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EXHIBIT 10.56
LEASE AGREEMENT,
DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS LEASE AGREEMENT, DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (this "Agreement" herein), dated as of June 30,
1999 is entered into by and between:
(1) SILICON VALLEY GROUP, INC., a Delaware corporation ("Lessee");
and
(2) SELCO SERVICE CORPORATION, an Ohio corporation doing business in
California as Ohio SELCO Service Corporation, as lessor under this
Agreement and as trustee under the deed of trust contained herein
("Lessor").
RECITALS
A. Lessee has requested Lessor and the financial institutions which are
"Participants" under the Participation Agreement referred to in Recital B below
(such financial institutions to be referred to collectively as the
"Participants") to provide to Lessee a lease facility pursuant to which:
(1) Lessor would (a) purchase certain property, (b) lease such
property to Lessee and (c) grant to Lessee the right to purchase such
property; and
(2) The Participants would participate in such lease facility by (a)
funding the advance to be made by Lessor to purchase such property and (b)
acquiring participation interests in the rental and certain other payments
to be made by Lessee.
B. Pursuant to a Participation Agreement dated of even date herewith (the
"Participation Agreement") among Lessee, Lessor, the Participants and KeyBank
National Association, as agent for the Participants (in such capacity, "Agent"),
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including without
limitation the execution and delivery of this Agreement setting forth the terms
of the lease by Lessor to Lessee of the property.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
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SECTION 1. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01.
1.02. Rules of Interpretation. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of interpretation set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.
SECTION 2. BASIC PROVISIONS.
2.01. Lease of the Property. Subject to the acquisition thereof by Lessor
pursuant to the Participation Agreement and the Acquisition Agreement (either as
of the date hereof or during the term hereof), Lessor agrees to lease to Lessee
and Lessee agrees to lease from Lessor the following property (the "Property")
to the extent of Lessor's estate, right, title and interest therein, thereto or
thereunder:
(a) All lots, pieces, tracts and parcels of land described in
Exhibit A (the "Land");
(b) All Lessor Improvements located on the Land;
(c) All Appurtenant Rights belonging, relating or pertaining to any
of the Land or Lessor Improvements;
(d) All Related Goods (including those described in Exhibit B),
Related Permits and Related Agreements related to any of the foregoing
Land, Lessor Improvements or Appurtenant Rights; and
(e) All accessions and accretions to and replacements and
substitutions for the foregoing.
2.02. Term.
(a) Original Term. The original term of this Agreement shall
commence on the Closing Date (the "Commencement Date") and shall end on
the fifth anniversary of the Closing Date (such date as it may be extended
pursuant to Subparagraph 2.02(b) to be referred to as the "Scheduled
Expiration Date").
(b) Extensions. Lessee may request Lessor to extend the Scheduled
Expiration Date in effect for three (3) additional periods of one (1) year
each, as provided in Paragraph 2.09 of the Participation Agreement. If
Lessor and each Participant consents to any such a request in accordance
with such provision, the then current
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Scheduled Expiration Date shall be deemed extended by one (1) year. Lessee
acknowledges that neither Lessor nor any Participant has any obligation or
commitment (either express or implied) to extend, or consent to the
extension of, the Scheduled Expiration Date at any time.
2.03. Rent.
(a) Base Rent.
(i) Lessee shall pay to Lessor as base rent hereunder ("Base
Rent") for each Rental Period for each Portion an amount equal to
the product of (A) the Rental Rate for such Rental Period, times (B)
the amount of the Portion on the first day of such Rental Period,
times (C) a fraction, the numerator of which is the number of days
in such Rental Period and the denominator of which is 360. If the
Rental Rate shall change during any Rental Period, the Rental Rate
for such Rental Period shall be the weighted average of the Rental
Rates in effect from time to time during such Rental Period.
(ii) After the initial Rental Period, Lessee may select the
number and amounts of the Portions into which the Outstanding Lease
Amount is to be divided and the Rental Period for each such Portion
by delivering to Lessor, at least three (3) Business Days prior to
the last day of each Rental Period for a Portion, an irrevocable
written notice in the form of Exhibit C, appropriately completed (a
"Notice of Rental Period Selection"), subject to the following:
(A) Each Portion shall be in the amount of $2,000,000 or
an integral multiple of $100,000 in excess thereof; provided,
however, that (1) the total number of Portions outstanding at
any time shall not exceed two (2), and (2) the Outstanding
Lease Amount shall consist of a single Portion in the amount
of the Outstanding Lease Amount if the Outstanding Lease
Amount is less than $4,000,000.
(B) The initial and each subsequent Rental Period
selected by Lessee for each Portion shall be one (1) month, or
if the Synthetic Lease Swap Agreement is no longer in effect,
two (2), three (3) or six (6) months; provided, however, that
(1) each Rental Period shall begin and end on the first
Business Day of a calendar month, (2) no Rental Period shall
end after the Scheduled Expiration Date, (3) no Rental Period
shall be longer than one (1) month if an Event of Default has
occurred and is continuing on the date three (3) Business Days
prior to the first day of such Rental Period and (4) each
Rental Period after the initial Rental Period for any Portion
for which Lessee fails to make a selection by delivering a
Notice of Rental Period Selection in accordance with this
clause (ii) shall be one (1) month.
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Lessee shall deliver each Notice of Rental Period Selection by
overnight courier, first-class mail or facsimile as required
by Subparagraph 2.02(c) and Paragraph 7.01 of the
Participation Agreement; provided, however, that Lessee shall
promptly deliver the original of any Notice of Rental Period
Selection initially delivered by facsimile.
(iii) The rental rate for each Rental Period ("Rental
Rate") shall be the LIBOR Rental Rate for such Rental Period,
except as follows:
(A) The Rental Rate for the initial Rental Period
shall be the Alternate Rental Rate;
(B) If any other Rental Period is less than one
(1) month, the Rental Rate for such Rental Period shall
be the Alternate Rental Rate; or
(C) If the LIBOR Rental Rate is unavailable for
any Rental Period pursuant to Subparagraph 2.12(a) or
Subparagraph 2.12(b) of the Participation Agreement, the
Rental Rate for such Rental Period shall be the
Alternate Rental Rate.
(iv) Lessee shall pay Base Rent in arrears (A) for each
Portion, on the last day of each Rental Period therefor and,
in the case of any Rental Period which exceeds three (3)
months, each day occurring every three (3) months after the
first day of such Rental Period (individually, a "Scheduled
Rent Payment Date") and (B) for all Portions, on the
Expiration Date.
(b) Supplemental Rent. Lessee shall pay as supplemental rent
hereunder ("Supplemental Rent") all amounts (other than Base Rent,
the purchase price payable by Lessee for any purchase of the
Property by Lessee pursuant to the Purchase Agreement and the
Residual Value Guaranty Amount payable under the Purchase Agreement)
payable by Lessee under this Agreement and the other Operative
Documents. Lessee shall pay all Supplemental Rent amounts on the
dates specified in this Agreement and the other Operative Documents
for the payment of such amounts or, if no date is specified for the
payment of any such amount, upon the demand of Lessor or any other
Person to whom such amount is payable.
2.04. Use. Lessee may use the Property for office purposes, and for
any other purpose which is in compliance with applicable zoning laws and
ordinances for the Property.
2.05. "As Is" Lease. Lessee has conducted, or will conduct from time
to time with regard to property that may be added hereto after the date
hereof, all due diligence which it deems appropriate regarding the
Property and agrees that no Lessor Party has any obligation to conduct any
such due diligence. Lessee is leasing the Property "as is, with all
faults" without any representation, warranty, indemnity or undertaking by
any Lessor Party regarding any aspect of the Property, including (a) the
condition of the Property (including the Lessor Improvements); (b) title
to the Property (including possession of the Property by any Person or the
existence of
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any Lien or any other right, title or interest in or to any of the
Property in favor of any Person); (c) the value, habitability, usability,
design, operation or fitness for use of the Property; (d) the availability
or adequacy of utilities and other services to the Property; (e) any
latent, hidden or patent defect in the Property; (f) the zoning or status
of the Property or any other restrictions on the use of the Property; (g)
the economics of the Property; (h) any Casualty or Condemnation; or (i)
the compliance of the Property with any applicable Governmental Rule or
Insurance Requirement; provided, however, that Lessor shall be obligated
to remove Lessor Liens to the extent required in Subparagraph 5.04(b) of
the Participation Agreement. Without limiting the generality of the
foregoing, Lessee specifically waives any covenant of quiet enjoyment
except as otherwise provided in Subparagraph 5.04(b) of the Participation
Agreement.
2.06. Nature of Transaction. As more fully provided in Paragraph
2.10 of the Participation Agreement, Lessee and the Lessor Parties intend
that the transaction evidenced by this Agreement and the other Operative
Documents constitute an operating lease for purposes of Lessee's financial
and SEC reporting and a loan secured by the Property for purposes of state
and local income tax and commercial, real estate and bankruptcy law.
2.07. Security, Etc. In order to secure the Lessee Obligations and
otherwise to assure the Lessor Parties the benefits hereof in the event
that the transaction evidenced by this Agreement and the other Operative
Documents is, pursuant to the intent of Lessee and the Lessor Parties,
treated as a loan for certain purposes, Lessee hereby makes the following
grants and agrees as follows:
(a) Real Property Security. As security for the Lessee
Obligations, Lessee hereby irrevocably and unconditionally grants,
conveys, transfers and assigns to Lessor, as beneficiary (in trust
for the benefit of the Lessor Parties), with power of sale and right
of entry and possession, all estate, right, title and interest of
Lessee in the following property, whether now owned or leased or
hereafter acquired, (collectively, the "Real Property Collateral"):
(i) The Land;
(ii) All Lessor Improvements located on the Land;
(iii) All Appurtenant Rights belonging, relating or
pertaining to any of the foregoing Land or Lessor
Improvements;
(iv) All Subleases of and all Issues and Profits
accruing from any of the foregoing Land, Lessor Improvements
or Appurtenant Rights to the extent that such Subleases and
Issues and Profits constitute real property;
(v) All Related Goods, Related Permits and Related
Agreements related to any of the foregoing Land, Lessor
Improvements or Appurtenant Rights to the extent that such
Related Goods, Related Agreements and Related Permits
constitute real property;
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(vi) All other Property to the extent that such property
constitutes real property; and
(vii) All proceeds of the foregoing, including Casualty
and Condemnation Proceeds.
(b) Personal Property Security. As security for the Lessee
Obligations, Lessee hereby irrevocably and unconditionally assigns
and grants to Lessor, for the benefit of the Lessor Parties, a
security interest in all estate, right, title and interest of Lessee
in the following property, whether now owned or leased or hereafter
acquired, (collectively, the "Personal Property Collateral"):
(i) All Subleases of and all Issues and Profits accruing
from any of the Land, Lessor Improvements or Appurtenant
Rights to the extent that such Subleases and Issues and
Profits constitute personal property;
(ii) All Related Goods, Related Permits and Related
Agreements related to any of the Land, Lessor Improvements or
Appurtenant Rights to the extent that such Related Goods,
Related Agreements and Related Permits constitute personal
property;
(iii) All Cash Collateral and all other deposit
accounts, instruments, investment property and monies held by
any Lessor Party in connection with this Agreement or any
other Operative Document (including any Repair and Restoration
Account);
(iv) All other Property to the extent such Property
constitutes personal property; and
(v) All proceeds of the foregoing, including Casualty
and Condemnation Proceeds.
This Agreement constitutes a fixture filing for purposes of the
California Commercial Code with respect to the Related Goods and
Modifications which are or are to become fixtures on the Land or
Lessor Improvements.
(c) Absolute Assignment of Subleases, Issues, and Profits.
Lessee hereby irrevocably assigns to Lessor, for the benefit of the
Lessor Parties, all of Lessee's estate, right, title and interest
in, to and under the Subleases and the Issues and Profits, whether
now owned or hereafter acquired. This is a present and absolute
assignment, not an assignment for security purposes only, and
Lessor's right to the Subleases and Issues and Profits is not
contingent upon, and may be exercised without possession of, the
Property.
(i) If no Event of Default has occurred and is
continuing, Lessee shall have a revocable license to collect
and retain the Issues and Profits as they become due. Upon the
occurrence and during the continuance of an Event of
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Default, such license shall automatically terminate, and
Lessor may collect and apply the Issues and Profits pursuant
to Subparagraph 5.02(d) without further notice to Lessee or
any other Person and without taking possession of the
Property. All Issues and Profits thereafter collected by
Lessee shall be held by Lessee as trustee in a constructive
trust for the benefit of Lessor. Lessee hereby irrevocably
authorizes and directs the sublessees under the Subleases,
without any need on their part to inquire as to whether an
Event of Default has actually occurred or is then existing, to
rely upon and comply with any notice or demand by Lessor for
the payment to Lessor of any rental or other sums which may
become due under the Subleases or for the performance of any
of the sublessees' undertakings under the Subleases.
Collection of any Issues and Profits by Lessor shall not cure
or waive any default or notice of default hereunder or
invalidate any acts done pursuant to such notice, but shall be
applied by Lessor to pay Lessee Obligations in such order as
Lessor shall determine in accordance with the Operative
Documents.
(ii) The foregoing irrevocable assignment shall not
cause any Lessor Party to be (A) a mortgagee in possession;
(B) responsible or liable for (1) the control, care,
management or repair of the Property or for performing any of
Lessee's obligations or duties under the Subleases, (2) any
waste committed on the Property by the sublessees under any of
the Subleases or by any other Persons, (3) any dangerous or
defective condition of the Property, or (4) any negligence in
the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any sublessee,
licensee, employee, invitee or other Person; or (C)
responsible for or impose upon any Lessor Party any duty to
produce rents or profits. No Lessor Party, in the absence of
gross negligence or willful misconduct on its part, shall be
liable to Lessee as a consequence of (y) the exercise or
failure to exercise any of the rights, remedies or powers
granted to Lessor hereunder or (z) the failure or refusal of
Lessor to perform or discharge any obligation, duty or
liability of Lessee arising under the Subleases.
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.
3.01. Maintenance, Repair, Etc.
(a) General. Lessee shall not permit any waste of the
Property, except for ordinary wear and tear, and shall, at its sole
cost and expense, maintain the Property in good working order,
mechanical condition and repair and make all necessary repairs
thereto, of every kind and nature whatsoever, whether interior or
exterior, ordinary or extraordinary, structural or nonstructural or
foreseen or unforeseen, in each case as required by all applicable
Governmental Rules and Insurance Requirements and on a basis
consistent with the operation and maintenance of commercial
properties comparable in type and location to the Property and in
compliance with prudent industry practice.
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(b) Modifications. Lessee, at its sole cost and expense, may
from time to time make alterations, renovations, improvements and
additions to the Property and substitutions and replacements
therefor (collectively, except for any such property removed in
accordance with Paragraph 3.10, "Modifications"); provided that:
(i) No Modification materially impairs the value,
utility or useful life of the Property or any part thereof
from that which existed immediately prior to such
Modification;
(ii) All Modifications are made expeditiously and, in
all cases, unless Lessee currently is exercising either the
Term Purchase Option or the Expiration Date Purchase Option,
completed not later than six (6) months prior to the Scheduled
Expiration Date;
(iii) All Modifications are made in a good and
workmanlike manner and in compliance with all applicable
Governmental Rules and Insurance Requirements;
(iv) Subject to Paragraph 3.12 relating to permitted
contests, Lessee pays all costs and expenses and discharges
(or cause to be insured or bonded over) any Liens arising in
connection with any Modification not later than the earlier of
(A) sixty (60) days after the same shall be filed (or
otherwise becomes effective) and (B) unless Lessee currently
is exercising either the Term Purchase Option or the
Expiration Date Purchase Option, six (6) months prior to the
Scheduled Expiration Date;
(v) At least one (1) month prior to the commencement of
(A) any Modifications which are anticipated to cost $1,000,000
or more in the aggregate, or (B) any Modifications which cause
the total of all Modifications undertaken during the previous
twelve-month period to exceed an aggregate cost of $2,500,000,
Lessee shall deliver to Lessor, with sufficient copies for
Agent and each Participant, a brief written description of
such Modifications; and
(vi) All Modifications otherwise comply with this
Agreement and the other Operative Documents.
(c) Abandonment. Lessee shall not abandon the Property or any
material portion thereof for any period in excess of thirty (30)
consecutive days during the term hereof, except as a part of any
Modifications as permitted herein or in the other Operative
Documents.
(d) Maintenance. Lessee shall maintain the Property and each
material portion thereof in a manner consistent with other similar
properties in the same area.
3.02. Risk of Loss. Lessee assumes all risks of loss arising from
any Casualty or Condemnation which arises or occurs prior to the
Expiration Date or while Lessee is in
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possession of the Property and all liability for all personal injuries and
deaths and damages to property suffered by any Person or property on or in
connection with the Property which arises or occurs prior to the
Expiration Date or while Lessee is in possession of the Property, except
in each case to the extent any such loss or liability is primarily caused
by the gross negligence or willful misconduct of a Lessor Party. Lessee
hereby waives the provisions of California Civil Code Sections 1932(1),
1932(2) and 1933(4), and any and all other applicable existing or future
Governmental Rules permitting the termination of this Agreement as a
result of any Casualty or Condemnation, and Lessor shall in no event be
answerable or accountable for any risk of loss of or decrease in the
enjoyment and beneficial use of the Property as a result of any such
event.
3.03. Insurance.
(a) Coverage. Lessee, at its sole cost and expense, shall
carry and maintain the insurance coverage not less than set forth in
Schedule 3.03 and such additional insurance of the types (including
the types set forth in Schedule 3.03), in amounts, in a form and
with deductibles customarily carried by a reasonably prudent Person
owning or operating properties similar to the Property in the same
geographic area as the Property.
(b) Carriers. Any insurance carried and maintained by Lessee
pursuant to this Paragraph 3.03 shall be underwritten by an
insurance company which (i) has, at the time such insurance is
placed and at the time of each renewal thereof, a general
policyholder rating of "A" and a financial rating of at least 13
from A.M. Best and Company or any successor thereto (or if there is
none, an organization having a similar national reputation) or (ii)
is otherwise approved by Lessor and Required Participants.
(c) Terms. Each insurance policy maintained by Lessee pursuant
to this Paragraph 3.03 shall provide as follows, whether through
endorsements or otherwise:
(i) Lessor and Agent shall be named as additional
insureds, in the case of each policy of liability insurance
and property insurance, and additional loss payees, in the
case of each policy of property insurance.
(ii) In respect of the interests of Lessor in the
policy, the insurance shall not be invalidated by any action
or by inaction of Lessee or by any Person having temporary
possession of the Property while under contract with Lessee to
perform maintenance, repair, alteration or similar work on the
Property, and shall insure the interests of Lessor regardless
of any breach or violation of any warranty, declaration or
condition contained in the insurance policy by Lessee, Lessor
or any other additional insured (other than by such additional
insured, as to such additional insured); provided, however,
that the foregoing shall not be deemed to (A) cause such
insurance policies to cover matters otherwise excluded from
coverage by the terms of such policies or (B) require any
insurance to remain in force notwithstanding non-payment of
premiums except as provided in clause (iii) below.
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(iii) If the insurance policy is cancelled for any
reason whatsoever, or substantial change is made in the
coverage that affects the interests of Lessor, or if the
insurance coverage is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be
effective as to Lessor for thirty (30) days after receipt by
Lessor of written notice from the insurers of such
cancellation, change or lapse.
(iv) No Lessor Party shall have any obligation or
liability for premiums, commissions, assessments, or calls in
connection with the insurance.
(v) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, that it may have against any Lessor Party.
(vi) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
any Lessor Party with respect to its interest in the Property.
(vii) The insurer shall waive any right of subrogation
against any Lessor Party.
(viii) All provisions of the insurance, except the
limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured party.
(ix) The insurance shall not be invalidated should
Lessee or any Lessor Party waive, in writing, prior to a loss,
any or all rights of recovery against any Person for losses
covered by such policy, nor shall the insurance in favor of
any Lessor Party or Lessee, as the case may be, or their
respective rights under and interests in said policies be
invalidated or reduced by any act or omission or negligence of
any Lessor Party or Lessee, as the case may be, or any other
Person having any interest in the Property.
(x) All insurance proceeds with a value of less than one
million Dollars ($1,000,000) in respect of any loss or
occurrence with respect to the Property shall be paid to and
adjusted solely by Lessee and all other insurance proceeds
shall be paid to Lessor and adjusted jointly by Lessor and
Lessee, except that, from and after the date on which the
insurer receives written notice from Lessor that an Event of
Default has occurred and is continuing (and unless and until
such insurer receives written notice from Lessor that all
Events of Default have been waived), all losses shall be
adjusted solely by, and all insurance proceeds shall be paid
solely to, Lessor.
(xi) Each policy of property insurance shall contain a
standard form mortgagee endorsement in favor of Lessor.
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(xii) Each insurance policy shall provide that the
coverage to be provided thereunder shall not be invalidated in
the event Lessee or any Lessor Party fails to maintain other
insurance covering losses of a similar type or types.
(xiii) Each insurance policy shall contain a
"severability of interest" provision.
(xiv) Each insurance policy which is written as "excess
insurance" shall contain a provision that it will drop down in
the event that any underlying insurance coverage has been
reduced or exhausted by reason of losses paid thereunder.
(xv) In the event of claims, losses and damages arising
from a single incident or occurrence (or related incidents or
occurrences) that relate to the Property and other property of
Lessee and that are covered by a "blanket" policy, claims,
losses and damages relating to the Property shall be
separately adjusted.
(d) Evidence of Insurance. Lessee, at its sole cost and
expense, shall furnish to Lessor from time to time upon the request
of Lessor such certificates or other documents as Lessor may
reasonably request to evidence Lessee's compliance with the
insurance requirements set forth in this Paragraph 3.03.
(e) Release of Lessor Parties. Lessee hereby waives, releases
and discharges each Lessor Party and its directors, officers,
employees, agents and advisors from all claims whatsoever arising
out of any loss, claim, expense or damage to or destruction covered
or coverable by insurance required under this Paragraph 3.03 to the
extent the policies for such insurance permit such waiver,
notwithstanding that such loss, claim, expense or damage may have
been caused by any such Person, and, as among Lessee and such
Persons, Lessee agrees to look to the insurance coverage only in the
event of such loss.
(f) Insurance to be Maintained Pursuant to the Fixed Price
Remediation Agreement. In addition to the other insurance
requirements set forth in this Paragraph 3.03 and in Subparagraph
5.01(d) of the Purchase Agreement , Lessee shall:
(i) Within ninety (90) days after the Commencement Date,
provide Lessor with evidence in form and substance
satisfactory to Lessor that (A) the policies of insurance of
the types and in the amounts required to be carried and
maintained by the Remediator pursuant to the Fixed Price
Remediation Agreement as indicated in the binders therefor
delivered to Lessor on the Commencement Date pursuant to
Schedule 3.01 of the Participation Agreement have been
obtained; and (B) that Lessor has been named additional
insured or loss payee (as applicable) with respect to all such
policies of insurance to the extent required pursuant to the
Fixed Price Remediation Agreement;
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(ii) Cause the Remediator to continue to carry and
maintain at all times such insurance of the types and in the
amounts required pursuant to the Fixed Price Remediation
Agreement; and;
(iii) Deliver to Lessor from time to time, as Lessor may
reasonably request, schedules setting forth all such insurance
then in effect.
With respect to all such insurance to be maintained pursuant to the
Remediation Agreement, Lessee acknowledges and agrees that neither
Lessor nor the other Lessor Parties shall be responsibility for
co-payments, deductibles and/or self-insured retentions to paid by
any Person with respect thereto.
3.04. Casualty and Condemnation.
(a) Notice. Lessee shall give Lessor prompt written notice of
the occurrence of any Casualty affecting, or the institution of any
proceedings for the Condemnation of, the Property or any portion
thereof.
(b) Repair or Purchase Option. After the occurrence of any
Casualty or any Condemnation affecting the Property or any portion
thereof, Lessee shall either (i) repair and restore the Property as
required by Subparagraph 3.04(c) or (ii) exercise the Term Purchase
Option and purchase the Property pursuant to the Purchase Agreement;
provided, however, that Lessee may not elect to repair and restore
the Property if such Casualty or Condemnation is a Major Casualty or
Major Condemnation or if any other Event of Default has occurred and
is continuing, unless Lessor and the Required Participants shall
consent in writing. Not later than one (1) month after the
occurrence of any Casualty or any Condemnation, Lessee shall deliver
to Lessor a written notice indicating whether it elects to repair
and restore or purchase the Property.
(c) Repair and Restoration. If Lessee elects to repair and
restore the Property following any Casualty or any Condemnation,
Lessee shall diligently proceed to repair and restore the Property
to the condition in which it existed immediately prior to such
Casualty or such Condemnation and shall complete all such repairs
and restoration as soon as reasonably practicable, but not later
than the earlier of (y) six (6) months after the occurrence of the
Casualty or the Condemnation and (z) six (6) months prior to the
Scheduled Expiration Date unless Lessee currently is exercising
either the Term Purchase Option or the Expiration Date Purchase
Option. Lessee shall use its own funds to make such repairs and
restoration, except to the extent any Casualty and Condemnation
Proceeds are available and are released to Lessee for such purpose
pursuant to Subparagraph 3.04(f). Lessee's exercise of the repair
and restoration option shall, if Lessor or Required Participants
direct, be subject to satisfaction of the following conditions:
(i) Within one (1) month after the occurrence of the
Casualty or the Condemnation, Lessee shall deposit in an
interest bearing deposit account acceptable to and controlled
by Lessor (a "Repair and Restoration Account")
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funds (including any Casualty and Condemnation Proceeds which
are available and are released to Lessee pursuant to
Subparagraph 3.04(f)) in the amount which Lessor determines is
needed to complete and fully pay all costs of the repair or
restoration (including taxes, financing charges, insurance and
rent during the repair period).
(ii) As soon as reasonably possible and in no event
later than two (2) months after the occurrence of the Casualty
or the Condemnation, Lessee shall establish an arrangement for
lien releases and disbursement of funds acceptable to Lessor
and in a manner and upon such terms and conditions as would be
required by a prudent interim construction lender.
(iii) As soon as reasonably possible and in no event
later than two (2) months after the occurrence of the Casualty
or the Condemnation, Lessee shall deliver to Lessor the
following, each in form and substance acceptable to Lessor:
(A) Evidence that the Property can, in Lessor's
reasonable judgment, with diligent restoration or
repair, be returned to a condition at least equal to the
condition thereof that existed prior to the Casualty or
Condemnation causing the loss or damage within the
earlier to occur of (A) six (6) months after the
occurrence of the Casualty or Condemnation and (B)
unless Lessee currently is exercising either the Term
Purchase Option or the Expiration Date Purchase Option,
six (6) months prior to the Scheduled Expiration Date;
(B) Evidence that all necessary governmental
approvals can be timely obtained to allow the rebuilding
and reoccupancy of the Property;
(C) Copies of all plans and specifications for the
work;
(D) Copies of contracts for all material aspects
of the work, signed by a contractor reasonably
acceptable to Lessor;
(E) A cost breakdown for the work;
(F) A payment and performance bond for the work or
other security satisfactory to Lessor;
(G) Evidence that, upon completion of the work,
the size, capacity and total value of the Property will
be at least as great as it was before the Casualty or
Condemnation occurred; and
(H) Evidence of satisfaction of any additional
conditions that Lessor or Required Participants may
reasonably establish to protect their rights under this
Agreement and the other Operative Documents.
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All plans and specifications for the work must be reasonably
acceptable to Lessor, except that Lessor's approval shall not
be required if the restoration work is based on the same plans
and specifications as were originally used to construct the
Property. To the extent that the funds in a Repair and
Restoration Account include both Casualty and Condemnation
Proceeds and other funds deposited by Lessee, the other funds
deposited by Lessee shall be used first. Lessee acknowledges
that the specific conditions described above are reasonable.
(d) Prosecution of Claims for Casualty and Condemnation
Proceeds. Lessee shall proceed promptly and diligently to prosecute
in good faith the settlement or compromise of any and all claims for
Casualty and Condemnation Proceeds; provided, however, that any
settlement or compromise of any such claim shall, except as
otherwise provided in clause (x) of Subparagraph 3.03(c), be subject
to the written consent of Lessor and Required Participants, which
consents shall not be unreasonably withheld. Lessor may participate
in any proceedings relating to such claims, and, after the
occurrence and during the continuance of any Event of Default,
Lessor is hereby authorized, in its own name or in Lessee's name, to
adjust any loss covered by insurance or any Casualty or Condemnation
claim or cause of action, and to settle or compromise any claim or
cause of action in connection therewith, and Lessee shall from time
to time deliver to Lessor any and all further assignments and other
instruments required to permit such participation.
(e) Assignment of Casualty and Condemnation Proceeds. As
security for the Lessee Obligations, Lessee hereby absolutely and
irrevocably assigns to Lessor all Casualty and Condemnation Proceeds
and all claims relating thereto. Except as otherwise provided in
clause (x) of Subparagraph 3.03(c), Lessee agrees that all Casualty
and Condemnation Proceeds are to be paid to Lessor and Lessee hereby
authorizes and directs any insurer, Governmental Authority or other
Person responsible for paying any Casualty and Condemnation Proceeds
to make payment thereof directly to Lessor alone, and not to Lessor
and Lessee jointly. If Lessee receives any Casualty and Condemnation
Proceeds payable to Lessor hereunder, Lessee shall promptly pay over
such Casualty and Condemnation Proceeds to Lessor. Lessee hereby
covenants that until such Casualty and Condemnation Proceeds are so
paid over to Lessor, Lessee shall hold such Casualty and
Condemnation Proceeds in trust for the benefit of Lessor and shall
not commingle such Casualty and Condemnation Proceeds with any other
funds or assets of Lessee or any other Person. Except as otherwise
provided in clause (x) of Subparagraph 3.03(c), Lessor may commence,
appear in, defend or prosecute any assigned right, claim or action,
and may adjust, compromise, settle and collect all rights, claims
and actions assigned to Lessor, but shall not be responsible for any
failure to collect any such right, claim or action, regardless of
the cause of the failure.
(f) Use of Casualty and Condemnation Proceeds.
(i) If (A) no Event of Default has occurred and is
continuing, (B) Lessee exercises the repair and restoration
option pursuant to Subparagraphs
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3.04(b) and 3.04(c) and (C) Lessee complies with any
conditions imposed pursuant to Subparagraph 3.04(c); then
Lessor shall (1) deposit all Casualty and Condemnation
Proceeds it receives into a Repair and Restoration Account,
(2) release to Lessee such Casualty and Condemnation Proceeds
from the Repair and Restoration Account for repair and
restoration of the Property and (3) if any proceeds remain in
the Repair and Restoration Account after the completion of the
repair and restoration of the Property in accordance with this
Agreement and the other Operative Documents, released such
proceeds to Lessee.
(ii) If (A) an Event of Default has occurred and is
continuing, (B) Lessee fails to or is unable to comply with
any conditions imposed pursuant to Subparagraph 3.04(c) or (C)
Lessee elects to exercise the Term Purchase Option and
purchase the Property pursuant to the Purchase Agreement;
then, at the absolute discretion of Lessor and the Required
Participants, regardless of any impairment of security or lack
of impairment of security, but subject to applicable
Governmental Rules governing the use of Casualty and
Condemnation Proceeds, if any, Lessor may (1) apply all or any
of the Casualty and Condemnation Proceeds it receives to the
expenses of Lessor Parties in obtaining such proceeds; (2)
apply the balance to the payment of Rent and/or the reduction
of the Outstanding Lease Amount, notwithstanding that such
amounts are not then due and payable or that such amounts are
otherwise adequately secured and/or (3) release all or any
part of such proceeds to Lessee upon any conditions Lessor and
the Required Participants may elect.
(iii) Lessor shall apply any Casualty and Condemnation
Proceeds which are to be used to reduce the Outstanding Lease
Amount only on the last day of a Rental Period unless an Event
of Default has occurred and is continuing.
(iv) Application of all or any portion of the Casualty
and Condemnation Proceeds, or the release thereof to Lessee,
shall not cure or waive any Default or notice of default or
invalidate any acts done pursuant to such notice.
3.05. Taxes. Subject to Paragraph 3.12 relating to permitted
contests, Lessee shall promptly pay when due all Indemnified Taxes imposed
on or payable by Lessee or any Lessor Party in connection with the
Property, this Agreement or any of the other Operative Documents, or any
of the transactions contemplated hereby or thereby. As promptly as
possible after any Indemnified Taxes are payable by Lessee, Lessee shall
send to Lessor for the account of the applicable Lessor Party a certified
copy of an original official receipt received by Lessee showing payment
thereof. If Lessee fails to pay any such Indemnified Taxes when due to the
appropriate taxing authority or fails to remit to Lessor the required
receipts or other required documentary evidence, Lessee shall indemnify
the Lessor Parties for any incremental taxes, interest or penalties that
may become payable by the Lessor Parties as a result of any such failure.
The obligations of Lessee under this Paragraph 3.05 shall survive the
payment and performance of the Lessee Obligations and the termination of
this Agreement.
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3.06. Environmental Matters.
(a) Lessee's Covenants. Lessee shall not cause or, except as
previously disclosed to the Lessor Parties in the Environmental
Reports, permit Hazardous Materials to be used, generated,
manufactured, stored, treated, disposed of, transported or present
on or released or discharged from the Property in any manner that is
reasonably likely to have a Material Adverse Effect. Lessee may use
Hazardous Materials in connection with the operation of its business
(or the business of permitted subtenants) so long as such use is
consistent with the preceding sentence. Lessee shall immediately
notify Lessor in writing of (i) the discovery of any Hazardous
Materials on, under or about the Property not previously disclosed
to Lessor Parties pursuant to the Environmental Reports; (ii) any
knowledge by Lessee that the Property does not comply with any
Environmental Laws not previously disclosed to Lessor Parties
pursuant to the Environmental Reports; (iii) any claims against
Lessee or the Property relating to Hazardous Materials or pursuant
to Environmental Laws; (iv) to the extent not previously disclosed
to Lessor Parties pursuant to the Environmental Reports, the
discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that could cause the
Property or any part thereof to be designated as "border zone
property" under the provisions of California Health and Safety Code
Sections 25220 et seq. or any regulation adopted in accordance
therewith; and (v) any material dispute or potential material
dispute among any of Lessee, Seller, Remediator or any other Person
in connection with the remediation of the Property pursuant to the
Fixed Price Remediation Agreement and the other Remediation
Agreements (including, without limitation, disputes with insurers
with respect to the insurance coverage to be maintained by
Remediator pursuant to the Fixed Price Remediation Agreement). In
response to the presence of any Hazardous Materials on, under or
about the Property not previously disclosed to Lessor Parties
pursuant to the Environmental Reports and which are not being
remediated pursuant to the Fixed Price Remediation Agreement and the
other Remediation Agreements, Lessee shall immediately take, at
Lessee's sole expense, all remedial action required by any
Environmental Laws or any judgment, consent decree, settlement or
compromise in respect to any claim based thereon.
(b) Inspection By Lessor. Upon reasonable prior notice to
Lessee, Lessor, its employees and agents, may from time to time
(whether before or after the commencement of a nonjudicial or
judicial foreclosure proceeding), enter and inspect the Property
(including, without limitation, the contents of any groundwater
monitoring xxxxx on the Property, which groundwater monitoring xxxxx
Lessee shall periodically sample as required by Environmental Laws)
for the purpose of determining the existence, location, nature and
magnitude of any past or present release or threatened release of
any Hazardous Materials into, onto, beneath or from the Property.
(c) Indemnity. Without in any way limiting any other indemnity
contained in this Agreement or any other Operative Document, Lessee
agrees to defend, indemnify and hold harmless the Lessor Parties and
the other Indemnitees from and against any claim, loss, damage,
cost, expense or liability directly or indirectly arising out of (i)
the
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use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal (including off-site
disposal), transportation or presence of any Hazardous Materials
which have not been previously disclosed to Lessor Parties pursuant
to the Environmental Reports and which are not being remediated
pursuant to the Fixed Price Remediation Agreement and the other
Remediation Agreements and which are hereafter found in, on, under
or about the Property or which are hereafter discovered off of the
Property for which Lessee has an obligation to remediate, or (ii)
the breach of any covenant, representation or warranty of Lessee
relating to Hazardous Materials or Environmental Laws contained in
this Agreement or any Operative Document, except to the extent such
liability arises from any act or occurrence which first occurs after
the Expiration Date and Lessee is no longer in possession of the
Property. This indemnity shall include (A) the costs, whether
foreseeable or unforeseeable, of any investigation, repair, cleanup
or detoxification of the Property which is required by any
Governmental Authority or is otherwise necessary to render the
Property in compliance with all Environmental Laws; (B) all other
direct or indirect consequential damages (including any third party
claims, claims by any Governmental Authority, or any fines or
penalties against the Indemnitees; and (C) all court costs and
attorneys' fees (including expert witness fees and the cost of any
consultants) paid or incurred by the Indemnitees. Lessee shall pay
immediately upon Lessor's demand any amounts owing under this
indemnity. Lessee shall use legal counsel reasonably acceptable to
Lessor in any action or proceeding arising under this indemnity.
Lessee further acknowledges and agrees that Lessor shall be entitled
to the benefit of any and all indemnification and related rights
that Lessee may have obtained from Seller (including, without
limitation, the indemnification and related rights set forth in the
Acquisition Agreement or any other document, instrument or agreement
related thereto) with respect to pre-existing environmental matters
(including, without limitation, such environmental matters as has
been previously disclosed to Lessor Parties pursuant to the
Environmental Reports and which are to be remediated pursuant to the
Fixed Price Remediation Agreement and the other Remediation
Agreements). The obligations of Lessee under this Subparagraph
3.06(c) shall survive the payment and performance of the Lessee
Obligations and the termination of this Agreement.
(d) Legal Effect of Section. Lessee and Lessor agree that (i)
this Paragraph 3.06 and clause (vi) of Subparagraph 4.01(t) of the
Participation Agreement are intended as Lessor's written request for
information (and Lessee's response) concerning the environmental
condition of the real property security as required by California
Code of Civil Procedure Section 726.5 and (ii) each representation
and warranty and covenant herein and therein (together with any
indemnity applicable to a breach of any such representation and
warranty) with respect to the environmental condition of the
Property is intended by Lessor and Lessee to be an "environmental
provision" for purposes of California Code of Civil Procedure
Section 736.
3.07. Liens, Easements, Etc.
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(a) Lessee's Covenants. Subject to Paragraph 3.12 relating to
permitted contests, Lessee shall not create, incur, assume or permit
to exist any Lien or easement on or with respect to any of the
Property of any character, whether now owned or hereafter acquired,
except for the following ("Permitted Property Liens"):
(i) Liens in favor of a Lessor Party securing the Lessee
Obligations and other Lessor Liens;
(ii) Liens and easements in existence on the
Commencement Date to the extent reflected in the title
insurance policies delivered to Agent pursuant to Paragraph
3.01 of and Schedule 3.01 to the Participation Agreement and
approved by Lessor;
(iii) Liens for taxes or other Governmental Charges not
at the time delinquent or thereafter payable without penalty;
and
(iv) Liens of carriers, warehousemen, mechanics,
materialmen and vendors and other similar Liens imposed by law
incurred in the ordinary course of business for sums not
overdue.
Subject to Paragraph 3.12 relating to permitted contests, Lessee
shall promptly (A) pay all Indebtedness of Lessee and other
obligations prior to the time the non-payment thereof would give
rise to a Lien on the Property and (B) discharge, at its sole cost
and expense, any Lien on the Property which is not a Permitted
Property Lien.
(b) No Consents. Nothing contained in this Agreement shall be
construed as constituting the consent or request of any Lessor
Party, express or implied, to or for the performance by any
contractor, mechanic, laborer, materialman, supplier 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. NOTICE IS HEREBY GIVEN THAT NO
LESSOR PARTY IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES
OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF ANY LESSOR
PARTY IN AND TO THE PROPERTY.
3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Property or any portion thereof to any Person, provided, that
(a) Lessee remains directly and primarily liable for performing its
obligations under this Agreement and all other Lessee Obligations; (b)
each sublease is subject to and subordinated to this Agreement; (c) each
sublease has a term which expires on or prior to the Scheduled Expiration
Date (or, if longer, includes a provision that the sublease terminates on
the Expiration Date if such Expiration Date occurs prior to the Scheduled
Expiration Date unless Lessee purchases the Property on the Expiration
Date pursuant to the Purchase Agreement); (d) each sublease prohibits the
sublessee from engaging in any
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activities on the Property other than those permitted by Paragraph 2.04;
and (e) no sublease has a Material Adverse Effect. Any sublease which does
not satisfy each of the requirements of the immediately preceding sentence
shall be null and void as to the Lessor Parties and their successor and
assigns. Except for such permitted subleases, Lessee shall not assign any
of its rights or interests under this Agreement to any other Person. (No
consolidation or merger by Lessee with any other Person or acquisition by
Lessee of any other Person shall constitute an assignment by Lessee of its
rights or interests under this Agreement unless such merger, consolidation
or acquisition is prohibited by Subparagraph 5.02(d) of the Participation
Agreement or constitutes a Change of Control.)
3.09. Utility Charges. Lessee shall pay all charges for electricity,
power, gas, oil, water, telephone, sanitary sewer service and all other
utilities and services to, on or in connection with the Property during
the Term.
3.10. Removal of Property.
(a) Lessor Improvements, Etc. Lessee shall not remove any
Lessor Improvements from the Land or any Related Good or
Modification from the Land or Lessor Improvements, except that,
during the Term, if no Event of Default has occurred and is
continuing:
(i) Lessee may remove any Lessor Improvement,
Modification or Related Good to make a Modification if such
Modification is made in accordance with Subparagraph 3.01(b);
and
(ii) Lessee may remove any Modification or Related Good
if:
(A) Such Modification or Related Good (1) was not
financed by an Acquisition Advance, (2) is not required
for the remaining Property to comply with any applicable
Governmental Rule or Insurance Requirement, and (3) is
removed without impairing the condition or useful life
of the remaining Property; and
(B) The value of the remaining Property after such
removal is not less than (1) the Expiration Date
Appraisal of the Property and (2) the value of the
Property prior to such removal.
(b) Lessee Improvements, Etc. Lessee may remove any Lessee
Improvement from the Land or any other property not constituting
Property from the Land or Lessor Improvements at any time during the
Term if such Lessee Improvement or other property (collectively,
"Lessee Property") (i) was not financed by an Acquisition Advance,
(ii) is not required for the Property to comply with any applicable
Governmental Rule or Insurance Requirement, and (iii) is removed
without impairing the condition, useful life or value of the
Property. If Lessor shall so request, Lessee shall remove all Lessee
Property (or any portion thereof specified by Lessor) from the
Property not later than the Expiration Date. If Lessee fails to
remove any such Lessee Property which Lessor has
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requested Lessee to remove prior to the Expiration Date, Lessor may
remove such Lessee Property or elect to treat such property as
abandoned pursuant to Subparagraph 3.10(c). Lessee shall pay all
costs incurred by Lessor in removing any such Lessee Property.
(c) Title. All Lessor Improvements, Modifications and Related
Goods removed by Lessee in accordance with this Paragraph 3.10 shall
cease to be part of the Property, and Lessee shall be the owner
thereof after such removal. Lessor acknowledges that Lessee is the
owner of the Lessee Property, except that Lessor may (unless Lessee
purchases the Property pursuant to the Purchase Agreement) treat any
Lessee Property remaining on the Property after the Expiration Date
as abandoned and part of the Property, without compensation to
Lessee. Lessor and Lessee shall execute and deliver to each other
such conveyancing and release documents and acknowledgements as the
other party may reasonably request to evidence the rights and title
of the parties in the Property and the Lessee Property.
(d) Repair of Damage. Lessee shall, at its expense, promptly
repair any damage to the remaining Property caused by its removal of
Lessor Improvements, Modifications and Related Goods pursuant to
Subparagraph 3.10(a) and any damage to the Property caused by its
removal of Lessee Property pursuant to Subparagraph 3.10(b).
3.11. Compliance with Governmental Rules and Insurance Requirements.
Lessee, at its sole cost and expense, shall, unless its failure is not
reasonably likely to have a Material Adverse Effect, (a) comply, and cause
its agents, sublessees, assignees, employees, invitees, licensees,
contractors and tenants, and the Property to comply, with all Governmental
Rules and Insurance Requirements relating to the Property (including the
construction, use, operation, maintenance, repair and restoration thereof,
whether or not compliance therewith shall require structural or
extraordinary changes in the Lessor Improvements or interfere with the use
and enjoyment of the Property), and (b) procure, maintain and comply with
all licenses, permits, orders, approvals, consents and other
authorizations required for the construction, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair
and restoration of the Lessor Improvements.
3.12. Permitted Contests. Lessee, at its sole cost and expense, may
contest any alleged Lien or easement on any of the Property or any alleged
Governmental Charge, Indebtedness or other obligation which is payable by
Lessee hereunder to Persons other than the Lessor Parties or which, if
unpaid, would give rise to a Lien on any of the Property, provided that
(a) each such contest is diligently pursued in good faith by appropriate
proceedings; (b) the commencement and continuation of such proceedings
suspends the enforcement of such Lien or easement or the collection of
such Governmental Charge, Indebtedness or obligation; (c) Lessee has
established adequate reserves for the discharge of such Lien or easement
or the payment of such Governmental Charge, Indebtedness or obligation in
accordance with GAAP and, if the failure to discharge such Lien or
easement or the failure to pay such Governmental Charge, Indebtedness or
obligation might result in any civil liability for any Lessor Party,
Lessee has provided to such Lessor Party a bond or other security
satisfactory to such Lessor Party; (d) the failure to discharge such Lien
or easement or the failure to pay such Governmental Charge, Indebtedness
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or obligation could not result in any criminal liability for any Lessor
Party; (e) the failure to discharge such Lien or easement or the failure
to pay such Governmental Charge, Indebtedness or obligation is not
otherwise reasonably likely to have a Material Adverse Effect; and (f)
unless Lessee currently is exercising either the Term Purchase Option or
the Expiration Date Purchase Option, any such contest is completed and
such Lien or easement is discharged (either pursuant to such proceedings
or otherwise) or such Governmental Charge, Indebtedness or obligation is
declared invalid, paid or otherwise satisfied not later than six (6)
months prior to the Scheduled Expiration Date.
3.13. Lessor Obligations; Right to Perform Lessee Obligations. No
Lessor Party shall have any obligation to (a) maintain, repair or make any
improvements to the Property, (b) maintain any insurance on the Property,
(c) perform any other obligation of Lessee under this Agreement or any
other Lessee Obligation, (d) make any expenditure on account of the
Property (except to make the Acquisition Advance as required by the
Participation Agreement) or (e) take any other action in connection with
the Property, this Agreement or any other Operative Document, except as
expressly provided herein or in another Operative Document; provided
however, that Lessor may, in its sole discretion and without any
obligation to do so, perform any Lessee Obligation not performed by Lessee
when required. Lessor may enter the Property or exercise any other right
of Lessee under this Agreement or any other Operative Document to the
extent Lessor determines in good faith that such entry or exercise is
reasonably necessary for Lessor to perform any such Lessee Obligation not
performed by Lessee when required. Lessee shall reimburse Lessor and the
other Lessor Parties, within five (5) Business Days after demand, for all
reasonable fees, costs and expenses incurred by them in performing any
such obligation or curing any Default.
3.14. Inspection Rights. During the Term, Lessee shall permit any
Person designated by Lessor, upon reasonable notice and during normal
business hours, to visit and inspect any of the Property.
3.15. Cooperation of Lessor to Facilitate Operation, Etc. During the
Term, Lessor shall take any action reasonably requested by Lessee to
facilitate the operation, management, development or repair of the
Property, including joining in or consenting to any of the following:
(a) The grant of easements, licenses, rights of way, and other
rights in the nature of easements encumbering the Property;
(b) The release or termination of easements, licenses, rights
of way or other rights in the nature of easements which are for the
benefit of the Property or any portion thereof;
(c) The dedication or transfer of portions of the Land not
improved with a building, for road, highway or other public
purposes;
(d) Agreements for the use and maintenance of common areas,
for reciprocal rights of parking, for ingress and egress and for
amendments to any Related Agreements (including amendments to the
Related Agreements that Lessee may reasonably request to
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facilitate construction or development on land owned by it or its
Affiliates other than the Land);
(e) Instruments necessary or desirable for the exercise or
enforcement of rights under the Related Agreements or any contract,
permit, license, franchise or other right included within the term
"Property";
(f) Permit applications or other documents reasonably required
to accommodate the construction or alteration of Lessor Improvements
otherwise permitted by this Agreement;
(g) Confirmations of Lessee's rights under any particular
provisions of this Agreement which Lessee may wish to provide to a
third party;
(h) The execution or filing of a tract or parcel map
subdividing the Property into lots or parcels or reconfiguring
existing parcels; or
(i) Agreements providing development incentives or tax
abatements with respect to the Property;
Provided that (i) no Event of Default has occurred and is continuing at
the time of any such action and (ii) neither such action alone nor such
action cumulatively with any other actions is reasonably likely to have a
Material Adverse Effect or materially increase the obligations or
potential liability of any Lessor Party.
3.16. Survey and Title Matters . Lessee, at its sole cost and
expense, shall promptly take steps to diligently pursue in good faith and
by appropriate proceedings to address the following survey and title
matters as disclosed by that certain ALTA/ACSM survey prepared by Xxxxxx
and Xxxxx, Job No. 99166, dated June 1999: (a) recordation of an access
and easement agreement and consent to encroachment from the City of Scotts
Valley to provide access from Xxxxxxxxxx Xxxx xxx Xxxxx Xxxxxxx Xxxx to
the Property as contemplated by that certain Agreement dated August 1,
1967, by and among the City of Scotts Valley, the City of Santa Xxxx, and
Xxxxxxx-Xxxxxxx Company; (b) recordation of an easement agreement for a
sanitary sewer easement from the City of Scotts Valley along the route
described in the unrecorded easement prepared by Xxxxxx Xxxxxx, LS 3666,
in 1987; (c) recordation of an easement agreement or consent to
encroachment as to the existing route of the overhead electric line
running along the access road described in clause (a) above; and (d)
recordation of an agreement from the Scotts Valley Water District to
relocate a water line around the building located on Parcel 2 as
contemplated by that certain unrecorded water line easement by and between
Xxxxxxx-Xxxxxxx Company and Scotts Valley Water District dated June 26,
1989.
SECTION 4. EXPIRATION DATE.
4.01. Termination by Lessee Prior to Scheduled Expiration Date.
Subject to the terms and conditions of the Purchase Agreement, Lessee may,
at any time prior to the Scheduled Expiration Date, terminate this
Agreement and purchase the Property pursuant to Section 2 of the
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Purchase Agreement. Lessee shall notify Lessor of Lessee's election so to
terminate this Agreement and purchase the Property by delivering to Agent
a Notice of Term Purchase Option Exercise pursuant to and in accordance
with the provisions of Paragraph 2.02 of the Purchase Agreement.
4.02. Return of Property.
(a) Upon the expiration or earlier termination of this
Agreement (unless Lessee, a Designated Purchase or an Assignee
Purchaser has purchased the Property on or prior to the Expiration
Date pursuant to the Purchase Agreement), Lessee shall vacate,
surrender and deliver possession of the Property to Lessor in broom
clean condition and in the condition required pursuant to Paragraph
3.01 hereof. Lessee shall remove from the Property on or prior to
the expiration or earlier termination of this Agreement, all Lessee
Modifications (other than those which Lessor has agreed in writing
will be surrendered) and all of Lessee's personal property,
furniture and fixtures situated thereon which is not the property of
Lessor under the terms of this Lease Agreement, and shall repair any
damages caused by such removal. Property not so removed shall become
the property of Lessor, and Lessor may cause such property to be
removed from the Property and disposed of, and Lessee shall pay the
reasonable cost of any such removal and disposition and of repairing
any damage caused by such removal.
(b) Except for surrender upon the expiration or earlier
termination of the Term, no surrender to Lessor of this Lease
Agreement shall be valid or effective unless agreed to and accepted
in writing by Lessor or any assignee of Lessor.
(c) Without limiting the generality of the foregoing, upon the
surrender and return of the Property to Lessor pursuant to this
Paragraph 4.02 (unless Lessee, a Designated Purchase or an Assignee
Purchaser has purchased the Property on or prior to the Expiration
Date pursuant to the Purchase Agreement), the Property shall (i) be
returned in a condition suitable for redevelopment and capable of
being immediately utilized by a third-party purchaser or third-party
lessee without further inspection, construction, repair,
replacement, alterations or improvements, licenses, permits, or
approvals, except for any of the foregoing required solely by virtue
of the change in ownership (other than to Lessor or an assignee of
Lessor), use or occupancy of the Property, (ii) be in accordance and
compliance with all Requirements of Law and Environmental Laws
including, without limitation, any of the foregoing required by
virtue of a change in ownership, use or occupancy of the Property
other than to Lessee, (iii) be free and clear of all Liens, other
than any Lessor Liens and Permitted Property Liens.
(d) On or prior to the date of such surrender and return of
the Property (unless Lessee, a Designated Purchase or an Assignee
Purchaser has purchased the Property on or prior to the Expiration
Date pursuant to the Purchase Agreement), Lessor shall have received
from Lessee, at Lessee's expense, evidence satisfactory to Lessor,
of compliance with the provisions of this Paragraph 4.02, including
without limitation, an environmental
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assessment for the Property addressed in form and substance
satisfactory to Lessor and each assignee of Lessor or, in lieu of
addressing to such parties directly, accompanied by a letter
permitting Lessor and each assignee of Lessor to rely thereon,
performed by an independent, licensed professional engineer
satisfactory to Lessor and each assignee of Lessor, and which
assessment (i) shall be sufficient in scope to determine compliance
with Environmental Laws, (ii) shall reveal no actual or potential
environmental liabilities which cannot be remediated by Lessee as
provided in the following clause (iii), and (iii) if such
environmental assessment reveals the need for additional review,
Lessee shall have provided such additional information or
environmental assessments as are required by Lessor and each
assignee of Lessor and, subject to Subparagraph 3.06 hereof, any
remediation recommended therein to be performed shall have been
performed, and evidence of compliance with clause (ii) of
Subparagraph 4.02(c).
(e) Upon such return of the Property to Lessor or any assignee
of Lessor, Lessee shall deliver to Lessor a then current title
insurance policy or a binding commitment to issue a title insurance
policy written by a title insurance company reasonably acceptable to
Lessor, insuring good and marketable title in the Property in an
amount equal to the Outstanding Lease Amount as determined as of the
Expiration Date, unencumbered except for Lessor Liens or Permitted
Liens. Upon the request of Lessor, Lessee shall continue to maintain
its insurance policies for the Property required under Subparagraph
3.03 hereof if able to do so on a commercially reasonable basis,
provided that Lessor shall pay or reimburses Lessee for its pro rata
costs thereof.
(f) The provisions of this Paragraph 4.02 are of the essence
of this Lease Agreement, and any breach thereof shall be deemed an
Event of Default hereunder, and upon application to any court of
equity having jurisdiction in the premises, Lessor shall be entitled
to a decree against Lessee requiring specific performance of the
covenants of Lessee set forth in this Paragraph 4.02.
4.03. Holding Over. If (a) Lessee does not purchase the Property on
the Expiration Date pursuant to the Purchase Agreement but continues in
possession of any portion of the Property after the Expiration Date or (b)
Lessee has failed to return the Property to Lessor in the condition
required pursuant to Paragraph 4.02 hereof, Lessee shall pay rent for each
day it so continues in possession, payable upon demand of Lessor, at a per
annum rate equal to the Alternate Rental Rate plus two percent (2.0%) and
shall pay and perform all of its other Lessee Obligations under this
Agreement and the other Operative Documents in the same manner as though
the Term had not ended; provided, however, that this Paragraph 4.03 shall
not be interpreted to permit such holding over or to limit any right or
remedy of Lessor for such holding over.
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SECTION 5. DEFAULT.
5.01. Events of Default. The occurrence or existence of any one or
more of the following shall constitute an "Event of Default" hereunder:
(a) Non-Payment. Lessee shall (i) fail to pay on the
Expiration Date any amount payable by Lessee under this Agreement or
any other Operative Document on such date, (ii) fail to pay within
five (5) Business Days after the same becomes due, any Base Rent, or
(iii) fail to pay within five (5) Business Days after delivery to
Lessee of written demand therefor, any Supplemental Rent or other
amount required under the terms of this Agreement or any other
Operative Document (other than any such amount payable on the
Expiration Date); or
(b) Specific Defaults. Lessee or any of its Subsidiaries shall
fail to observe or perform any covenant, obligation, condition or
agreement set forth in Paragraph 3.03 hereof or in clause (ii) of
Subparagraph 2.11(a), Paragraph 5.02 (other than Subparagraph
5.02(i)) or Paragraph 5.03 of the Participation Agreement; or
(c) Other Defaults. Lessee or any of its Subsidiaries shall
fail to observe or perform any other covenant, obligation, condition
or agreement contained in this Agreement or any other Operative
Document and such failure shall continue until the earliest of (i)
thirty (30) days after Lessee's written acknowledgement of such
failure, (ii) thirty (30) days after any Lessor Party's written
notice to Lessee of such failure and (iii) thirty (30) days prior to
the Expiration Date, provided, however, that, in the event that any
such failure cannot reasonably be cured within a thirty (30) day
period, such failure shall not constitute an Event of Default
hereunder if (A) such failure can reasonably be cured within one
hundred, eighty (180) days, (B) Lessee promptly commences and
diligently proceeds to cure such failure and (C) Lessee completes
such cure not later than the earliest of (1) one hundred, eighty
days (180) days after Lessee's written acknowledgement of such
failure, (2) one hundred, eighty days (180) days after any Lessor
Party's written notice to Lessee of such failure and (3) thirty (30)
days prior to the Expiration Date; or
(d) Representations and Warranties. Any representation,
warranty, certificate, information or other statement (financial or
otherwise) made or furnished by or on behalf of Lessee or any of its
Subsidiaries to any Lessor Party in or in connection with this
Agreement or any other Operative Document, or as an inducement to
any Lessor Party to enter into this Agreement or any other Operative
Document, shall be false, incorrect, incomplete or misleading in any
material respect when made or furnished and Lessee shall not have
cured the facts or circumstances causing such representation,
warranty, certificate or other statement to be false, incorrect,
incomplete or misleading not later than the earliest of (i) thirty
(30) days after Lessee's written acknowledgement thereof to Lessor,
(ii) thirty (30) days after any Lessor Party's written notice to
Lessee thereof, and (iii) thirty (30) days prior to the Expiration
Date; or
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(e) Cross-Default. (i) Lessee or any of its Subsidiaries shall
fail to make any payment on account of any Indebtedness of such
Person (other than the Lessee Obligations) when due (whether at
scheduled maturity, by required prepayment, upon acceleration or
otherwise) and such failure shall continue beyond any period of
grace provided with respect thereto, if the amount of such
Indebtedness exceeds $2,000,000 or the effect of such failure is to
cause, or permit the holder or holders thereof to cause,
Indebtedness of Lessee and its Subsidiaries (other than the Lessee
Obligations) in an aggregate amount exceeding $2,000,000 to become
due or payable (whether at scheduled maturity, by required
prepayment or redemption, upon acceleration or otherwise) and/or to
be secured by cash collateral or (ii) Lessee or any of its
Subsidiaries shall otherwise fail to observe or perform any
agreement, term or condition contained in any agreement or
instrument relating to any Indebtedness of such Person (other than
the Lessee Obligations), or any other event shall occur or condition
shall exist, if the effect of such failure, event or condition is to
cause, or permit the holder or holders thereof to cause,
Indebtedness of Lessee and its Subsidiaries (other than the Lessee
Obligations) in an aggregate amount exceeding $2,000,000 to become
due or payable (whether at scheduled maturity, by required
prepayment or redemption, upon acceleration or otherwise) and/or to
be secured by cash collateral; or
(f) Insolvency, Voluntary Proceedings. Lessee or any of its
Subsidiaries shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in
writing its inability, to pay its debts generally as they mature,
(iii) make a general assignment for the benefit of its or any of its
creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under
any applicable statute), (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property
by any official in an involuntary case or other proceeding commenced
against it, or (vi) take any action for the purpose of effecting any
of the foregoing; or
(g) Involuntary Proceedings. Proceedings for the appointment
of a receiver, trustee, liquidator or custodian of Lessee or any of
its Subsidiaries or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to Lessee
or any of its Subsidiaries or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in
effect shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within sixty (60)
days of commencement; or
(h) Judgments. (i) One or more judgments, orders, decrees or
arbitration awards requiring Lessee and/or its Subsidiaries to pay
an aggregate amount of $2,000,000 or more (exclusive of amounts
covered by insurance issued by an insurer not an Affiliate of Lessee
and otherwise satisfying the requirements set forth in Subparagraph
3.03(b))
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shall be rendered against Lessee and/or any of its Subsidiaries in
connection with any single or related series of transactions,
incidents or circumstances and the same shall not be satisfied,
vacated or stayed for a period of forty (40) consecutive days after
issue or levy; (ii) any judgment, writ, assessment, warrant of
attachment, tax lien or execution or similar process shall be issued
or levied against a substantial part of the property of Lessee or
any of its Subsidiaries and the same shall not be released, stayed,
vacated or otherwise dismissed within fifteen (15) days after issue
or levy; or (iii) any other judgments, orders, decrees, arbitration
awards, writs, assessments, warrants of attachment, tax liens or
executions or similar processes which, alone or in the aggregate,
are reasonably likely to have a Material Adverse Effect are
rendered, issued or levied; or
(i) Operative Documents. Any Operative Document or any
material term thereof shall cease to be, or be asserted by Lessee or
any of its Subsidiaries not to be, a legal, valid and binding
obligation of Lessee or any of its Subsidiaries enforceable in
accordance with its terms in a manner which could result in a
Material Adverse Effect; or
(j) ERISA. Any Reportable Event which constitutes grounds for
the termination of any Employee Benefit Plan by the PBGC or for the
appointment of a trustee by the PBGC to administer any Employee
Benefit Plan shall occur, or any Employee Benefit Plan shall be
terminated within the meaning of Title IV of ERISA or a trustee
shall be appointed by the PBGC to administer any Employee Benefit
Plan; or
(k) Change of Control. Any Change of Control shall occur; or
(l) Major Casualty or Condemnation. Any Major Casualty or
Major Condemnation affecting the Property shall occur and Lessee
shall not purchase the Property pursuant to the Term Purchase Option
in the Purchase Agreement within two (2) months after the occurrence
thereof; or
(m) Material Adverse Effect. Any event(s) or condition(s)
which is (are) reasonably likely to have a Material Adverse Effect
shall occur or exist.
5.02. General Remedies. In all cases, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such
Event of Default is waived, Lessor may, with the consent of the Required
Participants, or shall, upon instructions from the Required Participants,
exercise any one or more of the following rights and remedies (except that
the remedy set forth in the first sentence of Subparagraph 5.02(a) shall
be automatic):
(a) Termination of Commitments. If such Event of Default is an
Event of Default of the type described in Subparagraph 5.01(f) or
Subparagraph 5.01(g) affecting Lessee, immediately and without
notice the obligation of Lessor to make the Acquisition Advance and
the obligations of the Participants to fund the Acquisition Advance
shall automatically terminate. If such Event of Default is any other
Event of Default, Lessor may by written notice to Lessee, terminate
the obligation of Lessor to make the Acquisition Advance and the
obligations of the Participants to fund the Acquisition Advance.
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(b) Appointment of a Receiver. Lessor may apply to any court
of competent jurisdiction for, and obtain appointment of, a receiver
for the Property.
(c) Specific Performance. Lessor may bring an action in any
court of competent jurisdiction to obtain specific enforcement of
any of the covenants or agreements of Lessee in this Agreement or
any of the other Operative Documents.
(d) Collection of Issues and Profits. Lessor may collect
Issues and Profits as provided in Subparagraph 2.07(c) and apply the
proceeds to pay Lessee Obligations.
(e) Protection of Property. Lessor may enter, manage and
operate all or any part of the Property or take any other actions
which it reasonably determines are necessary to protect the Property
and the rights and remedies of the Lessor Parties under this
Agreement and the other Operative Documents, including (i) taking
and possessing all of Lessee's books and records relating to the
Property; (ii) entering into or enforcing subleases on such terms
and conditions as Lessor may consider proper; (iii) obtaining and
evicting tenants; (iv) entering into agreements with subtenants to
fix or modify sublease rents; (v) collecting and receiving any
payment of money owing to Lessee with respect to the Property; (vi)
completing any unfinished Lessor Improvements; and/or (vii)
contracting for and making needed repairs and alterations to the
Property.
(f) Other Rights and Remedies. In addition to the specific
rights and remedies set forth above in this Paragraph 5.02 and in
Paragraph 5.03 and Paragraph 5.04, Lessor may exercise any other
right, power or remedy permitted to it by any applicable
Governmental Rule, either by suit in equity or by action at law, or
both.
5.03. Lease Remedies. If a court of competent jurisdiction
determines that the transaction evidenced by this Agreement and the other
Operative Documents is a lease, upon the occurrence or existence of any
Event of Default and at any time thereafter unless such Event of Default
is waived, Lessor may, with the consent of the Required Participants, or
shall, upon instructions from the Required Participants, exercise any one
or more of the following rights and remedies in addition to those rights
and remedies set forth in Paragraph 5.02:
(a) Termination of Lease. Lessor may, by written notice to
Lessee, terminate this Agreement on a Termination Date which is
prior to the Scheduled Expiration Date and take possession of the
Property. Such Termination Date shall be the last day of a Rental
Period unless Required Participants shall otherwise direct. On such
Termination Date (which shall then be the Expiration Date), subject
to the limitations set forth in the Purchase Agreement, Lessee shall
pay all unpaid Base Rent accrued through such date and all
Supplemental Rent due and payable on or prior to such date and all
other amounts payable by Lessee on the Expiration Date pursuant to
this Agreement and the other Operative Documents, together with the
worth at the time of such payment of the amount by which the unpaid
Base Rent through the Scheduled Expiration Date exceeds the amount
of such rental loss for the same period that Lessee proves could
reasonably be avoided.
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(b) Continuation of Lease. Lessor may exercise the rights and
remedies provided by California Civil Code Section 1951.4, including
the right to continue this Agreement in effect after Lessee's breach
and abandonment and recover Rent as it becomes due. Acts of
maintenance or preservation, efforts to relet the Property, the
appointment of a receiver upon Lessor's initiative to protect its
interest under this Agreement or withholding consent to or
terminating a sublease shall not of themselves constitute a
termination of Lessee's right to possession.
(c) Removal and Storage of Property. Lessor may enter the
Property and remove therefrom all Persons and property, store such
property in a public warehouse or elsewhere at the cost of and for
the account of Lessee and sell such property and apply the proceeds
therefrom pursuant to applicable California law.
(d) Marketing. Notwithstanding the termination of Lessee's
tenancy hereunder, Lessor is subject to the duties and obligations
to Lessee set forth in Subparagraph 3.03(b) of the Purchase
Agreement.
5.04. Loan Remedies. Unless a court of competent jurisdiction
determines that the transaction evidenced by this Agreement and the other
Operative Documents is a lease, upon the occurrence or existence of any
Event of Default and at any time thereafter unless such Event of Default
is waived, Lessor may, with the consent of the Required Participants, or
shall, upon instructions from the Required Participants, exercise any one
or more of the following rights and remedies in addition to those rights
and remedies set forth in Paragraph 5.02:
(a) Acceleration of Lessee Obligations. Lessor may, by written
notice to Lessee, declare all unpaid Lessee Obligations due and
payable on a Termination Date prior to the Scheduled Expiration
Date. Such Termination Date shall be the last day of a Rental Period
unless Required Participants shall otherwise direct. On such
Termination Date (which shall then be the Expiration Date), subject
to the limitations set forth in the Purchase Agreement, Lessee shall
pay all unpaid Base Rent accrued through such date, all Supplemental
Rent due and payable on or prior to such date and all other amounts
payable by Lessee on the Expiration Date pursuant to this Agreement
and the other Operative Documents.
(b) Uniform Commercial Code Remedies. Lessor may exercise any
or all of the remedies granted to a secured party under the
California Uniform Commercial Code.
(c) Judicial Foreclosure. Lessor may bring an action in any
court of competent jurisdiction to foreclose the security interest
in the Property granted to Lessor by this Agreement or any of the
other Operative Documents.
(d) Power of Sale. Lessor may cause some or all of the
Property, including any Personal Property Collateral, to be sold
under a power of sale or otherwise disposed of in any combination
and in any manner permitted by applicable Governmental Rules.
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(i) Sales of Personal Property. Lessor may dispose of
any Personal Property Collateral separately from the sale of
Real Property Collateral, in any manner permitted by Division
9 of the California Uniform Commercial Code, including any
public or private sale, or in any manner permitted by any
other applicable Governmental Rule. Any proceeds of any such
disposition shall not cure any Event of Default or reinstate
any Lessee Obligation for purposes of Section 2924c of the
California Civil Code. In connection with any such sale or
other disposition of Personal Property Collateral, Lessee
agrees that the following procedures constitute a commercially
reasonable sale:
(A) Lessor shall mail written notice of the sale
to Lessee not later than thirty (30) days prior to such
sale.
(B) Once per week during the three (3) weeks
immediately preceding such sale, Lessor will publish
notice of the sale in a local daily newspaper of general
circulation.
(C) Upon receipt of any written request, Lessor
will make the Property available to any bona fide
prospective purchaser for inspection during reasonable
business hours.
(D) Notwithstanding, Lessor shall be under no
obligation to consummate a sale if, in its judgment,
none of the offers received by it equals the fair value
of the Property offered for sale.
(E) If Lessor so requests, Lessee shall assemble
all of the Personal Property Collateral and make it
available to Lessor at the site of the Land. Regardless
of any provision of this Agreement or any other
Operative Document, Lessor shall not be considered to
have accepted any property other than cash or
immediately available funds in satisfaction of any
Lessee Obligation, unless Lessor has given express
written notice of its election of that remedy in
accordance with California Uniform Commercial Code
Section 9505.
The foregoing procedures do not constitute the only procedures
that may be commercially reasonable.
(ii) Lessor's Sales of Real Property or Mixed
Collateral. Lessor may choose to dispose of some or all of the
Property which consists solely of Real Property Collateral in
any manner then permitted by applicable Governmental Rules,
including without limitation a nonjudicial trustee's sale
pursuant to California Civil Code Sections 2924 et seq. In its
discretion, Lessor may also or alternatively choose to dispose
of some or all of the Property, in any combination consisting
of both Real Property Collateral and Personal Property
Collateral, together in one sale to be held in accordance with
the law and procedures applicable to real property, as
permitted by Section 9501(4) of the California
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Uniform Commercial Code. Lessee agrees that such a sale of
Personal Property Collateral together with Real Property
Collateral constitutes a commercially reasonable sale of the
Personal Property Collateral. (For purposes of this power of
sale, either a sale of Real Property Collateral alone, or a
sale of both Real Property Collateral and Personal Property
Collateral together in accordance with California Uniform
Commercial Code Section 9501(4), will sometimes be referred to
as a "Lessor's Sale.")
(A) Before any Lessor's Sale, Lessor shall give
such notice of default and election to sell as may then
be required by applicable Governmental Rules.
(B) When all time periods then legally mandated
have expired, and after such notice of sale as may then
be legally required has been given, Lessor shall sell
the property being sold at a public auction to be held
at the time and place specified in the notice of sale.
(C) Neither Lessor nor Agent shall have any
obligation to make demand on Lessee before any Lessor's
Sale.
(D) From time to time in accordance with then
applicable law, Lessor may postpone any Lessor's Sale by
public announcement at the time and place noticed for
that sale.
(E) At any Lessor's Sale, Lessor shall sell to the
highest bidder at public auction for cash in lawful
money of the United States.
(F) Lessor shall execute and deliver to the
purchaser(s) a deed or deeds conveying the Property
being sold without any covenant or warranty whatsoever,
express or implied. The recitals in any such deed of any
matters or facts, including any facts bearing upon the
regularity or validity of any Lessor's Sale, shall be
conclusive proof of their truthfulness. Any such deed
shall be conclusive against all Persons as to the facts
recited in it.
(e) Foreclosure Sales.
(i) Single or Multiple. If the Property consists of more
than one lot, parcel or item of property, Lessor may:
(A) Designate the order in which the lots, parcels
and/or items shall be sold or disposed of or offered for
sale or disposition; and
(B) Elect to dispose of the lots, parcels and/or
items through a single consolidated sale or disposition
to be held or made under the power of sale granted in
Subparagraph 5.04(d), or in connection with judicial
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proceedings, or by virtue of a judgment and decree of
foreclosure and sale; or through two or more such sales
or dispositions; or in any other manner Lessor may deem
to be in its best interests (any such sale or
disposition, a "Foreclosure Sale;" any two or more,
"Foreclosure Sales").
If Lessor chooses to have more than one Foreclosure Sale,
Lessor at its option may cause the Foreclosure Sales to be
held simultaneously or successively, on the same day, or on
such different days and at such different times and in such
order as it may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the security
interests granted to Lessor in the Property by this Agreement
on any part of the Property which has not been sold, until all
of the Lessee Obligations have been paid in full.
(ii) Credit Bids. At any Foreclosure Sale, any Person,
including any Lessor Party, may bid for and acquire the
Property or any part of it to the extent permitted by then
applicable Governmental Rules. Instead of paying cash for the
Property, Lessor may settle for the purchase price by
crediting the sales price of the Property against the Lessee
Obligations in any order and proportions as Lessor in its sole
discretion may choose.
(f) Marketing. Notwithstanding the termination of Lessee's
tenancy hereunder, Lessor is subject to the duties and obligations
to Lessee set forth in Subparagraph 3.03(b) of the Purchase
Agreement.
5.05. Remedies Cumulative. The rights and remedies of Lessor under
this Agreement and the other Operative Documents are cumulative and may be
exercised singularly, successively, or together.
5.06. No Cure or Waiver. Neither the performance by Lessor of any of
Lessee's obligations pursuant to Paragraph 3.13 nor the exercise by Lessor
of any of its other rights and remedies under this Agreement or any other
Operative Document (including the collection of Issues and Profits and the
application thereof to the Lessee Obligations) shall constitute a cure or
waiver of any Default or nullify the effect of any notice of default or
sale, unless and until all Lessee Obligations are paid in full.
5.07. Exercise of Rights and Remedies. The rights and remedies
provided to Lessor under this Agreement may be exercised by Lessor itself,
by Agent pursuant to Subparagraph 2.02(c) of the Participation Agreement,
by a court-appointed receiver or by any other Person appointed by any of
the foregoing to act on its behalf. All of the benefits afforded to Lessor
under this Agreement and the other Operative Documents shall accrue to the
benefit of Agent to the extent provided in Subparagraph 2.02(c) of the
Participation Agreement.
SECTION 6. MISCELLANEOUS.
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6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Lessee or Lessor under this Agreement shall be given as provided in
Subparagraph 2.02(c) and Paragraph 7.01 of the Participation Agreement.
6.02. Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement may be amended or waived only as provided in
the Participation Agreement. No failure or delay by any Lessor Party in
exercising any right hereunder shall operate as a waiver thereof or of any
other right nor shall any single or partial exercise of any such right
preclude any other further exercise thereof or of any other right. Unless
otherwise specified in any such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and for
the specific purpose for which given.
6.03. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Lessor Parties and Lessee and their
permitted successors and assigns; provided, however, that the Lessor
Parties and Lessee shall not sell, assign or delegate their respective
rights and obligations hereunder except as provided in the Participation
Agreement.
6.04. No Third Party Rights. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give,
any Person, other than the Lessor Parties and Lessee and their permitted
successors and assigns, any benefit or legal or equitable right, remedy or
claim under or by virtue of this Agreement or under or by virtue of any
provision herein.
6.05. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
6.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
6.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto
shall be deemed to constitute a complete, executed original for all
purposes.
6.08. Nature of Lessee's Obligations.
(a) Independent Obligation. Except as otherwise provided in
Section 2 of the Purchase Agreement, the obligation of Lessee to pay
the amounts payable by Lessee under this Agreement and the other
Operative Documents and to perform the other Lessee Obligation are
absolute, unconditional and irrevocable obligations which are
separate and independent of the obligations of the Lessor Parties
under this Agreement and the other Operative Documents and all other
events and circumstances, including the events and circumstances set
forth in Subparagraph 6.08(c).
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(b) No Termination or Abatement. This Agreement and the other
Operative Documents and Lessee's obligation to pay Rent and to pay
and perform all other Lessee Obligations shall continue in full
force and effect without abatement notwithstanding the occurrence or
existence of any event or circumstance, including any event or
circumstance set forth in Subparagraph 6.08(c).
(c) Full Payment and Performance. Lessee shall make all
payments under this Agreement and the other Operative Documents in
the full amounts and at the times required by the terms of this
Agreement and the other Operative Documents without setoff,
deduction or reduction of any kind and shall perform all other
Lessee Obligations as and when required, without regard to any event
or circumstances whatsoever, including (i) the condition of the
Property (including any Lessor Improvements to the Property made
prior to the Commencement Date or during the Term); (ii) title to
the Property (including possession of the Property by any Person or
the existence of any Lien or any other right, title or interest in
or to any of the Property in favor of any Person); (iii) the value,
habitability, usability, design, operation or fitness for use of the
Property; (iv) the availability or adequacy of utilities and other
services to the Property; (v) any latent, hidden or patent defect in
the Property; (vi) the zoning or status of the Property or any other
restrictions on the use of the Property; (g) the economics of the
Property; (vii) any Casualty or Condemnation; (viii) the compliance
of the Property with any applicable Governmental Rule or Insurance
Requirement; (ix) any failure by any Lessor Party to perform any of
its obligations under this Agreement or any other Operative
Document; or (x) the exercise by any Lessor Party of any of its
remedies under this Agreement or any other Operative Document;
provided, however, that this Paragraph 6.08 shall not abrogate any
right which Lessee may have to recover damages from any Lessor Party
for any material breach by such Lessor Party of its obligations
under this Agreement or any other Operative Document to the extent
permitted hereunder or thereunder.
[The signature page follows.]
34
35
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed as of the day and year first above written.
LESSEE: SILICON VALLEY GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
LESSOR: SELCO SERVICE CORPORATION
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
35
36
STATE OF CALIFORNIA )
) ss
COUNTY OF _____________________)
On _____________, 1999, before me, ___________________ a Notary Public in
and for the State of California, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity on behalf of which the person(s) acted,
executed the instrument.
Witness my hand and official seal.
[SEAL]
_____________________________
37
STATE OF CALIFORNIA )
) ss
COUNTY OF _____________________)
On _____________, 1999, before me, ___________________ a Notary Public in
and for the State of California, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity on behalf of which the person(s) acted,
executed the instrument.
Witness my hand and official seal.
[SEAL]
_____________________________
38
SCHEDULE 3.03
INSURANCE REQUIREMENTS
(i) At all times during the Term, commercial general liability
insurance, umbrella insurance and excess liability insurance, each written
on an "occurrence basis", including products and completed operation
hazards, covering claims for bodily injury, personal injury or death
sustained by persons or damage to property, in an amount of not less than
$5,000,000 per occurrence and $10,000,000 annual aggregate;
(ii) At all times during the Term, workers' compensation insurance
for statutory limits and employer's liability insurance covering injury,
death or disease sustained by employees, in an amount not less than
$1,000,000 for disease and $1,000,000 for bodily injury or death by
accident; and
(iii) At all times during the Term, "all risk" property insurance
covering (A) loss or damage by flood in an amount not less than the lesser
of (1) the replacement cost of the Lessor Improvements and (2) the then
current Outstanding Lease Amount if any portion of the Property is located
in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable Governmental Authority,
(B) loss or damage by fire in an amount not less than the lesser of (1)
the replacement cost of the Lessor Improvements and (2) the then current
Outstanding Lease Amount, and (C) loss or damage by earthquake in an
amount not less than $3,500,000.
39
EXHIBIT A
LAND
A-1
40
EXHIBIT B
RELATED GOODS
None
B-1
41
EXHIBIT C
NOTICE OF RENTAL PERIOD SELECTION
[Date]
KeyBank National Association,
as Agent
000 X. Xxxx Xxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attn: Xxxxx Xxxxxxx or Xxxxxxxx Xxxxxxx
1. Reference is made to (A) that certain Participation Agreement, dated as
of June 30, 1999 (the "Participation Agreement"), among Silicon Valley Group,
Inc. ("Lessee"), SELCO Service Corporation ("Lessor"), the financial
institutions listed in Schedule I to the Participation Agreement (the
"Participants") and KeyBank National Association, as agent for the Participants
(in such capacity, "Agent"); and (b) that certain Lease Agreement, dated as of
June 30, 1999 (the "Lease Agreement") between Lessee and Lessor. Unless
otherwise indicated, all terms defined in the Participation Agreement have the
same respective meanings when used herein.
2. [Insert one of the following as appropriate]
[Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably selects a new Rental Period for a Portion of the Outstanding
Lease Amount as follows:
(a) The Portion for which a new Rental Period is to be selected is
the Portion in the amount of $__________ with a current Rental Period
which began on ________, ____ and ends on __________, ____; and
(b) The next Rental Period for such Portion shall be __________
month[s].]
[Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to divide a Portion of the Outstanding Lease Amount
into further Portions as follows:
(a) The Portion which is to be divided is the Portion in the amount
of $__________ with a current Rental Period which began on ________, ____
and ends on __________, ____; and
B-1
42
(b) On the last day of the current Rental Period for such Portion,
such Portion is to be divided into the following Portions with the
following initial Rental Periods:
Portion Rental Period
------------ -----------------
$ month[s]
----------- -------
$ month[s]
----------- -------
$ month[s]
----------- -------
$ month[s]]
----------- -------
[Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to combine into a single Portion certain Portions of
the Outstanding Lease Amount as follows:
(a) The Portions which are to be combined are the Portions in the
amounts of $__________, $_________ and $_______, each with a current
Rental Period which ends on __________, ____; and
(b) The initial Rental Period for such newly created Portion shall
be __________ month[s].]
3. Lessee hereby certifies to the Lessor Parties that, on the date of this
Notice of Rental Period Selection and after giving effect to the selection[s] as
described above:
(a) The representations and warranties of Lessee set forth in
Paragraph 4.01 of the Participation Agreement and in the other Operative
Documents are true and correct in all material respects as if made on such
date (except for representations and warranties expressly made as of a
specified date, which shall be true as of such date);
(b) No Default has occurred and is continuing; and
(c) All of the Operative Documents are in full force and effect on
such date.
IN WITNESS WHEREOF, Lessee has executed this Notice of Rental Period
Selection on the date set forth above.
SILICON VALLEY GROUP, INC.
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
B-2
43
Recording requested by and EXECUTION VERSION
when recorded return to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx
Old Federal Reserve Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LEASE AGREEMENT,
DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
BETWEEN
SILICON VALLEY GROUP, INC.
AND
SELCO SERVICE CORPORATION
JUNE 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THIS LEASE IS NOT INTENDED TO CONSTITUTE
A TRUE LEASE FOR INCOME TAX PURPOSES
(SEE PARAGRAPH 2.06)
44
TABLE OF CONTENTS
PAGE
SECTION 1. INTERPRETATION.............................................................................1
1.01. Definitions................................................................................1
1.02. Rules of Interpretation....................................................................2
SECTION 2. BASIC PROVISIONS...........................................................................2
2.01. Lease of the Property......................................................................2
2.02. Term.......................................................................................2
2.03. Rent.......................................................................................3
2.04. Use........................................................................................4
2.05. "As Is" Lease..............................................................................4
2.06. Nature of Transaction......................................................................5
2.07. Security, Etc..............................................................................5
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.............................................7
3.01. Maintenance, Repair, Etc...................................................................7
3.02. Risk of Loss...............................................................................8
3.03. Insurance..................................................................................8
3.04. Casualty and Condemnation.................................................................11
3.05. Taxes.....................................................................................15
3.06. Environmental Matters.....................................................................15
3.07. Liens, Easements, Etc.....................................................................17
3.08. Subletting................................................................................18
3.09. Utility Charges...........................................................................18
3.10. Removal of Property.......................................................................18
3.11. Compliance with Governmental Rules and Insurance Requirements.............................19
3.12. Permitted Contests........................................................................19
3.13. Lessor Obligations; Right to Perform Lessee Obligations...................................20
3.14. Inspection Rights.........................................................................20
3.15. Cooperation of Lessor to Facilitate Operation, Etc........................................20
3.16. Survey and Title Matters..................................................................21
SECTION 4. EXPIRATION DATE...........................................................................22
4.01. Termination by Lessee Prior to Scheduled Expiration Date..................................22
- i -
45
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.02. Return of Property........................................................................22
4.03. Holding Over..............................................................................23
SECTION 5. DEFAULT...................................................................................23
5.01. Events of Default.........................................................................23
5.02. General Remedies..........................................................................26
5.03. Lease Remedies............................................................................27
5.04. Loan Remedies.............................................................................28
5.05. Remedies Cumulative.......................................................................31
5.06. No Cure or Waiver.........................................................................31
5.07. Exercise of Rights and Remedies...........................................................31
SECTION 6. MISCELLANEOUS.............................................................................31
6.01. Notices...................................................................................31
6.02. Waivers; Amendments.......................................................................31
6.03. Successors and Assigns....................................................................31
6.04. No Third Party Rights.....................................................................32
6.05. Partial Invalidity........................................................................32
6.06. Governing Law.............................................................................32
6.07. Counterparts..............................................................................32
6.08. Nature of Lessee's Obligations............................................................32
SCHEDULE
3.03 Insurance Requirements
EXHIBITS
A Land (2.01(a))
B Related Goods (2.01(d))
C Notice of Rental Period Selection (2.03(a))
- ii -
