treasury Regulation Section
1.467-1(h)(3) in the amounts and for the periods set forth in the column of
Schedule 3.6 titled "Allocated Rent", (ii) this Lease does not constitute a
"disqualified leaseback or long-term agreement" within the meaning of Section
467(b)(4) of the Code and Treasury Regulation Section 1.467-3(b), (iii) this
Lease does not provide "adequate interest on fixed rent" under Treasury
Regulation Section 1.467-2(b), (iv) accordingly, rent for the Base Term will be
deemed to accrue under Treasury Regulation 1.467-1(b)(1) and Treasury Regulation
Section 1.467-1(d) equal to the "proportional rental amount" within the meaning
of Treasury Regulation Section 1.467-1(d)(2)(ii) and Treasury Regulation Section
1.467-2 in the amounts and for the periods set forth in the column of Schedule
3.6 titled "Proportional Rental Amount", (v) a "section 467 loan" will be deemed
to exist for Federal income tax purposes under Treasury Regulation Section
1.467-4 in the amounts and for the periods set forth in the columns of Schedule
3.6 titled "467 Loan Balance Beginning of Period" and "467 Loan Balance End of
Period", and interest will be deemed to accrue as income to the Lessee or the
5
Lessor as appropriate, on the section 467 loan under Treasury Regulation Section
1.467-4(c)(2) in the amounts and for the periods set forth in the column of
Schedule 3.6 titled "467 Interest", (vi) each of Lessee and Lessor shall make
all Federal income tax filings (and to the extent appropriate, state and local
income tax filings) on such basis, and shall diligently defend such positions in
the event of challenge by any tax authority, and (vii) if either party (or its
direct or indirect owners that are not pass through entities for Federal income
tax purposes) actually and finally realizes a net income tax benefit as a result
of any of the foregoing positions not being correct, such party shall pay to the
other party the amount of the net reduction in income taxes to such party (or
its direct or indirect owners as aforesaid) resulting from such net income tax
benefit (and from any net income tax benefit resulting from making such
payment). The party entitled to payment under the provisions of clause (B)(vii)
of this Section 3.6 shall be entitled to request verification of the amount of
the payment to which such party is entitled applying the principles of Section
19.2(g) as if the party entitled to such payment were the Lessee, and the party
required to make such payment were the Tax Indemnitee. The parties acknowledge
and agree that all obligations for Allocated Rent (and "fixed rent" in the
amount of Allocated Rent) are governed exclusively by the provisions of Section
3.1. The parties furthermore acknowledge and agree that neither the Lessee nor
the Lessor shall have any obligation to the other for the "proportional rental
amount", the "section 467 loan" or "interest" on the "section 467 loan", which
amounts shall exist only for purposes of calculating Lessor's and Lessee's
obligations for U.S. Federal income tax (and state and local income tax to the
extent such tax is calculated based upon U.S. Federal taxable income).
Section 3.7. True Lease. It is the intent of Lessor and Lessee and the
parties agree that the Lease is a true lease and that the Lease does not
represent a financing agreement. Each party shall reflect the transaction
represented hereby in all applicable books, records and reports (including
income tax filings) in a manner consistent with "true lease" treatment rather
than "financing" treatment.
ARTICLE 4
RIGHT OF OFFER
Section 4.1. Right of Offer. (a) Provided that no Lease Event of Default has
occurred and is continuing, Lessee shall have a right of first offer as
described in this Article 4 with respect to (i) any sale of the Property, or
(ii) any sale that would result in Zurich Structured Finance, Inc. or its
Affiliates ceasing to own, directly or indirectly, at least a 50% interest in
Lessor and in the profits and losses of Lessor. If Lessor or any party that owns
an interest, directly or indirectly, in Lessor (the "Offeror"), intends to offer
for sale the Property or any of the above described interests to any party
(other than to an Affiliate of such Offeror, or in connection with a Portfolio
Sale) the Offeror shall deliver to Lessee a notice (constituting an offer)
stating the sales price and all other material terms for the sale of the
Property or interest that the Offeror would accept (the "First Offer"). Lessee
shall have ninety (90) days from its receipt of the First Offer to accept the
First Offer. For purposes hereof, the ninety day period, is referred to as the
"Applicable Period". A First Offer may be accepted by Lessee or its designee.
The Offeror shall not be permitted to revoke the First Offer during the
Applicable Period, but the Applicable Period shall be deemed to be terminated
during the Applicable Period if Offeror and Lessee or its designee enter into a
purchase agreement on terms different than those contained in the First Offer.
The First Offer may be rejected by Lessee or its designee at any time.
6
If Lessee or its designee desires to accept the First Offer for the
Property, Lessee or its designee must accept the First Offer within the
Applicable Period and must enter into a purchase agreement with the Offeror for
the purchase and sale of the Property by the date which is thirty (30) days
after the earlier of (x) the expiration of the Applicable Period or (y) twenty
(20) days after Lessee has irrevocably accepted the First Offer. The purchase
agreement for the sale of the Property shall provide for a closing on the terms
set forth in the First Offer.
If Lessee or its designee desires to accept the First Offer for any
interest other than the sale of the Property, Lessee or its designee must accept
the First Offer within the Applicable Period and must enter into a purchase
agreement with the Offeror for the purchase and sale of the interest by the date
which is thirty (30) days after the earlier of (1) the expiration of the
Applicable Period or (2) twenty (20) days after Lessee has irrevocably accepted
the First Offer for the sale of the interest. The purchase agreement shall
provide for a closing on the terms set forth in the First Offer.
In the event a Lease Event of Default occurs and is continuing, the
Offeror shall have no obligation to provide a First Offer to Lessee, nor shall
Lessee have any right to accept the First Offer, enter into a purchase agreement
to purchase the offered interest (or Property) or to close on such offered
interest (or Property), and any agreement executed shall so state. Lessee or its
designee may reject or accept the First Offer in its sole discretion. If the
Offeror and Lessee or its designee enter into a purchase agreement for the
Property or the offered interest, Lessee or its designee shall be bound under
this Lease to purchase from Offeror and the Offeror shall be bound under this
Lease to sell the Property or interest in accordance with the terms of the
purchase agreement. Lessor and Lessee agree to negotiate any purchase agreement
in good faith, subject to Section 4.3, below. Lessee acknowledges that Lessor
has no right to sell the Property free and clear of the Lien of the Mortgage
unless Lessor repays all debt secured by such Mortgage, and all debt evidenced
by the Debt Documents.
(b) If Lessee (or its designee) rejects the First Offer, the Offeror
may, subject to the terms hereof, offer the Property or interest for sale to
third parties at a price and on terms materially no more beneficial to the third
party than those contained in the First Offer, provided, however, that if the
Offeror desires to accept an offer from a third party (the "Offeree") at a price
that is less than ninety five percent (95%) of the price offered to Lessee
(including in all cases considering debt to be assumed), or otherwise on terms
materially more beneficial to the Offeree than those contained in the First
Offer, then the offer of such Offeree shall be deemed to be materially more
beneficial to such Offeree and the Offeror is required to re-offer the Property
or interest to the Lessee on such more beneficial terms. The provisions of this
Section 4.1 shall govern said re-offer, except that the Applicable Period shall
be deemed to be thirty (30) days, commencing on the date the re-offer is
submitted to Lessee. If the Offeror desires to accept an offer from any Offeree
for a price that is ninety five percent (95%) or more than the price offered to
Lessee, and on such other terms materially no more beneficial to the third party
than those contained in the First Offer, Offeror may enter into a bona fide
agreement to sell or assign or otherwise transfer the Property or interest to
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the Offeree, provided that if the Offeror shall not have so sold, assigned or
transferred the Property or the interest prior to the expiration of two hundred
(200) days after the expiration of the Applicable Period, the Offeror shall be
required to repeat the procedure set forth in this Section 4.1 if it still
wishes to sell the Property. If a Lease Event of Default is existing at the time
the First Offer would otherwise be sent to Lessee, or at any time during the
Applicable Period, Lessee shall have no right of first offer hereunder with
respect to such First Offer, but if no sale, assignment or transfer shall have
occurred within the time period set forth above, then Lessee's right of first
offer shall (provided there is no uncured Lease Event of Default) be reinstated
with respect to any subsequent intended sale, assignment or transfer.
(c) Provided that no Lease Event of Default has occurred and is
continuing, in the event the Offeror receives and wishes to accept an offer for
the purchase of the Property or an interest described in 4.1(a), above, and it
has not been actively marketing the Property, the Offeror must deliver to Lessee
a notice (the "First Refusal Notice") setting forth each of the material terms
of the proposed transaction, including, without limitation, the proposed
purchaser, the sales price, the closing date and the down payment amount, if
any, and the other terms for payment of the sales price. Lessee shall, for
thirty (30) days commencing upon receipt of a First Refusal Notice (the "Right
of First Refusal Period") have the exclusive right to purchase (or designate a
purchaser of) the Property or interest on the terms set forth in such First
Refusal Notice by so notifying the Offeror within the Right of First Refusal
Period, whereupon Lessee shall be bound under this Lease to purchase (or to
cause the designated purchaser to purchase) from the Offeror, and the Offeror
shall be bound under this Lease to sell to Lessee or its designee, the Property
or interest on such terms, within fifteen (15) days of such acceptance. On or
before the closing date on such right of first refusal, Lessee or its designee
and Offeror shall execute and deliver to each other a purchase agreement
containing the terms of the offer. If Lessee fails to respond to such First
Refusal Notice during the Right of First Refusal Period, Lessee shall be deemed
to have elected not to purchase the Property or interest. If a Lease Event of
Default occurs and is continuing, Lessee shall have no right to elect to
purchase the Property or interest and shall be deemed to have elected not to
purchase. If Lessee does not elect (or is deemed not to elect) to purchase the
Property or interest within the Right of First Refusal Period, and the Offeror
executes and delivers a bona-fide binding purchase contract, the Offeror may
proceed with such sale, provided that if such sale shall not be consummated
within a two hundred ten (210) day period commencing upon the expiration of the
Right of First Refusal Period, the Offeror shall be required to repeat the
procedure set forth in this Section 4.1(c) if it still wishes to consummate such
transaction.
(d) Provided that no Lease Event of Default has occurred and is
continuing, in the event of a voluntary sale of the Property by Lessor pursuant
to this Section 4.1, Lessee shall not be responsible to pay the Make-Whole
Premium if payable under the Debt Documents.
Section 4.2. Non-Applicability of Section 4.1. (a) Section 4.1 shall
not apply to (i) a conveyance or assignment to (x) an Affiliate of the Lessor
or to a Holder, Indenture Trustee, or an Affiliate of them or any subsequent
Indenture Trustee, Holder or Affiliate, (y) the purchaser at a foreclosure sale
8
in connection with the foreclosure of the Property, or (z) to any Indenture
Trustee, Holder or an Affiliate of any Indenture Trustee or Holder or the
designee of any Holder or Indenture Trustee, in connection with a deed in lieu
of foreclosure of the related Mortgage, (ii) a transfer of any interest in
Zurich Structured Finance, Inc., or (iii) any Portfolio Sale. Lessee's rights
hereunder shall survive any sale or transfer described in this Section 4.2, but
shall not be applicable to any transaction in which Lessor reacquires the
Property or interest sold pursuant to an option acquired by Lessor in connection
with such original sale or transaction.
(b) This Article 4 shall not be construed as applying to any
Refinancing or reducing or modifying in any way the restrictions on transfer set
forth in Article 23.
(c) Any purchase of the Property under this Article 4 will be subject
to the Lease, the Mortgage and Section 5.04 of the Indenture, unless the
indebtedness evidenced by the Debt Documents is repaid in full.
Section 4.3. Miscellaneous. (a) If Lessee or its designee is the
purchaser under this Article 4, then (and notwithstanding any terms of a bona
fide offer to purchase received by Lessor) such purchase shall be by special
warranty deed and general conveyance on an "as is, where is" basis without
Property representations of any sort and the Lessee or its designee, as
applicable, shall release, indemnify and hold harmless the Lessor from and
against any and all claims arising from or related to the condition of the
Property, including, but not limited to, claims arising under Environmental
Laws, except those claims arising out of the gross negligence or willful
misconduct of Lessor, or its agents (excluding Lessee) or employees. In the
event Lessee or its designee is the purchaser under this Article 4, the
purchase agreement to be entered into shall, however, contain standard
representations and warranties from seller regarding seller's good standing,
organizational power and authority to enter into and consummate the transaction,
and the representation that seller has not encumbered the Property or other
interest, as the case may be (other than Permitted Liens and liens that will be
released by seller as of the closing of the sale). Seller's representations and
warranties shall survive for a period of one year.
(b) Lessee's failure to elect to purchase the Property pursuant to
Section 4.1 hereof shall, upon the completion of a sale, assignment, conveyance,
transfer or other disposition to a third party in accordance with the terms
hereof, constitute a waiver on the part of Lessee of all of its rights under
this Article 4, and this Article 4 shall have no further force or effect.
ARTICLE 5
RENEWAL OPTIONS
Section 5.1. Renewal Options. (a) Lessor hereby grants to Lessee the
option to extend the term of this Lease for the following periods (each, a
"Renewal Term"):
(i) for a period of ten (10) years commencing on the date that
is the day after the expiration of the Base Term and ending on the
tenth (10th) anniversary of the expiration of the Base Term (the "First
Renewal Term"); and
9
(ii) for two additional terms of ten (10) years each (the
"Additional Renewal Terms"), with each Additional Renewal Term
commencing on the date that is the day after the expiration of the
preceding Renewal Term.
(b) In order to exercise its option to extend this Lease for any
Renewal Term, the following procedure shall be followed:
Lessee shall give Lessor written notice of its desire to
discuss exercising an option to extend the term of this Lease not less
than twenty (20) months prior to the expiration of the Base Term or the
then current Renewal Term, as the case may be (a "Pre-Exercise
Notice"). Lessee and Lessor shall promptly after Lessor's receipt of
such Pre-Exercise Notice, for a period not in excess of sixty (60) days
(the "Pre-Exercise Period"), attempt in good faith to agree to the Base
Rent to be paid for the then applicable Renewal Term. The Base Rent to
which the parties will attempt to agree shall be equal to 100% of the
Fair Market Rental Value anticipated to be in effect as of the
commencement date of such Renewal Term. On or before the expiration of
the Pre-Exercise Period, Lessee may serve Lessor with a notice
confirming its intent to renew (the "Intent to Renew Notice"), time
being of the essence. If Lessee fails to provide such notice, Lessee
will be deemed to have waived its right to renew this Lease. If Lessee
delivers its Intent to Renew Notice and the parties have agreed to the
Fair Market Rental Value during the Pre-Exercise Period, the agreed
rent shall become the Base Rent during the applicable Renewal Term. If
Lessee delivers its Intent to Renew Notice but the parties were unable
to agree on the Fair Market Rental Value during the Pre-Exercise
Period, the Fair Market Rental Value shall be determined by the
Appraisal Procedure. Base Rent during each Renewal Term shall be
payable monthly in advance.
(c) The right of Lessee to extend the term of this Lease for any
Renewal Term is contingent upon there not being any Lease Event of Default in
existence on the date of Lessee's exercise of such right or on the date that the
Renewal Term commences.
Section 5.2. Lease Provisions Applicable During Renewal. All the
provisions of this Lease shall be applicable during each Renewal Term except
that the number of Renewal Terms shall be correspondingly reduced.
ARTICLE 6
LESSEE'S ACCEPTANCE OF PROPERTY, ENFORCEMENT OF WARRANTIES
Section 6.1. Waivers. The Property is demised and let by Lessor "AS IS"
in its present condition, subject to (a) the rights of any parties in possession
thereof (other than rights, if any, granted by Lessor), (b) the state of the
title thereto existing at the time of the commencement of the Lease Term (other
than defects in, or exceptions to, title, if any, created by Lessor, but
including liens created by the Debt Documents), (c) any state of facts which an
accurate survey or physical inspection might show, (d) all Applicable Laws, (e)
any violations of Applicable Laws which may exist at the commencement of the
Lease Term and (f) the presence of any Hazardous Materials at or under the
Property or at or under any property in the vicinity of the Property. NONE OF
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LESSOR, INDENTURE TRUSTEE OR HOLDER OF SECURED NOTES OR ANY AFFILIATE THEREOF
HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE,
HABITABILITY, COMPLIANCE WITH ANY PLANS AND SPECIFICATIONS, CONDITION, DESIGN,
OPERATION, LOCATION, USE, DURABILITY, MERCHANTABILITY, CONDITION OF TITLE, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF) FOR ANY PARTICULAR
PURPOSE, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NONE OF LESSOR, ANY
AFFILIATE THEREOF OR ANY HOLDER OR ANY DESIGNEE THEREOF SHALL BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR FOR THE FAILURE OF THE PROPERTY TO
BE CONSTRUCTED IN ACCORDANCE WITH ANY PLANS AND SPECIFICATIONS THEREFOR, FOR THE
COMPLIANCE OF THE PLANS AND SPECIFICATIONS FOR THE PROPERTY WITH APPLICABLE LAWS
OR FOR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO OTHERWISE COMPLY
WITH ANY APPLICABLE LAWS. It is agreed that Lessee or an Affiliate of Lessee has
occupied the Property as tenant or owner immediately prior to entering into this
Lease, has inspected the Property, is satisfied with the results of its
inspections of the Property and is entering into this Lease solely on the basis
of the results of its own inspections and all risks incident to the matters
discussed in the preceding sentence. The provisions of this Article 6 have been
negotiated, and the foregoing provisions are intended to be a complete exclusion
and negation of any representations or warranties by Lessor, any Affiliate
thereof or any Holder, express or implied, with respect to the physical
condition of the Property, that may arise pursuant to any law now or hereafter
in effect, or otherwise and specifically negating any warranties under the
Uniform Commercial Code or otherwise; provided, however, that nothing in the
foregoing disclaimer shall interfere with any claims Lessee may now or hereafter
have against Lessor in connection with a breach by Lessor of its covenant of
quiet enjoyment set forth herein.
Section 6.2. Lessee's Right to Enforce Warranties. (a) Subject to
Section 6.2(b) below, Lessor hereby assigns and sets over to, and Lessee hereby
accepts the assignment of all of Lessor's right, title and interest, and estate
in, to and under, any and all warranties and other claims against dealers,
manufacturers, vendors, contractors and subcontractors relating to the
construction, use and maintenance of the Property or any portion thereof now
existing or hereafter acquired (excluding from such assignment any such
warranties and claims which by their terms are not assignable by Lessor without
loss of some or all of the benefits of such warranties or claims); provided,
however, that Lessor shall have no obligations under, or liabilities with
respect to, any such warranties and claims.
(b) Unless a Lease Event of Default shall have occurred and be
continuing, Lessor authorizes Lessee (directly or through agents) at Lessee's
expense to assert during the Lease Term, all of Lessor's rights (if any) under
any applicable warranty and any other claim that Lessee or Lessor may have
against any dealer, vendor, manufacturer, contractor or subcontractor with
respect to the Property or any portion thereof. Any amount recovered by Lessor
during a Lease Event of Default shall be applied to Lessee's obligations in such
order as Lessor (or its assignee) may elect.
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(c) Unless a Lease Event of Default shall have occurred and be
continuing, Lessor agrees, at Lessee's expense, to cooperate with Lessee and
take all other action necessary as specifically requested by Lessee to enable
Lessee to enforce all of Lessee's rights (if any) under this Section 6.2, such
rights of enforcement to be exclusive to Lessee so long as no Lease Event of
Default exists, and Lessor will not, during the Lease Term (except during the
continuance of a Lease Event of Default), amend, modify or waive, or take any
action under, any applicable warranty and any other claim that Lessee may have
under this Section 6.2 without Lessee's prior written consent. Lessee agrees at
its expense to diligently assert all of its rights under such warranties and any
other claims that the Lessee may have against such vendor, manufacturer,
contractor or subcontractor with respect to the Property or any portion thereof.
ARTICLE 7
LIENS
Section 7.1. Liens. Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to any and all of
the Property, title thereto or any interest therein, to this Lease or the
leasehold interest created hereby, or to Rent, title thereto or interest
therein, or the rentals payable with respect to the subletting of the Property,
except Permitted Liens. Lessee shall promptly, but not later than sixty (60)
days after the filing thereof, at its own expense, take such action as may be
necessary duly to discharge or eliminate or bond in a manner reasonably
satisfactory to Lessor any such Lien (other than Permitted Liens); provided,
however, Lessee may contest such Lien in good faith, upon satisfaction of the
conditions contained in Section 8.6, below, and need not discharge or bond such
Lien while so doing provided (i) Guarantor (or Lessee if there is no Guarantor)
has a long term senior unsecured debt rating equal to or above the Trigger
Rating, (ii) no action to foreclose the Lien has been brought whether in any
judicial proceeding or otherwise, and (iii) such Lien does not constitute an
Event of Default by Lessor under its Debt Documents.
NOTHING CONTAINED IN THIS LEASE SHALL BE CONSTRUED AS CONSTITUTING THE
CONSENT OR REQUEST OF LESSOR, EXPRESS OR IMPLIED, TO OR FOR THE PERFORMANCE BY
ANY CONTRACTOR, LABORER, MATERIALMAN, OR VENDOR OF ANY LABOR OR SERVICES OR FOR
THE FURNISHING OF ANY MATERIALS FOR ANY CONSTRUCTION, ALTERATION, ADDITION,
REPAIR OR DEMOLITION OF OR TO THE PROPERTY OR ANY PART THEREOF, WHICH WOULD
RESULT IN ANY LIABILITY OF LESSOR FOR PAYMENT THEREOF. NOTICE IS HEREBY GIVEN
THAT LESSOR WILL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR
TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING AN INTEREST IN THE PROPERTY OR
ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANICS OR OTHER LIENS
FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST
OF LESSOR IN AND TO THE PROPERTY.
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Notwithstanding the foregoing paragraph, Lessor agrees to reasonably
cooperate with Lessee (without exposing its interest in the Property), at no
cost to Lessor, to allow Lessee to perform alterations on the Property.
ARTICLE 8
USE AND REPAIR
Section 8.1. Use. The Property may be used ("Permitted Use") for
general office space and any other legally permitted use, except (a) for uses
which would cause the Property to become "tax-exempt use property" within the
meaning of Section 168(h) of the Code, or "tax-exempt bond financed property"
within the meaning of Section 168(g)(5) of the Code, (b) for the operation of a
public nuisance, gasoline service or filling station or any other use that
would materially increase the risk of Lessor incurring environmental liability,
(c) for any use that would make it impossible to obtain or would invalidate any
insurance policy with respect to the Property, provided such policy is required
to be maintained hereunder, (d) for any use that would violate Applicable Laws,
(e) for any use that would involve the mining for, or removal of, any oil, gas
or minerals, (f)for any use that involves the storage, handling or processing of
Hazardous Materials, except for customary amounts of office, maintenance and
cleaning materials (provided the same is at all times in compliance with all
Applicable Laws) or (g) for any use that would have a material adverse effect on
the current or residual fair market value of the Property. Lessor agrees that
Lessee may, subject to any rights of the Indenture Trustee, exercise the rights
of Lessor under any property association now existing or consented to in the
future by Lessor, provided (i) such action by Lessee complies with this Lease in
all respects, (ii) Lessee takes no action which could result in either a
violation of this Lease or a material adverse effect on the Property, and (iii)
Lessee does not encumber the Property by any lien for the payment of money,
which could survive expiration of the Lease, or execute documents on behalf of
the Lessor unless such documents will not have a material adverse affect on the
Property, or Lessor's interest therein, and relate to the normal operations of
Property.
Section 8.2. Maintenance. Lessee, acting as a prudent owner would
having a long term ownership interest in the Property, shall at all times, at
its own expense, (i) maintain the Property in a first class condition
commensurate with a Class "A" office tower of similar "vintage", reasonable wear
and tear excepted, (ii) maintain the Property in accordance with the
requirements of all insurance policies relating to the Property required to be
maintained hereunder and in compliance with Applicable Laws and (iii) make
repairs and Alterations to the Property necessary to keep the same in the
condition required by the preceding clauses (i) and (ii), whether interior or
exterior, structural or nonstructural, ordinary or extraordinary, foreseen or
unforeseen and regardless of whether such expenditures would constitute capital
expenses under GAAP if made by the owner of the Property or if the useful life
of any Alterations would exceed the remaining Lease Term; provided, if such
repairs are structural and pursuant to Section 8.3 require the consent of the
Lessor, the Servicer, acting on behalf of the Indenture Trustee, or the Surety,
Lessee shall obtain such consent before performing such repairs. At least once
annually Lessee shall deliver to Lessor Lessee's scheduled maintenance program
for the following 12 month period. If normally done as a part of preparing such
schedule, Lessee shall include the expected timing of the proposed repair or
maintenance item, and the estimated cost thereof. Lessor acknowledges that
Lessee is not bound by such schedule, which is submitted for informational
purposes only and the information contained therein shall not create any
presumption against Lessee whatsoever that the work described therein is
required to satisfy the maintenance requirements of this Lease. Lessee shall not
be bound to perform all of the work set forth on the schedule, it being
understood that delivery of the schedule neither expands nor reduces Lessee's
maintenance obligations under the Lease.
13
Section 8.3. Alterations. (a) Provided that no Lease Event of Default
has occurred and is continuing, at any time and from time to time, Lessee, at
its sole cost and expense, may make (1) non-structural Alterations to the
Property; and (2) structural Alterations to the Property costing less than
$1,000,000 (the "Threshold Amount") without notice or consent, and structural
Alterations in an amount at or above the Threshold Amount after giving prior
written notice to Lessor, the Servicer, the Indenture Trustee and the Surety,
and obtaining Lessor's, the Servicer's (acting on behalf of the Indenture
Trustee) and the Surety's prior written consent, which shall not be unreasonably
withheld, conditioned or delayed; provided that no Alteration (whether consent
is necessary or not) shall (i) impair in any material respect the utility,
remaining useful life, or current or residual fair market value of the Property,
in each case assuming that the Improvements are then being operated and
maintained in accordance with this Article 8, (ii) cause the Property to be
characterized as "limited use property" (as described in Section 5.02 of Revenue
Procedure 2001-28), (iii) remove any Nonseverable equipment now or hereafter on
the Property (unless to replace it with similar equipment), (iv) increase in any
material respect the risk of liability to the Lessor or the Indenture Trustee
under any Environmental Laws, or (v) materially and permanently reduce the
usable square footage of the Improvements, or would materially weaken,
temporarily (other than during construction or repair of the structure) or
permanently, the structure of the Improvements or any part thereof, or reduce
the permitted uses thereof under applicable zoning or land use laws so as to
materially reduce the current or residual fair market value of the Property. Any
Alterations not expressly permitted hereunder shall require Lessor's, the
Indenture Trustee's and the Surety's consent, not to be unreasonably withheld,
conditioned or delayed. The foregoing Threshold Amount shall be increased on
every annual anniversary date of the Closing Date in the same proportion that
the CPI increases over such annual period. Notwithstanding the requirements for
notice and consent set forth above, Lessee may, in good faith, make any repairs
(structural or non-structural) required by virtue of an emergency, without
satisfying any otherwise applicable notice and/or consent requirement, provided
Lessee notifies Lessor of such repair (to the extent otherwise required) as
promptly as is reasonably practical, after the emergency and obtains Lessor's,
the Servicer's (acting on behalf of the Indenture Trustee) and the Surety's
approval thereof (if consent would otherwise have been required) in the manner
required in Section 8.3(c) below, to the repairs made, and otherwise satisfies
the provisions of this Section 8.3, all as promptly as practicable. Lessor shall
approve any work already performed or being performed unless such work either
violates the terms of this Lease or violates Applicable Law.
(b) Every Alteration shall comply with the following terms (which
compliance shall be at Lessee's sole cost and expense): (i) shall be made with
drawings for non-structural Alterations and with plans prepared by a certified
architect or civil engineer who shall be licensed in the appropriate
jurisdiction to the extent required for the filing of any plans in connection
14
with any structural Alterations (which architect may be an employee of Lessee or
its Affiliates); and shall be done under the supervision of such architect or
engineer, or other reasonably capable person, and copies of any such plans for
structural Alterations in excess of the Threshold Amount as required hereunder
shall be delivered to Lessor and Indenture Trustee at the time they are
submitted for permit application (or if no permit is necessary, prior to
commencement of renovation or construction), (ii) the structural integrity of
the existing Improvements will not be materially impaired upon completion of
such work, (iii) Lessee shall obtain any licenses, approvals or permits required
(including final approvals), copies of which shall be delivered to Lessor, the
Servicer or the Indenture Trustee upon written request by such party, and (iv)
such Alterations will not encroach upon any adjacent premises. Lessor agrees to
cooperate with Lessee (at no cost to Lessor) in signing permit applications and
similar documents to the extent required for any Alteration. Lessee shall submit
such applications or similar documents to Lessor to the extent Lessor's approval
is required for the subject Alteration. Lessee may execute such applications or
similar documents on behalf of and (if necessary) in the name of, Lessor for all
Alterations for which Lessor's, the Servicer's (acting on behalf of the
Indenture Trustee) and the Surety's consent is not required, and for Alterations
for which Lessor's, the Servicer's (acting on behalf of the Indenture Trustee)
and the Surety's consent is required and has been granted, but Lessor has not
executed such documents within 20 days of request therefor, which request must
state in boldface that failure to execute such documents shall allow Lessee to
do so. Lessee shall promptly furnish Lessor with copies of all documents Lessee
has signed on behalf of Lessor. Nothing herein shall be deemed to impose any
liability or responsibility on Lessor for performance or payment of such
Alteration. Any Claim asserted against or incurred by Lessor arising out of the
foregoing shall be indemnified by Lessee pursuant to the terms of Section 19.1,
below. In connection with any Alteration, Lessee shall perform and complete all
work promptly and in a first class manner in compliance with Applicable Laws and
the plans and specifications submitted to Surety, Lessor and Indenture Trustee,
if applicable. Lessee shall either (i) maintain or cause to be maintained at all
times during construction all builder's risks insurance and comprehensive
general liability insurance required under this Lease naming Lessor, the
Indenture Trustee and such other Persons as may be required by Lessor as
additional insureds or (ii) self insure the risk otherwise insured by the
policies required in the preceding clause (i) hereof, which self insurance shall
be subject to, and available only upon satisfaction of, the provisions of
Section 9.1(b). In the event Lessor and Lessee cannot agree as to whether Lessor
unreasonably withheld its consent to a proposed Alteration, the parties agree to
submit such dispute to the American Arbitration Association in New York, for
binding resolution in accordance with its expedited arbitration procedures.
(c) With respect to such structural Alterations for which Lessee must
obtain the consent of Lessor, the Surety and the Servicer, acting on behalf of
the Indenture Trustee pursuant to the terms of this Lease, Lessor, and the
Surety shall have thirty (30) days after Lessee's delivery of its request for
consent, together with preliminary drawings and specifications for such
Alterations, within which Lessor and the Surety may grant or not grant Lessee's
request for consent which consent shall not be unreasonably withheld,
conditioned or delayed. Lessor and the Surety shall each have the right, within
fourteen (14) days of receipt by each of such request for consent, to request in
writing reasonable additional information as shall be reasonably necessary to
provide an informed response with respect to the Alterations and the foregoing
15
period of thirty (30) days shall be extended to be thirty (30) days from receipt
of such additional information. If Lessee's notice stated in bold-face type that
Lessor and the Surety must seek additional information within fourteen (14) days
from the request for consent, and Lessor, and/or the Surety shall have not
within such 30-day period (as extended), responded to Lessee, Lessee may give a
second notice which clearly shall state in bold-face type that the failure to
respond within ten (10) days shall be deemed consent. If Lessor or the Surety,
as the case may be, shall not, within ten (10) days after such second notice,
notify Lessee that such consent will not be granted (and such second notice
specified therein that the failure to respond within ten (10) days shall
constitute deemed consent), such consent shall be deemed to have been granted by
the Lessor and/or the Surety, as applicable; provided however, in no event shall
consent be deemed to have been granted by the Servicer, acting on behalf of the
Indenture Trustee, until such time if, as and when it is received in accordance
with the Debt Documents. Notwithstanding Lessor and the Surety's consent, Lessee
shall not have the right to make the proposed Alterations unless and until it
receives the consent of the Servicer, acting on behalf of the Indenture Trustee.
All reasonable out-of-pocket costs of review incurred by Lessor, the Surety and
Servicer, acting on behalf of the Indenture Trustee (whether or not the
Alteration is approved) shall be paid by Lessee within thirty (30) days of
receipt of an invoice therefore.
(d) Wherever in this Section 8.3 notice to, or consent of, Lessor, is
required, Lessee shall also be obligated to provide notice to, and/or obtain
consent of, as applicable, the Indenture Trustee, the Servicer and the Surety,
which consent shall not be unreasonably withheld or delayed.
(e) Upon completion of any Alteration, whether or not consent is
required, Lessee shall provide to Lessor a statement setting forth the actual
costs incurred by Lessee in its undertaking of any Alterations, accompanied by
copies of "as-built" or "as-marked" plans for such Alterations.
Section 8.4. Title to Alterations. Title to Alterations shall without
further act vest in Lessor and shall be deemed to constitute a part of the
Property and be subject to this Lease in the following cases:
(a) such Alteration shall be in replacement of or in substitution for a
portion of the Improvements as of the date hereof;
(b) such Alteration shall be required to be made pursuant to the terms
of Section 8.2; or
(c) such Alteration shall be Nonseverable.
Lessee shall, at Lessor's request and at Lessee's sole cost and
expense, execute and deliver any deeds or assignments reasonably requested by
Lessor to evidence the vesting of title in and to such Alterations in Lessor. If
an Alteration is not within any of the categories set forth in Section 8.4(a)
through Section 8.4(c), then title to such Alteration shall vest in Lessee and
shall be removed by Lessee to the extent required in accordance with Article 10
hereof. All Alterations to which title shall vest in Lessee as aforesaid, and
all Lessee's Equipment and Personalty, so long as removal thereof shall not
result in the violation of any Applicable Laws or this Lease, may be removed at
any time by Lessee, provided that Lessee shall, at its expense, repair any
material damage to the Property caused by the removal of such Alteration.
16
Section 8.5. Compliance with Law; Environmental Compliance. (a) Lessee,
at Lessee's expense, shall comply, and shall cause its subtenants and other
users of the Property to comply, in all material respects at all times with all
Applicable Laws, including Environmental Laws. Such compliance includes, without
limitation, Lessee's obligation, at its expense, to take Remedial Action when
required by Applicable Laws (in accordance with Applicable Laws, and this Lease)
whether such requirement is now or hereafter existing, currently known or
unknown to Lessee and/or Lessor, as and when such requirements are known to
Lessee. In the event that Lessee is required or elects to enter into any plan
relating to a Material Remedial Action in connection with the Property with
respect to any Environment Laws, Lessee shall on a quarterly basis (or more
frequently if reasonably requested by Lessor) apprise Lessor, the Servicer and
the Indenture Trustee of the status of such remediation plan and provide copies
of all correspondence, plans, proposals, contracts and other documents relating
to such plan or proposed plan. Lessee may in good faith contest the
applicability or alleged liability under any Environmental Law to the Property,
provided (i) such contest will not result in a lien, encumbrance or judgment
against the Property or Lessor, (ii) such contest satisfies the conditions set
forth in subsections 8.6(i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and
(ix) below, (iii) Lessee (or Guarantor) then has a Required Rating equal to or
greater than the Trigger Rating, and (iv) compliance with such Law will be
satisfied as of the date which is six (6) months prior to the expiration date or
earlier termination of the Lease, and if not completed by the expiration date,
Lessee will continue to remain liable to comply with such Law and at Lessor's
election shall (x) remain on the Property as a month-to-month tenant and
otherwise in compliance with the Lease, until such time as the Law has been
complied with and Final Governmental Approval for the Remedial Action has been
obtained, (y) continue to comply with such Law, but vacate the Property except
to the extent necessary to comply (Lessee agreeing that Lessor may lease or sell
the Property to another party) or (z) vacate the Property and pay Lessor or its
designee, from time to time, within 30 days of demand therefor, for the actual
costs incurred by Lessor or such designee in connection with such Remedial
Action or in complying with such Law. Lessee shall keep Lessor regularly
apprised of the status of such contest. In all events Lessee must pay any cost,
fine, penalty, assessment or other charge after the contest is either adversely
decided or terminated voluntarily by Lessee or because it no longer has the
right to contest pursuant to the terms of the Lease. In the event Guarantor (or
Lessee if there is no Guarantor) falls below the Required Rating of the Trigger
Rating, Lessee may nonetheless continue to contest the applicability of any
Environmental Law provided that, within thirty (30) days of falling below the
Required Rating, Lessee and Lessor agree upon an Approved Environmental
Consultant who shall, at Lessee's sole cost and expense, prepare a report within
sixty (60) days of being retained, which report shall state the costs the
Approved Environmental Consultant reasonably believes are likely to be incurred
by Lessee to comply with the Environmental Law in the event Lessee loses its
contest. If, within thirty (30) days of receipt of said report, Lessee deposits
with the Proceeds Trustee an amount equal to 125% of the cost estimated by the
Approved Environmental Consultant to comply with the Environmental Law, Lessee
may continue the contest, provided the other terms of this Section 8.5 are met.
In the event Lessee loses the contest and is forced to incur costs to comply
with the Environmental Law, the Proceeds Trustee shall dispense the amount
retained by it pursuant to this paragraph from time to time, in accordance with
the provisions of Section 12.4 below, with any balance remaining thereafter to
be disbursed to Lessee provided no Lease Event of Default then exists and is
continuing. Lessor and Lessee shall reasonably cooperate in selecting the
Approved Environmental Consultant.
17
(b) Lessee shall notify Lessor, the Servicer and Indenture Trustee
promptly if (i) Lessee becomes aware of the presence or Release of any Hazardous
Material at, on, under, emanating from, or migrating to, the Property in any
quantity or manner, which could reasonably be expected to violate in any
Material respect any Environmental Law or give rise to any Material liability or
the obligation to take Remedial Action or other material obligations under any
Environmental Law, or (ii) Lessee receives any written notice, claim, demand,
request for information, or other communication from a Governmental Authority or
a third party regarding the presence or Release of any Hazardous Material at,
on, under, within, emanating from, or migrating to the Property or related to
the Property which could reasonably be expected to violate in any material
respect any Environmental Law or give rise to any Material liability or
obligation to take Remedial Action or other material obligations under any
Environmental Law. In connection with any actions undertaken pursuant to this
Agreement, Lessee shall at all times comply with all applicable Environmental
Laws and with all other Applicable Laws and shall use an Approved Environmental
Consultant to perform any Remedial Action.
(c) In the event Lessee is obligated or desires to undertake any
Remedial Action on, under or about the Property, Lessee shall undertake and
complete such Remedial Action in full compliance with all Applicable Laws and
shall submit to Lessor and the Indenture Trustee copies of any applicable
documents or certificates from the applicable governmental agency confirming
that no further Remedial Action is required to be taken ("Final Governmental
Approval"), if such Final Governmental Approval is required or reasonably
available.
Section 8.6. Payment of Impositions. Lessee shall pay or cause to be
paid all Impositions before any fine, penalty, further interest (except as
provided in the fourth sentence of this Section 8.6 with respect to
installments) or cost may be assessed or added for nonpayment, such payments to
be made directly to the taxing authorities where feasible. Within thirty (30)
days after any Impositions are due, Lessee shall deliver to Lessor and the
Indenture Trustee copies of receipts, canceled checks or other documentation
reasonably satisfactory to Lessor and the Indenture Trustee evidencing payment
of Impositions relating to payment of any real estate taxes or assessments.
Lessee shall maintain in its records evidence of payment of real estate taxes
for a period of no less than four (4) years. If any such Imposition may, at the
option of the taxpayer, lawfully be paid in installments (regardless whether
interest shall accrue on the unpaid balance of such Imposition), Lessee may
exercise the option to pay the same in installments, and in such event Lessee
shall pay only those installments that become due and payable during the Lease
Term or relate to the Lease Term, as the same become due and before any fine,
penalty, further interest or cost may be assessed or added thereto. If a Lease
Event of Default shall occur and be continuing, Lessee shall pay to the
Indenture Trustee, in monthly installments in amounts equal to the real estate
taxes and assessments payable in connection with the Property to be held and
applied by the Indenture Trustee (or Lessor if it has no lender), including on
such initial payment date
18
such additional amount as shall be necessary to assure that together with the
upcoming months' installment, the full amount of each Imposition shall have been
received by the Indenture Trustee (or Lessor if it has no lender) prior to the
due date of such Imposition. Notwithstanding the foregoing, Lessee shall have
the right to contest any Imposition, subject to the following: (i) such contest
shall be at its sole cost and expense, (ii) if the Imposition being contested is
in the amount of $2,000,000.00 or more, (as such amount may be increased by
increases in the CPI in the manner contemplated in Section 8.3(a), above) Lessee
shall provide prompt notice to Lessor and Indenture Trustee of such Imposition
and contest and the grounds thereof and the Lessee (or Guarantor) then has a
Required Rating equal to or greater than the Trigger Rating (or in lieu thereof,
shall provide a bond in an amount equal to at least 125% of the contested amount
(or such higher amount as may be required by applicable law), in form and
substance, and from a company reasonably satisfactory to Lessor and the
Indenture Trustee), (iii) such contest shall be by appropriate legal proceedings
conducted in good faith and with due diligence, (iv) except for contests seeking
the refund of amounts previously paid, such contest will operate to suspend the
collection of, or other realization upon, such Imposition, from any Property or
other interest of Lessor or Indenture Trustee, or from any Rent (or otherwise
affect Lessee's obligation to pay, and Lessor's right to receive, Rent), (v)
neither such contest nor an adverse outcome therein will adversely affect the
Indenture Trustee's lien on the Property, (for purposes hereof, "adversely
affecting" being deemed to mean such lien is subject to reasonable likelihood of
extinguishment), (vi) neither such contest nor an adverse outcome therein will
materially and adversely interfere with the possession, use or occupancy or sale
of the Property, (vii) neither such contest nor an adverse outcome therein will
subject Lessor or the Indenture Trustee or any Holder to any civil or criminal
liability (other than, in the case of the Lessor, civil liability for the
amounts being contested), (viii) Lessee shall not postpone the payment of any
Imposition for such length of time as shall permit the Property to become
subject to a lien created by such item being contested that is prior to the lien
securing the Indebtedness (other than a lien of real property taxes which are
already a first lien) and (ix) no Lease Event of Default exists. Lessee shall
pay any Imposition (and related costs) promptly after forgoing any contest or
after receipt of a final adverse judgment, or if such contest is not being
performed in accordance with the terms of this Section 8.6.
Section 8.7. Adjustment of Impositions. Impositions with respect to the
Property for a billing period during which Lessee's obligation to indemnify
Lessor pursuant to this Lease expires or terminates shall be adjusted and
prorated on a daily basis between Lessor and Lessee, whether or not such
Imposition is imposed before or after such expiration or termination, and
Lessee's and Lessor's obligation to pay its pro rata share thereof shall survive
such expiration or termination (to such extent Lessor shall be obligated to
reimburse Lessee for Impositions paid by Lessee for periods after expiration of
the Lease Term). Lessor shall not have any obligation to reimburse Lessee for so
long as a Lease Event of Default is continuing. Lessor acknowledges that Lessee
may bring any tax certiorari or other actions for refunds of Impositions for
which Lessee is liable, or relating to periods prior to the commencement date of
the Term and Lessee shall be entitled to all such refunds; provided Lessee
takes no such action which could increase any Imposition for a period after the
expiration or earlier termination of the Lease. During the Term, Lessor agrees
to cooperate with Lessee in such proceedings, at no cost to Lessor.
19
Section 8.8. Utility Charges. Lessee shall pay or cause to be paid,
directly to the party entitled, all charges for electricity, power, gas, oil,
water, telephone, sanitary sewer services and all other utilities used in or on
the Property prior to and during the Lease Term, and such obligation on the part
of Lessee shall survive the expiration or earlier termination of this Lease
until all such outstanding balances for services rendered prior to or during the
term of this Lease have been paid. Any refunds of such charges attributable to
the Term shall be the property of Lessee, and provided no Lease Event of Default
is continuing, Lessor shall pay the same to Lessee promptly upon its receipt
thereof. Lessee shall have the right to select such service providers for the
Property.
Section 8.9. Engineering Reports. Lessee hereby agrees that on or
before the fifth, ninth and twelfth anniversaries of the commencement of the
Lease Term and each second year anniversary thereafter, Lessee shall forward to
Lessor and the Indenture Trustee, a copy of a recent third party engineering
report prepared by Lessee's consultant for the Property, which report shall
specify the work needed to be done to the Property to properly maintain it in
compliance with the standard set forth in Section 8.2. Lessee agrees to promptly
perform, repair or replace, as necessary, all items noted by the third party
engineer to the extent such failure to perform, repair or replace constitutes a
violation of Lessee's maintenance obligations under this Lease.
Section 8.10. Litigation; Zoning; Joint Assessment. Lessee shall give
prompt written notice to Lessor and the Indenture Trustee of any litigation or
governmental proceedings pending or threatened against Lessee or the Property,
which could reasonably be expected to materially adversely affect the condition,
use or business of the Property. Lessee shall not initiate any zoning
reclassification for the Property, or any portion thereof, or seek any variance
under any existing zoning ordinances or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other Applicable Law.
Lessee shall not initiate any proceeding to cause the Property to be jointly
assessed with any other property or with any of Lessee's Equipment and
Personalty, or take any other action or initiate any proceeding which might
cause the personal property of the Lessee to be taxed in a manner whereby such
taxes or levies could be assessed against the Property.
Section 8.11. Fees. Lessee agrees to pay directly to the party to whom
it is due, as Supplemental Rent, within thirty (30) days of receipt of an
invoice therefor, but no later than its due date: (i) all annual fees (excluding
any initial fees) due to the Indenture Trustee, grantor trustee, Servicer and
any other fees and expenses owing to the foregoing arising out of Lessee's
requests, acts, Lease Defaults or Lease Events of Default, as more specifically
set forth, if applicable, in those certain fee letters among Lessor, Lessee, the
Indenture Trustee, Servicer and Owner Trustee, as applicable. Lessee shall
cooperate with
Lessor to ensure that invoices are sent directly to Lessee. In addition
to the foregoing, Lessee acknowledges that Lessor is required from time to time
under the terms of the Indenture to obtain appraisals of the Property and
leasing reports regarding the Dallas office market. Lessee, subject to its prior
approval of the expense of obtaining such appraisals and reports, which approval
shall not be unreasonably withheld and shall be deemed granted if not objected
to within thirty (30) days of delivery, agrees to pay for the costs of such
appraisals and reports as Supplemental Rent, as and when due, and acknowledges
that invoices may be sent directly to Lessee (and agrees to cooperate to allow
for that to occur).
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ARTICLE 9
INSURANCE
Section 9.1. Coverage. (a) Subject to Section 9.1(b), Lessee shall
maintain insurance of the types and in the amounts set forth on Schedule 9.1
attached hereto and made a part hereof.
(b) So long as (i) no Lease Event of Default has occurred and is
continuing, and (ii) the long term senior unsecured debt of Guarantor (or Lessee
if there is no Guarantor) has a Required Rating equal to or greater than the
Trigger Rating, Lessee shall be entitled to self-insure against any and all
risks it would otherwise be required to insure against under Section 9.1(a),
provided that such self-insurance program of this subsection (b) does not
violate any Applicable Law. During any period that Lessee is self insuring,
Lessee shall not be required to deliver any policies, certificates or other
evidence of insurance, but shall deliver annually a statement certifying that it
is self-insuring, and is entitled to do so pursuant to this Lease. If Lessee
does not self-insure, then (i) Lessee shall maintain a policy or policies of
commercial general liability insurance with respect to the Property, and shall
cause Lessor and the Indenture Trustee to be named as an additional insureds on
such policy or policies and (ii) Lessee shall maintain a policy or policies of
property insurance with respect to the Property, and Lessee shall cause Lessor
and the Indenture Trustee to be named as an additional insureds on such policy
or policies, all in forms and amounts as set forth in Schedule 9.1; and shall
promptly deliver duplicate policies or certificates evidencing such insurance
coverages to Lessor and the Servicer.
(c) Nothing in this Article 9 shall prohibit the Lessee from
maintaining, at its expense, insurance on or with respect to the Property,
naming the Lessee as insured and/or loss payee for an amount greater than the
insurance required to be maintained under this Section 9.1, unless such
insurance would conflict with or otherwise limit the availability of or coverage
afforded by insurance required to be maintained under Section 9.1. Nothing in
this Section 9.1 shall prohibit the Lessor from maintaining, at its expense,
other insurance on or with respect to the Property or the operation, use and
occupancy of the Property, naming the Lessor as insured and/or payee, unless
such insurance would conflict with, cause the Lessor to be a coinsurer or
otherwise limit or adversely affect the ability to obtain, or the cost of the
insurance required to be maintained under Section 9.1.
(d) Copies of any certificates required to be delivered under Schedule
9.1 shall be delivered to Lessor at the same time they are delivered to the
Indenture Trustee.
(e) Irrespective of the cause thereof, Lessor shall not be liable for
any loss or damage to any buildings or other portion of the Property resulting
from fire, explosion or any other casualty. In the event of Lessee's failure to
obtain or maintain the insurance required under this Lease, taking into account
Lessee's right to self insure, after notice and applicable grace, Lessor shall
have the right, together with Lessor's remedies set forth herein, to obtain the
policies of insurance required under this Lease and to xxxx Lessee for the
premium payments therefor, together with interest at the Default Rate. Lessor
shall have no obligation to maintain insurance of any nature or type whatsoever.
21
(f) Subject to Lessee's right to self-insure, as set forth in Section
9.1(b) above, Lessee shall insure the Property and the operations and
liabilities related thereto at least to the same standards as applicable to
comparable properties owned or operated by Lessee and its Affiliates.
(g) In the event Lessee elects to self-insure, it shall have the same
obligations as if it were a third party insurer hereunder with respect to an
insurance policy having no deductible amount and shall be obligated to use, or
deliver to the Indenture Trustee (if applicable) or pay to third parties, all
amounts that Lessor, or such third party, would have received as though Lessee
was a third party insurer and not self-insured. The foregoing shall not,
however, act as a limit on Lessee's liability. Sums due from Lessee in lieu of
insurance proceeds because of Lessee's self-insurance program shall be treated
as insurance proceeds for all purposes under this Lease.
(h) If said insurance or any part thereof shall expire, be withdrawn,
become void by breach of any condition thereof by Lessee or become void for any
other reason, Lessee shall immediately obtain new or additional insurance
reasonably satisfactory to Lessor and Lessee. Each policy required to be carried
by Lessee under this Lease shall also provide that any loss otherwise payable
thereunder shall be payable notwithstanding (i) any act or omission of Lessor or
the Indenture Trustee which might, absent such provision, result in a forfeiture
of all or a part of such insurance payment, (ii) the occupation or use of the
Property or any part thereof for purposes more hazardous than permitted by the
provisions of such policy, (iii) any foreclosure or other action or proceeding
taken by the Indenture Trustee, its successors and assigns, or any other Person
pursuant to any provision of the Mortgage upon the happening of an event of
default therein, or (iv) any change in title or ownership of the Property or any
part thereof.
(i) Lessee shall comply with all insurance requirements applicable
under any insurance policies required to be maintained under this Lease.
ARTICLE 10
RETURN OF PROPERTY TO LESSOR
Section 10.1. Return of Property to Lessor. Lessee shall, upon the
expiration or termination of this Lease, and at its own expense, return the
Property to Lessor by surrendering the same into the possession of Lessor:
(a) free and clear of all Liens (whether by payment or bonding), except
that Lessee shall have no responsibility or liability in respect of (i) Lessor
Liens, (ii) any Lien created by the Debt Documents, and (iii) Liens for taxes
not yet due and payable and described in clauses (e) and (f) of the definition
of "Permitted Liens"; and
(b) in compliance in all material respects with all Applicable Laws and
in compliance with the maintenance conditions required by this Lease. All
Alterations and Lessee's Equipment and Personalty not removed by Lessee by the
last day of the Lease Term (but in the event of a termination other than upon
22
the expiration of the Base Term or any Renewal Term, within forty five (45) days
after said termination of this Lease), other than those Alterations as to which
title shall vest in Lessor pursuant to Section 8.4, shall be deemed abandoned in
place by Lessee and shall become the property of Lessor. Lessee shall pay or
reimburse Lessor for any reasonable, actual, out-of-pocket costs incurred by
Lessor (i) in connection with the removal or disposal of such relinquished
property, or (ii) to bring any Property into material compliance with all
Applicable Laws and the maintenance conditions required by this Lease, which
obligations shall survive the expiration or termination of this Lease.
Upon the return of the Property, Lessee shall deliver therewith:
(i) all transferable licenses and permits pertaining to the
Property by general assignment, without warranty or recourse;
(ii) as built-drawings including plans for HVAC, mechanical
and electrical systems, to the extent available;
(iii) keys to the Property; and
(iv) assignment of all then existing maintenance contracts (to
the extent required by Lessor) and existing warranties applicable to
the Property by general assignment, without warranty or recourse.
Lessee agrees to reasonably cooperate with Lessor and its
representatives to effectuate a smooth transition of the operation and
maintenance of the Property, and its releasing and refinancing, during the last
13 months of the Lease Term. Such cooperation shall include, without limitation,
transfers of all keys, existing contracts, names and warranties with, of and
from service providers, and expected operation and maintenance requirements.
ARTICLE 11
ASSIGNMENT BY LESSEE
Section 11.1. Assignment by Lessee. So long as no Lease Event of
Default has occurred and is continuing, Lessee may, at Lessee's sole expense,
without the consent of Lessor, assign this Lease for a period that does not
extend beyond the Lease Term, to (A) any Affiliate of Lessee or Guarantor or
(B) any Replacement Guarantor (as defined in the Guaranty), or any Affiliate of
a Replacement Guarantor, provided, however, that in each case any such Person
or other Person is not (I) a tax-exempt entity (within the meaning of Section
168(h) of the Code) or (II) a debtor or debtor-in-possession in a voluntary or
involuntary bankruptcy proceeding at the commencement of the assignment. For
purposes hereof, an assignment shall be deemed any merger or consolidation of
Lessee which would violate the provisions of (I) or (II) above. Any assignee
shall assume in writing any obligations of Lessee arising from and after the
effective date of the assignment, provided, however, that no such assignment
shall become effective until (i) a fully executed copy of an assignment and
assumption agreement, reasonably acceptable to Lessor, Servicer, Indenture
Trustee and Lessee, shall have been delivered to Lessor, the Servicer and the
Indenture Trustee, (ii) such assignee shall have executed such instruments and
23
other documents and provided such further assurances as the Indenture Trustee
shall reasonably request to ensure that such assignment is subject to the
Assignment of Lease, the other Debt Documents and this Lease and is enforceable,
and (iii) the Guarantor delivers a reaffirmation of guaranty in form reasonably
acceptable to Guarantor, Lessor and the Servicer, acting on behalf of the
Indenture Trustee. Notwithstanding any such assignment, neither Lessee (except
as provided below) nor the Guarantor (except as provided in the Guaranty) shall
be released from its primary liability hereunder and shall continue to be
obligated for all obligations of "Lessee" in this Lease, which obligations shall
continue in full effect as obligations of a principal and not of a guarantor or
surety, as though no assignment had been made. Lessee will have the right,
subsequent to any assignment (unless Lessee shall be released from its
obligations hereunder as provided below) (a) to receive a duplicate copy of each
notice of default sent by Lessor to Lessee or any assignee (but such notice
shall be effective as against the Lessee, as well as any subsequent assignees,
even if a copy has not been delivered to such requesting assignee), and (b) to
cure any default by Lessee or other assignee under the Lease within the cure
period provided for hereunder. Unless Lessee shall be released from its
obligations hereunder, as provided below, Lessee's liability hereunder shall
continue notwithstanding the rejection of this Lease by an assignee or any
sublease of this Lease pursuant to Section 365 of Title 11 of the United States
Code, any other provision of the Bankruptcy Code, or any similar law relating to
bankruptcy, insolvency, reorganization or the rights of creditors, which arises
subsequent to such assignment. Unless Lessee shall be released from its
obligations hereunder, as provided below, in the event Lessee assigns this Lease
and it shall thereafter be rejected in a bankruptcy or similar proceeding, a new
lease identical to this Lease shall be reinstituted as between Lessor and Lessee
without further act of either party, provided Lessor shall not be obligated to
deliver to Lessee possession of the Property free of any tenancy created or
caused by Lessee or any entity holding by or through Lessee. Upon such an
assignment with the third sentence of this Section 11.1, Lessee (but not
Guarantor) shall be released from its obligations under this Lease provided that
Guarantor (or the Replacement Guarantor, as applicable) delivers to Lessor and
the Indenture Trustee a reaffirmation of its guaranty, in form and scope
acceptable to Lessor and the Indenture Trustee. Nothing herein shall be
construed to permit Lessee to mortgage, pledge, hypothecate or otherwise
collaterally assign in any manner or nature whatsoever Lessee's interest under
this Lease in whole or in part. Lessee shall provide written notice to Lessor,
the Servicer and the Indenture Trustee of any proposed assignment of this Lease
at least thirty (30) Business Days prior to the effective date thereof and an
executed copy of the approved agreement of assignment and assumption within
thirty (30) days after the execution thereof. To the extent an assignee of this
Lease fails to perform on behalf of Lessee the obligations of Lessee hereunder,
and Lessee performs such obligations, then Lessee shall be subrogated to the
rights of Lessor as against such assignee in respect of such performance. Lessor
acknowledges that pursuant to the terms of the Guaranty, the Guarantor may be
replaced (and released) upon satisfaction of the conditions set forth in Section
21 of the Guaranty.
ARTICLE 12
LOSS; DESTRUCTION; CONDEMNATION OR DAMAGE
Section 12.1. Event of Loss. If there shall occur an Event of Loss with
respect to the Property, Lessee shall give Lessor, the Servicer, and the
Indenture Trustee and the Surety prompt written notice thereof and elect, within
24
sixty (60) days after the occurrence of the Event of Loss, one of the following
options provided that Lessee's election of proceeding under clause (ii) shall be
effective only if restoration can be completed by the time specified in such
clause (ii):
Offer to purchase the Property from Lessor, on a Rent Payment
Date, which date shall be a date for which a value is set
forth on Schedule 12.1 hereto (the "Stipulated Loss Value
Date"), and which Rent Payment Date shall be the first Rent
Payment Date at least forty (40) days after Lessor accepts
such offer, for a purchase price equal to the Stipulated Loss
Value, determined as of such Stipulated Loss Value Date. In
addition to the purchase price, Lessee shall pay (A) all
unpaid Base Rent with respect to the Property due and payable
on or before such Stipulated Loss Value Date plus any
Supplemental Rent payable for the period ending on such
Stipulated Loss Value Date (excluding the Stipulated Loss
Value and any Make-Whole Premium payable under clause (C),
below), plus (B) an amount equal to the reasonable
out-of-pocket expenses of Lessor, Indenture Trustee (and the
Servicer) and the Holders relating to the purchase, if any, by
Lessee as a result of such Event of Loss, including reasonable
attorneys' fees and costs actually incurred plus (C) the
Make-Whole Premium, if any, payable by the Lessor as a
consequence of the Lessor's prepayment of the Secured Notes in
connection with such Event of Loss. For the avoidance of
doubt, in the event that, despite the express provisions of
this Lease to the contrary, a Stipulated Loss Payment is ever
made on a date which is not a Rent Payment Date, then Lessee
shall pay Base Rent and Supplemental Rent up to and including
the date of such Stipulated Loss Payment with Base Rent for
the semi-annual period in which the payment is made being
prorated based on the number of days since the last Rent
Payment Date to and including the date of such payment, over
the number of days in the payment period. Lessor, (subject to
the consent of the Servicer, acting on behalf of the Indenture
Trustee), shall have sixty (60) days from the date of receipt
of Lessee's offer to decide whether to reject such offer. If
Lessee has not received a response after forty (40) days, it
may send a second notice to the foregoing parties, stating
clearly that failure to reject such offer by the later of (i)
the original sixty (60) day period, or (ii) ten (10) days
after delivery of such second notice will result in Lessor's
being deemed to have accepted such offer, and if Lessee has
not received a response by such date, then Lessor shall be
deemed to have accepted such offer; or
(i) Restore and rebuild the Improvements damaged as a result
of such Event of Loss so that such Improvements will have a value,
utility and remaining useful life as nearly as reasonably practicable
equal to the value, utility and remaining useful life of the
Improvements immediately prior to such Event of Loss, and in all
events as required by Section 8.2, such restoration to be
substantially completed, subject to force majeure, by the earlier to
occur of (x) the thirtieth (30th) month anniversary of the Event of
Loss, or (y) six months prior to the expiration of the Lease Term
(and Lessee shall remain liable for the completion of such
restoration beyond the expiration of the Lease Term to
the extent not completed prior to such expiration and shall pay Base
Rent and Supplemental Rent with respect to the
Property from the date of expiration to the date of completion).
25
If Lessee makes an offer to purchase pursuant to clause (i)
above of this Section 12.1, and Lessor accepts such offer or is deemed to accept
such offer (taking into account the last sentence of clause (i) above) within
the sixty (60) day period referred to in the last sentence of clause (i) above,
the conveyance shall occur, and Lessee shall pay to Lessor the Stipulated Loss
Value, the Rent, the expenses and Make-Whole Premium described in said clause
(i) on the Stipulated Loss Value Date; provided that any Net Proceeds related to
the Property then held by Lessor or the Servicer on behalf of the Indenture
Trustee shall be credited against the portion of such purchase price payable to
Lessor and the balance of Net Proceeds, if any, shall be paid to or retained by
Lessee.
In the event Lessee has made the election described in (ii)
above and, notwithstanding diligent efforts in good faith, has failed to comply
with the terms thereof within the periods described, then Lessee shall be deemed
to have made the offer described in (i) above to purchase the Property and the
Stipulated Loss Value Date shall be deemed to be the next succeeding date set
forth on the Stipulated Loss Value Schedule occurring thirty (30) days after the
expiration of the period described in (ii), or if there is no such date, the
last date on Schedule 12.1, as the case may be, but in any event, only on a Rent
Payment Date; provided, however, in the event Lessee has elected option (ii)
above, and has not completed restoration as required therein within the time
frame set forth in subclause (x) thereof, no Lease Default or Lease Event of
Default is then existing, and the Guarantor has a Required Rating at least equal
to the Trigger Rating, Lessee may elect, within ten (10) days prior to
expiration of such period, in lieu of being deemed to make the offer described
in clause (i) above, to continue to elect option (ii) above. Such election shall
require Lessee to pay to Lessor, within thirty (30) days after demand therefor,
an amount as required under Section 19.2(a). Nothing herein shall be deemed to
affect Lessee's obligation to elect option (i) above to purchase the Property if
Lessee has not completed restoration by six (6) months prior to the expiration
of the Lease Term.
In the event Lessor rejects the offer of Lessee to purchase the
Property as provided in clause (i) of this Section 12.1 (which it may not do
without the Servicer's written consent unless it first pays to the Servicer,
acting on behalf of the Indenture Trustee, an amount sufficient to pay all
amounts due in respect of the Secured Note[s] secured by the Property including,
without limitation, the Make-Whole Premium, and all other amounts due and
payable under any of the Operative Documents relating to the Property), the
following amount shall be paid to or retained by Lessor on such Stipulated Loss
Value Date: (A) all Net Proceeds related to the Property, provided that, if
Lessee is self-insured (as permitted above) by means of deductibles, retained
risks or no insurance whatsoever, Lessee shall pay such amounts or additional
amounts so that Lessor receives in total (including any Net Proceeds) an amount
that would have been paid by a third-party insurer under a customary commercial
all-risk full replacement-value insurance policy substantially similar to that
described in Schedule 9.01 without deductibles or retained risks (but in any
case amounts paid to Lessor will not be in excess of the replacement value of
the Improvements immediately preceding the Event of Loss, which replacement
26
value shall be as mutually agreed between Lessee and Lessor and, failing such
agreement within fifteen (15) days of the request of either party to do so, by
the Appraisal Procedure), plus (B)unpaid Base Rent due and unpaid on or prior to
such Stipulated Loss Value Date and Supplemental Rent due with respect to the
Property for the period ending on such Stipulated Loss Value Date (excluding any
Make-Whole Premium payable under clause (C), below), plus (C) the Make-Whole
Premium, if any, payable by the Lessor as a consequence of the Lessor's
prepayment of the Secured Notes in connection with such Event of Loss (even if
Lessee's offer to purchase is rejected). For the avoidance of doubt, in the
event that, despite the express provisions of the Lease to the contrary, the
foregoing payments are ever made on a date which is not a Rent Payment Date,
then Lessee shall pay Base Rent and Supplemental Rent up to and including the
date of such payment with Base Rent for the semi-annual period in which the
payment is made being prorated based on the number of days since the last Rent
Payment Date to and including the date of such payment over the number of days
in the payment period.
If Lessor elects to reject the offer of Lessee hereunder to
purchase the Property pursuant to this Section 12.1 while the Secured Notes are
outstanding, any notice of rejection shall only be effective, and Lessor shall
only be entitled to reject such offer, if such notice is in writing and either
such rejection is concurrently consented to in writing by the Servicer on behalf
of the Indenture Trustee or Lessor pays to the Servicer (acting on behalf of the
Indenture Trustee) all amounts then due and payable under the Secured Notes and
all other amounts due and payable under any Operative Documents, and absent such
repayment or consent by the Servicer within the period referred to in the last
sentence of clause (i) above, Lessor shall be deemed to have accepted Lessee's
offer.
Upon payment in full of the amounts set forth in clauses (A),
(B) and (C) of the second preceding paragraph (in the event Lessor rejected
Lessee's offer) or upon payment in full of the amounts set forth in clause (i)
of the first sentence of this Section 12.1 and the conveyance of the Property to
Lessee as provided herein (in the event Lessor accepted (or is deemed to have
accepted) Lessee's offer to purchase), (1) the Lease Term shall end, and (2) the
obligations of Lessee hereunder (other than any obligations expressed herein as
surviving termination of this Lease) with respect to such Property shall
terminate as of the date of such payment.
Lessee shall continue to make all Rent Payments as and when
due hereunder until termination of the Lease as provided herein.
Section 12.1A. Casualty or Condemnation with Respect to the Garage. If
any Casualty or Condemnation shall occur with respect to the portion of the
Property constituting the garage only (the "Garage"), Lessee shall give Lessor,
the Servicer, the Indenture Trustee and the Surety prompt written notice thereof
and elect, within sixty (60) days after the occurrence of such Casualty or
Condemnation, one of the following options (provided that Lessee's election of
proceeding under clause (i) below shall be effective only if restoration can be
completed by the time specified in such clause):
27
(i) Restore and rebuild the Improvements damaged or taken as a result of
such Casualty or Condemnation so as to have a value, utility and
remaining useful life as nearly as reasonably practicable equal to the
value, utility and remaining useful life of the Garage immediately
prior to such Casualty or Condemnation, and in all events as required
by Section 8.2, such restoration to be substantially completed,
subject to force majeure, by the earlier to occur of (x) fourteen (14)
months after the occurrence of such Casualty or Condemnation or (y)
six months prior to the expiration of the Lease Term (and Lessee
shall remain liable for the completion of such restoration beyond the
expiration of the Lease Term to the extent not completed prior to such
expiration and shall pay Base Rent and Supplemental Rent
from the date of expiration to the date of completion); or
(ii) Within the lesser of fourteen (14) months after the occurrence of such
Casualty or Condemnation or the expiration of the Lease Term, identify
and procure (if not already owned by Lessee) another parking garage of
comparable, size, value and utility (and satisfying any zoning
requirements with respect to the Building) in reasonable proximity to
the Building, all acceptable to Lessor and the Indenture Trustee, in
their sole and absolute discretion and transfer title to such
substitute Garage to Lessor free of any liens other than Permitted
Liens and at no cost to Lessor. Upon such transfer, such substitute
Garage shall become subject to this Lease, and on the first Business
Day at least ninety-one (91) days after recordation of a supplemental
mortgage with respect to the substitute Garage, Lessor shall transfer
title to the original Garage (together with all right and interest
in any Net Proceeds or Awards relating to the Casualty or Condemnation
with respect to the Garage) to Lessee; or
(iii) If substantial restoration of the Garage after the occurrence of a
Casualty or Condemnation is rendered impossible due to a change in
zoning or any other Applicable Laws and Lessee after having exercised
its best efforts to locate a substitute parking garage in accordance
with subsection (ii) above is unable to do so at a commercially
reasonable price, then and in such event, Lessee shall within the
lesser of fourteen (14) months after the occurrence of such Casualty
or Condemnation or the expiration of the Lease Term, restore the Garage
to the greatest extent practicable to the condition existing
immediately before the occurrence of such Casualty or Condemnation and
the remaining Net Casualty Proceeds or Net Condemnation Proceeds shall
be paid over to Lessor and shall not reduce in any way any Base Rent
payable by Lessee hereunder. In addition to such payment Lessee shall
also pay over to Lessor any Make-Whole Premium arising out of the
payment by Lessor to the Indenture Trustee of
such Net Casualty Proceeds and/or Net Condemnation Proceeds.
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In the event Lessee has elected to restore and rebuild the Garage in accordance
with Subsection (i) or (iii) above, and fails to the extent required to
substantially complete the renovation within the time required in Subsection (i)
or (iii) above, then and in such event, Lessee shall upon demand by Lessor or
the Indenture Trustee, pay to the Indenture Trustee, as security for Lessee's
obligation to complete such restoration, an amount equal to 125 % of the
estimated cost of completion of such required restoration work, as determined by
a contractor or engineer selected by Lessor and reasonably acceptable to Lessee
(Lessee having 15 days to object (with reasonable reasons set forth) or approve
(silence being deemed approval)). Such amount shall be held by the Proceeds
Trustee to be administered and disbursed as a Restoration Fund, as hereinafter
defined, in accordance with Section 12.4 (except that any reference to
$5,000,000.00 shall be inapplicable for the purposes hereof). In addition,
Lessee shall be obligated to pay an amount as required by Section 19.2(a).
Section 12.2. Application of Payments Upon an Event of Loss When Lease
Continues. Subject to Section 12.4, payments received at any time by Lessor or
Lessee from any Governmental Authority or other Person with respect to any Event
of Loss in a case in which this Lease will not terminate (and there will occur
no abatement or, other than as described in this Section 12.2, reduction of
rent) because Lessee has elected to proceed under clause (ii) of Section 12.1,
shall be paid to Lessee to be applied, as necessary, to the repair or
restoration of the Property as described in clause (ii) of Section 12.1. Any
excess insurance proceeds remaining thereafter shall be retained by Lessee. In
the event of a condemnation which does not result in a termination of the Lease,
then (except as otherwise set forth below) the proceeds of the condemnation
award remaining after repair and restoration shall be retained by (or paid to)
Lessor to be applied to reduce the final scheduled payment of principal due at
the maturity date of the A-2 Secured Note, and thereafter, to be applied to
reduce the principal amount outstanding under the other Secured Notes, if any
are still outstanding. At the time of such payment Lessee shall pay to the
Indenture Trustee (or Servicer acting on its behalf) any Make-Whole Premium
payable under the Debt Documents by virtue of such prepayment of condemnation
proceeds to the A-2 Note and to the other Secured Notes. Base Rent shall
continue to be due and payable in accordance with Schedule 3.1, until such point
in the Term that all principal but the final scheduled payment of principal due
under the A-2 Secured Note has been paid in full whereupon the remaining
semi-annual installments of Base Rent, for the balance of the Initial Term,
shall be reduced to the amounts payable by Lessor on the Interest Payment
Date(s) (excluding the final scheduled payment of principal due under the A-2
Secured Note). Notwithstanding the foregoing, excess condemnation proceeds less
than $500,000 shall be retained by Lessor even if the Indebtedness is
outstanding and shall not reduce Base Rent.
Section 12.3. Application of Payments Not Relating to an Event of Loss.
In case of a Condemnation or Casualty with respect to the Garage or which is not
an Event of Loss or does not otherwise result in a termination of this Lease in
accordance with the above provisions of Article 12, this Lease shall remain in
full force and effect, without any abatement or reduction of Rent. Except as set
forth herein, and subject to Section 12.4, all Net Casualty Proceeds and all Net
Condemnation Proceeds, as the case may be, shall be paid to Lessee to be
applied, as necessary, to the repair or restoration of the Property so such
Property shall have a value, utility and remaining useful life as close as
reasonably practicable to the value, utility and remaining useful life existing
immediately prior to such Casualty or Condemnation. Except as otherwise provided
to the contrary, any excess insurance proceeds remaining thereafter shall be
retained by Lessee and any excess condemnation award remaining thereafter shall
be applied in the same manner as set forth in Section 12.2 above.
29
Section 12.4. Other Dispositions.
(a) Net Casualty Proceeds or Net Condemnation Proceeds, as the case may
be, in excess of $5,000,000.00 (as such amount may be increased by increases in
the CPI, as calculated in the manner set forth in Section 8.3(a)) (each, as
applicable, the "Restoration Fund") in respect of such Casualty or Condemnation,
as the case may be, shall be paid to the Indenture Trustee for release to Lessee
as restoration progresses, subject to and in accordance with Section 12.4(b).
Lessor and Lessee hereby authorize and direct (i) any insurer to make payment
under policies of casualty insurance required to be maintained by Lessee
pursuant to Section 9.1(a) directly to the Proceeds Trustee instead of to Lessor
and Lessee jointly, and (ii) any Governmental Agency to make payments of any Net
Condemnation Proceeds directly to the Indenture Trustee instead of to Lessor
and/or Lessee; and each of Lessee and Lessor hereby appoints the Proceeds
Trustee as its attorney-in-fact to endorse any draft therefor for the purposes
set forth in this Lease. In the event that a Casualty shall occur at such time
as Lessee shall not have maintained property or casualty insurance to the extent
required by Section 9.1(a) (i.e., Lessee is self insuring), Lessee shall, within
thirty (30) days of the Casualty, pay to the Indenture Trustee the amount of the
proceeds that would have been payable had such insurance been in effect and such
amount shall constitute a part of the Restoration Fund for all purposes hereof.
Notwithstanding the foregoing provisions of this Article 12, so long as a Lease
Event of Default shall be continuing, any amount that would otherwise be payable
to or for the account of Lessee pursuant to this Article 12 shall be paid to the
Indenture Trustee (or to Lessor when the Debt Documents shall not be in effect)
as security for the obligations of Lessee under this Lease and, at such time
thereafter as the Lease Event of Default shall have been waived or no longer be
continuing, unless Lessor shall be exercising its remedies under Section 17.1,
such amount shall be paid promptly to Lessee or the Indenture Trustee in
accordance with this Lease (subject to other terms hereof).
(b) The Restoration Fund, if any, shall be disbursed by the Indenture
Trustee by wire transfer of immediately available funds within five (5) Business
Days of the last submission made pursuant to and in accordance with the
following conditions (provided that there shall be no more than one disbursement
during each month):
(i) Lessee, prior to the disbursement of any sums by the
Indenture Trustee from the Restoration Fund, shall have paid the first
$5,000,000 of the costs of such restoration (such initial $5,000,000
payment representing the insurance proceeds, or self insurance
obligation, as applicable, not delivered to the Indenture Trustee) as
evidenced by paid receipts delivered to the Indenture Trustee from one
or more of Lessee's contractors hired in connection with such
restoration accompanied by partial releases of liens in respect of such
payment(s).
30
(ii) At the time of any disbursement, no Lease Event of
Default shall exist and, subject to Article 7, no mechanics' or
materialmen's liens shall have been filed and remain undischarged,
unbonded or not insured over.
(iii) Disbursements (subject to the holdback in Section
12.4(b)(v) below) shall be made from time to time in an amount not
exceeding the hard and soft cost of the work and costs incurred since
the last disbursement upon receipt of (1) satisfactory evidence,
including architects' certificates when required pursuant to Section
8.3, of the stage of completion, of the estimated cost of completion
and of performance of the work to date in a good and workmanlike manner
in accordance with the contracts, plans and specifications, (2) partial
releases of liens in respect of the disbursement made pursuant to the
immediately preceding request, and (3) other reasonable evidence of
cost incurred (whether or not paid) so that the Indenture Trustee is
able to verify that the amounts disbursed from time to time are
represented by work that is completed in place or delivered to the site
and free and clear of (subject to Article 7) mechanics' and
materialmen's lien claims.
(iv) Each request for disbursement shall be accompanied by a
certificate of Lessee (1) agreeing to use amounts disbursed for the
costs described in Section 12.4(b)(iii), (2) describing the work,
materials or other costs or expenses for which payment is requested,
(3) stating the cost incurred in connection therewith, and (4) stating
that Lessee has not previously received payment for such work or
expense and the certificate to be delivered by Lessee upon completion
of the work shall, in addition, state that the work has been
substantially completed and complies with the applicable requirements
of this Lease.
(v) The Indenture Trustee shall retain ten percent (10%) of
the amounts otherwise disbursable until the restoration is at least
fifty percent (50%) complete, and thereafter five percent (5%) until
the restoration is substantially complete.
(vi) The Restoration Fund shall be kept by the Indenture
Trustee in a separate interest-bearing federally insured account or
invested in Permitted Investments (as directed by, or on behalf of,
Lessee).
(vii) At all times the undisbursed balance of the Restoration
Fund held by the Indenture Trustee shall be not less than the cost of
completing the restoration, free and clear of all liens as certified to
by either Lessee's architect or engineer in accordance with Section
8.3(b) (other than Permitted Liens, which term for purposes hereof
shall exclude Liens of the type described in clause (d) of the
definition of Permitted Liens other than Liens for amounts not yet due
or that are bonded over or insured over).
(viii) In addition, prior to commencement of restoration and
at any time during restoration, if the estimated cost of restoration,
as reasonably determined by the Indenture Trustee, exceeds the then
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amount of the Restoration Fund, the amount of such excess shall be paid
by Lessee to the Indenture Trustee to be added to the Restoration Fund
or Lessee shall fund at its own expense the costs of such restoration
until the remaining Restoration Fund is sufficient for the completion
of the restoration. In the case of Casualty, any sum in the Restoration
Fund which remains in the Restoration Fund upon the completion of
restoration shall be paid to Lessee so long as no Lease Event of
Default then exists. In the case of Condemnation, any sum in the
Restoration Fund which remains in the Restoration Fund upon the
completion of restoration shall be applied as set forth in Section
12.2.
Section 12.5. Negotiations. In the event the Property becomes subject
to condemnation or requisition proceedings, Lessee shall control the
negotiations with the relevant Governmental Authority, unless: (i) a Lease Event
of Default shall be continuing, or (ii) the Net Condemnation Proceeds will
likely be in excess of $5,000,000.00 (as such amount may be increased by
increases in the CPI, as calculated in the manner set forth in Section 8.3(a),
above) (which determination shall be made in Lessor's reasonable discretion),
in which case Lessor (or if the Debt Documents are in effect, the Indenture
Trustee) at Lessee's expense may elect in writing to control such negotiations;
provided that in any event Lessor and the Indenture Trustee may elect to
participate at Lessee's expense in such negotiations. Lessee shall give to
Lessor and the Indenture Trustee such information, and copies of such documents,
which relate to such proceedings and are in the possession of Lessee, as are
reasonably requested by Lessor or the Indenture Trustee. Lessor shall use good
faith efforts to be reasonable when incurring expenses payable by Lessee
hereunder and shall confer with Lessee as to any negotiations with Governmental
Authorities material to Lessee's operations. Notwithstanding the foregoing, in
jurisdictions where a separate award may be granted for Lessee's Equipment and
Personalty, moving and relocation expenses, business loss, business damages,
loss of goodwill, unamortized costs of any Alterations title for which has not
vested in Lessor pursuant to the terms of this Lease, and Lessee's attorneys'
fees, costs and expenses in the proceedings, Lessee may assert claims for and
control the negotiations pertaining to such interests, provided that the
Lessor's award in respect to the Property is not diminished by the award to
Lessee.
ARTICLE 13
INTENTIONALLY OMITTED
ARTICLE 14
SUBLEASE
Section 14.1. Subleasing Permitted; Lessee Remains Obligated. Provided
that no Lease Event of Default shall have occurred and be continuing at the time
the sublease is entered into, upon fifteen (15) days' prior written notice to
Lessor and the Indenture Trustee (except for subleases to Affiliates, in which
case no notice shall be required), Lessee may at any time and from time to time
sublease the Property or any portion or portions thereof to any Person or permit
the occupancy of the Property or any portion or portions thereof by any Person
(i) who is not a tax-exempt entity (within the meaning of Section 168(h) of the
Code) and (ii) is not a debtor or debtor-in-possession in a voluntary or
involuntary bankruptcy proceeding at the commencement of the sublease term. Any
such sublease, sub-sublease, license, occupancy agreement or similar agreement
32
(each, a "Sublease") shall not release Lessee from its primary liability for the
performance of its duties and obligations hereunder, and Lessee shall continue
to be obligated for all obligations of "Lessee" in this Lease, which obligations
shall continue in full effect as obligations of a principal and not of a
guarantor or surety, as though no Sublease had been made. From time to time, and
no more often than once annually, upon Lessor's written request, Lessee shall
forward to Lessor the names, businesses and square footage leased of all
subtenants (other than Subleases to Affiliates). In addition, Lessee shall
furnish to Lessor, the Servicer and the Indenture Trustee within thirty (30)
days after the execution of each Sublease of twenty percent (20%) or more (or
any Sublease, when aggregated with previously executed Subleases that are still
in effect, exceeds twenty percent (20%) or more) of the total square feet of the
Improvements on the Property or a material portion of the Land (i) a copy of
such Sublease (and the previously executed Subleases still in effect, if
applicable) and (ii) such other instruments and documents as the Lessor and the
Indenture Trustee shall reasonably request to ensure that such Sublease is
subject to the Debt Documents. Lessee shall not be required to furnish copies to
Lessor of any Sublease with an Affiliate of Lessee, nor shall any such Affiliate
Subleases count against the 20% threshold set forth above. In no event shall
Lessee grant any purchase options to any subtenants or modify any existing
renewal or expansion rights in any Existing Sublease. Lessee shall be permitted
to extend the term and/or sublease additional space within the Property to
subtenants having Existing Subleases providing any such additional subleased
space or extensions to any terms are not for periods extending beyond the then
in effect expiration of the Lease Term. The foregoing limitation shall not
however, preclude or otherwise prohibit subtenants having Existing Subleases
from exercising under the terms of their Existing Subleases any expansion rights
or renewal options in effect as of the Lease Commencement Date.
Section 14.2. Provisions of Subleases. Each Sublease other than the
Existing Subleases will:
(a) be expressly subject and subordinate to this Lease and any mortgage
(including the Mortgage) encumbering the Property;
(b) not extend beyond the Lease Term minus one day;
(c) terminate upon any termination of this Lease, unless Lessor elects
in writing (which election must be consented to by the Servicer, acting on
behalf of the Indenture Trustee), to cause the sublessee to attorn to and
recognize Lessor as the lessor under such Sublease, whereupon such Sublease
shall continue as a direct lease between the sublessee and Lessor upon all the
terms and conditions of such Sublease (it being agreed that all Subleases with
Affiliates of Lessee shall automatically terminate upon termination of this
Lease); and
(d) not contravene or otherwise conflict with any express terms or
covenants contained in the Lease.
Section 14.3. Assignment of Sublease Rents. To secure the prompt and
full payment by Lessee of the Rent and the faithful performance by Lessee of all
the other terms and conditions herein contained on its part to be kept and
performed, Lessee hereby absolutely, presently assigns, transfers and sets over
33
unto Lessor, subject to the conditions hereinafter set forth in this Section
14.3, all of Lessee's right, title and interest in and to all Subleases, and
hereby confers upon Lessor, its agents and representatives, a right of entry in,
and sufficient possession of, the Property to permit and ensure the collection
by Lessor of the rentals and other sums payable under the Subleases, and further
agrees that the exercise of the right of entry and qualified possession by
Lessor shall not constitute an eviction of Lessee from the Property or any
portion thereof; provided, however, that Lessee shall continue to have the right
to collect all Sublease revenue unless and until (a) a Lease Event of Default
shall occur (and only for so long as such Lease Event of Default shall be
continuing), or (b) this Lease and the Lease Term shall be canceled or
terminated pursuant to the terms, covenants and conditions hereof, or (c) there
occurs repossession under a dispossess warrant or other judgment, order or
decree of a court of competent jurisdiction and then only as to such of the
Subleases that Lessor may elect to take over and assume. Notwithstanding the
foregoing, if the events described in Section 14.3(a), (b) or (c) hereinabove
have not occurred or if a Lease Event of Default which caused such collection of
revenue by Lessor shall have been cured by Lessee or otherwise not continue to
exist and the events described in Sections 14.3(b) and (c) hereinabove have not
occurred, Lessor shall cease to exercise the rights granted hereunder to Lessor
with respect to the Subleases, and amounts collected under the Subleases and not
applied to Lessee's obligations hereunder shall promptly be paid over to Lessee.
ARTICLE 15
INSPECTION
Section 15.1. Inspection. Upon at least five (5) Business Days' prior
written notice to Lessee (or immediately if a Lease Event of Default shall be
continuing), Lessor, the Indenture Trustee, the Servicer and the Surety, and
their respective representatives and agents (each, an "Inspecting Party") may,
in a commercially reasonable manner and at their own expense (except as set
forth in this Lease to the contrary) and risk, inspect the Property, during
normal business hours, including, without limitation, the right to cause
consultants to make structural, environmental (to the extent necessary to verify
compliance with the provisions of this Lease) and/or other inspections or tests.
No Sublease other than the Existing Subleases shall contain any restrictions on
inspection other than as set forth herein. The Inspecting Party shall repair any
damage caused by any inspection or test performed pursuant to Section 15.1
unless a Lease Event of Default has occurred and is continuing. The applicable
Inspecting Party will consult with Lessee prior to any intrusive inspection to
determine a convenient time for such inspection unless a Lease Event of Default
has occurred and is continuing, following an assignment of the Lease, or a
violation of Section 8.5 has occurred (in which event the inspection may be
immediate). Lessee shall have the right during such inspection to have its
representatives present at any such inspection, including security guards. Each
Inspecting Party agrees to hold in confidence all proprietary information and
trade secrets of which it becomes aware during such inspection. Except as set
forth in the following sentences, all such inspections and tests shall be at
Lessor's or the Indenture Trustee's expense, unless (i) a Lease Event of Default
shall have occurred and is continuing or (ii) such inspection and/or test
reveals deficiencies requiring Lessee to take any action or actions not
contemplated within the next 12 months, as evidenced by Lessee's maintenance
program last delivered to Lessor and the Indenture Trustee, the cost of which
34
equals $100,000, or more, in order to comply with the Lease. Such amount shall
be increased annually on each January 1 (starting January 1, 2003), based on
increases in the CPI. In either case, the reasonable out of pocket costs of such
inspection and/or test shall be promptly paid by the Lessee. Further, upon five
(5) Business Days' prior notice to Lessee, the Inspecting Parties, at their
expense, may inspect the books and records as they relate to the maintenance and
care of the Property during the term of this Lease (other than Lessee's
Equipment and Personalty), that are in the possession of Lessee or Guarantor,
which shall be made available at the Property or the headquarters of the Lessee.
ARTICLE 16
LEASE EVENTS OF DEFAULT
Section 16.1. Lease Events of Default. The following events shall
constitute a "Lease Events of Default":
(a) Lessee shall fail to make any payment of Base Rent, a Termination
Value Payment, a Stipulated Loss Value Payment, any payment owing by the Lessee
pursuant to Section 3.4, or any other regularly scheduled payment of
Supplemental Rent due to the Indenture Trustee or Servicer within three (3)
Business Days after the same shall become due;
(b) Lessee shall fail to make any other payment of Supplemental Rent,
or any other payment required to be made under this Lease, within thirty (30)
days after notice that such amount is due and unpaid;
(c) any of Guarantor or Lessee shall fail to timely perform or observe
any covenant or agreement (not otherwise specified in this Article 16) to be
performed or observed by it hereunder or under any other Lease Operative
Document and such failure shall continue for a period of thirty (30) days after
written notice thereof from Lessor or the Indenture Trustee; provided that the
continuation of such a failure for thirty (30) days or longer after such notice
shall not constitute a Lease Event of Default if such failure can be cured, but
cannot reasonably be cured within such thirty (30) day period, and Guarantor or
Lessee (as applicable) commences to cure such breach within thirty (30) days of
said notice and shall be diligently and continuously prosecuting the cure of
such failure; provided, that such failure must be cured within 270 days of such
notice.
(d) except to the extent the Lessee is self-insuring pursuant to
Section 9.1(b) and Schedule 9.1, Lessee shall fail to carry or maintain in full
force any insurance required hereunder, and such failure shall continue for five
(5) Business Days after such obligation arises;
(e) any representation or warranty made by the Guarantor or Lessee
herein or in any Lease Operative Document to which Guarantor or Lessee is a
party shall prove to have been incorrect in any material respect when such
representation or warranty was made.
(f) (A) Lessee or Guarantor makes any general arrangement or assignment
for the benefit of creditors; (B) Lessee or Guarantor becomes a "debtor" as
defined in 11 U.S.C. ss. 101 of the Bankruptcy Code or any successor statute
thereto (unless, in the case of a petition filed against Lessee or Guarantor,
35
the same is dismissed within ninety (90) days); (C) the appointment of a trustee
or receiver to take possession of substantially all of the assets of Lessee or
Guarantor where possession is not restored to Lessee or Guarantor within ninety
(90) days; (D) the attachment, execution or other judicial seizure of
substantially all of the assets of Lessee or Guarantor where such seizure is not
discharged within ninety (90) days; (E) Lessee or Guarantor admits in writing
its inability to pay its debts generally as they become due; (F) Lessee or
Guarantor files a petition in bankruptcy or a petition to take advantage of any
insolvency act; (G) Lessee or Guarantor files a petition or answer seeking
reorganization or arrangement or other protection under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any State thereof; (H) Lessee or Guarantor is liquidated or dissolved, or placed
under conservatorship or other protection under any applicable federal or state
law or begins proceedings toward such liquidation or dissolution; (I) any
petition is filed by or against Lessee or Guarantor or any subsidiary of either
under Federal bankruptcy laws, or any other proceeding is instituted by or
against Lessee or Guarantor or such subsidiary seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, reorganization, arrangement,
adjustment or composition of it 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 Lessee or Guarantor or such subsidiary,
or for any substantial part of the property of Lessee or Guarantor or such
subsidiary, and such proceeding is not dismissed within ninety (90) days after
institution thereof, or Lessee or Guarantor or such subsidiary shall take any
action to authorize or effect any of the actions set forth above in this
subsection (f).
(g) A Lease Event of Default described in Section 9(c) of the Guaranty.
ARTICLE 17
ENFORCEMENT
Section 17.1. Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, to the extent permitted by Applicable Laws, at its option, by
notice to Lessee do one or more of the following as Lessor in its sole
discretion shall determine:
(a) Lessor may, by notice to Lessee, terminate this Lease as of the
date specified in such notice; provided (i) no reletting, reentry or taking of
possession of any or all of the Property by Lessor will be construed as an
election on Lessor's part to terminate this Lease unless a written notice of
such intention to terminate this Lease is given to Lessee, (ii) notwithstanding
any reletting, reentry or taking of possession, Lessor may at any time
thereafter elect to terminate this Lease with respect to any or all of the
Property, and (iii) no act or thing done by Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of any or
all of the Property shall be valid unless the same shall be made in writing and
executed by Lessor. If Lessor shall have terminated the Lease, Lessor may demand
that Lessee pay to Lessor, and Lessee shall pay to Lessor, the amounts set forth
in subparagraphs (c) or (e) below.
(b) Lessor may whether or not the Lease is terminated (i) demand that
Lessee, and Lessee shall upon the written demand of Lessor, return the Property
promptly to Lessor in the manner and condition required by, and otherwise in
36
accordance with all of the provisions of, Article 10 as if the Property were
being returned at the end of the Lease Term, and Lessor shall not be liable for
the reimbursement of Lessee for any costs and expenses incurred by Lessee in
connection therewith, and (ii) without prejudice to any other remedy which
Lessor may have for possession of the Property, enter upon the Property and take
immediate possession of (to the exclusion of Lessee) the Property and expel or
remove Lessee and any other person who may be occupying the same (subject to the
terms of any nondisturbance agreements with Lessor, in favor of any subtenants),
by summary proceedings or otherwise, all without liability to Lessor for or by
reason of such entry or taking of possession, whether for the restoration of
damage to property caused by such taking or otherwise and, in addition to
Lessor's other damages, Lessee shall be responsible for the reasonably necessary
costs and expenses of reletting actually incurred.
(c) Lessor may sell the Property at public or private sale as Lessor
may determine, free and clear of any purchase options or other rights of Lessee
and without any duty to account to Lessee with respect to such action or
inaction or any proceeds with respect thereto (except to the extent required by
the next succeeding sentence if Lessor shall elect to exercise its rights
thereunder), in which event Lessee's obligation to pay Base Rent hereunder for
periods commencing after the Rent Payment Date next succeeding the date of such
sale shall be terminated. If Lessor shall have sold the Property pursuant to the
above terms of this Section 17.1(c), Lessor may demand that Lessee pay to
Lessor, and Lessee shall promptly pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (the parties
agreeing that Lessor's actual damages would be difficult to predict, but the
liquidated damages described below represent a reasonable approximation of such
amount), in lieu of Base Rent in respect of the Property due for the period
commencing on the Rent Payment Date next succeeding the date of sale, an amount
equal to the sum of:
(1) all unpaid Rent with respect to the Property due on or
prior to, and (without duplication) all unpaid Rent accruing but unpaid
through such Rent Payment Date; plus
(2) an amount equal to the Discounted Net Present Value of the
amount of the remaining Base Rent payments payable for the remainder of
the then current Term; plus
(3) interest at the Default Rate on all of the foregoing
amounts from the date due until the date of actual payment;
to the extent such amount exceeds the net proceeds of such sale.
(d) Except as Lessor may otherwise be required by Applicable Laws,
Lessor may hold, keep idle or lease to others the Property as Lessor in its sole
discretion may determine, free and clear of any rights of Lessee and without any
duty to account to Lessee with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that Lessee's
obligation to pay Base Rent from and after the occurrence of a Lease Event of
Default, but prior to the termination of the Lease or the foreclosure of the
Lien of the Indenture Trustee, shall be reduced by the net proceeds, if any,
received by Lessor from leasing the Property to any Person, or allowing any
Person to use the Property, other than Lessee for the same periods or any
portion thereof,
37
(e) Lessor may, whether or not Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under Section 17.1(b) or
17.1(d), but only if the Property shall not have been sold under Section
17.1(c), demand, by written notice to Lessee specifying a Rent Payment Date (the
"Final Payment Date") not earlier than twenty (20) days after the date of such
notice, that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the Final
Payment Date, as liquidated damages for loss of a bargain and not as a penalty
(the parties agreeing that Lessor's actual damages would be difficult to
predict, but the aforementioned liquidated damages represent a reasonable
approximation of such amount), in lieu of Base Rent for periods commencing after
the Final Payment Date, an amount equal to the sum of:
(1) all unpaid Rent with respect to the Property due on or
prior to, and (without duplication) all unpaid Rent accruing but unpaid
through, such Rent Payment Date; plus
(2) an amount equal to the Discounted Net Present Value of the
amount of the remaining Base Rent payments payable for the remainder of
the then current Term; plus
(3) interest at the Default Rate on all of the foregoing
amounts from the date due until the date of actual payment.
(f) Lessor may retain and apply against Lessor's damages all sums which
Lessor would, absent such Lease Event of Default, be required to pay to, or turn
over to, Lessee pursuant to the terms of this Lease.
(g) Lessor may exercise any other right or remedy that may be available
to it under Applicable Laws or in equity, or proceed by appropriate court action
(legal or equitable) to enforce the terms hereof or to recover damages for the
breach hereof. Separate suits may be brought to collect any such damages for any
period or periods with respect to which Rent shall have accrued, and such suits
shall not in any manner prejudice Lessor's right to collect any such damages for
any subsequent period, or Lessor may defer any such suit until after the
expiration of the Base Term or the then current Renewal Term, in which event
such suit shall be deemed not to have accrued until the expiration of the Base
Term, or the then current Renewal Term.
Section 17.2. Survival of Lessee's Obligations. No repossession of any
or all of the Property or exercise of any remedy under this Lease, including
termination of this Lease, shall, except as specifically provided herein,
relieve Lessee of any of its liabilities and obligations hereunder, including
the obligation to pay Rent. In addition, except as specifically provided herein,
Lessee shall be liable for any and all unpaid Rent due hereunder before, after
or during the exercise of any of the foregoing remedies, including all
reasonable legal fees and other costs and expenses incurred by Lessor and the
Indenture Trustee by reason of the occurrence of any Lease Default or Lease
Event of Default or the exercise of Lessor's remedies with respect thereto, and
including all costs and expenses incurred in connection with the return of the
Property in the manner and condition required by, and otherwise in accordance
with the provisions of, Article 10 as if the Property were being returned at the
end of the Lease Term. At any sale of any or all of the Property or any other
rights pursuant to Section 17.1, Lessor or the Indenture Trustee may bid for and
purchase the Property.
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Section 17.3. Remedies Cumulative; No Waiver; Consents; Mitigation of
Damages. To the extent permitted by, and subject to the mandatory requirements
of, Applicable Laws, each and every right, power and remedy herein specifically
given to Lessor or otherwise in this Lease shall be cumulative and shall be in
addition to every other right, power and remedy herein specifically given or now
or hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any right, power or remedy. No delay or omission
by Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of Lessee or to be an acquiescence therein.
Lessor's consent to any request made by Lessee shall not be deemed to constitute
or preclude the necessity for obtaining Lessor's consent, in the future, to all
similar requests. No express or implied waiver by Lessor of any Lease Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Event of Default.
ARTICLE 18
RIGHT TO PERFORM FOR LESSEE
Section 18.1. Right to Perform for Lessee. If Lessee shall fail to
perform or comply with any of its agreements contained herein, following
applicable notice and cure periods, Lessor may perform or comply with such
agreement, and Lessor shall not thereby be deemed to have waived any default
caused by such failure, and the amount of payment required to be made by Lessee
hereunder and made by Lessor on behalf of Lessee, and the reasonable
out-of-pocket third-party costs and expenses of Lessor (including reasonable
attorneys' fees and expenses) incurred in connection with the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Default Rate, shall be deemed Supplemental Rent, payable by
Lessee to Lessor upon demand. In addition, during the continuance of a Lease
Event of Default in respect of Lessee's obligations under Section 8.2 and/or
Section 8.5, then, in addition to the rights above and at the cost of Lessee,
(a) Lessor shall have the right to hire Persons (as selected by Lessor in its
reasonable discretion) to cure such Lease Event of Default, and to take any and
all other actions necessary to cure such Lease Event of Default, and (b) Lessee
shall cooperate with Lessor, and the Persons hired by Lessor, in the performance
of such cure, including, without limitation, (i) providing access to the subject
Property at reasonable times every day of the week, (ii) making available water,
electricity and other utilities existing at or on the subject Property, and
(iii) restricting or closing the Property, but only if such restriction or
closure is reasonably necessary for the performance of such cure and provided
that such closure shall be done for and during a time period and in such manner
that balances the need for the maintenance or repair of the Property (and doing
so in a safe manner) and the continuing operations of the Property.
39
ARTICLE 19
INDEMNITIES
Section 19.1. General Indemnification. (a) Lessee agrees to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After-Tax Basis, from and against any and all Claims arising
out of the acts, or failures to act, of Lessee or any of its subtenants
(existing now or in the future) prior to the expiration or earlier termination
of the Term and including any period during which the Lessee is a month-to-month
tenant under clause (x) of Section 8.5 (whether during the Lease Term, or prior
to the Closing Date), whenever they may be suffered, imposed on or asserted
against any Indemnitee, arising out of (i) the acquisition, ownership, leasing,
subleasing, assignment, transfer of title, sale, financing, refinancing,
renewal, return, disposition, operation, possession, use, non-use, maintenance,
modification, alteration, reconstruction, restoration, substitution, or
replacement of the Property or the Lease, or from the granting by Lessor at
Lessee's request of easements, licenses or any similar rights with respect to
all or any part of the Property, or from the construction, design, purchase or
condition of the Property (including any Claims (whether by Governmental
Authority or other Person) arising, directly or indirectly, out of the actual or
alleged presence, use, storage, generation, Release or threat of Release of any
Hazardous Materials, and any Claims for patent, trademark or copyright
infringement and latent or other defects, whether or not discoverable),
including any liability under Applicable Laws (including, without limitation,
any Claims arising directly or indirectly out of any actual or alleged
violation, now or hereafter existing, of any Environmental Laws), (ii) the
Lease Operative Documents or the Operative Documents or any modification,
amendment or supplement thereto (A) if the Indemnitee is Lessor, only to the
extent arising out of the operation, maintenance, use or possession of the
Property by Lessee, whether before or after the Closing Date and (B) if the
Indemnitee is any other Person, such indemnity is including, without limitation,
any Claims made against the Servicer, any Holder, the Indenture Trustee, and any
special servicer in connection with the Overall Transaction, whether or not
arising out of the operation, maintenance, use or possession of the Property by
Lessor, (iii) the non-compliance of the Property with Applicable Laws (including
because of the existence of the Permitted Liens), (iv) without limiting any
other indemnity herein, any other matters relating to the Property or any
operations thereon, and not already covered by this Section 19.1(a), to the
extent such matters arise out of the operation, maintenance, use or possession
of the Property by Lessee or any subtenants, whether before or after the Closing
Date, including matters relating to Environmental Laws or Hazardous Materials,
the breach by Lessee or Guarantor of any of its representations, warranties,
covenants and obligations in this Lease or the Guaranty, as applicable, or any
other Operative Documents or Lease Operative Documents whether or not such Claim
arises or accrues prior to the date of this Lease, (v) the business and
activities of Lessee or any subtenants, except to the extent arising out of
relationships between Lessor and Lessee not related to this transaction, (vi)
the cost of any Remedial Action, assessment, containment, monitoring, treatment
and/or removal of any and all Hazardous Materials from all or any portion of
the Property or any surrounding areas over which Lessee has responsibility, the
cost of any actions taken in response to a release or threat of release of any
Hazardous Materials on, in, under, relating to or affecting any portion of the
Property or any surrounding areas over which Lessee has responsibility to
prevent or minimize such release or threat of release so that it does not
migrate or otherwise cause or threaten danger to present or future public
40
health, safety, welfare or the environment, and costs incurred to comply with
Environmental Laws in connection with all or any portion of the Property or any
surrounding areas over which Lessee has responsibility, (vii) a Lease Default
or a Lease Event of Default, (viii) any litigation, suit, cause of action, writ,
decree, injunction, order, judgment, proceeding or Claim now or hereafter
asserted against the Property, Lessor (by virtue of its ownership of, leasing or
financing of the Property), or Lessee or any subtenants with respect to the
Property or this Lease, and (ix) any defects in title caused, created or
permitted by Lessee, or anyone acting by, through or under Lessee. Lessee
acknowledges that the foregoing includes any costs incurred by Lessor, the
Indenture Trustee or the Servicer (or special servicer) in performing any
inspections of any Property if such inspection reveals a violation by Lessee of
Section 8.5. Lessee shall not be required to indemnify any Indemnitee under this
Section 19.1 for any Claim to the extent resulting from (A) the willful
misconduct or gross negligence or breach of representation or warranty of such
Indemnitee or a member of such Indemnitee's Group, (B) any amounts payable under
the Debt Documents unless such amounts are payable by Lessee under this Lease or
any other Lease Operative Document, (C) any acts or events to the extent first
occurring after the expiration of the Lease Term and return of the Property to
Lessor in the condition required in this Lease (but any indemnification first
arising after the expiration of the Term (and not otherwise covered hereby)
shall include only those matters relating to Lessee's failure to return the
Property in the condition required), (D) any taxes, except to the extent covered
in Section 19.2 of this Lease, (E) any voluntary transfers of the Property made
by Lessor (other than arising out of a Lease Event of Default by Lessee), and
(F) any voluntary transfer of the Property made by the Indenture Trustee (other
than arising out of a Lease Event of Default by Lessee). Lessee shall be
entitled to credit against any payments due under this Section 19.1 any
insurance recoveries or other reimbursements received by the Indemnitee to be
indemnified in respect of the related Claim under or from insurance paid for,
directly or indirectly, by Lessee or assigned to Lessor by Lessee, to the extent
such insurance recoveries exceed such Indemnitee's costs and expenses incurred
in recouping such insurance recovery.
The foregoing indemnity (and any other indemnity made by Lessee herein,
including, without limitation, in Sections 4.3 and 19.2(b)(v)) applies to all
matters herein, including, without limitation, any of the same that are caused
in whole or in part by the sole or concurrent negligence of any Indemnitee.
(b) In case any Claim shall be made or brought against any Indemnitee,
such Indemnitee shall give prompt notice thereof to Lessee, provided that
failure to so notify Lessee shall not reduce Lessee's obligations to indemnify
any Indemnitee hereunder unless and only to the extent such failure results in
additional liability on Lessee's part. Lessee shall be entitled, at its expense,
acting through counsel selected by Lessee (and reasonably satisfactory to such
Indemnitee), to participate in, and, to the extent that Lessee desires to assume
and control, in consultation with Indemnitee, the negotiation, litigation and/or
settlement of any such Claim (subject to the provisions of the last sentence of
subparagraph (c) of this Section 19.1). Such Indemnitee may (but shall not be
obligated to) participate in a reasonable manner at its own expense (unless
Lessee is not properly performing its obligations hereunder) and with its own
counsel in any proceeding conducted by Lessee in accordance with the foregoing.
If Lessee shall defend the Indemnitee in any such suit or proceeding, then,
unless such Indemnitee shall determine (in its reasonable discretion) that a
conflict of interest exists between Lessee and such Indemnitee, Lessee shall not
be obligated to reimburse the Indemnitee for the cost of such Indemnitee's
attorneys' fees or expenses incurred in connection with such suit or proceeding.
41
(c) Each Indemnitee shall at Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee in connection with any
Claim for which Lessee may be required to indemnify any Indemnitee under this
Section 19.1. Unless a Lease Event of Default is continuing, no Indemnitee shall
enter into any settlement or other compromise with respect to any Claim for
which indemnification is required under this Section 19.1 without the prior
written consent of Lessee. Lessee shall have the authority to settle or
compromise any Claim against an Indemnitee hereunder, provided that no admission
of wrongdoing shall be required of such Indemnitee and such Indemnitee shall be
released of all liability in connection with any such Claim.
(d) Upon payment in full of any Claim by Lessee pursuant to this
Section 19.1 to or on behalf of an Indemnitee, Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise reasonably cooperate with Lessee to enable Lessee
to pursue such claims.
(e) Prior to paying any amount otherwise payable to an Indemnitee
pursuant to this Section 19.1, Lessee shall be entitled to receive from such
Indemnitee (i) a written statement describing the amount so payable, (ii) a
general release from Indemnitee upon such payment with respect to the claim made
and (iii) such additional information as Lessee may reasonably request and which
is reasonably available to such Indemnitee to properly substantiate the
requested payment.
(f) Subject to the penultimate sentence of Section 19.1(a) above,
Lessee's liability hereunder shall in no way be limited or impaired by any act,
including, without limitation, (i) any amendment or modification to any of the
Lease Operative Documents, (ii) any waiver of any Lease Event of Default,
default, or extension of time or any failure to enforce any remedies or rights
of either Lessor or Indenture Trustee under the Lease Operative Documents, (iii)
any sale or transfer of the Property, or (iv) any assignment of the Lease.
Section 19.2. General Tax Indemnification.
(a) Except as provided in Section 19.2(b), Lessee agrees to indemnify
each Tax Indemnitee against, and hold each Tax Indemnitee harmless from on an
After-Tax Basis, and to pay in accordance with Section 19.2(f): (i) any and all
Taxes of any United States federal taxing authority, state, or political
subdivision or taxing authority, thereof or therein or any other Governmental
Authority, which are imposed or levied upon or assessed against or with respect
to or in connection with (A) any such Tax Indemnitee, the Lessee, any tenant,
the Secured Note and any amounts and expenses payable thereunder, any financing
or refinancing, but only to the extent such Taxes arise in connection with the
Operative Documents, Property or the transactions or activities contemplated by
42
the Operative Documents, (B) the Property, or any part or interest therein, or
any additions, modifications or improvements thereto, or any estate, right,
title, or any occupancy, operation, possession of, or sales from or other
activity conducted on the Property or any damage to, removal, abandonment,
salvage, loss, condemnation, theft, scrapping, destruction of, any requisition
or taking thereof, (C) Base Rent, Supplemental Rent or other sums payable under
this Lease or any other Operative Document (including, in each case, any
amendment, supplement, waiver, or consent thereto), (D) this Lease or any other
Operative Document (including, in each case, any amendment, supplement, waiver
or consent thereto) or the leasehold estate hereby created or any interest
therein, or which arises in respect of the operation, possession or use or
disposition, after the acquisition thereof by a Tax Indemnitee, of all or any
portion of the Property or interest therein, if any, or (E) any leasing,
subleasing, sub-subleasing or use of the Property or any interest therein, (ii)
other governmental charges or Taxes imposed upon the Property or upon a Tax
Indemnitee as a result of ownership of the Property or interest therein
(including, without limitation, sewer or water assessments), (iii) payments
required to be made to a governmental or quasi-governmental authority (or
private entity in lieu thereof) which are in lieu of each of the foregoing
(whether or not expressly so designated), (iv) any loss to any of Lessor or its
direct or indirect owners that is not treated as a pass-through entity for
Federal income tax purposes, computed assuming applicability of the highest
Federal, state and local income tax rates applicable to such Tax Indemnitee,
resulting from a reduction, disallowance, elimination, recapture or
disqualification of, or from not claiming (based on a written opinion of counsel
that there is no reasonable basis for claiming), all or any portion of the
depreciation, interest and amortization deductions claimed (or that would have
been claimed but for such opinion of counsel) by the Tax Indemnitee as the owner
of the Property and the obligor under the Secured Note for income tax purposes,
to the extent such loss is due to any delay, act (voluntary or involuntary,
including, but not limited to, any bankruptcy or insolvency) of, or failure to
act by, the Lessee or an Affiliate of Lessee (including, without limitation, the
failure to timely restore, rebuild or place in service any Improvements in
accordance with Section 12.1 and/or Section 12.1A hereof after an Event of Loss
or any act or omission that is inconsistent with treating this Lease as a "true
lease" for income tax purposes, but in each case excluding any act or omission
required or expressly permitted by the Operative Documents or in connection with
the negotiation, execution and delivery thereof), or due to the Property
constituting "tax-exempt use property" or "tax-exempt bond financed property"
within the meaning of Code Sections 168(h) and (g)(5), respectively as a result
of the status of, or act of, Lessee and (v) any interest, penalties or additions
to tax payable by the Tax Indemnitee in connection with any of the foregoing
(any such amounts described in the foregoing clauses, being deemed to be a "Tax"
for purposes of this Section 19.2).
(b) Notwithstanding anything to the contrary contained in Section
19.2(a), Lessee will have no obligation under this Section 19.2 with respect to
amounts described in any one or more of the following:
(i) in the case of any Tax Indemnitee, (A) Taxes (other than
Taxes that are, or are in the nature of, sales, use, property, ad
valorem, rental, stamp, transfer or license Taxes) imposed on such Tax
Indemnitee by the United States federal government under Subtitle A or
Subtitle B of the Code (including any Taxes that are, or are in the
43
nature of minimum or alternative minimum Taxes, and any Taxes on or
measured by any items of Tax preference), (B) Taxes (other than Taxes
that are, or are in the nature of, sales, use, property, ad valorem,
rental, stamp, transfer or license Taxes) imposed on such Tax
Indemnitee by the state in which the Property is located or any local
jurisdiction therein on, based on or measured by net income (including
any minimum Taxes or Taxes on items of tax preference) or net receipts
or gross income or gross receipts, or Taxes that are in the nature of
intangibles Taxes, (C) Taxes (other than Taxes that are, or are in the
nature of, sales, use, property, ad valorem, rental, stamp, transfer,
or license Taxes) imposed on such Tax Indemnitee by the state in which
the Property is located or any local jurisdiction therein that are
imposed on capital or net worth, excess profits or conduct of business,
or (D) Taxes imposed by any foreign or domestic government or taxing
authority (other than the United States or any states or any local
government or taxing authority in any of the states), in each case,
under clauses (A), (B), (C) and (D) of this paragraph other than Taxes
imposed as a result of (v) the execution or delivery by the Lessee or
any Affiliate of any Operative Document in such jurisdiction, (w) the
identity, organization, activities or presence of the Lessee or any
Affiliate of the Lessee in such jurisdiction or (x) the Lessee's or any
Affiliate of the Lessee's (and, in the case of Taxes imposed on or with
respect to payments made to the Indenture Trustee on behalf of the
Holders, the Issuer's or any Affiliate of the Issuer's) making of any
payment (or being deemed to have made payments) under the Operative
Documents to the Indenture Trustee (on behalf of the Holders) or the
Lessor from the jurisdiction imposing such Taxes; provided that there
shall not be excluded under this clause (i) any amounts necessary to
make any payment required to be made under the Operative Documents to
be made on an After-Tax Basis, including but not limited to payments
pursuant to Section 19.3; provided further, that there shall not be
excluded under this clause (i) any Taxes which are specifically
provided in the relevant statute or legislative history to be in lieu
of or in replacement of any Taxes otherwise indemnified herein;
provided further, that there shall not be excluded under this clause
(i) any amount with respect to a loss described in clause (a)(iv) or
clause (a)(v) (to the extent it relates to clause (a)(iv)) of this
Section 19.2;
(ii) Taxes attributable to any (1) voluntary sale, assignment,
transfer or other disposition (collectively, a "Transfer") by such Tax
Indemnitee or any Affiliate thereof of any interest in such Tax
Indemnitee, the Property or any part thereof or any interest therein or
any interests or obligations arising under the Operative Documents, (2)
any involuntary transfer of any of the foregoing interests resulting
from any bankruptcy or other proceeding for the relief of debtors in
which such Tax Indemnitee is a debtor, (3) any foreclosure by a
creditor of such Tax Indemnitee, or (4) any transfer as the result of
Condemnation; provided, however, this clause (ii) shall not apply to
any such sale, assignment, transfer or other disposition occurring as a
result of and so long as a Lease Event of Default has occurred and is
continuing (it being understood that any transfer or disposition
expressly permitted by Articles 10, 12 or 13 of the Lease or requested
by the Lessee is not a voluntary transfer or disposition);
(iii) Taxes imposed against or payable by a Tax Indemnitee to
the extent imposed with respect to any period after the expiration or
earlier termination of this Lease (in either case provided that, if
required, possession of the Property has been returned and the Lessee's
obligation to pay Base Rent under the Lease has been extinguished)
other than pursuant to the exercise of remedies in connection with a
Lease Event of Default, provided that the exclusion in this clause
(iii) shall not apply to the extent such Taxes are imposed with respect
to any payments due under the Operative Documents after such expiration
or earlier termination;
44
(iv) Taxes imposed against, or payable by any trustee for any
Tax Indemnitee with respect to or measured by any trustee fees or
reimbursements for expenses for services rendered in its capacity as
trustee;
(v) Taxes imposed against or payable by any Tax Indemnitee as
a result of the gross negligence, willful misconduct or fraud of such
Tax Indemnitee or any Affiliate thereof or as a result of the
inaccuracy of any of the representations or breach of any of the
covenants of such Tax Indemnitee or any Affiliate thereof in any of the
Operative Documents;
(vi) as long as the Indenture Trustee is receiving all rent
without reductions on account of contested Taxes, any Tax being
contested in accordance with the provisions of Section 19.2(e), during
the pendency of such contest;
(vii) any Tax that would have been imposed on a particular Tax
Indemnitee without regard to the transactions contemplated by the
Operative Documents;
(viii) Taxes imposed against or payable by a Tax Indemnitee if
such Taxes are enacted as a substitute for or in lieu of any Taxes not
indemnifiable hereunder;
(ix) Taxes imposed solely as a result of the status of a Tax
Indemnitee for relevant tax purposes, such as a utility, insurance
company or banking or other financial institution or tax-exempt entity,
provided such Taxes are not in lieu of or a substitute for Taxes that
would be indemnifiable hereunder;
(x) Taxes or liabilities resulting from any prohibited
transaction described in Section 406 or 407 of ERISA or Section 4975(c)
of the Code or any successor provisions thereto that may arise in
connection with any transaction contemplated by the Operative
Documents, other than any such Taxes that are imposed as a result of a
breach of a representation of the Lessee;
(xi) Taxes that would not have been imposed but for an
amendment, supplement, modification, consent or waiver to any Operative
Document that has not been initiated or consented to by Lessee or any
Affiliate thereof in writing unless in each case (1) such amendment,
supplement, modification, consent or waiver is required or made
pursuant to the Operative Documents or Applicable Law or (2) is
necessary or appropriate to, and is in conformity with any other
amendment, supplement, modification, consent or waiver to any Operative
Documents initiated, requested by or consented to by the Lessee or any
Affiliate thereof in writing;
(xii) Taxes resulting from or that would not have been imposed
but for the existence of Lessor Liens;
45
(xiii) any interest, penalties or additions to Tax imposed
against or payable by a Tax Indemnitee that are the result of the
failure of such Tax Indemnitee (after timely written notice from the
Lessee, where such notice is required pursuant to subsection (j)
hereof) to prepare and file any return properly and timely, unless (i)
Lessee is required to prepare and/or file such return pursuant to the
Operative Documents or (ii) such failure is caused by the failure of
Lessee to forward to such Tax Indemnitee any and all information such
Tax Indemnitee has reasonably requested from Lessee (other than
information reasonably obtainable by, or in the possession of, such Tax
Indemnitee) or to send to such Tax Indemnitee on a timely basis any
notifications or notices received by Lessee with respect to such
returns from any applicable taxing authority;
(xiv) Taxes that would not have been imposed but for any
failure of a Tax Indemnitee to comply with (x) certification,
information, documentation, reporting or other similar requirements
(each, a "Requirement") concerning the nationality, residence, identity
or connection with the jurisdiction imposing such Taxes, if such
compliance is required by statute or regulation of the jurisdiction
imposing such Taxes as a precondition to relief or exemption from such
Taxes and such Tax Indemnitee was eligible to comply with such
Requirement or (y) any other Requirement under the tax laws or
regulations of the jurisdiction imposing such Taxes that would
establish entitlement to otherwise applicable relief or exemption from
such Taxes if such Tax Indemnitee was eligible to comply with such
Requirement; but only, in each case of (x) and (y), so long as such
procedure would not expose such Tax Indemnitee (in the Tax Indemnitee's
good faith opinion) to any cost or expense for which Lessee shall not
have agreed to indemnify such Tax Indemnitee; provided, however, that
the exclusion set forth in this clause (xiv) shall not apply if such
failure to comply is due to a failure of the Lessee to provide
reasonable assistance or response in complying with such Requirement;
or
(xv) Taxes that result from such Tax Indemnitee or any of its
Affiliates not being a United States person within the meaning of
Section 7701(a)(30) of the Code unless such failure is due to an act of
the Lessee.
(c) Reimbursement. If Lessee shall have paid any amount pursuant to the
Lease or any other Operative Document or Applicable Laws with respect to or on
account of Taxes not subject to indemnification pursuant to this Section 19.2,
the Tax Indemnitee on whose behalf such Taxes were paid shall pay to Lessee
within ten (10) Business Days of written notice of such payment by Lessee the
amount so paid by Lessee (or Person making payment on behalf of Lessee);
provided, that (x) if the Tax Indemnitee shall have failed to pay the amounts
due upon the expiration of such ten (10) Business Day period, the Tax Indemnitee
shall be liable to pay interest at the Default Rate from the date such payment
became due and payable to the date of receipt thereof, and (y) if the Tax
Indemnitee shall have paid the amounts due prior to the expiration of such ten
(10) Business Day period, the Tax Indemnitee shall not be liable for any
interest.
46
(d) Calculation of General Tax Indemnity Payments. Any payment or
indemnity to or for the benefit of any Tax Indemnitee with respect to any Tax
which is subject to indemnification under Section 19.2(a) shall (A) reflect the
current net savings available to such Tax Indemnitee or any Affiliate thereof
(computed at the highest marginal rates of federal, state and local tax then
applicable to the respective Tax Indemnitee) resulting from the current
deduction of such indemnified Tax, but only to the extent that such indemnified
Tax is deductible for federal, state and local tax purposes, and (B) include,
after taking into account the savings described in clause (A), the amount
necessary to hold such Tax Indemnitee harmless on an After-Tax Basis. If, by
reason of any payment made to or for the account of a Tax Indemnitee by Lessee
pursuant to Section 19.1 or this Section 19.2, or the event or circumstance
giving rise to such payment, such Tax Indemnitee or any Affiliate thereof or any
transferee, successor or assignee thereof, actually realizes a net tax benefit,
savings, deduction or credit not taken into account in computing such payment,
provided no Lease Event of Default has occurred and is continuing (in which case
any amount payable to Lessee on account of such tax benefit, savings, deduction
or credit shall not be due unless and until such Lease Event of Default is
cured), such Tax Indemnitee (or the transferee, successor or assignee thereof)
shall promptly pay to Lessee an amount equal to the sum of (I) the net reduction
in Taxes, if any, realized by such Tax Indemnitee or any Affiliate thereof
(computed at the highest marginal rates of federal, state and local tax then
applicable to each respective Tax Indemnitee) which is attributable to such net
tax benefits, savings, deductions or credits and (II) the net reduction in any
Taxes realized by such Tax Indemnitee or any Affiliate thereof (computed at the
highest marginal rates of federal, state and local tax then applicable to each
respective Tax Indemnitee) as the result of any payment made by such Tax
Indemnitee pursuant to this sentence. Notwithstanding the foregoing, no Tax
Indemnitee shall be required to make any payment to the Lessee pursuant to this
Section 19.2(d) to the extent payments by the Tax Indemnitee to the Lessee under
this Section 19.2(d) (without regard to amounts necessary to make such payments
on an After-Tax Basis) would exceed, in the aggregate, at any time, the amount
of all prior payments made by or on behalf of the Lessee to such Tax Indemnitee
(without regard to amounts necessary to make such payments on an After-Tax
Basis) less the amount of all prior payments made by the Tax Indemnitee to the
Lessee (without regard to amounts necessary to make such payments on an
After-Tax Basis) pursuant to this Section 19.2(d), but any such excess shall
reduce pro tanto any amount (without regard to amounts necessary to make such
payments on an After-Tax Basis) that the Lessee is subsequently obligated to pay
such Tax Indemnitee pursuant to this Section 19.2.
(e) Contests. If any written claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Taxes as to which Lessee
may have an indemnity obligation pursuant to Section 19.2, such Tax Indemnitee
shall promptly notify Lessee in writing and shall not take any action with
respect to such claim or Tax without the consent of Lessee for thirty (30) days
after sending such notice to Lessee; provided that, in the case of any such
claim or proceeding, if such Tax Indemnitee shall be required by law or
regulation to take action prior to the end of such 30-day period, such Tax
Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Tax
Indemnitee shall not take any action with respect to such claim or Tax without
the consent of Lessee (not to be unreasonably withheld) before ten (10) days
from the receipt of such notice by Lessee unless the Tax Indemnitee shall be
47
required by law or regulation to take action prior to the end of such 10 day
period provided, that failure to so notify Lessee shall not affect Lessee's
obligations to indemnify hereunder except to the extent of any resultant harm
suffered by Lessee. If requested by Lessee in a written request to such Tax
Indemnitee within thirty (30) days (or such shorter period referred to in the
proviso to the first sentence in this Section 19.2(e) specified in such notice
(but in any event not less than 10 days)) after its receipt of such notice, such
Tax Indemnitee shall itself or, at such Tax Indemnitee's request, the Lessee
shall, in good faith contest (including, without limitation, by pursuit of
appeals and administrative procedures), the validity, applicability or amount of
such indemnified Taxes by (A) resisting payment thereof, (B) not paying the same
except under protest (which protest must be pursued using reasonable efforts in
appropriate administrative and/or judicial proceedings) if protest shall be
necessary and proper or (C) if payment shall be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and/or judicial
proceedings; provided that in no event shall such Tax Indemnitee be required to
contest any claim for any Tax unless (1) the amount at issue (taking into
account all similar and logically related claims with respect to the
transactions contemplated by the Operative Documents that have been or could
have been raised in an audit by the taxing authority in question for any other
taxable period with respect to which an assessment of a tax deficiency is not
barred by a statute or limitations, including, without limitations, such claims
that may arise in future periods) exceeds $25,000, (2) the Tax that is the
subject of such contest is a Tax for which Lessee may have an indemnity
obligation hereunder; (3) Lessee shall have agreed to pay such Tax Indemnitee
and shall pay on an After-Tax Basis as incurred all reasonable costs and
expenses that such Tax Indemnitee shall incur in connection with contesting such
claim (including, without limitation, all reasonable costs, expenses, legal and
accounting fees and disbursements); (4) the action to be taken will not result
in any material danger of an imminent sale, forfeiture or loss of, or the
creation of any Lien (other than a Permitted Lien) against the Property and that
there is no risk that criminal or punitive civil liability may be imposed with
respect to such Tax Indemnitee (other than any liability for any interest,
penalties or additions to tax that may be assessed with respect to the Taxes
that are the subject of such contest and as to which clauses (2) and (3) of this
paragraph apply); (5) if such contest shall involve payment of the claim, Lessee
shall advance the amount thereof plus interest, penalties and additions to tax
with respect thereto to such Tax Indemnitee on an interest-free basis (with no
additional net after tax cost to such Tax Indemnitee and without taking into
account any net tax savings associated with such advance); (6) no Lease Event of
Default under this Lease shall have occurred and be continuing (it being agreed
that in such case, the Tax Indemnitee shall consult in good faith with Lessee to
determine whether Lessee can provide to the Tax Indemnitee reasonably
satisfactory security to cover its indemnity obligations with respect to amounts
to be contested and its obligations under the foregoing clause (5) of this
proviso, in which case, such Lease Event of Default shall not deprive Lessee of
its contest rights hereunder); and (7) in the case of a contest which must be
contested in the name of the Tax Indemnitee, prior to initiating the contest the
Lessee shall have furnished the Tax Indemnitee with an opinion of an independent
tax advisor selected by the Lessee and reasonably acceptable to the Tax
Indemnitee ("Tax Counsel") to the effect that a reasonable basis exists for such
contest. In no event shall the Tax Indemnitee be required to contest any claim
if the subject matter of such claim shall be of a continuing nature and shall
have previously been the subject of an adverse final determination under the
contest provisions of this Section 19.2(e) after exercise by the Lessee of its
rights pursuant to this Section 19.2, unless the Lessee shall have delivered to
such Tax Indemnitee an opinion of Tax Counsel to the effect that as a result of
a change in law or fact it is more likely than not that the Tax Indemnitee will
prevail in the contest of such claim.
48
The relevant Tax Indemnitee shall control any contest unless the Tax
Indemnitee requests that the Lessee control such contest or declines in writing
to control such contest. The party conducting the contest ("Controlling Party")
shall consult in good faith with the other party ("Noncontrolling Party") and
its counsel with respect to the contest of such claim for Taxes (or claim for
refund) but the decisions regarding what actions to be taken shall be made by
the Controlling Party in its sole judgment (exercised in good faith). In
addition, the Controlling Party shall keep the Noncontrolling Party reasonably
informed as to the progress of the contest, and shall provide the Noncontrolling
Party with a copy of (or appropriate excerpts from) any reports or claims issued
by the relevant auditing agents or taxing authority to the Controlling Party or
any Affiliate thereof, in connection with such claim or the contest thereof. The
Controlling Party shall be responsible for the selection of counsel, which
counsel must be reasonably satisfactory to the Noncontrolling Party. If the
lessee is the Controlling Party, the Controlling Party shall permit the
Noncontrolling Party's counsel to be present at all meetings (to the extent
permitted by law, and the Controlling Party shall execute any necessary consents
and take such other actions as may be required to permit the Noncontrolling
Party or its counsel to be present).
Notwithstanding anything contained in this Section 19.2, a Tax
Indemnitee shall not be required to contest any claim and may settle any contest
without the consent of Lessee if such Tax Indemnitee (A) shall waive its right
to indemnity under this Section 19.2 with respect to such claim for such Tax
(and any claim made by any taxing authority with respect to other taxable
periods that is based upon the resolution of such claim, or the contest of which
is materially prejudiced by the resolution of such claim), and (B) shall pay to
Lessee any amount of Tax previously paid or advanced by Lessee pursuant to this
Section 19.2 with respect to such claim other than the costs and expenses of the
contest of such claim paid by the Lessee, together with interest thereon at the
underpayment rate, as defined in Section 6621 of the Code.
Notwithstanding any of the foregoing in this Section 19.2(e), Lessee
may, at any time and with notice to any Tax Indemnitee, contest the property or
ad valorem Taxes for which the Lessee has an obligation to indemnify any Tax
Indemnitee hereunder, provided Lessee complies with the contest provisions of
Section 8.6 hereof. Each Tax Indemnitee shall, upon the Lessee's reasonable
request, execute any necessary consents and take such other actions as
reasonably may be required to permit Lessee to conduct any such contest.
If any Tax Indemnitee or any Affiliate thereof shall obtain a refund
(including by way of credit) of all or any part of any Tax with respect to which
the Lessee shall have paid on behalf of such Tax Indemnitee or reimbursed such
Tax Indemnitee, then such Tax Indemnitee shall, so long as no Lease Event of
Default shall have occurred and be continuing, pay to the Lessee any such refund
(including any applicable interest received with respect to such refund or that
would have been received with respect to such refund but for a counterclaim or
other claim not indemnified by Lessee hereunder) plus any tax savings realized
by such Tax Indemnitee as a result of a payment pursuant to this sentence (it
being understood that the calculation of such tax savings shall take into
account any additional income Taxes incurred by such Tax Indemnitee as a result
of the receipt or accrual of such refund). A Tax Indemnitee shall not be
49
obligated pursuant to this Section 19.2(e) to make a payment (i) before such
time as the Lessee shall have made all payments then due under the Operative
Documents and any Lease Event of Default that shall have occurred shall no
longer be continuing or (ii) in excess of the amounts paid by Lessee to such Tax
Indemnitee pursuant to this Section 19.2(e) in respect of the Taxes giving rise
to such tax savings (minus any amounts previously paid to Lessee by such Tax
Indemnitee pursuant to this Section 19.2(e) plus any applicable interest that
would have been received with respect to such refund but for a counterclaim or
other claim not indemnified by Lessee hereunder), provided that any such amounts
not paid to Lessee pursuant to the limitation contained in clause (ii) of this
sentence shall be carried forward to reduce, pro tanto, any future amounts that
may become payable by the Lessee to such Tax Indemnitee pursuant to this Section
19.2(e) in respect of the Taxes giving rise to such tax savings. The
disallowance, loss, recapture or reduction of any credit, refund or other tax
savings with respect to which a Tax Indemnitee has made a payment to the Lessee
under this Section 19.2(e) shall be treated as a Tax for which the Lessee is
obligated to indemnify such Tax Indemnitee hereunder, without regard to the
exclusions set forth in Section 19.2(b). The Tax Indemnitee shall make any
payments to the Lessee under this Section 19.2(e) within ten (10) days of the
receipt of such refund.
(f) Payments. Any Taxes indemnified hereunder shall be paid by Lessee,
to the extent allowed, directly to the appropriate taxing authority on or before
the time, and in the manner, prescribed by Applicable Laws. Any amount payable
to a Tax Indemnitee pursuant to this Section 19.2 shall be paid within ten (10)
days after receipt of a written demand therefor from such Tax Indemnitee
accompanied by a written statement describing in reasonable detail the amount so
payable, but not before the date such Tax is due. Any payments to be made by
Lessee pursuant to this Section 19.2 that are not paid to the appropriate
Governmental Authority shall be made directly to the Tax Indemnitee entitled
thereto, and any payments to be made to Lessee pursuant to this Section 19.2
shall be made directly to Lessee, in each case in immediately payable funds at
such bank or to such account as specified by the payee in written directions to
the payor, or, if no such directions shall have been given, by check of the
payor payable to the order of the payee and mailed to the payee by certified
mail, postage prepaid at its address as set forth in this Lease. Any amount
payable under this Section 19.2 that is not paid when due shall bear interest at
the Default Rate.
(g) Verification. At Lessee's request, the amount of any indemnity
payment by Lessee pursuant to this Section 19.2 or any payment by a Tax
Indemnitee to Lessee pursuant to this Section 19.2 shall be verified by the
certified public accountant who regularly prepares the tax returns for such Tax
Indemnitee, who shall verify and certify in writing the accuracy of the Tax
Indemnitee's computations. Notwithstanding the foregoing, Lessee may request
verification by a separate nationally recognized United States or international
accounting firm selected by the Tax Indemnitee and reasonably acceptable to
Lessee. The person or persons required to perform such verification (the
"Verifier") shall be asked to verify, after consulting with the Tax Indemnitee,
whether the Tax Indemnitee's computations are correct and to report its
conclusions to both Lessee and the Tax Indemnitee. Each Tax Indemnitee and
Lessee hereby agree to provide the Verifier with all information and materials
as shall be reasonably necessary or desirable in connection therewith; provided,
however, that in no case shall the Verifier or any other Person be entitled to
50
see the tax returns or the books and records of the Tax Indemnitee other than
necessary excerpts thereof with respect to which the Verifier or such other
Person has agreed to treat as confidential. The fee of such Verifier (if such
Verifier is an independent accounting firm) shall be paid by Lessee unless such
verification discloses an error adverse to Lessee of more than the greater of
(i) the Verifier's fee, or (ii) 5% or more of the amount determined by such
Verifier, in which case such fees shall be paid by the applicable Tax
Indemnitee. The Verifier shall be requested to make its determination within
thirty (30) days of its appointment. In the event such Verifier shall determine
that such computations are incorrect, then such Verifier shall determine what it
believes to be the correct computations. Notwithstanding anything herein to the
contrary, the sole responsibility of the Verifier shall be to verify the
computations of the amount payable; interpretations of this Agreement or any
other Operative Documents are not within the scope of such Verifier's
responsibilities.
(h) Forms, etc. Each Tax Indemnitee agrees to furnish to Lessee from
time to time, at the written request and expense of Lessee, such duly executed
and properly completed forms as may be necessary or appropriate in order to
claim any reduction of or exemption from any withholding or other Tax imposed by
any taxing authority in respect of any payments otherwise required to be made by
Lessee, as the case may be, pursuant to this Lease, which reduction or exemption
is available to such Tax Indemnitee; provided that no Tax Indemnitee shall have
any obligation to comply with any request or take any other action pursuant to
this Section 19.2 if in order to comply with such request or take such action
the Tax Indemnitee would be required to make any inaccurate statement or would
be exposed (in Tax Indemnitee's good faith opinion) to any cost or expense for
which Lessee shall not have agreed to indemnify such Tax Indemnitee.
(i) Non-Parties. If any Tax Indemnitee is not a party to this Lease,
such Tax Indemnitee shall be a third party beneficiary of this Section 19.2, but
Lessee may require the Tax Indemnitee, before making any payment to such Tax
Indemnitee under this Section 19.2, to provide the Lessee in writing with an
agreement executed by the Tax Indemnitee, as follows:
In consideration of the rights of the undersigned to payments
from the Lessee pursuant to Section 19.2 of the Lease Agreement, dated
as of February 14, 2002, between the Lessor thereof and the Lessee
thereof, the undersigned hereby agrees and covenants that it is a "Tax
Indemnitee" for the purposes of and shall be subject to the terms and
conditions of Section 19.2 of the Lease and will make all payments and
take such other actions as are required under Section 19.2 of the
Lease.
(j) Filings. If any report, return or statement (a "Filing") is
required to be filed with respect to any Tax that is subject to indemnification
under this Section 19.2 and such Filing would be required to be made by a
domestic entity, Lessee shall promptly notify the appropriate Tax Indemnitee or,
if the Lessee elects, the Lessor of such requirement in writing (at least thirty
(30) days prior to the date such Filing is due) and, if permitted by Applicable
Laws to do so, Lessee shall timely file or cause to be filed such Filing with
respect to such Tax (except for any such Filing that a Tax Indemnitee has
notified Lessee in writing that such Tax Indemnitee intends to file) and will
(if ownership of the Property or any part thereof or interest therein is
required to be shown on such Filing) show the ownership of the Property in the
name of Lessor and send a copy of such Filing to the appropriate Tax Indemnitee
51
and Tax Indemnitee shall furnish Lessee, at Lessee's request, with such
information, not within the control of Lessee, as is in such Tax Indemnitee's
control or is reasonably available to such Tax Indemnitee and necessary to file
such Filing; provided, however, Lessee shall pay all reasonable out-of-pocket
expenses of the Tax Indemnitee in connection therewith. If Lessee is not
permitted by Applicable Laws to file any such Filing, Lessee will promptly
notify the appropriate Tax Indemnitee of such requirement in writing and prepare
and deliver to the appropriate Tax Indemnitee a proposed form of such Filing
within a reasonable time, and in all events at least fifteen (15) days prior to
the time such Filing is required to be filed. In the case of any Filing either
required to reflect items in addition to Taxes imposed on or indemnified against
by the Lessee under this Section 19.2 or which the Tax Indemnitee has notified
Lessee in writing that it will prepare and file, Lessee shall, upon the written
request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is within Lessee's reasonable control or access. Lessee shall
hold each Tax Indemnitee harmless from and against any liabilities, including,
but not limited to penalties, additions to tax, fines and interest, arising out
of any insufficiency or inaccuracy in any such Filing, if such insufficiency or
inaccuracy is attributable to Lessee.
(k) Cooperation. Each Tax Indemnitee shall cooperate with Lessee and
shall take any action reasonably requested by Lessee to avoid or minimize the
amount of any Tax for which Lessee would be required to make a payment under
this Section 19.2; provided, that no Tax Indemnitee would have suffered costs or
expenses as a result of such requested action for which Lessee shall not have
agreed to indemnify such Tax Indemnitee.
Section 19.3. Withholdings of Rent. Lessee agrees that each payment of
Rent shall be free and clear of, and without deduction for, any and all
withholdings of any nature whatsoever. If any deduction or withholding is
required with respect to a payment of Rent by Lessee, Lessee shall pay an
additional amount such that the net amount actually received by the Tax
Indemnitee, after deduction or withholding, will be equal on an After-Tax Basis
to all such amounts that would be received by the Tax Indemnitee if no such
deduction or withholding had been required provided, that the Lessee shall not
be obligated to pay any additional amount pursuant to this first paragraph of
Section 19.3 if due to the failure of a Tax Indemnitee to comply with a
Requirement as provided in Section 19.2(b)(xiv) required as a precondition to
relief or exemption from such withholding tax on Rent.
Notwithstanding anything to the contrary contained herein, Lessee will
indemnify the Indenture Trustee and Lessor (and any Affiliate of the foregoing)
on an After-Tax Basis for any obligation to the Holders with respect to
withholding Taxes imposed on Indenture Trustee and Lessor (or any Affiliate of
the foregoing) with respect to the Secured Notes (or any debt issued to
refinance or refund such Notes pursuant to Article 24 of this Agreement or
otherwise with the consent of the Lessee) pursuant to the Indenture as initially
agreed or as amended from time to time with Lessee's consent (or the
documentation for such debt issued to refinance or refund the Secured Notes as
aforesaid) as a result of any claim with respect to such withholding or as a
result of a claim by the Internal Revenue Service or any other taxing authority
asserted against Indenture Trustee or Lessor (or any Affiliate of the foregoing)
with respect to any such withholding Tax, provided, that Lessee shall not be
obligated to pay any additional amount pursuant to this second paragraph of
Section 19.3 if due to the failure of the Indenture Trustee or the relevant
Holder to comply with any documentation requirements contained in the Indenture
relating to such withholding Tax and provided further, that Lessee shall be
subrogated to the rights and defenses of such Person that it has indemnified or
held harmless in respect of such withholding Taxes.
52
If Lessee makes any payment to a Tax Indemnitee pursuant to this
Section 19.3 with respect to a Tax for which such Tax Indemnitee does not have
an indemnification obligation pursuant to Section 19.2, Lessor shall promptly
repay Lessee for the amount of such payment and any unpaid amount shall bear
interest at the prime rate from time to time in effect at Citibank, N.A., or any
successor.
ARTICLE 20
LESSEE REPRESENTATIONS AND COVENANTS
Section 20.1. Representations and Warranties. Lessee represents and
warrants to Lessor that the following are true and correct as of the date
hereof:
(a) Due Organization. Lessee is a corporation duly organized, validly
existing and in good standing in the State of Texas and is qualified to do
business in the State of Texas. Lessee has the corporate power and authority to
conduct its business as now conducted, to own or hold under lease its property,
to lease the Property and to enter into and perform its obligations under the
Operative Documents to which it is or is to become a party. Lessee is duly
qualified to do business and is in good standing as a foreign corporation in any
jurisdiction where the failure to so qualify would have a material adverse
effect on its ability to perform its obligations under the Operative Documents
to which it is a party.
(b) Due Authorization; No Conflict. Each of the Operative Documents to
which Lessee is a party has been duly authorized by all necessary corporate
action on the part of Lessee and has been duly executed and delivered by Lessee,
and the execution, delivery and performance thereof by Lessee will not, (i)
require any approval of the stockholder of Lessee (except as heretofore
obtained) or any approval or consent of any trustee or holder of any
indebtedness or obligation of Lessee or of any Guarantor or Affiliate of either
of them, other than such consents and approvals as have been obtained, (ii)
contravene any Applicable Law binding on Lessee or (iii) contravene or result in
any breach of or constitute any default under Lessee's charter or by-laws or
other organizational documents, or any indenture, judgment, order, mortgage,
loan agreement, contract, partnership or joint venture agreement, lease or other
agreement or instrument to which Lessee is a party or by which Lessee is bound,
or result in the creation of any Lien (other than pursuant to the Operative
Documents) upon any of the property of Lessee.
(c) Governmental Actions. All Governmental Action required in
connection with the execution, delivery and performance by Lessee of the
Operative Documents to which it is a party, has been or will have been obtained,
given or made.
(d) Enforceability. Each of the Operative Documents to which Lessee is
or is to become a party constitutes the legal, valid and binding obligation of
Lessee, enforceable against Lessee in accordance with the terms thereof, except
as enforceability may be limited by bankruptcy, moratorium, fraudulent
conveyance, insolvency, general principles of equity or other similar laws
affecting the enforcement of creditors' rights in general.
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(e) Investment Company. Lessee 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.
(f) Securities Act. Lessee has not offered any interest in the Property
or the Lease, or any similar securities of Lessee to, or solicited any offer to
acquire any of the same from, any Person, in violation of Section 5 of the
Securities Act, nor has it authorized any Person to take any such action, and
Lessee has not taken any action that would subject any interest in the Property,
the Secured Notes, or the Lease to the registration requirements of Section 5 of
the Securities Act.
(g) Bankruptcy. No bankruptcy, reorganization, arrangement or
insolvency proceedings are pending, threatened or contemplated by Lessee, and
Lessee has not made a general assignment for the benefit of creditors.
(h) Tax Filings. all tax returns and reports of Lessee required by law
to be filed with respect to the Property have been duly filed, and all taxes,
interests and penalties assessed by any Governmental Authority upon the Property
or Lessee (with respect to the Property), which are due and payable, have been
paid, except to the extent being contested in good faith by the Lessee.
(i) ERISA. No member of the ERISA Group sponsors, maintains,
contributes to or is required to contribute to any pension plan subject to Title
IV of ERISA, and no member of the ERISA Group has at any time in the past
sponsored, maintained, contributed to or been required to contribute to any such
plan.
(j) Condemnation. The Lessee has not received notice (and is not
otherwise aware) of any proceeding pending for the total or partial condemnation
of or affecting the Property, such that such proceeding would have a material
adverse effect on the Property.
(k) Environmental Conditions. To the Lessee's knowledge, there are no
circumstances or conditions with respect to the Property not revealed in the
Environmental Report that render the Property in material violation of any
applicable Environmental Laws.
(l) Taxes and Assessments. There are no delinquent or unpaid taxes or
assessments (including assessments payable in future installments), or other
outstanding charges of a similar nature affecting the Property which are or may
become a lien of priority equal to or higher than the lien of the related
Mortgage (other than such taxes or assessments that the Lessee is contesting in
good faith). For purposes of this representation and warranty, real property
taxes and assessments shall not be considered unpaid until the date on which
interest (other than interest due in connection with installment payments
permitted by law, and actually paid) and/or penalties would be payable thereon.
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(m) Local Law Compliance. Except as set forth in Schedule 20.1(m), The
Improvements located on or forming part of the Property comply with applicable
zoning laws and ordinances, without the benefit of being a legal non-conforming
use, except to the extent failure to comply would not have a material adverse
effect on the Property or its value.
(n) Legal Proceedings. There are no pending, or to the Lessee's
knowledge, threatened actions, suits or proceedings by or before any court or
governmental authority against or affecting the Lessee with respect to the
Property that, if determined adversely to such Lessee or Property, would
materially and adversely affect the value of the Property or the ability of the
Lessee to pay Rent or to perform any other obligations hereunder.
(o) No Mechanics' Liens. The Property is free and clear of any and all
mechanic's and materialmen's liens (other than liens which are Permitted Liens
or are disclosed in the related Title Policy).
(p) Licenses and Permits. To the Lessee's knowledge, (i) it possesses
all licenses, permits and authorizations required by applicable law for the
operation of the Property and (ii) all such licenses, permits and authorizations
are valid and in full force and effect, in each case except to the extent the
failure to possess any such license, permit or authorization, individually or in
the aggregate, would not have a material adverse effect on the Property or its
value.
The phrase "the Lessee's knowledge" and other words and phrases of like import
shall mean the actual state of knowledge of the Lessee regarding the matters
referred to.
ARTICLE 21
EARLY TERMINATION
Section 21.1. Early Termination.
(a) Provided no Lease Event of Default has occurred and is continuing
or will occur by virtue of the provisions of this Section 21.1, then for a
period of one hundred eighty (180) days commencing on July 15, 2013 Lessee shall
have the right to determine in its sole discretion that the Property is an
Uneconomic Property. In such event, Lessee shall have the right to make a
rejectable offer to Lessor (with a copy to the Servicer and the Indenture
Trustee) to purchase the Property on the terms set forth below. The purchase
price shall be equal to the Termination Value as set forth on Schedule 21.1
attached hereto as of the proposed closing date of the purchase ("Termination
Value Date"), which shall be a Rent Payment Date. In addition to the purchase
price, all unpaid Base Rent due and payable on or prior to such Termination
Value Date, Supplemental Rent (excluding the Termination Value), all reasonable
out-of-pocket expenses of Lessor, Indenture Trustee (and the Servicer) and the
Holders relating to the purchase, if any, including reasonable attorneys' fees
and costs actually incurred and other amounts due under the Lease and the Debt
Documents (excluding the principal amount outstanding under the Notes, but
including, to the extent owed and not otherwise included in Supplemental Rent,
the Make-Whole Premium) payable by Lessor arising out of Lessor's prepayment of
the Secured Notes in connection with Lessee's offer to purchase (whether or not
such offer is accepted) shall be paid through and including the Termination
Value Date. For the avoidance of doubt, in the event that, despite the express
55
provisions of this Lease to the contrary, a Termination Value payment is ever
made on a date which is not a Rent Payment Date, then Lessee shall pay Base Rent
and Supplemental Rent up to and including the date of such Termination Value
Date with Base Rent for the semi-annual period in which the payment is made
being prorated based on the number of days since the last Rent Payment Date to
and including the date of such payment, over the number of days in the payment
period. The Termination Value Date shall be selected by Lessee but shall be at
least twelve (12) months and no more than eighteen (18) months from the date of
Lessee's offer to purchase. Lessor shall have a period of six (6) months to
elect whether to accept Lessee's offer to purchase the Property or reject such
offer. Failure to respond (provided Lessee delivers a second notice to Lessor
and the Indenture Trustee no earlier than one hundred and fifty (150) days from
the date of its first offer and no later than one hundred and seventy (170) days
from the date of such offer, further advising (in boldface) Lessor of Lessee's
offer and the fact that Lessor's silence shall be deemed acceptance of Lessee's
offer) shall be deemed acceptance of the offer. Lessor may not reject Lessee's
offer without the prior written consent of the Servicer, acting on behalf of the
Indenture Trustee. Any Make-Whole Premium or other payment (other than
principal) payable to the Indenture Trustee by virtue of this sale shall be the
sole cost and obligation of Lessee and not Lessor. Lessee's right is a one time
right only.
(b) In the event Lessor rejects Lessee's offer, which Lessor may do in
its sole discretion (provided, however, Lessor may not reject such offer without
the prior written consent of the Servicer, acting on behalf of the Indenture
Trustee, or payment to the Indenture Trustee of all amounts then outstanding
under the Debt Documents on the date that it rejects Lessee's offer, and Lessor
shall be deemed to accept such offer unless Lessor delivers to Lessee such
consent of the Servicer or payment of all such amounts when it rejects the
offer) this Lease shall terminate as of the Termination Value Date and as a
condition thereto, Lessee shall be obligated to pay to Lessor all unpaid Base
Rent due and payable on or prior to such Termination Value Date and Supplemental
Rent (through the Termination Value Date) and other amounts due under the Lease
and the Debt Documents (excluding the principal amount outstanding under the
Notes, but including, to the extent owed and not otherwise included in
Supplemental Rent, the Make-Whole Premium) payable by Lessor arising out of
Lessor's prepayment of the Secured Notes in connection with Lessee's offer to
purchase (whether or not such offer is accepted). For the avoidance of doubt, in
the event that, despite the express provisions of the Lease to the contrary, the
foregoing payments are ever made on a date which is not a Rent Payment Date,
then Lessee shall pay Base Rent and Supplemental Rent up to and including the
date of such payment with Base Rent for the semi-annual period in which the
payment is made being prorated based on the number of days since the last Rent
Payment Date to and including the date of such payment over the number of days
in the payment period.
(c) In the event Lessor accepts, or is deemed to accept, Lessee's
offer, the provisions of Article 22 below shall be operative. In such event,
Lessee agrees to vacate the Property, and to cause all of its Affiliates to
vacate the Property, for a period of at least three (3) consecutive years,
commencing as of the Termination Value Date.
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(d) In the event Lessor accepts, or is deemed to accept, Lessee's
offer, Lessee shall commence marketing of the Property at its sole cost and
expense and may require Lessor to execute documents to effectuate a sale
provided such documents are contemplated by Article 22 below. The net proceeds
of any sale (after payment of all expenses of the sale and all actual out of
pocket costs incurred by Lessor, the Servicer, the Indenture Trustee and the
Holders, including without limitation, reasonable attorneys' fees and expenses
and the Make-Whole Premium) shall be received by Lessor and shall be netted
against the Termination Value payable by Lessee to Lessor if received prior to
the Termination Value Date. Any amounts received in excess of the Termination
Value shall be applied with the following priority (i) to Lessee to reimburse it
for its reasonable, out-of-pocket third party marketing costs, and (ii) for
Lessor's account. In the event there is any shortfall between the net proceeds
received by Lessor from such sale and the amount of the Termination Value,
Lessee shall pay such shortfall on or prior to the Termination Value Date. In
all events, the amounts payable pursuant to subsection (a) above, shall be
payable by Lessee at the closing.
ARTICLE 22
PURCHASE PROCEDURE
Section 22.1. Purchase Procedure. In the event of the purchase of
Lessor's interest in the Property by Lessee (or its designee, as provided in
Section 4) pursuant to any provision of this Lease, the terms and conditions of
this Section 22.1 shall apply.
(a) On the closing date fixed for the purchase of Lessor's interest in
the Property which shall be a Rent Payment Date:
(i) Lessee shall pay to Lessor, in lawful money of the United
States, at Lessor's address hereinabove stated or at any other place in
the United States which Lessor may designate, in immediately available
funds, the applicable purchase price or Termination Value, and all
other costs due as of such Closing, including, without limitation, the
applicable Make-Whole Premium;
(ii) Lessor shall execute and deliver to Lessee a Special
Warranty Deed with covenants against grantor's acts, assignment and/or
such other instrument or instruments as may be appropriate, which shall
transfer Lessor's interest in the Property, subject to, (A) Permitted
Liens (except for any mortgage indebtedness of Lessor if the sale is
pursuant to Article 12 or Section 21.1), (B) all liens, encumbrances,
charges, exceptions and restrictions attaching to the Property after
the Closing Date which shall not have been created or caused by Lessor
(unless, if created or caused by Lessor, consented to by Lessee), and
(C) all applicable laws, rules, regulations, ordinances and
governmental restrictions then in effect; and
(iii) Lessee shall comply with Section 5.01 of the Indenture
if the Property is being purchased pursuant to Lessee's right of first
offer set forth in Article 4.
(b) Lessee shall pay all costs, charges and expenses incident to such
transfer, including, without limitation, all recording fees, transfer taxes,
title insurance premiums, fees to the Servicer's, Indenture Trustee's and the
Holders' counsel and federal, state and local taxes, except for any income taxes
and as otherwise provided under Section 19.2.
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(c) In the event Lessor and Lessee enter into a purchase agreement for
the sale of the Property, Lessor agrees to cause the entity that owns the
Property to be sold to Lessee, in lieu of a sale of the Property to Lessee, in
the event (i) Lessee requests Lessor to do so; and (ii) the sale of the
interests in Lessor (rather than the Property) to Lessee shall not impose any
obligations on Lessor that would not be imposed had Lessor sold the Property,
will not decrease any rights Lessor would have had Lessor sold the Property, and
will not create any increased possibility of additional liability to Lessor
(including without limitation, for ongoing corporate acts, taxes, etc.), all as
shall be reasonably evidenced to Lessor by certificates, affidavits, opinions or
otherwise. Lessor agrees to cooperate with Lessee in effectuating such a
transfer of equity interests, subject to the terms hereof.
ARTICLE 23
TRANSFER OF LESSOR'S INTEREST
Section 23.1. Permitted Transfer. Subject to Article 4, Lessor may
transfer all, or any part of, its right, title and interest in and to the
Property and its rights under this Lease and the other documents relating
thereto with respect to such Property other than (so long as no Lease Event of
Default shall exist) to Prohibited Transferees, on the following terms and
conditions, each of which shall be satisfied prior to the effective date of the
transfer (provided that such terms and conditions shall not apply to a transfer
by a deed-in-lieu of foreclosure or similar transfer made in connection with an
exercise of remedies under the Debt Documents):
(a) such transfer shall be in compliance with Applicable Laws and shall
not create a relationship which would violate Applicable Laws;
(b) under no circumstances shall such transfer materially adversely
affect the rights and privileges of Lessee under the Lease, or increase the
nature, scope or amount of any obligations or liabilities (including any
contingent liabilities) of Lessee in excess of those existing prior to such
transfer in any material respect; and
(c) the transferor shall have given or at closing will give to Lessee,
notice of such transfer, which notice shall contain such information and
evidence as shall be reasonably necessary to establish compliance with this
Article 23 and, if of the entire Property, the name and address of the
transferee for notices.
The foregoing restrictions on sales to Prohibited Transferees shall not
apply in the event of, or survive, a foreclosure or deed-in-lieu thereof.
Section 23.2. Effects of Transfer. From and after any transfer effected
in accordance with this Article 23, the transferor shall be released, to the
extent of the interest transferred and the obligations assumed by the
transferee, from its liability hereunder and under the other documents to which
it is a party relating to the interests being transferred. Such release shall be
in respect of obligations (that are assumed by the transferee) arising on or
after the date of
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such transfer. Upon any transfer by Lessor as above provided, any such
transferee shall be deemed the "Lessor" for all purposes of such documents and
each reference herein to Lessor shall thereafter be deemed a reference to such
transferee for all purposes, except as provided in the preceding sentence.
Lessee agrees to execute any and all documents reasonably appropriate to
effectuate the contemplated transfer by Lessor, including, without limitation,
an amendment to this Lease providing that the new Lessor shall be Lessor and the
existing Lessor shall be released from its liabilities.
ARTICLE 24
PERMITTED FINANCING
Section 24.1. Financing During Term.
Lessee hereby expressly consents to the Lien imposed in favor of the
Indebtedness pursuant to the Debt Documents and such Indebtedness as in effect
on the date hereof. With respect to any refinancing of the initial Indebtedness
or additional financing during the Base Term and during any Renewal Term, Lessor
shall be free to encumber the Property, provided that under no circumstances
shall any such financing adversely affect the rights and privileges of Lessee
under this Lease, or any sub-tenants under any Existing Subleases, or increase
the nature, scope or amount of any obligations or liabilities (including any
contingent liabilities) of Lessee in excess of those existing prior to any such
further encumbrances by Lessor, in each case, other than to a de minimus extent.
Lessee and its Affiliates will have no obligation to amend this Lease or any
other Operative Documents to facilitate such financing (except, subject to the
proviso in the immediately preceding sentence, to amend the definitions of "Debt
Documents", "Holders", "Indebtedness", "Mortgage", "Secured Note", "Indenture
Trustee", etc. to mean the replacement documents, the new lender, the new
indebtedness and the references to the sections therein); but shall execute and
deliver a mutually acceptable subordination and attornment agreement to any
lender to Lessor permitted by the above terms of this Section 24.1 if such
lender shall in turn deliver a nondisturbance agreement to Lessee, in each case
with terms substantially similar to the SNDA Agreement. Lessee agrees to
cooperate with any refinancing by Lessor permitted hereunder. Such cooperation
shall include, without limitation, (i) naming such new lender(s) as additional
insureds; and (ii) making payments of Base Rent and/or Supplemental Rent to or
at the direction of such lender(s).
Section 24.2. Lessee's Consent to Assignment for Indebtedness. Lessee
acknowledges that in order to secure Lessor's obligations under the Secured
Notes and the other Debt Documents, Lessor has in the Assignment of Lease and in
the Mortgage, among other things, assigned (to the extent provided therein) to
the Indenture Trustee of Lessor's right, title and interest to this Lease. While
the Assignment of Lease and the Mortgage or any replacements thereof are in
effect, Lessee hereby:
(a) consents to such assignment in this Lease and pursuant to the
Consent Agreement;
(b) covenants to make in full, in funds that are immediately available,
to Indenture Trustee, in Indenture Trustee's name, for the benefit of the
Holders, when due (without offset, deduction, defense, deferment, abatement or
diminution, except as provided in this Lease), by wire or intrabank transfer or
through Automated Clearing House in accordance with the terms of this Lease:
59
(i) each payment of Base Rent and, to the extent not directly
payable by Lessee to third parties or Governmental Authorities, or
payable to Lessor under Articles 18 or 19, all Supplemental Rent.
(ii) all purchase prices, termination amounts, and other sums
payable to Lessor under this Lease;
(c) agrees:
(i) to deliver to the Indenture Trustee copies of all notices
and other communications which Lessee is required to deliver to the
Lessor pursuant to this Lease;
(ii) that (except as set forth in Section 12.1 and in Section
21.1 with respect to Lessor's right to reject an offer of early
termination and in each case override the consent of the Indenture
Trustee) all consents, approvals, waivers and the like to be delivered
by the Lessor pursuant to this Lease shall be given by Lessor and by
the Servicer or Indenture Trustee, acting at the direction of the
Holders and no such consent, approval, waiver and the like delivered by
Lessor shall be of any force or effect unless also delivered by the
Servicer, acting on behalf of Indenture Trustee, or Indenture Trustee;
(iii) that it shall not, except as provided in Article 19 of
this Lease or under Applicable Law, seek to recover from the Indenture
Trustee any moneys paid to the Indenture Trustee by virtue of the
Assignment of Lease and the foregoing provisions; provided, however,
that neither the Assignment of Lease nor the foregoing provisions shall
limit Lessee's right to recover (A) any duplicate payment made to the
Indenture Trustee, whether due to computational or administrative error
or otherwise, if the Indenture Trustee has received such payment, (B)
all or any portion of a payment in excess of the amount then due under
this Lease or otherwise owed by Lessor to Lessee under this Lease, and
(C) any amounts that have been paid to or are actually held by the
Indenture Trustee that are required to be refunded to, repaid, or
otherwise released to or for the benefit of Lessee under this Lease;
(iv) that no payment of Rents (other than Excepted Payments)
or delivery of such notices or other communications by Lessee shall be
of any force or effect unless paid to Indenture Trustee or delivered to
the Indenture Trustee as provided above;
(v) that Lessee shall not pay any Rent more than thirty (30)
days prior to such payment's scheduled due date except as provided in
this Lease;
(vi) that Lessee shall not enter into any agreement
subordinating or (except as expressly permitted by the terms of this
Lease as in effect on the date hereof) surrendering, canceling, or
terminating this Lease without the prior written consent of the
Indenture Trustee, who shall act on behalf of the Holders, and any such
attempted subordination or termination without such consent shall be
void;
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(vii) that Lessee shall not enter into any amendment or
modification of this Lease without the prior written consent of the
Indenture Trustee, who shall act on behalf of the Holders (and the
Surety with respect to Article 8 and Article 21), and any such
attempted amendment or modification without such consent shall be void;
(viii) that if this Lease shall be amended, it shall continue
to constitute collateral under the Mortgage and the Assignment of Lease
without the necessity of any further act by Lessor, Lessee or the
Indenture Trustee; and
(ix) that except as expressly provided in this Lease, Lessee
shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding, to the fullest extent permitted by law, the
bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or other proceeding affecting Lessor or any
assignee of Lessor and notwithstanding any action with respect to the
Lease which may be taken by an assignee, Indenture Trustee or receiver
of Lessor or of any such assignee or by any court in any such
proceedings.
Each Holder is an express third party beneficiary of the agreements
contained in this Section 24.2. However, nothing herein shall be construed as
Lessee's agreement to be bound and perform the obligations of Lessor under the
Debt Documents. Subject to the provisions of Section 24(c)(ii), if Lessee
receives conflicting direction from Lessor and the Indenture Trustee, or is in
good faith uncertain as to whether it should comply with a direction from either
Lessor or the Indenture Trustee, Lessee shall be permitted to seek written
confirmation from Lessor and the Indenture Trustee, or to comply with the
written direction of the Holders, or if the matter in dispute regards the
payment of money by Lessee, pay the same into a court at Lessor's cost and
provide Lessor and the Indenture Trustee with reasonably prompt notice of such
payment.
ARTICLE 25
MISCELLANEOUS
Section 25.1. Memorandum. Lessee and Lessor agree that a memorandum of
this Lease (and any amendment hereof) shall be executed and recorded, at
Lessee's expense, in the land records of the jurisdiction in which the Property
is situated.
Section 25.2. Binding Effect; Successors and Assigns; Survival. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor and Lessee, shall be binding upon their respective
successors, legal representatives and assigns (including, in the case of Lessor,
any Person to whom Lessor may transfer the Property) and inure to the benefit of
their respective permitted successors and assigns, and the rights hereunder of
the Indenture Trustee shall inure (subject to such conditions as are contained
herein) to the benefit of (i) its permitted successors and assigns, and (ii)
Servicer. The Indenture Trustee and the Servicer are intended third-party
beneficiaries under this Lease, including Article 10. In addition, the
Indemnitees and the Tax Indemnitees (to the extent of the indemnification
provisions of Article 19 of this Lease and any Supplemental Rent payable to an
Indemnitee) are also intended third party beneficiaries under the Lease.
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Section 25.3. Quiet Enjoyment. Lessee shall have the right to peaceably
and quietly hold, possess and use any and all of the Property hereunder during
the Lease Term without hindrance by Lessor, or any person claiming through or
under Lessor, so long as no Lease Event of Default has occurred and is
continuing. Nothing in this Lease shall interfere with any claims Lessee may now
or hereafter have against an Affiliate of Lessor who has issued an insurance
policy to Lessee, or against Lessor arising out of any interference with
Lessee's right of quiet enjoyment to the extent caused by the wrongful act or
gross negligence of Lessor.
Section 25.4. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be in writing sent to either that Person's Address, and a copy
thereof shall be sent to each Person to receive a copy pursuant to the
definition of "Address", by (i) a prepaid nationally recognized overnight
courier service, and any such notice shall be deemed received one (1) Business
Day after delivery to a nationally recognized courier service specifying
overnight delivery, or (ii) U.S. certified or registered mail, return receipt
requested, postage prepaid, and such notice shall be deemed received when
actually received, as evidenced by the return receipt, or when delivery is first
refused. From time to time any party may designate a new Address for purposes of
notice hereunder by giving fifteen (15) days' written notice thereof to each of
the other parties hereto. All notices given hereunder shall be irrevocable
unless expressly specified otherwise. When sending notices to Lessor, Lessee
should refer to Section 24.2(c)(ii), above, Section 25.30, below, and the
Consent Agreement. All notices given hereunder to the Indenture Trustee must
also be delivered to the Servicer. Lessor shall endeavor to label any envelope
which contains a notice of default with the legend: "Default Notice," but its
failure to do so shall not invalidate or affect in any way such notice.
Section 25.5. Severability. If any of the provisions of this Lease, or
the application thereof to any person or circumstances, shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law. To the extent permitted by applicable law,
Lessor and Lessee hereby waive any provision of law that renders any provision
hereof prohibited or unenforceable in any respect.
Section 25.6. Amendments, Complete Agreements. Neither this Lease nor
any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification
shall be sought and, as required by the Assignment of Lease, by the Indenture
Trustee (or its successors and/or assigns). This Lease is intended by the
parties as a final expression of their lease agreement and as a complete and
exclusive statement of the terms thereof, all negotiations, considerations and
representations between the parties having been incorporated herein. No
representations, undertakings, or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth in the
Operative Documents.
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Section 25.7. Headings. The Table of Contents and headings of the
various Articles and Sections of this Lease are for convenience of reference
only and shall not modify, define or limit any of the terms or provisions
hereof.
Section 25.8. Counterparts. This Lease may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 25.9. Governing Law. This Lease shall be governed by, and
construed in accordance with, the laws of the State of Texas.
LESSOR AND LESSEE HEREBY SUBMIT TO THE NON-EXCLUSIVE PERSONAL
JURISDICTION IN THE STATE AND CITY OF NEW YORK AND THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA LOCATED IN THE STATE AND CITY OF NEW YORK (AND ANY
APPELLATE COURTS TAKING APPEALS THEREFROM) FOR THE ENFORCEMENT OF SUCH PERSON'S
OBLIGATIONS HEREUNDER AND WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF
ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN SUCH STATE FOR THE PURPOSES OF
SUCH ACTION, SUIT, PROCEEDING OR LITIGATION TO ENFORCE SUCH OBLIGATIONS OF
LESSEE OR LESSOR. LESSOR AND LESSEE HEREBY WAIVE AND AGREE NOT TO ASSERT, AS A
DEFENSE IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
LEASE (A) THAT IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT
OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT
IT IS EXEMPT OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM OR (C) THAT THE VENUE OF THE ACTION, SUIT OR
PROCEEDING IS IMPROPER. LESSEE AND LESSOR EACH HEREBY EXPRESSLY WAIVES ANY AND
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATED TO THE
ENFORCEMENT OF THIS LEASE.
Section 25.10. Surety Privity Agreement.
Notwithstanding anything to the contrary contained in this Lease, to
the extent Lessee has paid as damages any amounts to the Surety pursuant to that
certain Privity Agreement dated as of the Closing Date (the "Privity Agreement")
among Guarantor, the Lessee, the Surety and the Indenture Trustee, any
requirement under this Lease that the Lessee pay or provide funds to Lessor or
the Proceeds Trustee, whether as damages or insurance proceeds or otherwise, in
respect of the same breach by Lessee of the Maintenance Standards (as defined in
the Privity Agreement), and to the extent such amount would be in duplication of
the amount paid under the Privity Agreement, shall be reduced by the amount of
such payment to the Surety. Nothing herein shall, however, be deemed to permit
any reduction in Base Rent or any other Supplemental Rent due hereunder.
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Section 25.11. Estoppel Certificates. Each party hereto agrees that at
any time and from time to time during the Lease Term (but on no more than two
occasions during each Lease Year), it will promptly, but in no event later than
ten (10) days after request by the other party hereto, execute, acknowledge and
deliver to such other party a certificate in the form of Exhibit B attached
hereto. In addition, each party agrees to include in such certificate such other
items as may be reasonably requested under the circumstances giving rise to the
delivery of such certificate. Such certificate may be relied upon by any bona
fide, permitted purchaser of, or mortgagee with respect to, Lessor's or Lessee's
interest in the Property (direct or indirect), or any prospective sublessee of
Lessee in respect of any one or more of the Property.
Section 25.12. Easements. So long as no Lease Event of Default has
occurred and is then continuing, and provided that no such action individually
or in the aggregate could reasonably be expected to have a material adverse
effect upon Lessee's ability to perform its obligations under the Operative
Documents, or on the Fair Market Rental Value or Fair Market Sales Value of the
Property, Lessor will join with Lessee from time to time at the request of
Lessee (and at Lessee's sole cost and expense) to:
(a) subject to the terms of Article 12, sell, assign, convey
or otherwise transfer an interest in any or all of the Property to any
Person legally empowered to take such interest under the power of
eminent domain, and dedicate or transfer unimproved portions of any or
all of the Property for road, highway or other public purposes;
(b) upon approval by Lessor, which approval may not be
unreasonably withheld: (i) grant new (or release existing) easements,
servitudes, licenses, rights of way and other rights and privileges in
the nature of easements, with respect to the Property, and (ii) execute
amendments to any covenants and restrictions affecting the Property;
and
(c) execute and deliver any instrument, in form and substance
reasonably acceptable to Lessor, necessary or appropriate to make or
confirm the grants, releases or other actions described above in
Section 25.12(a) and Section 25.12(b).
Lessor agrees that it shall not grant any easements, licenses or other
possessory interests in the Property to any party without Lessee's prior written
consent, which shall not be unreasonably withheld or delayed, provided, however,
Lessee's consent shall not be required (i) during the continuation of a Lease
Event of Default, and (ii) to the extent such easement, license or other
possessory interest is required by law.
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Section 25.13. No Joint Venture. Any intention to create a joint
venture or partnership relation between Lessor and Lessee is hereby expressly
disclaimed.
Section 25.14. No Accord and Satisfaction. The acceptance by Lessor of
any sums from Lessee (whether as Rent or otherwise) in amounts which are less
than the amounts due and payable by Lessee hereunder is not intended, nor shall
be construed, to constitute an accord and satisfaction, or compromise, of any
dispute between such parties regarding sums due and payable by Lessee hereunder,
unless the Indenture Trustee and the Lessor specifically agree to it as such in
writing.
Section 25.15. No Merger. In no event shall the leasehold interests,
estates or rights of Lessee hereunder, or of the Indenture Trustee, merge with
any interests, estates or rights of Lessor in or to any and all of the Property,
it being understood that such leasehold interests, estates and rights of Lessee
hereunder, and of the Indenture Trustee, shall be deemed to be separate and
distinct from Lessor's interests, estates and rights in or to the Property,
notwithstanding that any such interests, estates or rights shall at any time or
times be held by or vested in the same person, corporation or other entity.
Section 25.16. Lessor Bankruptcy. During the Lease Term the parties
hereto agree that if Lessee elects to remain in possession of any and all of the
Property after the rejection of the Lease by Lessor under Section 365(h) of the
Bankruptcy Code, all of the terms and provisions of this Lease shall be
effective during such period of possession by Lessee, including the Renewal
Terms and Lessee's purchase rights hereunder, even if Lessor becomes subject to
a case or proceeding under the Bankruptcy Code prior to the commencement of any
such Renewal Term or the exercise by Lessee of such purchase rights.
Section 25.17. Naming and Signage of the Property. Lessee shall have
all rights in respect of signage for or in connection with the Property. Lessor
shall not display its name or logo on the Property nor have or acquire any right
or interest with respect to any such name or names used at any time by Lessee,
or any trade name, trademark, service xxxx or other intellectual property of any
type of Lessee. Lessor shall cooperate with Lessee to effectuate Lessee's sign
rights hereunder, at no cost to Lessor.
Section 25.18. Expenses. Whenever this Lease provides for the
reimbursement by Lessee of costs and expenses of Lessor or any other Person,
then such reimbursement obligation shall be limited to reasonable, actual,
out-of pocket third-party costs and expenses. In addition to any other costs
payable hereunder by Lessee, Lessee acknowledges and agrees that whenever (i)
it seeks Lessor's consent to an Alteration, (ii) it makes a rejectable offer,
(iii) it seeks an early termination, (iv) Fair Market Sales Value, Fair Market
Rental Value or Base Rent during a Renewal Term needs to be calculated,
(v) Lessee requests a partial release, (vi) Lessee assigns its lease, (vii)
Lessor is asked to sign a landlord waiver with respect to Lessee's personal
property, or (viii) a casualty or condemnation (including, without limitation,
an Event of Loss) occurs, Lessee, except as otherwise expressly stated to the
contrary in the definition of "Appraisal Procedure", shall pay all reasonable
costs incurred by Lessor, the Servicer (or special servicer) and Indenture
Trustee arising out of the foregoing.
65
Section 25.19. Investments. Any moneys held by Lessor (or by the
Indenture Trustee or Proceeds Trustee) pursuant to this Lease, including Section
12.4, except when there is continuing a Lease Event of Default shall, until paid
to Lessee, be invested by Lessor or, if the Debt Documents are in effect, by the
Indenture Trustee in Permitted Investments as directed by or on behalf of
Lessee. Any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions, Taxes and other expenses, if any,
incurred in connection with such investment) shall be retained with, and
distributed and re-invested in the same manner, as the original principal
amount. Lessor (and the Indenture Trustee or Proceeds Trustee) shall have no
liability for any losses arising from any such investments or reinvestments. At
such time as there no longer exists a requirement under this Lease for the
Indenture Trustee to hold such amounts, and no Lease Event of Default is
continuing, such amounts, together with any income thereon, shall be disbursed
to Lessee.
Section 25.20. Further Assurances. Lessor and Lessee, at the cost and
expense of the requesting party (except as otherwise set forth in this Lease to
the contrary), will cause to be promptly and duly taken, executed, acknowledged
and delivered all such further acts, documents and assurances as any of the
othersreasonably may request from time to time in order to carry out more
effectively the intent and purposes of this Lease. Nothing herein shall obligate
Lessee to provide to Lessor or the Indenture Trustee any proprietary or
confidential information relating to the manner, method and procedures of
Lessee's business operations, or relating to Lessee's business plan. Lessee also
agrees to cooperate with Lessor in determining how to allocate the purchase
price paid for the property for purposes of depreciation, including review of
the applicable portions of Lessee's books applicable to Lessee's depreciation of
the Property, as prior owner and as Lessee.
Section 25.21. Conveyance Expenses. All transfer taxes, title insurance
premiums, and other costs, fees and expenses (including reasonable attorneys'
fees and expenses and Make-Whole Premium, if applicable) incurred in connection
with the transfer of any or all of the Property to Lessee under Articles 11, 12,
21 and 22 shall be paid by Lessee. All such amounts incurred in connection with
a transfer to Lessee or its designee under Article 4 shall be paid in accordance
with the terms of the relevant offer.
Section 25.22. Independent Covenants. The covenants of Lessor and
Lessee herein are independent and several covenants and not dependent on the
performance of any other covenant in this Lease.
Section 25.23. Lessor Exculpation. Anything to the contrary in this
Lease notwithstanding, the covenants contained in this Lease to be performed by
Lessor shall not be binding on any member of Lessor in its or his or her
individual capacity, but instead said covenants are made for the purpose of
binding only all of Lessor's right, title and interest in and to the Property,
and none of Lessor or any of its Affiliate or any of its successors and assigns
shall have any liability under this Lease in excess of, and Lessee shall have
no recourse under this Lease against Lessor or any Affiliate of it except for
Lessor's interest (to the extent not pledged or assigned) in the Property, Net
Proceeds and Rent.
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Section 25.24. Remedies Cumulative. To the extent permitted by, and
subject to the mandatory requirements of, Applicable Laws, each and every right,
power and remedy herein specifically given to the Lessor or otherwise in this
Lease shall be cumulative and shall be in addition to every other right, power
and remedy herein specifically given or now or hereafter existing at law, in
equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by Lessor. No
delay or omission by Lessor in the exercise of any right, power or remedy or in
the pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver or any default on the part of Lessee or to be an
acquiescence therein. Lessor's consent to any request made by Lessee shall not
be deemed to constitute or preclude the necessity for obtaining Lessor's
consent, in the future, to all similar requests. No waiver by Lessor of any
default shall in any way be, or be construed to be, a waiver of any future or
subsequent default.
Section 25.25. Holding Over. Lessee covenants that if for any reason
Lessee or any subtenant of Lessee shall fail to vacate and surrender possession
of a Property or any part thereof, in the condition required herein, on or
before the expiration or earlier termination of this Lease and the Term, then
Lessee's continued possession of the Property shall be as a tenant at
sufferance, during which time, without prejudice and in addition to any other
rights and remedies Lessor may have hereunder or at law, Lessee shall pay to
Lessor an amount equal to: (a) one hundred twenty-five percent (125%) of the
total monthly amount of Rent payable hereunder immediately prior to such
termination (the "Existing Rent") for the first thirty (30) days during which
Lessee holds over, and (b)one hundred fifty percent (150%) of the Existing Rent
thereafter. The provisions of this Section shall not in any way be deemed to
(i) permit Lessee to remain in possession of the Property after the expiration
date or sooner termination of this Lease, or (ii) imply any right of Lessee to
use or occupy the Property upon expiration or termination of this Lease and the
Term and no acceptance by Lessor of payments from Lessee after the expiration
date or sooner termination of theTerm shall be deemed to be other than on
account of the amount to be paid by Lessee in accordance with the provisions of
this Section. Lessee's obligations under this Section shall survive the
expiration or earlier termination of this Lease.
Section 25.26. Survival. The following provisions shall survive the
termination of this Lease: (i) Sections 3.2, 3.5, 6.1, 8.4, 8.5, 8.6 (only with
respect to Impositions arising during the Term) 8.7, 8.8, 17.2, 20.1, 22.1,
Articles 7, 10, 19 and 25 to the extent relating to unfulfilled obligations of
Lessee arising or occurring prior to the date of termination of this Lease, and
(ii) any provision of this Lease pursuant to which the Lessor or Lessee had an
existing obligation which was unsatisfied at the time of termination of this
Lease and remains unsatisfied, including, without limitation, to the extent
there was any unsatisfied obligation under, Sections 12.1, and Article 3,
provided, however, that nothing in this Section 25.26 shall be deemed to extend
any applicable statute of limitations.
Section 25.27. State Specific Provisions. Attached hereto as Schedule
25.27 are provisions (if necessary) applicable to the jurisdiction in which the
Property is located. Such provisions are hereby incorporated herein by
reference.
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Section 25.28. Lease Subordinate. This Lease, the leasehold estate of
Lessee created hereby and all rights of Lessee hereunder including, without
limitation, Lessee's rights under Article 4 and 21 hereof, are and shall be
subject and subordinate to the Mortgage and to all renewals, modifications,
consolidations, replacements and extensions of the Mortgage. A commercially
reasonable subordination, non-disturbance and attornment agreement, in a form
reasonably agreed to between the parties hereto and dated of even date herewith,
shall be entered into among Lessor, Lessee and the Lender which provides that,
so long as no Lease Event of Default has occurred or is occurring, Lessee's
occupancy and use of the Property pursuant to the terms of this Lease shall not
be disturbed and Lessee's rights under this Lease are and shall always be
subordinate to the Mortgage and to all renewals, modification, consolidation,
replacements and extension of the Mortgage.
Section 25.29. Lessor Representations. Lessor, as of the Closing Date,
shall be a "Single Purpose Entity". Each of the Operative Documents to which
Lessor is a party has been duly authorized by all necessary action on the part
of Lessor; and has been duly executed and delivered by Lessor; and the
execution, delivery and performance thereof by Lessor will not: (i) require any
consent or approval of any Person, other than such consents and approvals as
have been obtained, (ii) contravene any Applicable Law binding on Lessor or the
organizational documents of Lessor or (iii) contravene or result in any breach
of or constitute any default under Lessor's organizational documents, or any
indenture, mortgage, loan agreement, contract, partnership or joint venture
agreement, lease or other agreement or instrument to which Lessor is a party or
by which Lessor is bound. Notwithstanding anything in the Lease to the contrary,
Lessee shall not be required to pay the Make-Whole Premium if the obligation to
pay the same results from an Event of Default by Lessor under the Debt Documents
providing such Event of Default is not caused by or otherwise related to a Lease
Event of Default.
Section 25.30. Servicer Acting on Behalf of Indenture Trustee. The
Servicer has authority to act on behalf of the Indenture Trustee with respect
to this Lease, and therefore, any acts or obligations of the Indenture Trustee
hereunder may be performed by Servicer on behalf of the Indenture Trustee, any
notices or documents to be delivered to the Indenture Trustee hereunder must be
simultaneously delivered to the Servicer, and any required consents of the
Indenture Trustee in this Lease are to be deemed required from Servicer, on
behalf of the Indenture Trustee, and if received from the Servicer shall be
deemed given by the Indenture Trustee.
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IN WITNESS WHEREOF, Lessor and Lessee have duly authorized, executed
and delivered this Lease as of the date first hereinabove set forth.
LESSOR:
State Street Bank and Trust Company
of Connecticut, National
Association, not in its individual
capacity but solely as owner trustee
of ZSF/Dallas Tower Trust
By: /s/Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
69
LESSEE:
TXU PROPERTIES COMPANY
a Texas corporation
By: /s/Xxxx X. Xxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer and Assistant Secretary
APPENDIX A
[Definitions]
Unless otherwise specified or the context otherwise requires:
(a) any term defined below by reference to another instrument or document shall
continue to have the meaning ascribed thereto whether or not such other
instrument or document remains in effect;
(b) words which include a number of constituent parts, things or elements, shall
be construed as referring separately to each constituent part, thing or element
thereof, as well as to all of such constituent parts, things or elements as a
whole;
(c) references to any Person include such Person's successors and assigns and in
the case of an individual, the word "successors" includes such Person's heirs,
devisees, legatees, executors, administrators and personal representatives;
(d) words importing the singular include the plural and vice versa;
(e) words importing a gender include any gender;
(f) the words "consent", "approve", "agree" and "request", and derivations
thereof or words of similar import, mean the prior written consent, approval,
agreement or request of the Person in question;
(g) a reference to a part, clause, party, section, article, exhibit or schedule
is a reference to a part and clause of, and a party, section, article, exhibit
and schedule to, such Operative Document;
(h) a reference to any statute, regulation, proclamation, ordinance or law
includes all statutes, regulations, proclamations, ordinances or laws varying,
consolidating or replacing them, and a reference to a statute includes all
regulations, proclamations and ordinances issued or otherwise applicable under
that statute;
70
(i) a reference to a document includes an amendment or supplement to, or
replacement or novation of, that document;
(j) a reference to a party to a document includes that party's successors and
permitted delegees and/or assigns, and specifically, any reference in the
Operative Documents to the Indenture Trustee shall be deemed to include the
Servicer; and
(k) the words "including" and "includes," and words of similar import, shall be
deemed to be followed by the phrase "without limitation";
(l) the words "hereof" and "hereunder," and words of similar import, shall be
deemed to refer to the Operative Document as a whole and not to the specific
section or provision where such word appears;
(m) unless the context shall otherwise require, a reference to the "Property" or
"Improvements" shall be deemed to be followed by the phrase "or a portion
thereof";
(n) the Schedules and Exhibits of the Operative Documents are incorporated
herein by reference;
(o) the titles and headings of Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses are inserted as a matter of convenience and
shall not affect the construction of the Operative Documents;
(p) all obligations of the Issuer under the Indenture shall be satisfied by the
Issuer at Issuer's sole cost and expense,
(q) all rights and powers granted to the Indenture Trustee under the Indenture
shall be deemed to be coupled with an interest and be irrevocable; and
(r) references to any Operative Document include all amendments, supplements,
consolidations, replacements, restatements, extensions, renewals and other
modifications thereof, in whole or in part.
"Actual Knowledge" with respect to any Person, shall mean the present,
conscious, actual knowledge of, or receipt of notice by, (i) senior officers of
such Person or the officers or employees of such Person charged with the
oversight on its behalf of the this transaction or (ii) with respect to a matter
covered by a representation and warranty, the property or asset manager having
responsibility for the matters covered by such representation and the person to
whom such manager reports.
"Additional Renewal Term" shall have the meaning specified in Section
5.1 of the Lease.
"Address" shall mean, subject to the rights of the party in question to
change its Address in accordance with the terms of the Operative Documents:
(i) with respect to Lessee: TXU Properties Company, 0000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxx 00000, Attention: Treasurer.
with a copy to: Xxxx Xxxxxxx;
and: Xxxxx Xxxxx, Xxxxxx & Xxxxxxxx, 0000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxx 00000.
(ii) with respect to Lessor: x/x Xxxxx Xxxxxx Xxxx and Trust Company of
Connecticut, National Association as Owner Trustee, Xxx Xxxxxx xx Xxxxxxxxx, 0xx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Corporate Trust Administration;
with a copy to the Owner Participant, Attn: Xx. Xxxxxxxxx Xxxxxx, Zurich
Structured Finance, Inc. Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000;
and: General Counsel, Zurich Structured Finance, Inc., Xxx Xxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000;
and: Xxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000;
(iii) with respect to the Indenture Trustee, to LaSalle Bank National
Association, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
Attn: Asset Backed Securities Trust Services Group - TXU Pass-Through Trust,
Series 2002-1; provided that all copies of notices to the Indenture Trustee
shall be sent to the Servicer at the Servicer's Address;
(v) with respect to the Servicer, to First Union National Bank, NC 1075,
0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, X.X. 00000-0000.
"Additional Interest" shall have the meaning accorded it in the Secured
Notes.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under common control with, such Person
and shall include, if such Person is an individual, members of the Family of
such Person and trusts for the benefit of such individual or Family members. For
purposes of this definition, the term, "control" (including the correlative
meanings of the terms "controlling" "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"After-Tax Basis" means, with respect to any payment received or
accrued by any Person, the amount of such payment (the "base payment")
supplemented by a further payment (the "additional payment") to that Person so
that the sum of the base payment plus the additional payment shall, after taking
into account the amount of all Taxes required to be paid by such Person in
respect of the receipt or accrual of the base payment and the additional payment
(after any current credits or deductions arising therefrom and the timing
thereof [and taking into account any credits or deductions arising from the
event giving rise to the base payment]), be equal to the amount required to be
received. Such calculations shall be made on the assumption that the recipient
is subject to U.S. federal, state and local income taxation at the highest
marginal rates applicable to the respective Tax Indemnitees (as the case may
be).
"Alterations" shall mean alterations, improvements, installations,
demolitions, modifications, changes and additions to the Property, but shall not
include Lessee's Equipment and Personalty.
"Applicable Laws" shall mean (i) all existing and future applicable
laws (including common laws), rules, regulations, statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authorities, and applicable judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including those pertaining to the environment and those pertaining
to the construction, use or occupancy of the Property), and (ii) any reciprocal
easement agreement, covenant, other agreement or deed restriction or easement of
record affecting the Property as of the date hereof or subsequent hereto
pursuant to the terms of the Lease (but excluding for purposes of this
definition the Debt Documents). Applicable Laws include Environmental Laws.
"Appraisal Procedure" shall mean the following procedure for
determining any one or more of the Fair Market Sales Value of the Property, the
Fair Market Rental Value of the Property or any other amount which may, pursuant
to any provision of any Operative Document, be determined by the Appraisal
Procedure: one Qualified Appraiser, chosen by the Lessor but if the Lessee shall
fail to agree with the selection of the Lessor's Qualified Appraiser than Lessee
shall have the right to engage an additional Qualified Appraiser. However, if
the Lessee fails to choose a Qualified Appraiser within twenty (20) Business
Days after written notice from the Lessor of the selection of its Qualified
Appraiser followed by a second notice (which notice shall specifically state
that failure to select a Qualified Appraiser within ten (10) Business Days shall
prohibit appointment of a Qualified Appraiser by the addressed party) given at
least ten (10) Business Days prior to the expiration of such twenty-day period,
then the appraisal by such appointed Qualified Appraiser shall be binding on the
parties. If the two Qualified Appraisers cannot agree on a value within twenty
(20) Business Days after the appointment of the Second Qualified Appraiser, then
a third Qualified Appraiser shall be selected by the two Qualified Appraisers
or, failing agreement as to such third Qualified Appraiser within thirty (30)
Business Days after the appointment of the Second Qualified Appraiser, by the
American Arbitration Association office in Dallas, Texas. The appraisals of the
three Qualified Appraisers shall be given within twenty (20) Business Days of
the appointment of the third Qualified Appraiser and the Appraisal of the
Qualified Appraiser most different from the average of the other two shall be
discarded and such average of the remaining two Appraisers shall be binding on
the parties; provided that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
the parties. The fees and expenses of the Qualified Appraiser appointed by a
party shall be paid by such party (such fees and expenses not being
indemnifiable by Lessee); the fees and expenses of the third Qualified Appraiser
shall be divided equally between the two parties, except that all fees and
expenses of all the Qualified Appraisers shall be paid by Lessee in the case of
an appraisal or determination under Article 17 of the Lease.
"Approved Environmental Consultant" shall mean any environmental
consultant to Lessee of national standing and reasonably approved by Lessor and
Indenture Trustee.
"Assignment of Lease" shall mean the Assignment of Lease and Agreement
dated as of the Closing Date by and among the Lessor, as assignor, and the
Indenture Trustee, as assignee, for the benefit of the Holders, with respect to
the Lease.
"Authorized Officer" shall mean with respect to a Person if the Person
is not an individual, any officer or principal of the Person, any trustee of the
Person (if the Person is a trust), any general partner or joint venturer of the
Person (if the Person is a partnership or joint venture) or any manager or
member that is a manager of the Person (if the Person is a limited liability
company) who shall be duly authorized to execute the Operative Documents.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978 as
amended and as may be further amended.
"Base Rent" shall mean, for the Base Term, the rent payable pursuant to
Section 3.1 of the Lease and, for any Renewal Term, the rent payable pursuant to
Article 5 of the Lease as such amounts may be adjusted from time to time.
"Base Term" shall mean the period commencing on the Closing Date and
ending on February 14, 2022, or such shorter period as may result from earlier
termination of the Lease as provided therein.
"Board of Directors", with respect to a corporation, means either the
Board of Directors or any duly authorized committee of that Board which pursuant
to the by-laws of such corporation has the same authority as that Board as to
the matter at issue.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks are authorized to be closed in the State of New York,
the State of Texas, or the state in which the principal corporate trust office
of the Trustee is located.
"Casualty" shall mean any damage or destruction caused to the Property
by any reason, whether or not constituting an Event of Loss.
"Claims" shall mean Liens (including, without limitation, lien removal
and bonding costs), liabilities, obligations, damages, losses, demands,
penalties, assessments, payments, fees of Trustee and Servicer, fines, claims,
actions, suits, judgments, settlements, costs, expenses and disbursements
(including, without limitation, reasonable, actually-incurred legal fees and
expenses and costs of investigation and Remedial Action) of any kind and nature
whatsoever.
"Closing Date" shall mean February 14, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Condemnation" shall mean any condemnation, requisition or other taking
or sale of the use, occupancy or title to any or all of the Property, by or on
account of any eminent domain proceeding or other action by any Governmental
Authority or other Person under the power of eminent domain or otherwise or any
transfer in lieu of or in anticipation thereof.
"Consent Agreement" shall mean the Consent Agreement dated as of the
Closing Date among the Issuer, the Indenture Trustee and the Lessee.
"Controlling Party" shall have the meaning specified in Section 19.2(e)
of the Lease.
"CPI" shall mean the national Consumer Price Index, for all urban
consumers (1982-84=100), all items, all cities, as published by the Bureau of
Labor Statistics.
"CPI Increase", when used with respect to a stated dollar amount as of
a given date, shall mean that the stated dollar amount shall be increased by a
percentage equal to the percentage increase, if any, in the CPI from the Closing
Date (or the anniversary thereof, as applicable) to such date.
"Debt Documents" shall mean (i) the Secured Notes, (ii) the Mortgage,
(iii) Indenture, (iv) the Assignment of Lease, (v) the Note Purchase Agreement,
(vi) the Consent Agreement, (vii) the Assignment of Agreements (as defined in
the Indenture), (viii) the SNDA Agreement (as defined in the Indenture), (ix)
the Indenture Trustee Fee Letter, (x) the Servicer Fee Letter (as defined in the
Indenture), (xi) the Certificate Purchase Agreement and (xii) UCC financing
statements relating to any of the foregoing.
"Default" shall mean any event, condition or failure which, with notice
or lapse of time or both, would become an Event of Default.
"Default Rate" shall mean, at any time, the greater of (x) 2.5% percent
above the annual rate of interest set by Citibank, N.A. (or any successor
thereto) as its "Prime Rate" from time to time, and (y) 2% above the highest
stated rate of interest on the Secured Notes, but in no event to exceed the
highest rate permitted by Applicable Laws. For the purposes of this Lease, the
Default Rate shall be applicable to late payments of any obligations defined as
Supplemental Rent hereunder (and on Base Rent only after the Secured Notes have
been repaid in full).
"Discounted Net Present Value" shall mean an amount equal to the sum of
(i) an amount obtained by discounting that portion of the remaining scheduled
payments of Base Rent equal to the remaining scheduled payments of principal and
interest on the Series A-1-A Note from their respective scheduled due dates to
the determination date, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
such Secured Note is payable) equal to the Series A-1 Reference Rate, (ii) an
amount obtained by discounting that portion of the remaining scheduled payments
of Base Rent equal to the remaining scheduled payments of principal and interest
on the Series A-1-B Note from their respective scheduled due dates to the
determination date, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
such Secured Note is payable) equal to the Series A-1 Reference Rate, (iii) an
amount obtained by discounting that portion of the remaining scheduled payments
of Base Rent equal to the remaining scheduled payments of principal and interest
on the Series A-2 Note (excluding therefrom the final payment of principal on
the Series A-2 Note) from their respective scheduled due dates to the
determination date, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
such Secured Note is payable) equal to the Series A-2 Reference Rate, and (iv)
an amount obtained by discounting that portion of the remaining scheduled
payments of Base Rent (if any) that exceeds the sum of the remaining scheduled
payments of principal and interest on the Secured Notes (excluding therefrom the
final payment of principal on the Series A-2 Note (the "Equity Portion of Base
Rent")) from their respective scheduled due dates to the determination date, in
accordance with accepted financial practice and at a discount factor equal to
the Equity Portion of Base Rent Reference Rate. For purposes of the foregoing,
Series A-1 Reference Rate and Series A-2 Reference Rate shall mean the yield to
maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City
local time) on the Business Day next preceding the determination date, on the
display designated as "Page 678" on the Telerate Service of Bridge Information
Services (or such other display as may replace page 678 on the Telerate Service)
for actively traded U.S. Treasury securities having a maturity equal to the
"Remaining Average Life" of the A-1 Note and the A-2 Note, respectively, as of
such determination date, or if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the determination date, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of the
A-1 Note and the A-2 Note, respectively, as of such determination date. Such
implied yield shall be determined, if necessary, by (x) converting U.S. Treasury
xxxx quotations to bond-equivalent yields in accordance with accepted financial
practice and (y) by interpolating linearly between yields reported for various
maturities. The Series A-1 Reference Rate and the Series A-2 Reference Rate will
be rounded to that number of decimal places as appears in the coupon for the
Secured Notes. The "Remaining Average Life" of a Secured Note shall mean the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (a) the outstanding principal balance of such Secured Note at the date
of determination into (b) the sum of the products obtained by multiplying (i)
each remaining scheduled payment of principal of such Secured Note (but not of
interest thereon) by (ii) the number of years (calculated to the nearest
one-twelfth year) which will elapse between the determination date and the
scheduled due date of such scheduled payment of principal. The Equity Portion of
Base Rent Reference Rate shall be computed in a like manner except that the
Remaining Average Life shall be the number of years (calculated to the nearest
one-twelfth year) from the determination date to the scheduled expiration date
of the Base Term.
"Environmental Laws" shall mean all federal, state or local laws,
ordinances, rules, orders, statutes, decrees, judgments, injunctions, codes,
regulations and common law (a) relating to the environment, human health or
natural resources; (b) regulating, controlling or imposing liability or
standards of conduct concerning Hazardous Materials; (c) relating to the
remediation of the mortgaged property, including investigation, response,
clean-up, remediation, prevention, mitigation or removal of Hazardous Materials;
or (d) requiring notification or disclosure of releases of Hazardous Materials
or any other environmental conditions on the mortgaged property, as any of the
foregoing may have been or may be amended, supplemented or supplanted from time
to time, including the Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. xx.xx. 6901 et seq., as amended by the Hazardous and Solid Waste
Amendments of 1984, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. xx.xx. 9601 et seq. ("CERCLA"), the Hazardous Materials
Transportation Act of 1975, 49 U.S.C. xx.xx. 1801-1812, the Toxic Substances
Control Act, 15 U.S.C. xx.xx. 2601-2671, the Clean Air Act, 42 U.S.C. xx.xx.
7041 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
xx.xx. 136 et seq., as any of the foregoing may have been or may be amended,
supplemented or supplanted from time to time.
"Environmental Reports" shall mean the reports and information covering
the Property prepared by Xxxxxx Associates.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"ERISA Group" shall mean Lessee and each business or entity which is
under "common control" with Lessee, with the meaning of Section 4001(a)(14) of
ERISA.
"Event of Default" shall have the meaning specified in Section 10 of
the Indenture.
"Event of Loss" shall mean (y) the damage, by fire or otherwise, and
whether total or partial, that (A) the Lessee in its sole discretion shall
determine that as a result of such damage the Property is no longer useful for
its intended purpose, and (B) the cost of repair or restoration of the
Improvements constituting exclusively the office building would exceed
twenty-five percent (25%) of the Property Cost of such office building or (z)
the permanent or material taking by Condemnation effecting (A) title to all or
substantially all of the Property, (B) the principal points of ingress or egress
of the Property to public roadways, or (C) such a material part of the Land or
the Improvement so as to have a material and adverse effect on the business of
the Lessee. Any decision regarding whether the Property is no longer useful for
its intended purpose shall be made by Lessee in good faith and evidenced by an
Officer's Certificate of Lessee delivered to Lessor and the Servicer.
"Excepted Payments" shall mean and include (i) the amount by which Base
Rent exceeds all amounts then due and payable under the Debt Documents, any
amount payable to Lessor as a reimbursement for tax losses suffered by Lessor
pursuant to Section 12.1 and/or Section 12.1A above and any other amounts
payable directly to Lessor under Articles 18 or 19 as set forth in the Lease or
in a notice from time-to-time from the Indenture Trustee, (ii) proceeds of
public liability or property damage insurance maintained under any Operative
Document solely for the benefit of any Person other than the Indenture Trustee
or the Holders, (iii) any payment to the Issuer defined as Excepted Payments
under the Indenture and (iv) any payment required under the Lease to be made
directly by Lessee to a third party such as taxes, utility charges, ground rent,
if any, and similar payments.
"Excepted Rights" shall mean (i) all rights with respect to Excepted
Payments of the Person entitled thereto and (ii) all rights and privileges
expressly reserved to the Issuer pursuant to the Indenture.
"Existing Rent" shall have the meaning specified in Section 25.25 of
the Lease.
"Existing Subleases" shall mean the leases listed on Schedule 14.1.
"Fair Market Rental Value" with respect to any Property shall mean the
fair market monthly rental value that would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor, in either case under no compulsion to lease, and neither of which is
related to Lessor or Lessee, for the lease of such Property on the terms set
forth, or referred to, in Article 5 of the Lease. Such fair market rental value
shall be calculated as the value for the use of such Property assuming that such
Property is in the condition and repair required to be maintained by the terms
of the Lease, including, without limitation, in compliance with all Applicable
Laws and assuming no Hazardous Materials present in, on, under or about the
Property.
"Fair Market Sales Value" with respect to any Property shall mean the
fair market sales value that would be obtained in an arm's-length transaction
between an informed and willing buyer (other than a lessee currently in
possession) and an informed and willing seller, under no compulsion,
respectively, to buy or sell, and neither of which is related to Lessor or
Lessee, for the purchase of the Property. Such Fair Market Sales Value shall be
calculated as the value for such Property using the same methodology as used in
the appraisals delivered on or before the Closing Date (and if more than one
methodology is used, i.e., based on a methodology that includes an assumption
that the Lease is in effect and a methodology that includes an assumption that
the Lease is not in effect, using the methodology that results in the highest
value) and assuming that the Property is in the condition and repair required to
be maintained by the terms of the Lease, including, without limitation, in
compliance with all Applicable Laws and assuming no Hazardous Materials present
in, on, under or about the Property.
"Family" shall mean, as to any Person, such Person's grandparents, all
lineal descendants of such Person's grandparents, Persons adopted by, or
stepchildren of, any such grandparent or descendant and Persons currently
married to, or who are widows or widowers of, any such grandparent, descendant,
adoptee or stepchild.
"Filing" shall have the meaning specified in Section 19.2(j) of the
Lease.
"Final Payment Date" shall have the meaning specified in Section
17.1(e) of the Lease.
"First Offer" shall have the meaning specified in Section 4.1 of the
Lease.
"Fixtures" shall have the meaning specified in the term "Property".
"GAAP" shall mean generally accepted accounting principles in the
United States, as in effect from time to time, consistently applied.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, decrees, licenses, exemptions, publications, filings, notices to and
declarations of or with, or required by, any Governmental Authority, or required
by any Applicable Laws, and shall include, without limitation, all filings,
environmental and operating permits and licenses that are required for the use,
occupancy, zoning and operation of the Property.
"Governmental Authority" shall mean any federal, state, county,
municipal or other governmental or regulatory authority, agency, board, body,
commission, instrumentality, court or quasi governmental authority (or private
entity in lieu thereof).
"Guarantor" means TXU Corp., a Texas corporation having its principal
office address at 0000 Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or any successor
entity in accordance with the terms of the Guaranty. If any Additional Guaranty
is hereafter delivered, references to the "Guarantor" herein shall be deemed to
include the Guarantor and any Additional Guarantor. If any Replacement Guaranty
(as defined in the TXU Guaranty Agreement) is hereafter delivered, references to
the "Guarantor" herein shall be deemed to refer to the guarantor thereunder and
any Additional Guarantor, and not the Guarantor named herein; provided the term
Guarantor shall continue to include any Person from time to time included in the
definition of Guarantor unless and until such Person is released from such
liability pursuant to the terms of the Guaranty to which it is a party.
"Guaranty" means the TXU Guaranty Agreement. If any Additional Guaranty
is hereafter delivered, references to the Guaranty shall be deemed to include
the Guaranty and such Additional Guaranty. If any Replacement Guaranty (as
defined in the TXU Guaranty Agreement) is hereafter delivered, references to the
"Guaranty" herein shall be deemed to refer to such Replacement Guaranty and any
Additional Guaranty but not this Guaranty, provided, that the term Guaranty
shall continue to include any guaranty from time to time included in the
definition of Guaranty unless and until such Guaranty is released in accordance
with the terms hereof.
"Hazardous Material" shall mean any substance (whether solid, liquid or
gas), pollutant, contaminant, waste or material (including those that are toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous or considered pollutants including petroleum,
its derivatives, by-products and other hydrocarbons and asbestos), in each case
that is or becomes regulated by any Governmental Authority, including any
agency, department, commission, board or instrumentality of the United States
and/or each State in which the Property is situated, or that may form the basis
of liability under any Environmental Law.
"Holder" shall mean, as of any particular date, (i) any registered
holder of one or more Secured Notes as of such date, and (ii) any registered
holder of one or more Certificates (as defined in the Declaration of Trust (as
defined in the Indenture)).
"Impositions" shall mean, collectively, all real estate, ad valorem,
use, rent or similar taxes levied or incurred with respect to the Property, or
the use, lease, ownership or operation thereof, personal property tax on any
property covered by the Lease that is classified by government authorities as
personal property, assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed within the Lease
Term), water, sewer, utilities or other rents and charges, excises, levies, fees
and all other similar governmental charges of any kind or nature whatsoever,
general or special, foreseen or unforeseen, ordinary or extraordinary, with
respect to the Property or any part thereof, including all interest and
penalties thereon, which at any time prior to, during or with respect to the
Lease Term may be assessed or imposed on or with respect to or be a Lien upon
Lessor or the Property or any part thereof or any rent therefrom or any estate,
title or interest therein. Impositions shall exclude, however, any tax (other
than a tax that is, or is in the nature of, a rental tax) based on or measured
by net income (including any minimum taxes or taxes on items of a tax
preference) or net receipts or gross income or gross receipts.
"Improvements" shall have the meaning specified in the term "Property".
"Indebtedness" shall mean the indebtedness evidenced by the Secured
Notes and secured by the Mortgages, and any replacement indebtedness thereof.
"Indemnitee" shall mean the Lessor, any Holder, the Indenture Trustee
(and any assignee of the Indenture Trustee), any co-trustee, any trustee under a
Mortgage which is a deed of trust, Pass-Through Trustee, the Servicer, any
special servicer, the Surety, and each of their Affiliates and their respective
officers, directors, employees, agents, shareholders, members or partners.
"Indemnitee's Group" shall mean, with respect to a particular
Indemnitee, such Indemnitee (including its Affiliates and their respective
officers, directors, employees, agents, shareholders, trustees, members or
partners) and their successors and assigns.
"Indenture" shall mean the Indenture and Servicing Agreement dated as
of the Closing Date between the Issuer and the Indenture Trustee.
"Indenture Trustee" shall mean LaSalle Bank National Association, a
national banking association, and each successor indenture trustee, as indenture
trustee under the Indenture.
"Indenture Trustee Fee Letter" shall mean that certain letter dated the
Closing Date between the Indenture Trustee and Lessee.
"Indenture Trustee Office" shall mean the office of the Indenture
Trustee located as set forth in the Address for notice of the Indenture Trustee,
or such other office as may be designated by the Indenture Trustee.
"Independent Director" or "Independent Manager" shall mean an
individual who is not at the time of the initial appointment or election and has
not been at any time during the preceding five (5) years: (i) a director,
officer, employee, member or partner of the Issuer or any of its Affiliates;
(ii) any stockholder who owns more than 10% of the outstanding stock of the
Issuer or any of its Affiliates, (iii) a customer, supplier or other person who
derives more than 10% of its purchases or revenues from its activities with the
Issuer or any of its Affiliates; (iv) an Affiliate of any such stockholder,
director, officer, employee, member, partner, customer, supplier or other
person; or (v) a spouse, parent, sibling, or child of any such stockholder,
director, officer, employee, customer, supplier or other person.
"Initial Appraiser" shall mean Xxxxxxx & Xxxxxxxxx, Inc.
"Initial Relevant Constituent Entity" shall have the meaning specified
in Section 5.04 of the Indenture.
"Inspecting Parties" shall have the meaning specified in Article 15 of
the Lease.
"Intent to Renew Notice" shall have the meaning specified in Section
5.1(b)(i) of the Lease.
"Interest Rate" for any Secured Note shall mean the rate of interest
specified in such Secured Note (other than the Default Rate).
"Issuer" shall mean the Lessor.
"Land" shall have the meaning specified in the term "Property".
"Lease" shall mean the Lease Agreement dated as of the Closing Date
between Lessor, as lessor, and Lessee, as lessee.
"Lease Default" shall mean any event, condition or failure which, with
notice or lapse of time or both, would become a Lease Event of Default.
"Lease Event of Default" shall have the meaning specified in Article 16
of the Lease.
"Lease Operative Documents" shall mean (i) the Purchase and Sale
Agreement entered into by Lessee as seller ("Seller") and Lessor as buyer
("Buyer") dated as of February 14, 2002, (ii) the deeds, and any other
instruments of transfer in respect of the Property executed and delivered by
Seller or its Affiliates to Lessor or its Affiliates, (iii) the Lease, (iv) the
SNDA Agreement, (v) the Assignment of Lease, (vi) the Consent Agreement, (vii)
the Guaranty, (viii) the Memorandum of Lease, (ix) the Trustee Fee Letter, (x)
the Servicer Fee Letter and (xi) the Privity Agreement.
"Lease Term" shall mean the full term of the Lease, including the Base
Term and any Renewal Terms as to which Lessee exercises a renewal option
pursuant to Article 5 of the Lease, or such shorter period as may result from
earlier termination of the Lease as provided therein.
"Lease Year" shall mean each consecutive period of twelve (12) full
calendar months occurring after the Closing Date, provided, however, that, if
the Closing Date shall not be the first day of a month, then the first Lease
Year shall also include the partial month in which the Closing Date occurs.
"Lessee" shall mean the Lessee named in the Lease to which this
Appendix is attached.
"Lessee's Equipment and Personalty" shall mean all furniture, equipment
and personal property of Lessee, which includes, without limitation, inventory,
lifts, cabling, antennae, machinery, communication equipment, data cabinets,
signs, desks, movable partitions, vending machines, computer software and
hardware, movable storage and utility rooms and removable trade fixtures and
equipment, even if bolted or otherwise affixed to the floors, in each case, as
now or may hereafter exist in or on any of the Improvements and any other
personal property owned by Lessee or a sublessee of Lessee. In no case shall
Lessee's Equipment and Personalty include fixtures or built-in heating,
ventilating, air-conditioning, and electrical equipment (including power panels)
to be utilized in connection with the operation of the Property.
"Lessor" shall mean the Lessor named in the Lease to which this
Appendix is attached.
"Lessor Liens" shall mean Liens on or against the Property or the Lease
or any payment of Rent (a) which result from any act of, or any Claim against,
Lessor, or which result from any violation by Lessor of any of the terms of the
Operative Documents other than a violation due to a default by Lessee under the
Lease, (b) which result from Liens in favor of any taxing authority by reason of
any Tax owed and payable by Lessor, except that Lessor Liens shall not include
any Lien resulting from any Tax for which Lessee is obligated to indemnify
Lessor until such time as Lessee shall have already paid to or on behalf of
Lessor the Tax or the required indemnity with respect to the same, or (c) which
result from any expenses owed, caused or occasioned by Lessor or any of its
employees or agents which are not indemnified by Lessee pursuant to Section 19.1
of the Lease, but shall exclude Permitted Liens and any Liens created by the
Debt Documents, except to the extent any such Lien arises by the Holders'
payment of any of the foregoing.
"Lien" shall mean any lien, mortgage, pledge, charge, security interest
or encumbrance of any kind, or any other type of preferential arrangement that
has the practical effect of creating a security interest, including, without
limitation, any thereof arising under any conditional sale agreement, capital
lease or other title retention agreement.
"Make-Whole Premium" shall have the meaning specified in the Indenture.
"Material" (x) as used to describe Lessee's compliance requirement in
Section 8.5 of the Lease shall mean that the failure to so comply may reasonably
be expected to result in material risk of (i) physical injury or illness to any
individual, (ii) criminal liability, or (iii) fines or Remedial Action or
compliance costs in excess of $500,000 (which shall be adjusted upward each
January 1 by any CPI Increase) and (y) as used to describe the failure to comply
with any obligation owed to the Indenture Trustee (whether directly or
indirectly) shall mean the failure to so comply may reasonably be expected to
result in a material diminution of Fair Market Sales Value of the Property or an
adverse effect on the Lien (or priority thereof) created by the Debt Documents.
"Maturity Date" shall mean February 14, 2022.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. and its
successors.
"Mortgage" shall mean that certain Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Financing Statement, dated of even
date herewith between the Lessor, as mortgagor or trustor, and the Indenture
Trustee, as mortgagee or beneficiary, and as the same may be renewed, amended,
modified, consolidated, replaced or extended.
"Mortgaged Property" shall mean the Mortgaged Property or Trust
Property, as defined in the Mortgage.
"Net Casualty Proceeds" shall mean the compensation and/or insurance
payments (whether received from a third party insurance company or from Lessee
because it has self-insured) net of the reasonable expenses of collecting such
amounts incurred by the Lessor, the Indenture Trustee, the Servicer, the Lessee,
the Guarantor or the Holders and received by the Indenture Trustee, the
Servicer, the Lessor or the Lessee in respect of the Property by reason of and
on account of an Event of Loss described in clause (y) of the definition thereof
or a casualty.
"Net Condemnation Proceeds" shall mean any award or compensation net of
the reasonable expenses of collecting such amounts incurred by the Lessor, the
Indenture Trustee, the Servicer, the Lessee, the Guarantor, the Holders and
received by the Indenture Trustee, the Servicer, the Lessor or the Lessee in
respect of the Property by reason of and on account of a Condemnation.
"Net Proceeds" shall mean Net Casualty Proceeds and Net Condemnation
Proceeds.
"Noncontrolling Party" shall have the meaning specified in Section
19.2(e) of the Lease.
"Nonseverable" shall describe an Alteration or part of an Alteration
which cannot be removed from the existing Improvements or the Land without
causing material damage to the property; provided that Lessee's Equipment and
Personalty shall not be construed as Nonseverable.
"Note Purchase Agreement" shall mean that certain agreement dated as of
the Closing Date between the Issuer, the Indenture Trustee and the Pass Through
Trustee.
"NSRO" shall mean a nationally recognized statistical rating
organization, which as of this date would include Standard & Poor's and Moody's.
"Offeree" shall have the meaning specified in Article 4 of the Lease.
"Offeror" shall have the meaning specified in Article 4 of the Lease.
"Officer's Certificate" of a Person or any Person signing on behalf of
a Person shall mean a certificate signed, in the case of a partnership, by a
general partner of such partnership, or, in the case of a corporation, by an
Authorized Officer of such Person, or, in the case of a limited liability
company, by the manager of such limited liability company. Each Officer's
Certificate delivered to the Indenture Trustee shall include a statement that
the signatory (a) has reviewed the activities of the entity on whose behalf the
Officer's Certificate is being given with respect to the subject matter for
which such Officer's Certificate is requested, (b) is familiar with the
provisions of the Indenture or Lease to which the requested Officer's
Certificate relates and (c) has, in such signatory's opinion, made such
examination or investigation as is necessary to enable such signatory to act on
an informed basis in responding to such request.
"Operative Documents" shall mean the Debt Documents, the Lease
Operative Documents, the Surety Bond and the Pass-Through Trust Agreement,
collectively.
"Outstanding", when used with respect to the Secured Notes, shall mean
as of the date of determination, all Secured Notes theretofore issued and
delivered under the Indenture, except:
(a) Secured Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(b) Secured Notes or portions thereof for whose payment or redemption
money in the necessary amount is on deposit with the Indenture Trustee; provided
that such Secured Notes are to be redeemed and notice of such redemption has
been duly given and not revoked or otherwise withdrawn pursuant to the
Indenture; and
(c) Secured Notes to the extent paid, or in exchange for which, or in
lieu of which, other Secured Notes have been authenticated and delivered
pursuant to the Indenture.
"Pass-Through Trust Agreement" shall mean the Declaration of Trust, as
defined in the Indenture.
"Pass-Through Trust Certificates" shall mean the Trust Certificates, as
defined in the Indenture.
"Pass-Through Trustee" shall have the meaning accorded it in the
Indenture.
"Payment Date" shall mean the date or dates identified as such in the
Schedule attached to the Secured Notes.
"Permits" shall mean as to the Property all licenses, authorizations,
certificates, variances, concessions, grants, registrations, consents, permits
and other approvals issued by a Governmental Authority now or hereafter
pertaining to the ownership, management, occupancy, use or operation of the
Property, including certificates of occupancy.
"Permitted Encumbrances" shall mean the easements, rights of way,
reservations, servitudes and rights of others against the Property which are
listed in the Title Policy issued to the Issuer or the Indenture Trustee (as
applicable).
"Permitted Investments" shall mean any one or more of the following
obligations or securities having (a) a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (b) bearing interest that may either
be fixed or variable but which is tied to a single interest rate index plus a
single fixed rate spread (if any) that moves proportionately with that index,
and (c) having the required ratings, if any, provided for in this definition:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of America
that mature in thirty (30) days or less after the date of issuance and that does
not have a "r" highlighter affixed to its rating;
(ii) time deposits, unsecured certificates of deposit, or bankers'
acceptances that mature in thirty (30) days or less after the date of issuance
and are issued or held by any depository institution or trust company (including
the Indenture Trustee) incorporated or organized under the laws of the United
States of America or any State thereof and subject to supervision and
examination by federal or state banking authorities, so long as the commercial
paper or other short-term debt obligations of such depository institution or
trust company are rated at least "A-1" and "P-1" by Standard & Poor's and
Moody's, respectively, or such other rating as would not result in the
downgrading, withdrawal or qualification of the then current rating assigned by
the Rating Agencies to the Pass-Through Certificates, as evidenced in writing
and that does not have a "r" highlighter affixed to its rating;
(iii) repurchase agreements or obligations with respect to any security
described in clause (i) above where such security has a remaining maturity of
thirty (30) days or less and where such repurchase obligation has been entered
into with a depository institution or trust company (acting as principal)
described in clause (ii) above;
(iv) debt obligations bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which mature in thirty (30) days or less from the date of
issuance, which debt obligations have ratings from Moody's and Standard & Poor's
in the highest category possible, or such other rating as would not result in
the downgrading, withdrawal or qualification of the then-current rating assigned
by the Rating Agencies to any Pass-Through Certificate as specified in writing
by the Rating Agencies and that do not have a "r" highlighter affixed to their
rating; provided, however, that securities issued by any particular corporation
will not be Permitted Investments to the extent that investment therein will
cause the then-outstanding principal amount of securities issued by such
corporation and held in the accounts established hereunder to exceed 10% of the
sum of the aggregate principal balance and the aggregate principal amount of all
Permitted Investments in such accounts; and
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations) payable on demand or on a
specified date maturing in thirty (30) days or less after the date of issuance
thereof and which is rated in the highest category possible by Moody's and
Standard & Poor's and that does not have a "r" highlighter affixed to such
rating.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the Lessee, the Lessor and
the Holders under the Operative Documents,
(b) Liens for Taxes either not yet due or being contested in good faith
and by appropriate proceedings, so long as such proceedings shall not involve
any material danger of the sale, forfeiture or loss of any part of the Property,
title thereto or any interest therein and are undertaken in accordance with the
terms of any documents securing the Indebtedness (including, without limitation,
posting of any bonds or other collateral to the extent required by such
documents),
(c) materialmen's, mechanics', workers', repairmen's, employees or
other like Liens for amounts either not yet due or being contested in good faith
and by appropriate proceedings and in accordance with the Lease, so long as such
proceedings shall not involve any material danger of the sale, forfeiture or
loss of any part of the Property, title thereto or any interest therein,
provided
Lessee agrees that it shall pay, discharge or record or bond any such
lien within sixty (60) days after the filing thereof, if Guarantor does not have
Required Rating equal to or greater than the Trigger Rating, or if a Lease Event
of Default exists,
(d) Liens arising out of judgments or awards with respect to which at
the time an appeal or proceeding for review is being prosecuted in good faith
and either which have been bonded or for the payment of which adequate reserves
shall have been provided to Lessor's reasonable satisfaction, provided that if
the long-term unsecured debt of Guarantor (or Lessee if there is no Guarantor)
shall not have a Required Rating of at least the Trigger Rating then any such
amount in excess of Five Hundred Thousand Dollars ($500,000) (as adjusted upward
by the CPI every January 1) (unless Guarantor or its Affiliates are insured
therefor), shall be bonded or discharged by Lessee within thirty (30) days after
Lessee's knowledge thereof,
(e) easements, rights of way, reservations, servitudes and rights of
others against the Property which are granted pursuant to Section 25.12 of the
Lease and which could not reasonably be expected to have a material adverse
effect on the Property,
(f) Permitted Encumbrances, and
(g) assignments and subleases expressly permitted by the Lease.
No lien, judgment, charge or other agreement shall be deemed to be a
Permitted Lien if such lien, judgment, charge or other agreement, individually
or in the aggregate with other liens, judgments, charges or agreements,
materially and adversely affects (i) the value of the Property, (ii) Guarantor's
and Lessee's ability to pay all Rent, as and when due hereunder, or (iii)
Lessee's right to use and operate the Property for all Permitted Uses.
"Permitted Use" shall have the meaning given to such term in Section
8.1 of the Lease.
"Person" shall mean individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
nonincorporated organization or government or any agency or political
subdivision thereof.
"Portfolio Sale" shall mean the sale of at least eight (8) properties,
or of the equity interest therein, which are owned by Lessor or similarly
created entities whose equity interests are substantially owned by Zurich
Structured Finance, Inc. and the total sales price of such properties are at
least twice the price paid by Lessor for the Property.
"Privity Agreement" shall mean the agreement executed as of the Closing
Date among the Lessor, the Lessee, the Surety and the Indenture Trustee.
"Proceeds Trustee" shall mean the Indenture Trustee (or at its
election, the Servicer) or, if the Property shall not at the time in question be
encumbered by a Mortgage, a federally insured bank or other financial
institution, selected by Lessor and reasonably satisfactory to Lessee.
"Prohibited Transferee" shall mean any competitor of TXU Corp. which is
primarily engaged in the business of natural gas distribution or electricity
production and/or distribution.
"Property" shall mean the real property described on Exhibit A to the
Lease (the "Land"); together with all buildings, structures, and other
improvements of every kind situated on the Land (collectively, the
"Improvements"); together with all easements, rights and appurtenances relating
to the Land or the Improvements; and together with all fixtures, including all
components thereof, on and in respect to the Improvements, including, without
limitation, all built-in H.V.A.C. equipment used in the operation of the
Property, together with all replacements, modifications, alterations and
additions thereto (collectively, the "Fixtures"), provided that in no event
shall "Property" include Lessee's Equipment and Personalty.
"Property Cost" shall mean "Purchase Price" (as defined in the Purchase
and Sale Agreement).
"Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement dated as of February 14, 2002 between TXU Properties Company, as
Seller and State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee, and not individually, of ZSF/Dallas Tower Trust,
as Purchaser.
"Qualified Appraiser" means an independent appraiser who shall be a
member of The Appraisal Institute (or its successor organization) with not less
than five (5) years experience appraising properties similar to the Property in
the market in which the Property is located.
"Rating Agencies" shall mean Moody's and Standard & Poor's, or at the
Indenture Trustee's election, another NSRO.
"Refinancing" shall mean any refinancing of the Indebtedness.
"Release" shall mean the release or threatened release of any Hazardous
Material into or upon or under any land or water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
"Released Property" shall have the meaning specified in Section 23.05
of the Indenture.
"Relevant Constituent Entity" shall mean an Initial Relevant
Constituent Entity and in the future shall include the entities the transfers of
interests in which are restricted pursuant to Section 5.04 of the Indenture.
"Remedial Action" means the investigation, response, clean-up,
remediation, prevention, mitigation or removal of contamination, environmental
degradation or damage caused by, related to or arising from the existence,
generation, use, handling, treatment, storage, transportation, disposal,
discharge, Release (including a continuous Release), or emission of Hazardous
Materials, including, without limitation, investigations, response, removal,
monitoring and remedial actions under CERCLA; corrective action under the
Resource Conservation and Recovery Act of 1976, as amended, the investigation,
removal or closure of any underground storage tanks, and any related soil or
groundwater investigation, remediation or other action, and investigation,
clean-up or other actions required under or necessary to comply with any
Environmental Laws.
"Renewal Term" shall have the meaning specified in Section 5.1 of the
Lease.
"Rent" shall mean Base Rent and Supplemental Rent, collectively.
"Rent Directions Letter" shall mean a letter from the Lessor, or the
Lessor and any Holder or the Indenture Trustee, to the Lessee, instructing the
Lessee where to make payments under the Lease.
"Rent Payment Dates" shall mean the dates on which Base Rent is due
during the Lease Term as shown on Schedule 3.1; provided, however, in the event
such date is not a Business Day, the Rent Payment Date shall be the immediately
preceding Business Day.
"Required Rating" shall mean a rating at the level set forth in the
Lease as required for Lessee to have the benefit conferred, issued by Standard &
Poor's and Moody's (or any replacement of either of them made by the Indenture
Trust (in which case the rating shall be the equivalent)).
"Requirement" shall have the meaning specified in Section 19.2(b)(xiv)
of the Lease.
"Responsible Officer" shall mean an officer in the corporate trust
administration department of the Indenture Trustee or the Servicer, as
applicable.
"Restoration Fund" shall have the meaning specified in Section 12.4(a)
of the Lease.
"Secured Notes" shall mean the Series A-1 A Note in the amount of
$70,000,000, the Series A-1 B Note in the amount of $1,650,000, and the Series
A-2 Note in the amount of $75,350,000.
"Secured Obligations" shall have the meaning given to such term in the
Mortgage.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Documents" shall mean (i) the Mortgage, (ii) the Assignment
of Lease, (iii) the Assignment of Agreements, (iv) the UCC Financing Statements,
(v) the Consent Agreement, and (vi) the SNDA Agreement.
"Servicer" shall mean First Union National Bank, as servicer under the
Indenture Agreement and its successors and assigns.
"Single Purpose Entity" shall mean a Person, other than an individual,
which (a) in the case of the Lessor, (i) is formed or organized solely for the
purpose of holding an ownership interest in and leasing the Property, (ii) does
not engage in any business unrelated to the Property, (iii) does not have any
assets other than those related to its interest in the Property or any
indebtedness other than as permitted by the other Operative Documents, (iv) has
its own separate books and records and has its own accounts in each case which
are separate and apart from the books and records and accounts of any other
Person, (v) at all times (A) has, or (B) in the case of a grantor trust (in
which the beneficial ownership of such trust is owned by a limited partnership)
or a limited partnership, has either a corporate general partner of either such
limited partnership or another entity which has a Controlling Interest in such
limited partnership which has, or (C) in the case of a grantor trust (in which
the beneficial ownership of such trust is owned by a limited liability company)
or a limited liability company, has a corporate manager of either such limited
liability company or another entity which has a Controlling Interest in such
limited liability company which has one Independent Manager or Independent
Director (or, if the manager of the limited liability company is a partnership,
such partnership has a corporate general partner) which has, one Independent
Manager or Independent Director (as applicable) and (vi) is otherwise subject to
all of the applicable limitations on powers set forth in Sections 5.01, 5.02(a)
and 5.02(d) of the Indenture;
(b) in the case of a Relevant Constituent Entity, (i) is formed or
organized solely for the purpose of holding a direct or indirect ownership
interest and/or direct or indirect Controlling Interest in the Lessor or a
Relevant Constituent Entity, (ii) does not engage in any business unrelated to
the Property, its interest in the Lessor or any Relevant Constituent Entity,
(iii) does not have any assets (other than those related to its interest in the
Lessor or a Relevant Constituent Entity) or any indebtedness other than as
permitted by the other Operative Documents, (iv) has its own separate books and
records and has its own accounts in each case which are separate and apart from
the books and records and accounts of any other person and (v) at all times (A)
has, (B) in the case of a limited partnership, has a corporate general partner
or other entity which has a Controlling interest in such limited partnership
which has, or (C) in the case of a limited liability company, has a corporate
manager which has, one Independent Manager or Independent Director (as
applicable) and (vi) is otherwise subject to all of the applicable limitations
on powers set forth in Sections 5.01, 5.02(a) and 5.02(d) of the Indenture.
"SNDA Agreement" shall mean the Lease Subordination, Non-Disturbance
and Attornment Agreement dated as of the Closing Date among the Lessor, Lessee
and the Indenture Trustee.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., and its successors.
"Stipulated Loss Value" shall mean on the Stipulated Loss Value Date
(i) during the Base Term, the value listed on Schedule 12.1 to the Lease as of
such date, and (ii) during a Renewal Term, the Fair Market Sales Value of the
Property as of such date. The Stipulated Loss Value for the Property together
with the other amounts payable under the Lease, including, without limitation,
the Make-Whole Premium, will be sufficient to pay in full the unpaid principal
balance of, and accrued but unpaid interest on, the Secured Notes relating to
the Property, and any other amounts due under the Debt Documents.
"Stipulated Loss Value Date" shall have the meaning specified in
Section 12.1(i) of the Lease, and after expiration of the Base Term shall mean
the first day of each month during a Renewal Term.
"Stipulated Loss Value Payment" shall mean the amounts payable by the
Lessee pursuant to clause (i) of Section 12.1 or the amounts payable by the
Lessee pursuant to the fourth full paragraph of Section 12.1, as applicable,
including, in each case (without duplication but for the avoidance of doubt) the
Make-Whole Premium.
"Sublease" shall have the meaning given such term in Section 14.1 of
the Lease.
"Subsidiary" shall mean any corporation whose assets and liabilities
are consolidated with that of Lessee.
"Supplemental Rent" shall mean the Make-Whole Premium payable by Lessee
hereunder, and any and all amounts, liabilities, obligations, late charges,
default interest (under this Lease and under any Debt Document, to the extent
arising out of any Lease Event of Default), fees owed under any easement or
other agreement affecting the Property (excluding the Debt Documents and Lessor
Liens, except to the extent expressly set forth herein), Taxes and Impositions
other than Base Rent which Lessee assumes or agrees or is otherwise obligated to
pay under the Lease and the Operative Documents, including, without limitation,
under the fee letters referred to in Section 8.11 of the Lease (whether or not
designated as Supplemental Rent) to the Lessor, grantor trustee, the Indenture
Trustee, the Holders, the Servicer (or any special servicer), any NSRO, or any
other party, including Fair Market Sales Value payments, Stipulated Loss Value
Payments, costs payable under Section 8.11, Termination Value Payments, amounts
payable by reference to Additional Interest, if any, due under any Secured Note,
and indemnities and damages for breach of any covenants, representations,
warranties or agreements.
"Surety" shall mean ZC Specialty Insurance Company, a Texas
corporation.
"Surety Bond" shall mean the bond of the Surety pursuant to which the
Surety will pay all or a portion of the scheduled unamortized principal of the
Secured A-2 Note.
"Tax Counsel" shall have the meaning specified in Section 19.2(e) of
the Lease.
"Tax Indemnitee" shall mean any co-trustee, the Lessor and its direct
and indirect owners, the Indenture Trustee, the Pass-Through Trustee, any
Holder, any Indemnitee, any trustee under any Mortgage which is a deed of trust,
any Affiliate, officer, director, employee, shareholder, member or partner of
any of the foregoing or any of their successors or assigns.
"Taxes" shall mean any and all present and future taxes, including
income (gross or net), gross or net receipts, sales, use, value added,
franchise, doing business, transfer, capital, property (tangible or intangible),
municipal assessments, excise and stamp taxes, levies, imposts, duties, charges,
assessments or withholding, together with any penalties, fines or interest
thereon or additions thereto (any of the foregoing being referred to herein
individually as a "Tax"), imposed by any Governmental Authority. Taxes shall
include the costs of any contest or appeal pursued which reduces the Taxes (or
attempts to do so) including reasonable attorney's fees and costs incident
thereto. Without limiting the foregoing, if at any time during the term of the
Lease the methods of taxation prevailing at the execution thereof shall be
changed or altered so that in lieu of or as a supplement or addition to or a
substitute for the whole or any part of the real estate taxes or assessments now
or from time to time, thereafter levied, assessed or imposed by applicable
taxing authorities for the funding of governmental services, there shall be
imposed (i) a tax, assessment, levy, imposition or charge, wholly or partially
as a capital levy or otherwise, on the rents received from or otherwise
attributable to the Property, or (ii) a tax, assessment, levy (including but not
limited to any municipal, state or federal levy), imposition or charge measured
by or based in whole or in part upon the Property or the Lease, and imposed on
the Lessor under the Lease or any portion thereof, or (iii) a license fee or
other fee or tax measured by the rent payable under the Lease, or (iv) any other
tax, assessment, levy, charge, fee or the like payable by the Lessor under the
Lease with respect to the Property, the rents, issues and profits thereof, the
Lease or the rents and charges payable pursuant thereto, then all such taxes,
assessment, levies, impositions and/or charges, or the part thereof so measured
or based shall be deemed to be Taxes.
"Term" shall mean the Base Term and Renewal Term (if any).
"Termination Value" shall mean on the Termination Value Date or the
date payment is to be made under Section 21.1 if Lessor rejects Lessee's offer
to purchase, as the case may be, during the Base Term, the value listed on
Schedule 21.1 to the Lease for such Property as of such date. The Termination
Value, together with the other amounts payable under the Lease, including,
without limitation, the Make-Whole Premium, shall be sufficient to pay in full
the unpaid principal balance of, and accrued but unpaid interest on the Secured
Notes relating to the Property on the Termination Value Date, and any other
amounts due under the Debt Documents.
"Termination Value Date" shall have the meaning specified in Section
21.1 of the Lease.
"Termination Value Payment" shall mean the amounts payable by the
Lessee pursuant to Section 21.1(a) or the amounts payable by the Lessee pursuant
to Section 21.1(b), as applicable, including, in each case (without duplication
but for the avoidance of doubt) the Make-Whole Premium.
"Title Insurance Company" shall mean American Title Company.
"Title Policy" shall mean the title insurance policy issued by the
Title Insurance Company to Lessor pursuant to the Purchase and Sale Agreement,
and to the Indenture Trustee pursuant to the Note Purchase Agreement and the
Security Documents (as applicable) on the Closing Date.
"Transfer" shall have the meaning given to such term in Section 5.04 of
the Indenture.
"Trigger Rating", with respect to any Person, shall mean that the
senior unsecured non-credit enhanced long term obligations of such Person shall
have a rating (or if the senior unsecured obligations of such Person shall not
be rated, such Person shall have a confidential debt rating) of at least BBB- by
Standard & Poor's, and at least Baa3 by Moody's.
"TXU Guaranty Agreement" means that certain Guaranty executed as of
February 14, 2002 by TXU Corp. for the benefit of the Lessor.
"UCC" shall mean the Uniform Commercial Code as enacted by each state
in which Property is located, as applicable.
"Unavoidable Delays" shall mean delays caused by war, riot, civil
commotion, strikes, labor action, acts of God, force majeure, shortages of
supplies or labor, adverse weather condition not reasonably anticipatable given
the location of a Property and the season of year, or any other cause not
reasonably within the control of Lessee but excluding the financial condition of
the Lessee.
"Uneconomic Property" shall mean a Property that in Lessee's good faith
decision is either obsolete or uneconomic for the conduct of Lessee's business,
and which, but for this Lease, would not be used for the conduct of Lessee's
business, as certified by an Officer's Certificate.
"Verifier" shall have the meaning specified in Section 19.2(g) of the
Lease.
Schedule 3.1
SCHEDULE OF BASE RENT
(US $)
Semiannual Base Rent Base Rent Allocated
Period Ending Payment Date Payable* Rent
------------- ------------ -------- ----
14-Aug-2002 11-Aug-2002 $9,817,815.72 $0.00
14-Feb-2003 11-Feb-2003 $9,679,662.43 $15,385,854.07
14-Aug-2003 11-Aug-2003 $9,554,954.60 $0.00
14-Feb-2004 11-Feb-2004 $9,430,246.75 $12,643,757.53
14-Aug-2004 11-Aug-2004 $9,305,538.91 $0.00
14-Feb-2005 11-Feb-2005 $9,180,831.08 $13,504,415.57
14-Aug-2005 11-Aug-2005 $9,056,123.24 $0.00
14-Feb-2006 11-Feb-2006 $8,931,415.40 $13,234,282.03
14-Aug-2006 11-Aug-2006 $8,806,707.57 $0.00
14-Feb-2007 11-Feb-2007 $8,681,999.72 $13,319,068.47
14-Aug-2007 11-Aug-2007 $8,557,291.88 $0.00
14-Feb-2008 11-Feb-2008 $8,432,584.05 $13,292,456.67
14-Aug-2008 11-Aug-2008 $5,820,029.00 $0.00
14-Feb-2009 11-Feb-2009 $5,768,678.72 $13,300,809.28
14-Aug-2009 11-Aug-2009 $5,717,328.42 $0.00
14-Feb-2010 11-Feb-2010 $5,665,978.14 $13,298,187.65
14-Aug-2010 11-Aug-2010 $5,614,627.86 $0.00
14-Feb-2011 11-Feb-2011 $5,563,277.56 $13,299,010.49
14-Aug-2011 11-Aug-2011 $5,511,927.28 $0.00
14-Feb-2012 11-Feb-2012 $5,460,577.00 $13,298,752.23
14-Aug-2012 11-Aug-2012 $5,409,226.70 $0.00
14-Feb-2013 11-Feb-2013 $5,357,876.42 $9,285,132.23
14-Aug-2013 11-Aug-2013 $5,306,526.14 $0.00
14-Feb-2014 11-Feb-2014 $5,255,175.88 $10,000,436.32
14-Aug-2014 11-Aug-2014 $3,462,332.50 $0.00
14-Feb-2015 11-Feb-2015 $3,462,332.50 $9,775,924.82
14-Aug-2015 11-Aug-2015 $3,462,332.50 $0.00
14-Feb-2016 11-Feb-2016 $3,462,332.50 $9,846,391.93
14-Aug-2016 11-Aug-2016 $3,462,332.50 $0.00
14-Feb-2017 11-Feb-2017 $3,462,332.50 $9,824,274.51
14-Aug-2017 11-Aug-2017 $3,462,332.50 $0.00
14-Feb-2018 11-Feb-2018 $3,462,332.50 $9,831,216.48
14-Aug-2018 11-Aug-2018 $3,462,332.50 $0.00
14-Feb-2019 11-Feb-2019 $3,462,332.50 $9,829,037.62
14-Aug-2019 11-Aug-2019 $3,462,332.50 $0.00
14-Feb-2020 11-Feb-2020 $3,462,332.50 $9,829,721.49
14-Aug-2020 11-Aug-2020 $3,462,332.50 $0.00
14-Feb-2021 11-Feb-2021 $3,462,332.50 $9,829,506.84
14-Aug-2021 11-Aug-2021 $3,462,332.50 $3,740,705.20
14-Feb-2022 11-Feb-2022 $3,462,332.50 $4,914,779.06
*Excludes Trustee and Servicing Fees payable pursuant to this Lease.
Schedule 3.6
SCHEDULE OF FEDERAL INCOME TAX ALLOCATION OF BASE RENT & INTEREST
(US $)
467 Loan Balance 467 Loan
Semiannual Allocated Proportional Beginning Balance
Period Ending Rent Rental Amount of Period End of Period 467 Interest
------------- ---- ------------- --------- ------------- ------------
14-Aug-2002 $0.00 $0.00 $0.00 $9,817,815.72 $0.00
14-Feb-2003 $15,385,854.07 $16,856,337.95 $9,817,815.72 $2,939,110.91 $297,970.71
14-Aug-2003 $0.00 $0.00 $2,939,110.91 $12,583,267.53 $89,202.02
14-Feb-2004 $12,643,757.53 $13,852,168.94 $12,583,267.53 $8,543,247.51 $381,902.17
14-Aug-2004 $0.00 $0.00 $8,543,247.51 $18,108,073.98 $259,287.56
14-Feb-2005 $13,504,415.57 $14,795,083.30 $18,108,073.98 $13,043,401.81 $549,580.05
14-Aug-2005 $0.00 $0.00 $13,043,401.81 $22,495,392.30 $395,867.24
14-Feb-2006 $13,234,282.03 $14,499,132.08 $22,495,392.30 $17,610,410.78 $682,735.16
14-Aug-2006 $0.00 $0.00 $17,610,410.78 $26,951,594.31 $534,475.97
14-Feb-2007 $13,319,068.47 $14,592,021.88 $26,951,594.31 $21,859,553.04 $817,980.89
14-Aug-2007 $0.00 $0.00 $21,859,553.04 $31,080,282.36 $663,437.43
14-Feb-2008 $13,292,456.67 $14,562;866.69 $31,080,282.36 $25,893,286.29 $943,286.57
14-Aug-2008 $0.00 $0.00 $25,893,286.29 $32,499,176.53 $785,861.24
14-Feb-2009 $13,300,809.28 $14,572,017.59 $32,499,176.53 $24,682,187.67 $986,350.01
14-Aug-2009 $0.00 $0.00 $24,682,187.67 $31,148,620.49 $749,104.40
14-Feb-2010 $13,298,187.65 $14,569,145.41 $31,148,620.49 $23,190,813.85 $945,360.63
14-Aug-2010 $0.00 $0.00 $23,190,813.85 $29,509,282.91 $703,841.20
14-Feb-2011 $13,299,010.49 $14,570,046.89 $29,509,282.91 $21,398,120.32 $895,606.74
14-Aug-2011 $0.00 $0.00 $21,398,120.32 $27,559,480.55 $649,432.95
14-Feb-2012 $13,298,752..23 $14,569,763.95 $27,559,480.55 $19,286,723.84 $836,430.23
14-Aug-2012 $0.00 $0.00 $19,286,723.84 $25,281,302.61 $585,352.07
14-Feb-2013 $9,285,132.23 $10,172,547.20 $25,281,302.61 $21,233,919.37 $767,287.53
14-Aug-2013 $0.00 $0.00 $21,233,919.37 $27,184,894.96 $644,449.45
14-Feb-2014 $10,000,436.32 $10,956,215.59 $27,184,894.96 $22,308,916.82 $825,061.56
14-Aug-2014 $0.00 $0.00 $22,308,916.82 $26,448,324.94 $677,075.63
14-Feb-2015 $9,775,924.82 $10,710,246.68 $26,448,324.94 $20,003,117.43 $802,706.66
14-Aug-2015 $0.00 $0.00 $20,003,117.43 $24,072,544.54 $607,094.61
l4-Feb-2016 $9,846,391.93 $10,787,448.60 $24,072,544.54 $17,478,030.17 $730,601.73
14-Aug-2016 $0.00 $0.00 $17,478,030.17 $21,470,820.88 $530,458.22
14-Feb-2017 $9,824,274.51 $10,763,217.34 $21,470,820.88 $14,821,575.46 $651,639.41
14-Aug-2017 $0.00 $0.00 $14,821,575.46 $18,733,742.78 $449,834.82
14-Feb-2018 $9,831,216.48 $10,770,822.77 $18,733,742.78 $11,993,821.60 $568,569.09
14-Aug-2018 $0.00 $0.00 $11,993,821.60 $15,820,166.59 $364,012.49
14-Feb-2019 $9,829,037.62 $10,768,435.67 $15,820,166.59 $8,994,205.48 $480,142.06
14-Aug-2019 $0.00 $0.00 $8,994,205.48 $12,729,512.11 $272,974.14
14-Feb-2020 $9,829,721.49 $10,769,184.90 $12,729,512.11 $5,809,000.41 $386,340.69
14-Aug-2020 $0.00 $0.00 $5,809,000.41 $9,447,636.07 $176,303.16
l4-Feb-2021 $9,829,506.84 $10,768,949.74 $9,447,636.07 $2,427,754.59 $286,735.75
14-Aug-2021 $3,740,705.20 $4,098,218.45 $2,427,754.59 $1,865,550.99 $73,682.35
14-Feb-2022 $4,914,779.06 $5,384,502.96 $1,865,550.99 $0.00 $56,619.47
SCHEDULE 9.1
Insurance Requirements
(a) Lessee covenants and agrees that it will at all times keep in full
force and effect the following insurance coverage:
(i) A broad form commercial general liability insurance
policy, including but not limited to premises, operations, automobile
liability (which may be carried by separate policy) and products
liability, personal injury liability, contractual liability, and
property damage liability coverage at the Property and the business
conducted by Lessee thereon. The policy shall provide coverage limits
of not less than Two Million Dollars ($2,000,000) per occurrence. The
commercial general liability policy shall also include a commercial
excess or umbrella liability of Ten Million Dollars ($10,000,000) and
shall name Lessor and the Indenture Trustee as additional insureds, as
their interest may appear. Lessor may reasonably require other types of
general liability insurance, based upon (A) the loss history at the
Property, and (B) industry standards, and taking into account Lessee's
(or its parent's, if applicable) insurance program, and other types of
coverage being obtained in similar transactions.
(ii) All risk property replacement cost insurance against
physical loss or damage by fire, lightning and other risks and
supplementary perils from time to time included under all risk
policies, with standard and extended coverage or all risk endorsement,
including without limitation, vandalism and malicious mischief [with
agreed amount endorsements] of all building and other facilities and
improvements constructed on the Property and all tenant finish and
leasehold improvements and fixtures. This policy shall name Lessor and
the Indenture Trustee as loss payees as their interest may appear. To
the extent commercially available, such policy shall contain a
deductible of not more than Five Million Dollars ($5,000,000.00) per
occurrence. Lessee shall be responsible for all deductibles.
(iii) To the extent commercially available, a full replacement
policy of flood insurance (which may be a part of the policy described
in clause (ii)) and subject to the same terms and conditions, covering
those improvements located in the Flood Zones containing the letters
"A" or "V".
(iv) Workers' compensation or other such insurance in
accordance with applicable state law requirements covering all of
Lessee's employees.
(b) If the Guarantor (or Lessee if there is no Guarantor) fails to
satisfy the conditions necessary to maintain a program of self-insurance
adequate to satisfy the requirements set forth herein, Lessee shall have a
period of five (5) days in which to obtain the necessary insurance coverage and
deliver to Lessor and the Indenture Trustee a certificate of insurance
evidencing compliance with the requirements set forth in Section 9.1.
(c) All policies of insurance described in this Schedule which Lessee
is required to procure and maintain will be issued by responsible insurance
companies, having a rating of not less than Best's A-VIII or better at all
times. Unless Lessee elects (and is permitted) to self-insure as provided in
Section 9.1(b), certificates of such insurance will be delivered to Lessor and
the Indenture Trustee, and any additional insureds upon execution of this Lease
and any renewals or extensions of said policies or certificates of insurance
shall be delivered to Lessor and the Indenture Trustee at least thirty (30) days
prior to the expiration or termination of such policies. Upon request of Lessor
or Indenture Trustee, Lessee shall provide certified copies of all policies
within thirty (30) days of request. Unless Lessee elects (and is permitted) to
self-insure as provided in Section 9.1(b), all liability and property damage
policies will contain the following provisions:
(i) The company writing such policy will agree to give the
insured and additionally named insured parties or loss payees not less
than thirty (30) days notice in writing prior to any cancellation,
reduction, or modification of such insurance;
(ii) Lessor and the Indenture Trustee shall be named as
additional insured or loss payees, as their interests may appear, for
each insurance policy required to be maintained by Lessee (except
(a)(iv) above), with all proceeds under any policy under (a)(ii) and
(iii) to be paid in accordance with the provisions of the Lease.
(d) Any insurance required by the Lease (excluding, however, the
coverage identified in Section (a)(iv) above) may be brought within the coverage
of a so-called blanket policy or policies of insurance carried by and maintained
by the insuring party insuring the combined operations at the Property with
other premises leased or owned by Lessee, so long as the insured party and the
additional insureds required hereunder are named under such policies as their
interest may appear with coverage at least as good as required herein.
(e) If Lessee fails to acquire or maintain the insurance required
pursuant to this Schedule and Article 9 or to pay the premiums for such
insurance and deliver the required certificates, Lessor may, in addition to
other rights and remedies available to Lessor, acquire such insurance and/or pay
the requisite premiums therefor. Such premiums so paid by Lessor will be
reimbursable and payable by Lessee immediately upon written demand therefor made
to Lessee by Lessor, plus interest at the Default Rate from the date paid by
Lessor until reimbursement by Lessee.
(f) Except to the extent otherwise provided in the Lease, the parties
hereto release each other, and their respective representatives, agents,
contractors and employees from any claims for damage to any Person or to the
Property and all improvements located in the Property, and to the fixtures,
personal property, improvements, and alteration of either Lessor or Lessee in or
upon the Property, that are caused by or result from risks insured against under
any insurance policies carried by the parties (or which should have been carried
by the parties pursuant to the terms hereof) or, in the case of Lessee's
self-insurance, all risks that would otherwise be insured against under the
policies identified herein; provided, however, the foregoing shall not impair
any claim against Lessee in its capacity as self insurer. Each party shall cause
each insurance policy obtained by it (recognizing that Lessor may not in fact
obtain any insurance) to provide that the insurance company waives in writing
all right of recovery by way of subrogation against the other party in
connection with any damage covered by such policy. Neither party shall be liable
to the other for any damage caused by fire or any of the risks insured against
(or to be insured against) under any insurance policy required by the Lease or
self-insurance maintained in lieu of any such required insurance.
SCHEDULE 12.1
SCHEDULE OF STIPULATED LOSS VALUES*
(US $)
Stipulated Loss Stipulated
Value Date Loss Value
---------- ----------
11-Aug-2002 $145,284,711.97
11-Feb-2003 $141,631,823.64
11-Aug-2003 $137,978,412.16
11-Feb-2004 $134,322,857.84
11-Aug-2004 $130,666,597.68
11-Feb-2005 $127,009,677.75
11-Aug-2005 $123,353,183.07
11-Feb-2006 $119,697,245.35
11-Aug-2006 $116,042,664.29
11-Feb-2007 $112,389,642.52
11-Aug-2007 $108,738,590.97
11-Feb-2008 $105,089,586.82
11-Aug-2008 $103,930,794.79
11-Feb-2009 $102,773,269.45
11-Aug-2009 $101,618,766.24
11-Feb-2010 $100,467,802.54
11-Aug-2010 $99,320,821.78
11-Feb-2011 $98,178,577.52
11-Aug-2011 $97,041,011.40
11-Feb-2012 $95,908,674.59
11-Aug-2012 $94,779,266.31
11-Feb-2013 $93,650,854.20
11-Aug-2013 $92,523,538.10
11-Feb-2014 $91,396,780.09
11-Aug-2014 $92,012,535.68
11-Feb-2015 $92,628,194.36
11-Aug-2015 $93,245,050.27
11-Feb-2016 $93,862,877.85
11-Aug-2016 $94,482,091.63
11-Feb-2017 $95,102,505.84
11-Aug-2017 $95,724,699.82
11-Feb-2018 $96,348,753.77
11-Aug-2018 $96,975,192.26
11-Feb-2019 $97,604,246.18
11-Aug-2019 $98,236,111.38
11-Feb-2020 $98,870,877.70
11-Aug-2020 $99,508,709.81
11-Feb-2021 $100,149,747.36
11-Aug-2021 $100,794,186.21
11-Feb-2022 $101,500,000.00
*Rent and Make-Whole Premiums, if any, are payable in addition to Stipulated
Loss Value.
SCHEDULE 14.1
Existing Subleases
1. Lease Agreement dated as of October 1, 1994, by and between Texas
Utilities Properties Inc. (now known as TXU Properties Company), as
landlord, and Texas Utilities Services Company, now known as TXU
Business Services Company, as tenant, as amended by those Lease
Amendment Agreements effective as of January 1, 1997, March 15, 1998,
August 1, 1998, August 1, 1998, and February 14, 2002.
2. Lease Agreement dated May 1, 1995, by and between Texas Utilities
Properties, Inc., as landlord, and Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx,
L.L.P. (predecessor in interest to Hunton & Xxxxxxxx), as tenant, as
amended by that First Amendment to Lease Agreement dated December 1,
1999.
3. Lease Agreement dated January 1, 2000, by and between TXU Properties,
Inc., as landlord, and AROMA Coffee and Vending, Inc., as tenant.
Schedule 21.1
SCHEDULE OF TERMINATION VALUES*
(US $)
Termination Termination
Value Date Value
----------- -----------
11-Aug-2014 $104,252,270.04
11-Feb-2015 $104,971,344.73
*Rent and Make-Whole Premiums, if any, are payable in addition to
Termination Value.
SCHEDULE 25.27
State Specific Provisions
NONE
EXHIBIT A
TRACT ONE
SITUATED in the City of Dallas, Dallas County, State of Texas, being a part of
the Xxxx Xxxxxxx Survey, Abstract No. 495, and being a part of Block 237 of
Xxxxxxxxxx Addition to said City of Dallas, including a portion of former Xxxxx
Street conveyed by the City of Dallas to Atlantic Richfield Company pursuant to
City Ordinance No. 16679, as recorded in Volume 81092, Page 3598 and described
in deeds recorded in Volume 81092, Page 3594 and Volume 81078, page 0000, Xxxx
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx, and being the property which is now occupied by
the "Arco Tower" building, and being more particularly described by metes and
bounds as follows:
BEGINNING at a point in a steel monument found at the intersection of the
Southwesterly right-of-way line of Xxxxx Street, (60 foot right-of-way), with
the Southeasterly right-of-way line of Federal Street, (37.5 foot right-of-way);
THENCE South 45 degrees 00 minutes 00 seconds East with said Southwesterly
right-of-way line of Xxxxx Street a distance of 228.31 feet to a 1/2 inch steel
rod set in the Northwesterly right-of-way of Xxxxx Street, as defined in said
City Ordinance 16679; (currently under construction);
THENCE South 44 degrees 59 minutes 57 seconds West with said right-of-way line a
distance of 261.83 feet to an "X" cut in the Northeasterly right-of-way line of
Xxxxxxxxxx Street, (now Xxxxxxxxxx Plaza, platted as a 40 foot right-of-way);
THENCE North 45 degrees 00 minutes 00 seconds West along said right-of-way line
a distance of 224.90 feet to a point in a steel monument found in the
Southeasterly right-of-way line of Federal Street, (a 40 foot right-of-way);
THENCE North 44 degrees 48 minutes 00 seconds East with said right-of-way line a
distance of 150.00 feet to a point in a steel monument found at an "L" corner;
THENCE North 45 degrees 00 minutes 00 seconds West a distance of 2.50 feet to a
point in a steel monument found at an "L" corner;
THENCE North 44 degrees 48 minutes 00 seconds East continuing with said
right-of-way line of Federal Street a distance of 111.83 feet to the Point of
Beginning and containing 59,283 square feet or 1.361 acres of land more or less.
Page 1 of 5
TRACT TWO (NON-EXCLUSIVE LICENSE FOR SUB-SURFACE UTILIZATION)
Estate created pursuant to that grant of a non-exclusive private license to
Atlantic Richfield Company by the City of Dallas pursuant to City of Dallas
Ordinance No. 21356, passed October 12, 1992, a certified copy of which appears
of record in Volume 92242, Page 0000, Xxxx Xxxxxxx, XXXXXX Xxxxxx, Xxxxx, in and
to the following described parcels of land, to-wit:
PARCEL A
BEING all that certain lot, tract or parcel of land lying and being situated in
the City and County of DALLAS, Texas, more particularly described as follows:
BEING a part of Xxxxx Street as dedicated by XXXXXXXXXX'X ADDITION, according to
the map or plat thereof recorded in. Volume 32, Page 83, of the Deed Records of
DALLAS County, Texas, and a part of the land acquired by the City of Dallas for
the widening of said Xxxxx Street by deed recorded in Volume 1661, Page 356 of
said Deed Records, and being more particularly described as follows:
BEGINNING at a point on the northwest line of Xxxxx Street as established by the
City of Dallas by Ordinance No. 16679, said point being 63.64 feet northeastward
along said northwest line from its intersection with the northeast line of
Xxxxxxxxxx Xxxxx (xxxxxxxx Xxxxxxxxxx Xxxxxx);
THENCE in a northeasterly direction along said northwest line, a distance of
26.85 feet to a point for corner;
THENCE deflect right 120 degrees 00 minutes and in a southeasterly direction, a
distance of 65.07 feet to a point on the curving southeast line of Xxxxx Street
as established by the City of Dallas by Ordinance No. 14461;
THENCE deflect right 61 degrees 59 minutes 47 seconds from the last described
course to the tangent of said curving southeast line and in a southwesterly
direction curving to the left through a central angle of 4 degrees 42 minutes 10
seconds and a radius of 527.96 feet, an arc distance of 47.03 feet to a point
for corner;
THENCE deflect right 122 degrees 42 minutes 23 seconds from the tangent of the
last described curve and in a northwesterly direction, a distance of 25.99 feet
to a point for corner;
THENCE deflect right 60 degrees 00 minutes and in a northeasterly direction, a
distance of 20.00 feet to a point for corner;
Page 2 of 5
THENCE deflect left 60 degrees 00 minutes and in a northwesterly direction, a
distance of 39.42 feet to the PLACE OF BEGINNING and CONTAINING approximately
1949 square feet of land.
PARCEL B
BEING a part of Federal Street (formerly Cottage Lane) as dedicated by
XXXXXXXXXX'X ADDITION, according to the map or plat thereof recorded in Volume
32, Page 83, of the Deed Records of DALLAS County, Texas, and being adjacent to
Block 237, Official City of Dallas numbers, and being more particularly
described as follows:
BEGINNING at a point on the southeast line of Federal Street, 94.75 feet
northeastward along same from its intersection with the northeast line of
Xxxxxxxxxx Xxxxx (xxxxxxxx Xxxxxxxxxx Xxxxxx);
THENCE in a northeasterly direction along said southeast line, a distance of
55.25 feet to an offset in said southeast line of Federal Street;
THENCE deflect left 89 degrees 48 minutes and in a northwesterly direction, a
distance of 2.50 feet to a point for corner;
THENCE deflect right 89 degrees 48 minutes and in a northeasterly direction
along said southeast line of Federal Street, a distance of 54.25 feet to a point
for corner;
THENCE deflect left 89 degrees 48 minutes and in a northwesterly direction, a
distance of 6.40 feet to a point for corner;
THENCE deflect left 90 degrees 00 minutes and in a southwesterly direction, a
distance of 109.50 feet to a point for corner;
THENCE deflect 90 degrees 00 minutes left and in a southeasterly direction, a
distance of 9.28 feet to the PLACE OF BEGINNING and CONTAINING approximately 860
square feet of land.
PARCEL C
BEING a part of Federal Street (formerly Cottage Lane) as dedicated by
XXXXXXXXXX'X ADDITION, according to the map or plat thereof recorded in Volume
32, Page 83 of the Deed Records of DALLAS County, Texas, and being adjacent to
Block 237, Official City of Dallas numbers, and being more particularly
described as follows:
BEGINNING at a point in the southeast line of Federal Street, 13.08 feet
southwestward along same from its intersection with the southwest line of Xxxxx
Street;
Page 3 of 5
THENCE in a Southwesterly direction along said southeast line, a distance of
37.00 feet to a point for corner;
THENCE deflect right 90 degrees 12 minutes and in a northwesterly direction, a
distance of 0.38 feet to a point for corner;
THENCE deflect right 90 degrees 00 minutes and in a northeasterly direction, a
distance of 37.00 feet to a point for corner;
THENCE deflect right 90 degrees 00 minutes and in a southeasterly direction, a
distance of 0.25 feet to the PLACE OF BEGINNING, and CONTAINING approximately
13.1 square feet of land.
Page 4 of 5
TRACT THREE
Situated in the City of Dallas, Dallas County, State of Texas, and being all of
Lot 58 and part of Xxx 00 xx Xxxx xx Xxxxxx Xxxxx No. 230, and being the same
tract of land conveyed to Atlantic Richfield by deed recorded in Volume 79002,
Page 0000, Xxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx, and being more particularly
described by metes and bounds as follows:
Beginning at an "X" cut in concrete at the intersection of the Westerly
right-of-way line of Xxxxx Street with the Northerly right-of-way line of
Xxxxxxxxx Avenue, said "X" maintaining the Southeast corner of said Block 230;
THENCE South 50 degrees 04 minutes 19 seconds West with said Northerly
right-of-way line of Xxxxxxxxx Avenue and the South line of Block 230 a distance
of 131.25 feet to a 1/2 inch steel rod found at the Southwest corner of said Lot
58;
THENCE North 40 degrees 32 minutes 30 seconds West with the West line of Lot 58
a distance of 164.87 feet to a 1/2 inch steel rod found at the Northwest corner
of said Lot 58;
THENCE North 45 degrees 00 minutes 56 seconds East a distance of 50.02 feet to a
point for corner in the face of a building wall;
THENCE South 44 degrees 57 minutes 26 seconds East with said building wall a
distance of 23.36 feet to the corner of said building wall;
THENCE North 75 degrees 52 minutes 37 seconds East continuing with said face of
building wall a distance of 136.57 feet to a 5/8 inch steel rod found in the
said Westerly right-of-way line of Xxxxx Street;
THENCE South 14 degrees 08 minutes 34 seconds East with said right-of-way line
and the East line of said Lot 59 a distance of 96.12 feet to the POINT OF
BEGINNING and containing 20,987 square feet or 0.481 acres of land more or less.
Page 5 of 5
EXHIBIT B
Form of Estoppel Agreement
__________________, the _______________ of [Lessee][Lessor] hereby
certifies that as of __________ (the "Certification Date"), the following is
true and correct:
(a) the Lease dated as February __, 2002 is unmodified and in force and
effect [(or if there have been modifications, that the Lease is in force and
effect as modified, and identifying the modification agreements];
(b) the date to which Base Rent has been paid is _________ __, ____;
(c) there is no default by Lessee in the payment of Base Rent or any
other Rent payable to Lessor hereunder, and there is no other existing default
by either party with respect to which a notice of default or notice of
termination (by Lessor) has been served, [and, if there is any such default,
specifying the nature and extent thereof], and, to the actual knowledge of the
property or asset manager of Lessee having responsibility for the Lease and
Property, and the officer to which he or she reports, there are no acts under
the Lease that have occurred that would constitute a Lease Event of Default with
notice, and the passage of time;
(d) to the knowledge of the signer, there are no setoffs, defenses or
counterclaims against enforcement of the obligations to be performed hereunder
existing in favor of the party executing such certificate.
(e) the term of the Lease commenced on ____________, 2002, and is
scheduled to expire on ________________, 2022, unless renewed or terminated in
accordance with the terms of the Lease. Pursuant to the Lease, Lessee is
entitled to renew the Lease for three (3) terms of ten (10) years each.
[(f) Lessee [and the Guarantor] is not the subject of any filing for
bankruptcy or reorganization under any applicable law.]1
[LESSOR/LESSEE]
--------------------
---------------------------------
1 Only if Lessee is delivering estoppel certificate.
Page 6 of 5
