1
GROUND LEASE
(PARCEL 2 AND LOT 54)
By and Between
IRISH LEASING CORPORATION
A TEXAS CORPORATION
as Landlord
and
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION,
as Tenant
for
Premises located in
San Jose, California
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE
FOR INCOME TAX PURPOSES. SEE SECTION 21.2
2
TABLE OF CONTENTS
Page
ARTICLE 1 BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 Date of Lease . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Lease Commencement Date . . . . . . . . . . . . . . . . . . . 2
1.8 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . 2
1.9 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Addresses for Notices . . . . . . . . . . . . . . . . . . . . 2
1.11 Addresses for Rent Payments . . . . . . . . . . . . . . . . . 2
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Approval Plans . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Authorized Loan . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorized Plans . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Equity Funded Amount . . . . . . . . . . . . . . . . . . . . . 4
2.11 Equity Rent Component . . . . . . . . . . . . . . . . . . . . 4
2.12 Event of Major Default . . . . . . . . . . . . . . . . . . . . 4
2.13 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Fee Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 Fee Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . 4
2.16 Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17 Guaranteed Residual Value . . . . . . . . . . . . . . . . . . 4
2.18 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.21 Landlord Affiliate . . . . . . . . . . . . . . . . . . . . . . 5
2.22 Lease Commencement Date . . . . . . . . . . . . . . . . . . . 5
2.23 Lease Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.24 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . 5
2.25 LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . 5
2.26 LIBOR Rate. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.27 Loan Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.30 New Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.31 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.32 Official Records . . . . . . . . . . . . . . . . . . . . . . . 6
2.33 Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . 6
i.
3
2.34 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.35 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . 6
2.36 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.37 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . 6
2.38 Rent Payment Date . . . . . . . . . . . . . . . . . . . . . . 6
2.39 Replacement Loan . . . . . . . . . . . . . . . . . . . . . . . 6
2.40 Required Permits . . . . . . . . . . . . . . . . . . . . . . . 6
2.41 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 7
2.42 Senior Funded Amount . . . . . . . . . . . . . . . . . . . . . 7
2.43 Senior Rent Component . . . . . . . . . . . . . . . . . . . . 7
2.44 SGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.45 Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.46 Tenant Deed of Trust . . . . . . . . . . . . . . . . . . . . . 7
2.47 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.48 UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.49 UBS Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.50 UBS Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 DEMISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Extension Term . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . 10
5.4 Delinquent Rent . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 6 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Personal Property Taxes . . . . . . . . . . . . . . . . . . . 12
6.3 Right to Contest . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Additional Provisions Relating to Taxes . . . . . . . . . . . 14
ARTICLE 7 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Liability Insurance . . . . . . . . . . . . . . . . . . . . . 15
7.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 15
7.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 8 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Contest of Legal Requirements . . . . . . . . . . . . . . . . 19
8.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 19
ii.
4
ARTICLE 9 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . 20
9.1 Services to the Premises . . . . . . . . . . . . . . . . . . . 20
ARTICLE 10 MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES . . . . . . 20
10.1 Tenant Obligations . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Surrender of the Premises . . . . . . . . . . . . . . . . . . 21
ARTICLE 11 CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA . . . . . . . . . 21
11.1 Tenant's Rights to Construct Improvements . . . . . . . . . . 21
11.2 Required Permits, Easements, etc . . . . . . . . . . . . . . . 23
11.3 Demolition and Reconstruction . . . . . . . . . . . . . . . . 23
11.4 Title to and Nature of Improvements . . . . . . . . . . . . . 23
ARTICLE 12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 13 ASSIGNMENT BY LANDLORD . . . . . . . . . . . . . . . . . . . . 24
13.1 Further Mortgages or Encumbrances by Landlord;
Authorized Loans . . . . . . . . . . . . . . . . . . . . . . 24
13.2 Landlord's Right to Sell . . . . . . . . . . . . . . . . . . . 26
13.3 Transfer of Funds and Property . . . . . . . . . . . . . . . . 26
ARTICLE 14 ASSIGNMENT AND SUBLEASING . . . . . . . . . . . . . . . . . . 27
14.1 Right to Assign . . . . . . . . . . . . . . . . . . . . . . . 27
14.2 Right to Sublet . . . . . . . . . . . . . . . . . . . . . . . 27
14.3 Tenant's Right to Mortgage . . . . . . . . . . . . . . . . . . 28
ARTICLE 15 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . 28
15.1 Total or Substantial Taking . . . . . . . . . . . . . . . . . 28
15.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . 28
15.3 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . 28
15.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.5 Notice and Execution . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 16 DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . 29
16.1 Insured Casualty . . . . . . . . . . . . . . . . . . . . . . . 29
16.2 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 17 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.2 Event of Major Default . . . . . . . . . . . . . . . . . . . . 31
17.3 Contest by Tenant . . . . . . . . . . . . . . . . . . . . . . 31
17.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.6 Effect of Assignment . . . . . . . . . . . . . . . . . . . . . 32
17.7 Landlord Cure Right . . . . . . . . . . . . . . . . . . . . . 32
17.8 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 18 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . 34
18.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 34
iii.
5
ARTICLE 19 TENANT'S OPTION TO PURCHASE . . . . . . . . . . . . . . . . . 35
19.1 Option To Purchase Premises . . . . . . . . . . . . . . . . . 35
19.2 Mandatory Purchase/Sale of Premises . . . . . . . . . . . . . 37
19.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 20 ADDITIONAL COVENANTS OF LANDLORD . . . . . . . . . . . . . . . 38
20.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20.2 Land Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
20.3 Transfer of Property Interests . . . . . . . . . . . . . . . . 40
20.4 Shareholder Equity; No Other Asset . . . . . . . . . . . . . . 40
20.5 Recourse Obligations . . . . . . . . . . . . . . . . . . . . . 40
20.6 Default Under Authorized Loan . . . . . . . . . . . . . . . . 40
ARTICLE 21 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 40
21.1 Relationship . . . . . . . . . . . . . . . . . . . . . . . . . 40
21.2 Form of Transaction; Certain Tax Matters . . . . . . . . . . . 41
21.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
21.4 Severability of Provisions . . . . . . . . . . . . . . . . . . 42
21.5 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . 42
21.6 Approvals and Consents . . . . . . . . . . . . . . . . . . . . 42
21.7 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.8 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . 43
21.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 43
21.10 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 43
21.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 43
21.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 43
21.14 Time Is of the Essence . . . . . . . . . . . . . . . . . . . . 44
21.15 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . 44
21.16 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.17 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . 44
21.18 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.19 Landlord's Continuing Obligation to Sell . . . . . . . . . . . 45
21.20 As-Is Lease . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.21 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 45
21.22 Representations and Warranties . . . . . . . . . . . . . . . . 45
List of Exhibits
Exhibit A Description of Land
Exhibit B Permitted Exceptions
Exhibit C Memorandum of Lease
Exhibit D Closing Costs and Fees to be Included in Funded Amount
Exhibit E Lease Commencement Date Memorandum
Exhibit F Description of Additional Property Owned by Landlord
iv.
6
GROUND LEASE
THIS GROUND LEASE ("Lease") by and between IRISH LEASING CORPORATION,
a Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a California
corporation ("Tenant"), is entered into as of the date set forth in Article 1
and shall be effective and binding upon the parties hereto as of such date.
Capitalized terms used in this Lease shall have the definitions set forth in
Article 2 or in the text of this Lease.
In consideration of the Base Rent reserved herein, and the terms,
covenants and conditions set forth below, Landlord and Tenant hereby agree as
follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: February 28, 1995.
1.2 LANDLORD: Irish Leasing Corporation, a Texas corporation.
1.3 TENANT: Cisco Systems, Inc., a California corporation.
1.4 LAND: That certain tract of land located in the City
of San Xxxx, Santa Xxxxx County, California,
consisting of two (2) parcels and more
particularly described on Exhibit A attached
hereto, together with all easements, rights of
way, appurtenances and other rights and benefits
belonging or pertaining to such land.
1.5 PREMISES: The Land.
1.6 TERM: The initial term ("Initial Term") of this Lease
shall be for five (5) years commencing on the
Lease Commencement Date (as defined in Section
4.1). Subject to the conditions set forth in
Section 4.2, Tenant may extend the Initial Term
for one (1) additional period of five (5) years
("Extension Term"). The Initial Term and (if
exercised by Tenant) the Extension Term shall be
referred to collectively herein as the "Term."
The Term shall cease upon, and shall not refer
to any period of time after, termination of this
Lease (whether
1.
7
pursuant to the terms of the Lease, by operation
of law, or otherwise).
1.7 LEASE COMMENCEMENT
DATE: As described in Section 4.1.
1.8 RENT COMMENCEMENT
DATE: The rent commencement date ("Rent Commencement
Date") shall be the first LIBOR Business Day (as
defined in Section 2.25) of the calendar month
which commences immediately following the Lease
Commencement Date.
1.9 BASE RENT: As described in Section 2.5.
1.10 ADDRESSES FOR
NOTICES:
LANDLORD: TENANT:
Irish Leasing Corporation Cisco Systems, Inc.
0000 XXX Xxxxxxx, Xxxxx 0000 0000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxx Attention: Xxxxxx Xxxx
With a copy to: With a copy to:
Xxxxx Xxxxxxx, Esq. Cisco Systems, Inc.
Xxxxxxx, XxXxxxxx & Xxxxxx 0000 Xxxxxxx Xxxxx
00000 Xxxxx Xxxxx Xxxxx Xxxxx, XX 00000
Suite 1150 Attention: Xxxxx Bareilles
Xxxxxx, Xxxxx 00000
and
Xxxx X. Xxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx
000 Xxxx X Xxxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
1.11 ADDRESSES FOR RENT
PAYMENTS:
Senior Rent Component: Union Bank of Switzerland
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Equity Rent Component: Irish Leasing Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxx
2.
8
This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article 1 and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE 2
DEFINITIONS
For purposes of this Lease, the following defined terms shall have the
meanings set forth in this Article 2.
2.1 ADDITIONAL RENT. "Additional Rent" shall mean any amounts other
than Base Rent payable by Tenant to Landlord or to other Entities on Landlord's
behalf as required under this Lease, including, without limitation, interest at
the Default Rate accrued on past due Base Rent and other amounts past due
hereunder, costs and expenses to be paid or reimbursed by Tenant hereunder,
amounts due pursuant to Tenant's indemnity obligations hereunder, and Real
Estate Taxes.
2.2 APPROVAL PLANS. "Approval Plans" shall have the meaning set forth
in Section 11.1(a).
2.3 AUTHORIZED LOAN. "Authorized Loan" shall have the meaning set
forth in Section 13.1(b).
2.4 AUTHORIZED PLANS. "Authorized Plans" shall have the meaning set
forth in Section 11.1(a).
2.5 BASE RENT. "Base Rent" shall mean, as of a Rent Payment Date, the
product of the Funded Amount as of the Rent Payment Date multiplied by the Lease
Rate.
2.6 COLLATERAL. "Collateral" shall have the meaning set forth in
Section 21.18.
2.7 DEFAULT. "Default" shall have the meaning set forth in Section
17.1.
2.8 DEFAULT RATE. "Default Rate" shall mean the interest rate charged
or chargeable pursuant to the UBS Note or other Authorized Loan on any amounts
not paid when due. Notwithstanding the foregoing, in the event that the
foregoing Default Rate shall be in violation of any usury or similar law, then
the Default Rate shall be reduced to the extent necessary to cause the Default
Rate to comply with any usury or similar law.
2.9 ENTITY. "Entity" shall mean any person, corporation, partnership
(general or limited), joint venture, association, joint stock company, trust or
other business entity or organization.
3.
9
2.10 EQUITY FUNDED AMOUNT. "Equity Funded Amount" shall mean that
portion of the Funded Amount equal to the Funded Amount minus the Senior Funded
Amount.
2.11 EQUITY RENT COMPONENT. "Equity Rent Component" shall mean the
Base Rent as of a Rent Payment Date minus the Senior Rent Component.
2.12 EVENT OF MAJOR DEFAULT. "Event of Major Default" shall have the
meaning set forth in Section 17.2.
2.13 EXTENSION TERM. "Extension Term" shall have the meaning set forth
in the Basic Lease Provisions.
2.14 FEE MORTGAGE. "Fee Mortgage" shall mean any Mortgage at any time
given by Landlord and remaining uncancelled on the Official Records, encumbering
all or any portion of Landlord's right, title and estate in the Land or in this
Lease.
2.15 FEE MORTGAGEE. "Fee Mortgagee" shall mean the Mortgagee from time
to time of a Fee Mortgage.
2.16 FUNDED AMOUNT. "Funded Amount" shall mean the aggregate amount of
the sum paid by Landlord to acquire the Land, plus the closing costs and fees
set forth on Exhibit D attached hereto; less any reductions in the amount of the
UBS Loan or any other Authorized Loan or in the Equity Funded Amount, whether
such principal reduction or reduction in the Equity Funded Amount is
accomplished by payment to UBS or the holder of an Authorized Loan, the
application of the Collateral or other collateral by UBS or the holder of an
Authorized Loan, the payment of insurance proceeds, condemnation awards, or
otherwise.
2.17 GUARANTEED RESIDUAL VALUE. "Guaranteed Residual Value" shall mean
that amount necessary to cause the present value of the aggregate Minimum Lease
Payments under this Lease, including the present value of the Guaranteed
Residual Value, to not exceed eighty nine and 9/10 percent (89.9%) of the Funded
Amount, computed at the Date of Lease and discounted to present value as of the
Rent Commencement Date using the interest rate implicit in the Lease or the
incremental borrowing rate, whichever is higher, all as calculated and
determined pursuant to Statement of Financial Accounting Standards Number 13.
"Minimum Lease Payments" shall mean the sum of the aggregate Base Rent payable
over the Initial Term and the Extension Term, plus imputed interest on the
non-interest bearing portion of the Security Deposit imputed at a market rate of
interest for an investment for a similar term, plus the Guaranteed Residual
Value, plus the following to the extent paid in cash: custodial and other fees
paid by Tenant, and any other reimbursed costs of Landlord paid by Tenant deemed
to meet the definition of Minimum Lease Payments under SFAS No. 13.
4.
10
2.18 IMPROVEMENTS. "Improvements" shall mean any and all improvements
erected, constructed or situated upon the Land or any part thereof during the
Term.
2.19 INITIAL TERM. "Initial Term" shall have the meaning set forth in
the Basic Lease Provisions.
2.20 LAND. "Land" shall have the meaning set forth in the Basic Lease
Provisions.
2.21 LANDLORD AFFILIATE. "Landlord Affiliate" shall mean any Entity
which controls is controlled by or is under the common control of SGA
Development Partnership, Ltd., or The Staubach Company, a Texas corporation.
2.22 LEASE COMMENCEMENT DATE. "Lease Commencement Date" shall have the
meaning set forth in Section 4.1.
2.23 LEASE RATE. "Lease Rate" shall mean interest at the rate of the
product of 0.846 times the then-effective LIBOR Rate plus .0046 per annum.
2.24 LEGAL REQUIREMENTS. "Legal Requirements" shall mean all statutes,
codes, laws, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements of
all federal, state, county, municipal and other governments, departments,
commissions, boards, courts, authorities, officials and officers, and any
covenants, conditions and restrictions and other matters of record (subject to
the provisions of Section 13.1(a) hereof), which now or at any time hereafter
are applicable to Tenant or this Lease or applicable to and enforceable against
the Premises, the Improvements or any part thereof, as applicable.
2.25 LIBOR BUSINESS DAY. "LIBOR Business Day" shall have the same
meaning as such term is defined in the UBS Note or other Authorized Loan.
2.26 LIBOR RATE. "LIBOR Rate" shall mean the LIBOR interest rate as
defined in the UBS Note, or a subsequent Authorized Loan.
2.27 LOAN RATE. "Loan Rate" shall mean the relevant rate (or rates) of
interest, as the same may change from time to time, applicable under the UBS
Note (or if the UBS Loan has been replaced by an Authorized Loan, then the
relevant rate of interest under the promissory note evidencing such Authorized
Loan), all subject to the terms of Section 13.1(b).
2.28 MORTGAGE. "Mortgage" shall mean any mortgage, deed of trust, or
other instrument in the nature thereof at any time and from time to time
constituting a lien, charge or encumbrance upon any interest or estate of Tenant
or Landlord in the Premises or in this Lease.
5.
11
2.29 MORTGAGEE. "Mortgagee" shall mean the record holder (as reflected
in the Official Records) from time to time of, or the record beneficiary (as
reflected in the Official Records) from time to time under, a Mortgage.
2.30 NEW LOAN. "New Loan" shall have the meaning set forth in Section
13.1(b).
2.31 NOTICE. "Notice" shall mean a written advice, request, demand or
notification required or permitted by this Lease, as more particularly provided
in Section 21.3.
2.32 OFFICIAL RECORDS. "Official Records" shall mean the official
records of Santa Xxxxx County, California.
2.33 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean the
following: (1) the exceptions set forth in Exhibit B; (2) any exceptions created
or caused by Tenant or to which Tenant consents in writing; (3) taxes and
assessments not yet due and payable; (4) a deed of trust or mortgage which
secures a New Loan authorized pursuant to the terms of Section 13.1(b); (5) the
Tenant Deed of Trust; (6) all title defects, liens, encumbrances, deeds of
trust, mortgages, rights-of-way, and restrictive covenants and conditions
affecting the Land unless any of the foregoing arise as a result of Landlord's
actions or with Landlord's written consent (unless such actions taken or consent
given by Landlord are requested in writing by Tenant pursuant to Section 11.2,
20.1 or 20.2); and (7) this Lease.
2.34 PREMISES. "Premises" shall have the meaning set forth in the
Basic Lease Provisions. It is the intention of the parties that the Premises
consist only of the Land, and in no event shall the Premises consist of any
Improvements whatsoever.
2.35 REAL ESTATE TAXES. "Real Estate Taxes" shall have the meaning set
forth in Section 6.1(b).
2.36 RENT. "Rent" shall mean Base Rent and Additional Rent.
2.37 RENT COMMENCEMENT DATE. "Rent Commencement Date" shall have the
meaning set forth in the Basic Lease Provisions.
2.38 RENT PAYMENT DATE. "Rent Payment Date" shall have the meaning set
forth in Section 5.1.
2.39 REPLACEMENT LOAN. "Replacement Loan" shall have the meaning set
forth in Section 13.1(c).
2.40 REQUIRED PERMITS. "Required Permits" shall mean each and every
building and development permit including, without limitation, demolition
permits, site permits and addenda thereto (including, without limitation,
foundation permits and structural permits), temporary and final occupancy
permits and any other
6.
12
governmental or quasi-governmental approvals which must be issued by any
governmental authority, department, commission, board, official or officer as a
condition precedent to construction and occupancy of any Improvements.
2.41 SECURITY DEPOSIT. "Security Deposit" shall have the meaning set
forth in Section 5.5.
2.42 SENIOR FUNDED AMOUNT. "Senior Funded Amount" shall mean the
principal amount of the UBS Loan as of the Lease Commencement Date, less any
reductions in the principal amount of the UBS Loan or any other Authorized Loan,
whether such principal reduction is accomplished by payment to UBS or the holder
of the Authorized Loan, the application of the Collateral or other collateral by
UBS or the holder of the Authorized Loan, the payment of condemnation awards, or
otherwise.
2.43 SENIOR RENT COMPONENT. "Senior Rent Component" shall mean the
product of the Senior Funded Amount as of a Rent Payment Date times the Loan
Rate.
2.44 SGA. "SGA" shall mean SGA Development Partnership, Ltd., a Texas
limited partnership, the sole shareholder of Landlord.
2.45 TAKING. "Taking" shall have the meaning set forth in Section
15.1.
2.46 TENANT DEED OF TRUST. "Tenant Deed of Trust" shall mean that
certain deed of trust to be executed by Landlord in favor of Tenant and recorded
in the Official Records as of the Lease Commencement Date, as more fully
described in Section 13.1(d).
2.47 TERM. "Term" shall have the meaning set forth in the Basic Lease
Provisions.
2.48 UBS. "UBS" shall mean the Union Bank of Switzerland, a Swiss
banking corporation, acting through its Los Angeles branch.
2.49 UBS LOAN. "UBS Loan" shall have the meaning set forth in Section
13.1(b).
2.50 UBS NOTE. "UBS Note" shall have the meaning set forth in Section
13.1(b).
ARTICLE 3
DEMISE
3.1 PREMISES. Subject to the terms, covenants and conditions contained
herein, Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises, together with all rights, privileges, easements and
appurtenances relating to the Premises.
7.
13
ARTICLE 4
TERM
The Term of this Lease shall consist of the Initial Term, and if
exercised by Tenant, the Extension Term, as follows:
4.1 INITIAL TERM. The Initial Term of this Lease is specified in
Article 1. The Initial Term shall commence on the date ("Lease Commencement
Date") that Landlord acquires title to the Land pursuant to that certain
Purchase and Sale Agreement ("Purchase Agreement") executed or to be executed by
Xxxxxxx Properties, Inc. as Seller ("Seller") and Landlord as Buyer. Within
thirty (30) days after the Lease Commencement Date, Landlord and Tenant shall
execute the Lease Commencement Date Memorandum in the form attached hereto as
Exhibit E. In the event that the Initial Term does not commence on or before
July 1, 1995, Tenant shall have the unilateral right to terminate this Lease by
written notice to Landlord, and upon such termination Landlord shall immediately
return the Security Deposit to Tenant, plus all interest earned thereon. In the
event the Purchase Agreement is terminated as a result of any default under or
breach of the Purchase Agreement by Landlord which is not the result of
Landlord's gross negligence, willful misconduct or breach of this Lease,
Landlord shall not be obligated to return any portion of the Security Deposit
retained by Seller as liquidated damages pursuant to the terms of the Purchase
Agreement; provided that, at Tenant's request, Landlord shall assign to Tenant
any and all rights, claims and causes of action which Landlord may have with
respect to the Purchase Agreement, excluding, however, any rights, claims and
causes of action which may be necessary for Landlord to retain in order for
Landlord to avoid or seek reimbursement for any liability, loss, cost, damage,
injury or expense (including without limitation reasonable attorneys' fees and
costs) which Landlord may sustain or suffer or be entitled to recover in
connection with the Purchase Agreement.
4.2 EXTENSION TERM. Upon at least ninety (90) days' prior written
Notice to Landlord, and provided that a New Loan or Replacement Loan has been
obtained as of the commencement of the Extension Term (subject to the terms and
conditions set forth in Sections 13.1(b) and 13.1(c)), Tenant may extend the
Term for the Extension Term specified in Article 1. All provisions of this Lease
shall remain in full force and effect for the Extension Term, including, without
limitation, the Base Rent payable hereunder, except that Tenant shall have no
further right to extend the Term of this Lease, and except that the Lease Rate
may be adjusted only to reflect any actual change in the rate of interest (that
is, the spread over LIBOR) charged pursuant to the Authorized Loan.
4.3 HOLDING OVER. If Tenant remains in possession of the Premises
after the expiration of the Term without executing a new lease, such holding
over shall be construed as a tenancy from month-to-month, subject to all terms,
covenants and conditions herein contained (except that Tenant shall have no
right to extend the Term of this Lease), and at the Base Rent required to be
paid by Tenant pursuant to the terms hereof during the last month of the Term.
8.
14
ARTICLE 5
RENT
5.1 BASE RENT.
(a) Tenant shall pay Base Rent in the manner set forth below.
Base Rent shall be payable monthly, in arrears, without notice on the Rent
Commencement Date, and continuing thereafter on the first LIBOR Business Day of
each successive month, except that the last installment of Base Rent shall be
payable on the last day of the Term (each such date shall be a "Rent Payment
Date") and shall be an amount sufficient to pay all Base Rent accrued through
the end of the Term.
Tenant shall pay Base Rent as follows: The Senior Rent Component
shall be paid to UBS, and the Equity Rent Component shall be paid to Landlord,
at the Address for Rent set forth in the Basic Lease Provisions (or, if the UBS
Loan has been replaced by a New Loan or Replacement Loan, then the Senior Rent
Component shall be paid directly to the holder of such New Loan or Replacement
Loan) or at such other place as Landlord and Tenant may from time to time
mutually agree upon, in their respective sole and absolute discretion. Tenant
shall pay Base Rent by wire transfer or by check. Landlord or UBS or such other
holder of a New Loan, as the case may be, shall supply Tenant with such bank
account information as Tenant shall require to enable payment by wire transfer.
The parties agree that Tenant is paying the Senior Rent Component of Base Rent
directly to UBS for the convenience of the parties in order to satisfy
Landlord's obligations to pay interest under the UBS Loan for the period of time
corresponding to the Term of this Lease; all Base Rent payments shall be deemed
payments to Landlord to the extent of the Equity Rent Component and payments of
the interest due to UBS under the UBS Loan to the extent of the Senior Rent
Component.
(b) INTEREST RATE SELECTION. The parties acknowledge that the
interest rate applicable under the UBS Loan (or other Authorized Loan) shall
affect the amount of Base Rent payable by Tenant hereunder. Therefore, Tenant
shall have the right, by written notice to UBS (or the holder of any Authorized
Loan), SGA and Landlord, to designate the interest period to be selected from
time to time by SGA pursuant to the terms of the UBS Note (or other Authorized
Loan). Tenant acknowledges that the rates available to be selected under the UBS
Loan after the first partial calendar month of the Term are 1, 3, 6, 9 or
12-month LIBOR rates. In the event that Tenant fails to give such written notice
to UBS (or other holder of an Authorized Loan), SGA and Landlord prior to the
applicable deadline for selection of such interest period pursuant to the terms
of the UBS Note (or other Authorized Loan), the same interest period then in
effect for the UBS Loan (or other Authorized Loan) shall be selected.
5.2 PRORATION. If the Term expires or is otherwise terminated on a
day other than the day before the first LIBOR
9.
15
Business Day of a calendar month, Base Rent for such calendar month shall be
prorated on the basis of actual days elapsed on the basis of a thirty (30) day
month.
5.3 NO ABATEMENT OF RENT. Except as a consequence of a reduction in
the Funded Amount or the terms of Section 15 (Taking), Tenant shall not be
entitled to any abatement, diminution, reduction, setoff or postponement of Base
Rent as a consequence of any inconvenience to, interruption of, cessation of or
loss of Tenant's use or enjoyment of the Premises or as a result of any reason
whatsoever.
5.4 DELINQUENT RENT. Any Base Rent not paid on the due date shall
accrue interest at the Default Rate from the date such Base Rent was originally
due until the date such Base Rent is paid. All interest accrued on past due Base
Rent shall be due and payable to Landlord at the time the Base Rent is paid, or
upon demand by Landlord, if earlier.
5.5 SECURITY DEPOSIT. On the Date of Lease, Tenant shall deliver to
Landlord a security deposit ("Security Deposit") in an amount equal to One
Million Two Hundred Sixty Thousand Dollars ($1,260,000), to be held in an
interest bearing account requiring authorization by both Landlord and Tenant for
withdrawal. On the Lease Commencement Date, the Security Deposit plus all
interest earned thereon shall be released to Landlord, and Tenant shall deliver
to Landlord an amount sufficient to increase the Security Deposit to an amount
equal to the Equity Funded Amount as of such date; provided that Tenant shall
receive a credit for any interest earned on the Security Deposit prior to the
Lease Commencement Date. The Security Deposit shall be held by Landlord as
security solely for the payment of Base Rent and Additional Rent by Tenant
pursuant to this Lease. One-fifth of the Security Deposit shall bear interest
from the Lease Commencement Date at the rate of 6.75% per annum, simple
interest, paid by Landlord to Tenant in cash on an annual basis on each
anniversary of the Lease Commencement Date; and the remainder of the Security
Deposit shall not bear interest. If at any time during the Term any Base Rent
shall be overdue, then Landlord may at its election (but shall not be required
to) appropriate and apply any portion of the Security Deposit to the payment of
any such overdue Base Rent; provided, however, that Landlord shall use the
non-interest bearing portion of the Security Deposit first, before appropriating
any portion of the Security Deposit that shall bear interest pursuant hereto.
Should the entire Security Deposit, or any portion thereof, be appropriated and
applied by Landlord as provided herein, then Tenant shall immediately, after
receipt of written demand by Landlord, pay to Landlord a sufficient sum in cash
to restore the Security Deposit to the original sum of the Security Deposit.
Landlord shall have no obligation to segregate the Security Deposit from other
funds. In the event that the Equity Funded Amount is reduced for any reason,
including without limitation by reason of a sale of any portion of the Premises
or the application of the proceeds of a condemnation award to reduce the Equity
Funded Amount
10.
16
(it being understood that the Equity Funded Amount will only be reduced in the
event and to the extent that the net proceeds of such condemnation award exceeds
the Senior Funded Amount, with such award proceeds to be applied first to the
Senior Funded Amount pursuant to Section 15.4 hereof), the amount of the
Security Deposit required hereunder shall be reduced (pro rata between the
interest bearing and non-interest bearing portions of the Security Deposit) by a
like amount, and any such excess funds held by Landlord shall immediately be
returned to Tenant. The entire Security Deposit (other than amounts withheld
against Base Rent due hereunder), plus any accrued and unpaid interest required
to be paid thereon pursuant to this Lease, shall be returned to Tenant at the
end of the Term.
ARTICLE 6
TAXES
6.1 REAL ESTATE TAXES.
(a) From and after the Lease Commencement Date, Tenant shall pay
directly to the appropriate taxing authority all Real Estate Taxes. If the Lease
Commencement Date occurs or the Term expires or otherwise terminates at any time
other than the beginning or end of a taxable year, Tenant's obligation to pay
Real Estate Taxes shall be prorated on the basis of a 365-day year, so as to
include only that portion of the taxable year which is a part of the Term.
Unless a termination of the Lease results from a purchase of the Land pursuant
to Article 19, any Real Estate Taxes levied against the Land which accrue during
the Term of this Lease but which would not be due and payable to the appropriate
taxing authority until after the expiration of the Term of this Lease (as the
same may be extended) shall be paid by Tenant to Landlord upon such termination.
Landlord shall pay such amounts to the appropriate taxing authority on a timely
basis.
(b) Except to the extent that Real Estate Tax bills and
statements are sent directly to Tenant by the taxing authority, upon receipt by
Landlord of the tax bills or statements, Landlord will use reasonable efforts to
promptly advise Tenant in writing of all Real Estate Taxes and shall deliver
copies of all applicable tax bills or statements to Tenant. Tenant shall pay
directly to the taxing authority all Real Estate Taxes prior to the later of (i)
thirty (30) days after receipt by Tenant of a copy of such bills and statements
referred to above, or (ii) five (5) days prior to delinquency. As used herein,
the term "Real Estate Taxes" shall mean any and all taxes, governmental fees and
similar charges or assessments levied or assessed against the Improvements
and/or the Land including, without limitation, ad valorem taxes and special
assessments applicable to real property; provided, however, that Real Estate
Taxes shall not include any Landlord Income Taxes. Real Estate Taxes shall also
include any and all documentary, transfer, sales, mortgage, recording or similar
taxes imposed on Landlord or Tenant in connection with (i) the original
acquisition
11.
17
of the Premises by Landlord, (ii) any transfer of the Premises to Tenant
pursuant to the terms of this Lease, or (iii) any sale of the Premises to a
third party pursuant to the terms of this Lease. As used herein, the term
"Landlord Income Taxes" shall mean any and all income, franchise, gains, gift,
succession, excess profits, gross receipts, revenue, estate, rental, or similar
taxes or taxes in lieu thereof imposed upon Landlord or any party other than
Tenant (or an affiliate thereof) and any withholding tax imposed as a collection
device for, in lieu of, or otherwise related to any of the foregoing without
regard to whether such tax is required to be collected by Tenant and without
regard to whether Tenant would be liable for such withholding tax in the event
it failed to so withhold. For purposes of the foregoing, an income tax shall
include, without limitation, any tax imposed under the United States Internal
Revenue Code or the California Bank and Corporation Tax Law as well as any tax
which could qualify as an "income tax" under United States Treasury Regulation
Section 1.901-2 (except to the extent any such statute or regulation is
subsequently modified to include a tax or other governmental charge of a
materially different type and nature from the taxes currently described therein)
and any income tax which may be payable under the laws of any jurisdiction
either now or in the future. Real Estate Taxes for any given tax year shall
exclude assessment installments that are not due and payable during such tax
year.
6.2 PERSONAL PROPERTY TAXES. Tenant shall pay directly to the
appropriate taxing authorities prior to delinquency any and all taxes and
assessments levied or assessed during the Term upon or against Tenant's
furniture, equipment, trade fixtures and any other personal property in the
Premises.
6.3 RIGHT TO CONTEST. Tenant shall not be required to pay any Real
Estate Taxes or any other taxes for which Tenant is liable hereunder (including,
without limitation, any taxes for which Tenant is required to indemnify Landlord
under Section 6.5) (including penalties and interest), so long as (i) Tenant
shall contest the same or the validity thereof by appropriate legal proceedings
in such a manner to prevent the tax sale of any portion of the Premises and (ii)
the position to be taken by Tenant pursuant to such contest would have a
realistic possibility of success if litigated. For purposes of this Lease,
Tenant may conclusively establish that a position to be taken in a contest would
have a realistic possibility of success if litigated by providing to Landlord a
letter from counsel stating an opinion to such effect. In the event of any such
contest, Tenant shall, within thirty (30) days after the final determination
thereof, pay and discharge the amounts determined to be due in accordance
therewith and with the provisions of this Lease, together with any penalties,
fines, interest, costs and expenses that may have accrued thereon or that may
have resulted from Tenant's contest. Tenant also shall have a right to contest
any taxes for which it is liable hereunder, but with regard to which the
position to be taken pursuant to such contest would not have a realistic
possibility of success if litigated, provided that Tenant pays such taxes on or
12.
18
prior to the date upon which such taxes are asserted to be due by the relevant
governmental authority. Notwithstanding the foregoing provisions of this Section
6.3, Tenant shall have an unconditional right to contest (without prior payment)
any taxes imposed by law upon Tenant rather than upon Landlord. Tenant's
decision to pay any taxes prior to contesting its or another party's underlying
liability therefore shall not be deemed to imply or suggest that the position to
be taken in such contest would not have a realistic possibility of success if
litigated. Landlord shall cooperate fully with Tenant in connection with the
exercise of Tenant's right of contest contained herein, and in the event that
applicable law shall require that Landlord, rather than Tenant, pursue legal
proceedings for such contest, Landlord will initiate and pursue such contest
upon Tenant's request and in accordance with Tenant's instructions (including,
without limitation, Tenant's instructions as to the selection of legal counsel
and matters of strategy or settlement); provided, however, that Landlord shall
not be subject to any liability for the payment of any costs or expenses in
connection with any such contest or proceedings, and Tenant will indemnify,
defend and save harmless Landlord from and against any such costs and expenses
(including, without limitation, reasonable attorneys' fees, costs of court and
appraisal costs), reimbursing Landlord therefor upon demand (or paying such
costs and expenses directly when due, all as directed by Landlord). Tenant shall
be entitled to any refund of any taxes and penalties or interest from any
governmental authority to the extent the refund represents monies paid to the
governmental authority by Tenant or paid by Landlord and reimbursed by Tenant.
6.4 WITHHOLDING TAXES. Subject to Section 6.5, but notwithstanding any
other provision of this Lease to the contrary, Tenant may withhold from any
payments under this Lease any Landlord Income Taxes, without obligation to
gross-up, indemnify or otherwise increase payments in consequence thereof, to
the extent required by applicable law (as determined by Tenant in its reasonable
discretion). Upon the date hereof or upon the date a party becomes a Landlord or
a transferee of any portion of the Landlord's interest in the Premises or this
Lease, and within thirty (30) days following the first day of each calendar year
or if otherwise requested from time to time by Tenant, Landlord and each
transferee, if organized under the laws of a jurisdiction outside the United
States, shall provide Tenant with three counterparts of each of the forms
prescribed by the Internal Revenue Service of the United States (Form 1001 or
4224, or successor form(s), as the case may be) certifying as to Landlord's or
such transferee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to such person.
Without limitation upon the foregoing, unless Tenant has received such forms or
other documents reasonably satisfactory to it indicating that payments under
this Lease are not subject to United States withholding tax, Tenant is
authorized to and shall withhold taxes from such payments at the applicable
statutory rate. Landlord and each transferee, if organized under the laws of the
United States or any State thereof, shall timely
13.
19
provide Tenant with duplicate documents conforming to the requirements of
Treasury Regulation 1.1441-5(b) or any successor thereto (which statement may be
made on a Form W-9).
6.5 ADDITIONAL PROVISIONS RELATING TO TAXES.
Notwithstanding anything in this Section 6 to the contrary, Tenant
shall indemnify, defend and hold Landlord harmless from and against:
(a) Any and all Landlord Income Taxes imposed upon Landlord in
consequence of Landlord being treated as the owner or lessor of the Premises (or
any part thereof) for such tax purposes (provided that Landlord has fully
complied with its obligations under Section 21.2(b));
(b) Any and all minimum franchise taxes imposed in respect of
doing business within the State of California, business qualification taxes, and
similar governmental charges for which Landlord would not be liable but for its
participation in the transactions described in this Lease, including obtaining
the UBS Loan or any other Authorized Loan pursuant to this Lease;
(c) Any and all taxes imposed upon Tenant (except to the extent
that such taxes are imposed upon Tenant as a result of Landlord's failure to
comply with its obligations under this Lease);
(d) Any and all taxes required to be withheld from payments made
by Tenant to a third party not related to or affiliated with Landlord or The
Staubach Company;
(e) Any and all taxes imposed upon Landlord on cancellation or
discharge of indebtedness income arising in connection with a write-down, payoff
modification or cancellation of the UBS Loan or other Authorized Loan (other
than in connection with Landlord's or SGA's bankruptcy or insolvency or any
write-down, payoff, modification or cancellation of the SGA Loan (as defined in
Section 12.1(b)) not authorized in advance by Tenant) and provided that Landlord
has fully complied with its obligations under Section 21.2(b);
(f) Any and all Real Estate Taxes; and (g) Any and all taxes owed
by Landlord as a result of payment made by Tenant to or for the benefit of
Landlord pursuant to Tenant's indemnity obligations under this Section 6.5.
(g) Any and all taxes owed by Landlord as a result of payment
made by Tenant to or for the benefit of Landlord pursuant to Tenant's
indemnity obligations under this Section 6.5.
Tenant's obligation to reimburse or indemnify Landlord for any taxes,
governmental fees, penalties, interest or other supplemental tax charges under
this Lease shall be reduced by the value of any related or offsetting tax
benefits derived or realized by Landlord. For purposes of calculation of tax
benefits derived or realized by Landlord, any net operating loss attributable to
the
14.
20
Premises for any year shall be deemed to be available to offset against income
from the Premises in subsequent years regardless of whether it is in fact
available. Tenant's duty to indemnify Landlord under this Section 6.5 shall
apply only to taxes arising during the Term (whether or not due and payable at
the conclusion of the Term), but shall otherwise survive the expiration or
earlier termination of this Lease.
ARTICLE 7
INSURANCE
7.1 LIABILITY INSURANCE. At all times during the Term, Tenant shall
obtain at Tenant's sole cost and expense a policy or policies of comprehensive
general liability insurance on an "occurrence" basis against claims for
"personal injury" liability, including, without limitation, bodily injury, death
or property damage liability. The liability insurance policy shall contain
coverage limits no less than a combined single limit of $5,000,000 per
occurrence. The insurance may be furnished under a "primary" policy and an
"umbrella" policy or policies. Landlord shall be named as an additional insured
under Tenant's policy and Tenant's policy shall contain an endorsement for
cross-liability coverage. Tenant shall furnish Landlord with certificates from
Tenant's insurers with respect to the insurance required to be carried hereunder
on or before the date of execution of this Lease. The certificates shall state
that such insurance is in full force and effect and that coverage will not be
cancelled without twenty (20) days' prior written notice to Landlord. Renewal
certificates shall be furnished to Landlord not less than thirty (30) days prior
to the expiration of each such policy. Any blanket insurance policy or policies
that insure Tenant against the risks and for the amounts herein specified shall
be deemed to satisfy the obligation of Tenant hereunder, provided that any such
policy of blanket insurance shall specify the amount of the total insurance
allocated to the risks required to be insured hereunder and such allocated
amount meets the requirements of this Article 7. All insurance required by this
Article 7 shall be with an insurance company licensed to do business in the
State of California with a general policyholder's rating, as rated by the most
current available "Bests" Insurance Reports, no less than A-III, and shall be
primary and non-contributing.
7.2 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
contained herein, to the extent permitted by law and so long as any insurance
coverage maintained by Tenant is not diminished by reason thereof, Tenant hereby
(a) releases and waives any rights it may have against Landlord and its
officers, agents and employees on account of any loss or damages occasioned to
Tenant, its property or the Premises, and arising from any risk covered by any
fire and extended coverage insurance maintained by Tenant, whether or not due to
the negligence of Landlord, its agents, employees, contractors, licensees,
invitees or other persons, and (b) waives on behalf of any insurer providing
such
15.
21
insurance to Tenant any right of subrogation that any such insurer may have or
acquire against Landlord or such persons by virtue of payment of any loss under
such insurance. Tenant shall use its best efforts to cause its insurance
policies to contain a waiver of subrogation clauses in accordance with the
foregoing.
7.3 INDEMNITY. Tenant shall protect, defend, indemnify, hold and save
Landlord harmless from and against any and all losses, costs, liabilities or
damages (including reasonable attorneys' fees and disbursements and court costs)
arising by reason of: (i) any and all injury or death of persons or damage to
property against which Tenant is obligated to maintain insurance for the benefit
of Landlord pursuant to this Article 7; (ii) the failure to obtain the waiver of
subrogation clause required by Section 7.2 hereof where such clause could have
been obtained through the exercise of Tenant's best efforts; or (iii) the
invalidation of such insurance policy required to be obtained by Tenant
hereunder by Tenant's insurer. Tenant's duty to indemnify Landlord under this
Section 7.3 shall survive the expiration or earlier termination of this Lease
with respect to events occurring during the Term.
ARTICLE 8
USE
8.1 USE.
(a) PERMITTED USES. Tenant may use the Premises for any lawful
purpose.
(b) ENVIRONMENTAL COMPLIANCE.
(i) DEFINED TERMS. The term "Applicable Environmental
Laws" shall mean any applicable laws, regulations or ordinances pertaining to
health or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 or otherwise (as
amended, hereinafter called "CERCLA"), the Resource Conservation and Recovery
Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, the Hazardous and Solid Waste Amendments of
1984 or otherwise (as amended, hereinafter called "RCRA"), and California Health
& Safety Code Section 25501(j). The terms "hazardous substance" and "release" as
used in this Lease shall have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings specified
in RCRA; provided, in the event either CERCLA or RCRA is amended or superseded
by other laws so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
or other laws; and, provided further, to the extent that the laws of the State
of California establish a meaning for "hazardous substance", "release", "solid
waste", or "disposal"
16.
22
which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply. The term "Pre-existing Contamination" means concentrations
of arsenic and lead existing in soil and groundwater at the Premises as of the
Lease Commencement Date.
(ii) TENANT'S COVENANTS. Tenant will not cause or permit
the Premises or the Improvements to be in violation of, or do anything or permit
anything to be done which subjects Landlord, Tenant or the Premises to any
remedial obligations under or which creates a claim or cause of action under,
any Applicable Environmental Laws, including, without limitation, CERCLA, RCRA,
and the California Health and Safety Code Section 25501(j), assuming disclosure
to the applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Premises and the Improvements, and
Tenant will promptly notify Landlord in writing of any existing, pending or
threatened investigation, claim or inquiry of which Tenant has knowledge by any
governmental authority in connection with any Applicable Environmental Laws.
Tenant shall obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any Improvements, fixtures and equipment at
any time located on the Premises by reason of any Applicable Environmental Laws.
Tenant will not use the Premises or the Improvements in a manner which will
result in the unlawful disposal or other unlawful release of any hazardous
substance or solid waste on or to the Premises or the Improvements and covenants
and agrees to keep or cause the Premises and the Improvements to be kept free of
any unlawful hazardous substance, unlawful solid waste or unlawful environmental
contaminants (including, without limitation, friable asbestos and any substance
containing asbestos deemed hazardous and unlawful by any Applicable
Environmental Law) and to remove the unlawful amounts of the same (or if removal
is prohibited by law, to take whatever action is required by law) promptly upon
discovery at Tenant's sole expense. Tenant shall promptly notify Landlord in
writing of any unlawful disposal or other unlawful release of any hazardous
substance, environmental contaminants or solid wastes on or to the Premises or
the Improvements. Landlord and Tenant acknowledge that Pre-existing
Contamination exists at the Premises due to operations of prior owners and that
Tenant has no further obligation to notify Landlord regarding such Pre-existing
Contamination. Landlord acknowledges receipt of that certain Phase I
Environmental Assessment and Phase II Soil and Groundwater Evaluation dated
February 1995 prepared by Xxxxxx Associates ("Report"); provided that delivery
of such Report shall in no way limit or modify Tenant's indemnity obligations
pursuant to Section 8.1(b)(iii) hereof. Tenant acknowledges that Landlord will
not acquire the Premises if any environmental contamination of the Premises in
violation of applicable law, which contamination is not disclosed in the Report,
occurs or is discovered before the Lease Commencement Date. In the event Tenant
fails to comply with or perform any of the foregoing covenants and obligations,
after thirty (30) days' prior written Notice to Tenant, Landlord may, but shall
be under no obligation to, cause the Premises and the Improvements to be freed
from the unlawful hazardous substance,
17.
23
unlawful solid waste or unlawful environmental contaminants (or if removal is
prohibited by law, to take whatever action is required by law) and the
reasonable cost of the removal or such other action shall be a demand obligation
owing by Tenant to Landlord pursuant to this Lease; provided, however that this
sentence shall not apply to Pre-existing Contamination. Notwithstanding the
foregoing, Landlord shall have no right to cause the removal of such materials
so long as Tenant both: (1) is diligently and in good faith proceeding to comply
with Tenant's obligation to remove the unlawful amounts of such materials; and
(2) has the financial ability to so comply. Subject to the foregoing, Tenant
grants to Landlord and Landlord's agents and employees access to the Premises
and the Improvements, and the license to remove the unlawful hazardous
substance, unlawful solid waste or unlawful environmental contaminants (or if
removal is prohibited by law, to take whatever action is required by law) and
agrees to indemnify, defend and save Landlord harmless from and against all
reasonable costs and expenses involved and from all claims (including
consequential damages) asserted or proven against Landlord by any party in
connection therewith. Upon Landlord's reasonable request for "good cause"
(defined below), at any time and from time to time during the Term, Tenant will
provide at Tenant's sole expense an inspection or audit of the Premises and the
Improvements from an engineering or consulting firm approved by Landlord,
indicating the presence or absence of any hazardous substance, solid waste or
environmental contaminants located on the Premises; provided, however that this
provision shall not apply to Pre-existing Contamination. If Tenant fails to
provide same after sixty (60) days' notice, Landlord may order same, and Tenant
grants to Landlord and Landlord's employees and agents access to the Premises
and the Improvements and a license to undertake any testing reasonably required
to obtain such inspection or audit. The reasonable cost of obtaining such
inspection or audit and any expenses incurred by Landlord in connection
therewith, shall be a demand obligation owing by Tenant to Landlord pursuant to
this Lease. For purposes of this Section 8.1(b)(ii), "good cause" shall mean
that Landlord shall have reasonable grounds to believe that an unlawful release
or unlawful disposal of hazardous substances or solid wastes has occurred on the
Premises or the Improvements, but shall not include Pre-existing Contamination.
(iii) TENANT'S INDEMNITY. Tenant agrees to indemnify,
defend and hold Landlord harmless from and against, and to reimburse Landlord
with respect to, any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including without limitation attorneys' fees
and court costs), fines and/or penalties of any and every kind or character,
known or unknown, fixed or contingent, asserted or potentially asserted against
or incurred by Landlord at any time and from time to time by reason of, in
connection with or arising out of (A) the failure of Tenant to perform any
obligation herein required to be performed by Tenant regarding Applicable
Environmental Laws, (B) any violation of any Applicable Environmental Law by
Tenant or with respect to the Premises or the Improvements, or any disposal or
18.
24
other release by Tenant or with respect to the Premises or the Improvements of
any hazardous substance, environmental contaminants or solid waste on or to the
Premises or the Improvements, whether or not resulting in a violation of any
Applicable Environmental Law, (C) any act, omission, event or circumstance by
Tenant or with respect to the Premises or the Improvements which constitutes or
has constituted a violation of any Applicable Environmental Law with respect to
the Premises or the Improvements, regardless of whether the act, omission, event
or circumstance constituted a violation of any Applicable Environmental Law at
the time of its existence or occurrence, and (D) any and all claims or
proceedings (whether brought by private party or governmental agencies) for
bodily injury, property damage, abatement or remediation, environmental damage
or impairment or any other injury or damage resulting from or relating to any
hazardous or toxic substance or contaminated material located upon or migrating
into, from or through the Premises or the Improvements (whether or not the
release of such materials was caused by Tenant, a subtenant, a prior owner of
the Premises or any other Entity) which Landlord may incur. Tenant's duty to
indemnify Landlord under this Section 8.1 shall survive the expiration or
earlier termination of the Lease with respect to events occurring during or
prior to the Term or after the Term while Landlord has record title to and
Tenant is occupying the Premises.
8.2 CONTEST OF LEGAL REQUIREMENTS. Tenant shall have the right at its
sole cost and expense to contest the validity of any Legal Requirements
applicable to the Premises by appropriate proceedings diligently conducted in
good faith; and upon the request of Tenant and at Tenant's sole cost and
expense, Landlord will join and cooperate with Tenant in such proceedings. Any
other provision of this Lease (other than Section 6.3) to the contrary
notwithstanding, Tenant's right to contest Legal Requirements must be exercised
in such a manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale or exposure of Landlord to civil or criminal
penalties arising from Tenant's non-compliance with such Legal Requirements.
Tenant shall defend and indemnify Landlord against, and hold Landlord harmless
from, any and all liability, loss, cost, damage, injury or expense (including,
without limitation, attorneys' fees and costs) which Landlord may sustain or
suffer by reason of Tenant's failure or delay in complying with, or Tenant's
contest of, any such Legal Requirements (or Landlord's contest, if requested in
writing by Tenant), and Tenant's duty to indemnify Landlord under this Section
8.2 shall survive the expiration or earlier termination of this Lease.
8.3 INDEMNIFICATION. Tenant will defend, protect, indemnify and save
harmless Landlord from and against all liabilities, obligations, claims,
damages, causes of action, costs and expenses, imposed upon or incurred by
Landlord by reason of the occurrence or existence of any of the following during
the Term, except to the extent caused by the willful misconduct, gross
negligence, or willful breach of contract of Landlord or its agents
19.
25
or contractors: (1) any claims of Seller arising from the Purchase Agreement
described in Section 4.1 (provided, that, without limitation of Tenant's
indemnity obligations hereunder, Tenant's indemnity obligation under this Clause
1 shall apply notwithstanding a willful breach of the Purchase Agreement by
Landlord if such breach is caused, directly or indirectly, by Tenant or any
actions or failure to act by Tenant or as a result of Landlord's following
Tenant's instructions with respect to the Purchase Agreement or in the event
that Landlord is unable to obtain the UBS Loan); (2) any accident, injury to or
death of persons or loss of or damage to property occurring on or about the
Premises or Improvements; (3) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or the
Improvements; (4) the negligence or willful misconduct on the part of Tenant or
any of its agents, invitees, employees or contractors or any other persons
entering onto the Premises or the Improvements at the request, behest or with
the permission of Tenant; (5) the construction, use or occupancy of the
Improvements which Tenant may elect to construct; (6) the existence or
application of any Legal Requirements with respect to the Premises or
Improvements; or (7) the use of the Premises or Improvements. Tenant's duty to
indemnify Landlord under this Section 8.3 shall survive the expiration or
earlier termination of this Lease with respect to events occurring prior to the
commencement of the Term, during the Term or after the Term while Landlord has
record title to and Tenant is occupying the Premises. Notwithstanding anything
to the contrary herein, Tenant's duty to indemnify Landlord pursuant to Clause 1
above shall apply only with respect to events or occurrences occurring prior to
commencement of the Term.
ARTICLE 9
UTILITIES AND SERVICES
9.1 SERVICES TO THE PREMISES. At Tenant's sole cost and expense,
Tenant shall make its own arrangements for the provision of all utilities and
services to be provided to or consumed on the Premises, including, without
limitation, air conditioning, ventilation, heating, electric power, telephone,
water (both domestic and fire protection), sanitary sewer, storm drain, natural
gas and janitorial services, including for the installation, maintenance and
repair of service lines and meters to measure Tenant's consumption of such
utilities.
ARTICLE 10
MAINTENANCE AND REPAIRS; SURRENDER OF THE PREMISES
10.1 TENANT OBLIGATIONS. Except as otherwise provided in this Lease,
Tenant shall maintain the Premises in good repair, normal wear and tear,
casualty and Takings (as defined in Section 15.1) excepted. All maintenance that
Tenant is obligated to perform under this Section 10.1 shall be at the sole
expense of
20.
26
Tenant, except to the extent that repairs are made necessary because of the
gross negligence or willful misconduct of Landlord, its agents, employees or
contractors.
10.2 SURRENDER OF THE PREMISES. Except as provided in Section 19, upon
the expiration or earlier termination of the Term, Tenant shall surrender the
Premises to Landlord in its then "AS-IS" condition, including, without
limitation, any condition resulting from: (i) wear and tear; (ii) obsolescence
and damage by fire or other casualty, act of God or the elements; (iii) damage
that is beyond Tenant's reasonable control or is caused by Landlord, its agents,
employees or contractors; (iv) any Improvements which Tenant may elect to
construct (in compliance with the terms of this Lease) and leave on the Premises
(subject to the rights of any other Entity in such Improvements); (v) Takings;
and (vi) Tenant's alterations, additions, removals, repairs, replacements, or
decorations in, to or of the Premises. Title to all Improvements, furniture,
furnishings, fixtures, trade fixtures and personal property of Tenant located in
or upon the Premises, whether or not affixed to the realty, shall be and remain
in Tenant, and upon the expiration or earlier termination of this Lease, or
within thirty (30) days thereafter (or as soon thereafter as reasonably
practical), the same may be removed by Tenant, or, at Tenant's election,
surrendered with the Premises, in which event title to such surrendered property
shall, if Landlord so elects in Landlord's sole discretion, be deemed
transferred to Landlord (subject to the rights of any other Entity in such
Improvements).
ARTICLE 11
CONSTRUCTION OF IMPROVEMENTS AND COMMON AREA
11.1 TENANT'S RIGHTS TO CONSTRUCT IMPROVEMENTS. Tenant shall be under
no obligation whatsoever to construct any Improvements. Tenant shall have the
right, in Tenant's sole discretion, to construct Improvements which Tenant
desires, subject only to the specific approvals required from Landlord pursuant
to the terms of this Section 11.1. Notwithstanding anything to the contrary,
without obtaining Landlord's approval, Tenant may perform work on the Premises
which does not consist of the actual construction of above-ground buildings (for
example, Tenant may perform grading, trenching and similar work, and may install
and construct utilities, parking lots, driveways, roadways, foundations, and the
like).
(a) APPROVAL PLANS. Prior to commencing any actual construction
of Improvements (except as otherwise permitted or already approved pursuant to
this Section 11.1), Tenant's proposed site plans (showing the locations and
orientations of any proposed buildings) and exterior shell plans (showing
exterior building sections) (collectively, "Approval Plans") of any Improvements
which Tenant may elect to construct shall be submitted to and approved by
Landlord in accordance with the following (in each case to the extent
applicable). Tenant shall deliver a letter to
21.
27
Landlord along with any submitted Approval Plans in which Tenant states that the
submitted Approval Plans do not violate any Legal Requirements. Landlord may
only withhold Landlord's approval to any such Approval Plans to the extent that
the Approval Plans violate any material Legal Requirements, and Landlord may not
withhold its consent on any other ground. At the option of Tenant, the foregoing
documentation may be submitted to Landlord for approval in stages as Tenant
completes it. Landlord shall have a period of ten (10) days from the date of
receipt of each component of the documentation within which to approve or reject
it. The Approval Plans, as approved from time to time by Landlord pursuant to
this Section 11.1 shall constitute the "Authorized Plans." Tenant shall
immediately reimburse Landlord on demand for all reasonable out-of-pocket costs
and expenses incurred by Landlord in connection with the review and approval of
any Approval Plans, provided that Landlord first gives Tenant a detailed written
notice that it has reasonable grounds to believe that the Approval Plans violate
material Legal Requirements, and Tenant fails either to revise such Approval
Plans to comply with such material Legal Requirements or to provide reasonable
evidence that the Approval Plans do not violate material Legal Requirements.
Landlord's approval of any Authorized Plans does not constitute any
representation or warranty by Landlord with respect to such Authorized Plans,
and Landlord hereby specifically disclaims any such representations and
warranties.
(b) FURTHER APPROVALS; PROPOSED CHANGES. Subsequent to Landlord's
approval of any Authorized Plans pursuant to Section 11.1(a), Tenant shall only
be obligated to submit to Landlord for approval documentation showing any
proposed material change to the Authorized Plans (but no approval shall be
required with respect to construction or design matters that are not contained
or addressed by the Authorized Plans), and only to the extent such change is
materially inconsistent with the Authorized Plans. Landlord shall have a period
of ten (10) days from receipt of each material change within which to approve or
reject it. Landlord may only withhold Landlord's approval to any such change to
the Authorized Plans to the extent that such change violates any material Legal
Requirements, and Landlord may not withhold its consent on any other ground.
Tenant shall immediately reimburse Landlord on demand for all reasonable
out-of-pocket costs and expenses incurred by Landlord in connection with the
review and approval of any such changes, provided that Landlord first gives
Tenant a detailed written notice that it has reasonable grounds to believe that
the Approval Plans violate material Legal Requirements, and Tenant fails either
to revise such Approval Plans to comply with such material Legal Requirements or
to provide reasonable evidence that the Approval Plans do not violate material
Legal Requirements. Tenant shall have the right, without further approval of
Landlord, to construct Improvements not inconsistent with the Authorized Plans
together with such changes thereto as may be requested or required to comply
with Legal Requirements.
22.
28
(c) FAILURE TO DISAPPROVE. The failure by Landlord to disapprove
any portion of the proposed Approval Plans submitted pursuant to this Section
11.1, or send Notice that it has grounds to believe the proposed Approval Plans
violate a material Legal Requirement within the specified approval period shall
be deemed to constitute approval thereof as submitted, and such Approval Plans
shall thereupon become Authorized Plans. Any disapproval by Landlord of any
portion of the proposed Approval Plans shall be in writing and shall specify
with particularity the basis for the disapproval.
(d) OTHER IMPROVEMENTS AND ALTERATIONS. At any time and from time
to time, and without the necessity for obtaining Landlord's approval or giving
Notice thereof to Landlord, Tenant shall have the right, at its expense, to make
any Improvements, alterations, additions, repairs, replacements or decorations
in, to or of the Premises which do not materially change the exterior design
scope of the Improvements as previously approved by Landlord pursuant to any
Authorized Plans. In constructing any Improvements, Tenant shall do so in a
manner which does not violate any applicable and material Legal Requirements.
11.2 REQUIRED PERMITS, EASEMENTS, ETC. From time to time, upon request
of Tenant, Landlord (as holder of record of title to the Land) shall execute
such reasonable documents, petitions, applications and authorizations, easements
and rights of way (which have been prepared at Tenant's expense) and shall
appear at and participate in such public hearings, staff meetings and similar
gatherings, in each case as may in the reasonable and good-faith opinion of
Tenant be necessary or appropriate for the purpose of obtaining any Required
Permits or private easements or rights of way or utility services for the
Improvements or to remove any title encumbrances on the Land which may interfere
with Tenant's construction of the Improvements. Tenant shall immediately
reimburse Landlord on demand (or pay directly) for all reasonable out-of-pocket
costs and expenses incurred by Landlord in complying with Landlord's obligations
under this Section 11.2.
11.3 DEMOLITION AND RECONSTRUCTION. At any time and from time to time,
Tenant shall have the right to demolish or alter all or any portion of the then
existing Improvements and construct additional Improvements in their place. The
additional Improvements, if any, to be constructed shall be submitted to and
approved by Landlord only to the extent required by Section 11.1, as applicable.
11.4 TITLE TO AND NATURE OF IMPROVEMENTS. Any and all Improvements of
whatever nature at any time constructed, placed or maintained upon any part of
the Land shall be and remain the property of Tenant, subject to Tenant's right
to assign or sublease. The severance of fee title to the Land and Improvements
shall not change the character of the Improvements as real property.
23.
29
ARTICLE 12
LIENS
Except for claims that Tenant is contesting in good faith in such
manner as to avoid any exposure of the Premises or any part thereof to
foreclosure or execution sale, Tenant shall promptly pay and discharge all
claims for work or labor done, supplies furnished or services rendered to the
Premises, and shall keep the Premises free and clear of all mechanics' and
materialmen's liens in connection therewith.
ARTICLE 13
ASSIGNMENT BY LANDLORD
13.1 FURTHER MORTGAGES OR ENCUMBRANCES BY LANDLORD; AUTHORIZED LOANS.
(a) PROHIBITION. Except for the Tenant Deed of Trust and as
specifically permitted in Section 11.2, 13.1(b) or 20, Landlord shall not cause
or create any mortgages, deeds of trust, encumbrances or other exceptions to
title (collectively, "New Encumbrances") to exist with respect to the Premises
at any time, and any such encumbrance not authorized in writing by Tenant shall
be null and void. The term "New Encumbrances" shall also include any bonds or
assessments affecting the Premises to which Landlord consents in writing without
the prior written approval of Tenant (which may be withheld in Tenant's sole and
absolute discretion). Without the prior written consent of Tenant (which may be
withheld in Tenant's sole and absolute discretion), Landlord shall not make or
join in an application or other document which requests or authorizes any bonds
or assessments to affect the Premises. Landlord recognizes that any New
Encumbrance may irreparably harm Tenant in connection with one or more of the
following: (1) construction which Tenant may desire to perform; (2) the use of
the Premises; (3) Tenant's rights pursuant to the Purchase Option in Section 19;
(4) the amount of assessments which Tenant is required to pay; or (5) other
matters.
(b) AUTHORIZED LOAN. Tenant has approved the terms of the loan
("UBS Loan") to be made by UBS to SGA which shall be evidenced by that certain
Tranche B Promissory Note dated as of the Lease Commencement Date by SGA in
favor of UBS ("UBS Note"), and further evidenced and/or secured by (a) that
certain General Terms and Conditions of Credit Arrangement between SGA and UBS,
(b) that certain Additional Terms and Conditions between SGA and UBS, (c) that
certain Pledge Agreement, as amended by Rider No. 1 thereto, made by Tenant in
favor of UBS, and (d) certain documents (including, without limitation a
promissory note and related documents) evidencing a loan ("SGA Loan") from SGA
to Landlord in the principal amount of the UBS Note, all dated as of the Lease
Commencement Date; provided, however, that Tenant, Landlord and SGA reserve the
right to approve, in their sole discretion, the final form of all documents
related to the UBS Loan. In addition, upon
24.
30
the maturity or prepayment of the UBS Loan (whether by its terms, by
acceleration or otherwise), Landlord may (but, subject to the terms of Section
13.1(c), shall not be obligated to) enter into a new loan (such authorized loan
shall be the "New Loan"), provided Landlord first obtains Tenant's written
consent (which consent shall not be unreasonably withheld except with respect to
the matters contained in clauses (i) through (v) below so long as: (i) the UBS
Loan is paid off with the proceeds of such New Loan and all documents securing
or reflecting the UBS Loan are assigned to the lender who makes the New Loan or
are released and satisfied; (ii) the principal amount of the New Loan does not
exceed the principal amount of the UBS Loan existing at the time the UBS Loan is
repaid; (iii) the interest rate and payment provisions under the New Loan would
not result in higher monthly payments than the method under the UBS Loan, and
all such monthly payments shall be interest only; (iv) there are no prepayment
prohibitions, penalties or other restrictions which would limit rights to retire
the New Loan or require additional payment to do so; and (v) the New Loan
documents do not contain terms and conditions which differ from the UBS Loan
documents in any material respect, including provisions relating to the
Collateral as defined in Section 21.18. The UBS Loan, the New Loan authorized
pursuant to the preceding sentence and the Replacement Loan described in Section
13.1(c) below shall be the "Authorized Loan"; provided that only one Authorized
Loan may exist at any one point in time. Landlord may not modify the terms of an
Authorized Loan without the prior written consent of Tenant, which Tenant shall
not unreasonably withhold (but may be withheld in Tenant's sole and absolute
discretion based upon any of the matters identified in subitems (i) through (v)
above in this Section 13.1(b)).
(c) REPLACEMENT LOAN. Subject to Landlord's prior written consent
(which consent shall not be unreasonably withheld or delayed), at the request of
Tenant, Landlord shall execute and/or shall cause SGA to execute loan documents
evidencing and/or securing a new loan to Landlord or SGA, the proceeds of which
would be used to retire the UBS Loan (such loan requested by Tenant shall be a
"Replacement Loan"). Landlord shall only be entitled to refuse to consent to
such new loan if (1) the maturity date of the Replacement Loan is a date before
the expiration date of the Extension Term; (2) the principal amount of the
Replacement Loan exceeds the principal amount of the UBS Loan plus any accrued
interest and fees payable at the time the UBS Loan is prepaid; (3) the interest
rate structure under the Replacement Loan is materially higher than market
conditions would justify at the time; (4) there are prepayment prohibitions,
penalties or other restrictions which would limit rights to retire the
Replacement Loan or require additional payment to do so; (5) the Replacement
Loan creates greater liability for Landlord or SGA than otherwise would exist
for Landlord and SGA, or would result in the violation of any law, rule or
regulation applicable to Landlord or SGA, or (6) the Replacement Loan documents
contain terms and conditions which differ from the UBS Loan documents in any
material respect (including provisions relating to the Collateral as defined in
25.
31
Section 21.18); provided, however, that Landlord shall not be entitled to object
to a Replacement Loan on the ground that Landlord, rather than SGA, shall be the
borrower under such Replacement Loan. Tenant shall pay all reasonable costs,
including without limitation reasonable attorneys' fees, incurred by Landlord in
connection with obtaining such a Replacement Loan. If Tenant requests and
provides the funds, Landlord shall make all arrangements necessary for, and
shall pay down any Authorized Loan in the amount requested by Tenant, and shall
arrange for all documentation reasonably requested by Tenant to reflect the
reduction or elimination of such Authorized Loan.
(d) On the Lease Commencement Date, Landlord shall execute,
acknowledge, and cause to be recorded in the Official Records, a deed of trust
in form acceptable to Tenant ("Tenant Deed of Trust"), which Tenant Deed of
Trust shall secure Landlord's obligations under this Lease (i) to return the
Security Deposit pursuant to the terms of this Lease, (ii) to convey the
Premises to Tenant as required pursuant to Article 19 hereof, and (iii) to
comply with Sections 20.4, 20.5 and 20.6. The Tenant Deed of Trust shall be a
first priority lien against the Premises.
13.2 LANDLORD'S RIGHT TO SELL. Subject to Tenant's Purchase Option and
the mandatory purchase set forth in Article 19 and the terms of Section 13.1 and
Article 20, nothing contained in this Lease shall be deemed in any way to limit,
restrict or otherwise affect the right of Landlord at any time and from time to
time to sell or transfer all of its right, title and estate in the Premises to a
Landlord Affiliate or, if an Event of Major Default has occurred and is
continuing at the time of such sale or transfer, to any Entity, provided that
such buyer or transferee shall concurrently assume without incurring personal
liability except as expressly provided in this Lease, in writing, in a manner
consistent with this Lease and in compliance with all requirements of the UBS
Loan documents, all of Landlord's and/or SGA's obligations under the UBS Loan or
any other Authorized Loan and the Landlord's obligations under this Lease.
Notwithstanding anything to the contrary in this Lease, without the prior
written consent of Tenant (which may be withheld in Tenant's sole discretion),
in no event shall Landlord sell or transfer all or any portion of Landlord's
right, title or estate in the Premises to any Entity which does not then comply
with the requirements of Sections 20.4 and 20.5 if an Event of Major Default
does not then exist at the time of such sale or transfer. Any sale or transfer
by Landlord whatsoever shall by its express terms recognize and confirm the
right of possession of Tenant to the Premises and Tenant's other rights arising
out of this Lease shall not be affected or disturbed in any way by any such
sale, transfer, assignment or conveyance.
13.3 TRANSFER OF FUNDS AND PROPERTY. At each time Landlord sells,
assigns, transfers or conveys the entire right, title and estate of Landlord in
the Premises and in this Lease, Landlord shall turn over to the transferee the
Security Deposit and any other funds or other property then held by Landlord
under this
26.
32
Lease and thereupon all the liabilities and obligations on the part of the
Landlord under this Lease arising after the effective date of such sale,
assignment, transfer or conveyance shall terminate as to the transferor and be
binding upon the transferee.
ARTICLE 14
ASSIGNMENT AND SUBLEASING
14.1 RIGHT TO ASSIGN.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to assign all or any portion of its right,
title and estate in the Premises and in this Lease without approval by Landlord.
Any such assignee, immediate or remote, shall have the same right of assignment.
Any such assignment shall be evidenced by a written instrument, properly
executed and acknowledged by all parties thereto and, at Tenant's election, duly
recorded in the Official Records, wherein and whereby the assignee assumes all
of the obligations of Tenant under this Lease. Notwithstanding any such
assignment and assumption or any sublease permitted under Section 14.2 hereof,
Tenant shall remain primarily liable for all obligations and liabilities on the
part of Tenant theretofore or thereafter arising under this Lease.
(b) NOTICE. Tenant shall, promptly after execution of each
assignment, notify Landlord of the name and mailing address of the assignee and
shall, on demand, permit Landlord to examine and copy the assignment agreement.
14.2 RIGHT TO SUBLET.
(a) TENANT'S RIGHT. Tenant shall have the right, at any time and
from time to time during the Term, to sublet all or any portion of the Premises
and to extend, modify or renew any sublease without the approval of Landlord.
(b) NOTICE. Tenant shall, promptly after execution of each
sublease, notify Landlord of the name and mailing address of the subtenant and
shall, on demand, permit Landlord to examine and copy the sublease.
(c) NON-DISTURBANCE AGREEMENT. Upon Tenant's request, Landlord
shall enter into a "landlord agreement" with any subtenant of Tenant. Such
agreement shall provide that Landlord shall recognize the sublease and not
disturb the subtenant's possession thereunder so long as such subtenant shall
not be in default under its sublease, and an Event of Major Default is not then
in existence and continuing under this Lease. Tenant shall immediately reimburse
Landlord on demand for all reasonable out-of- pocket costs and expenses incurred
by Landlord in complying with Landlord's obligations under this Section 14.2(c).
27.
33
14.3 TENANT'S RIGHT TO MORTGAGE.
(a) RIGHT OF TENANT. Tenant shall have the right from time to
time and at any time, without obtaining the approval of Landlord, to mortgage,
pledge or otherwise encumber all or any portion of the right, title and estate
of Tenant in the Premises or in this Lease.
(b) NOTICE. Tenant shall, promptly after execution of any
Mortgage, notify Landlord of the name and mailing address of the Mortgagee
thereunder and shall, on demand, permit Landlord to examine and copy the
Mortgage.
ARTICLE 15
EMINENT DOMAIN
15.1 TOTAL OR SUBSTANTIAL TAKING. If title or access is taken for any
public or quasi-public use, or under any statute or by right of condemnation or
eminent domain, or by sale in lieu thereof (a "Taking") with respect to all of
the Premises, or if title to so much of the Premises or access thereto is Taken,
or if the Premises or access thereto is damaged, blocked or impaired by the
Taking, so that, in Tenant's sole discretion, the Premises or access thereto,
even after a reasonable amount of reconstruction thereof, will no longer be
suitable for Tenant's (and/or Tenant's subtenants') continued occupancy for the
conduct of Tenant's (and/or Tenant's subtenants') business in a manner
consistent with the conduct of such business prior to such Taking, then in any
such event, this Lease shall terminate on the date of such Taking.
15.2 PARTIAL TAKING. If any part of the Premises, or access thereto,
shall be Taken, and the Premises or the remaining part thereof and access
thereto will be, in Tenant's sole discretion, suitable for Tenant's (and/or
Tenant's subtenants') continued occupancy for the conduct of Tenant's (and/or
Tenant's subtenants') business in a manner consistent with the conduct of such
business prior to such Taking, all of the terms, covenants and conditions of
this Lease shall continue, except that Base Rent shall be adjusted to reflect
the decreased Funded Amount remaining after application thereto of the award
made to Landlord for such Taking (subject to Section 15.3 below).
15.3 TEMPORARY TAKING. If the whole or any part of the Premises is
Taken for temporary use or occupancy, this Lease shall not terminate by reason
thereof and Tenant shall continue to pay, in the manner and at the times herein
specified, the full amount of the Base Rent payable by Tenant hereunder, and,
except only to the extent that Tenant may be prevented from so doing by reason
of such Taking, Tenant shall continue to perform and observe all of the other
terms, covenants and conditions hereof on the part of Tenant to be performed and
observed, as though the Taking had not occurred. In the event of any such
temporary Taking, Tenant shall be entitled to receive the entire amount of the
award made for the
28.
34
Taking, whether paid by way of damages, rent or otherwise. If the temporary
Taking is for a term in excess of thirty (30) days, then the Taking shall be
treated as a permanent Taking and be governed by Section 15.1 or 15.2, as
applicable.
15.4 DAMAGES. The compensation awarded or paid upon any Taking (other
than a temporary Taking, which shall be governed by Section 15.3), whether
awarded to Landlord, Tenant, or both of them, shall be distributed as set forth
below (in each case the compensation or value shall be determined as of the date
of the Taking):
(a) to Landlord, any amounts payable on account of the value of
the Land, but not to exceed an amount equal to the Funded Amount (or, if less
than the entire Premises is Taken, not to exceed a pro rata portion of the
Funded Amount equal to the ratio that the square footage of the portion of the
Premises Taken bears to the square footage of the entire Premises prior to the
Taking) plus all accrued Rent hereunder; and
(b) to Tenant, any other award, or portion thereof, including any
portion of the award above the Funded Amount (or the pro rata portion thereof)
pursuant to Section 15.4(a)).
Landlord shall promptly pay over to UBS or the holder of an Authorized
Loan, as the case may be, any award (not exceeding, however, the Senior Funded
Amount) paid to Landlord hereunder, and Tenant shall be entitled to establish
reasonable security arrangements to ensure the prompt payment of such amounts to
such holder. The Funded Amount shall be reduced on a dollar-for-dollar basis by
the amount of any award required to be paid by Landlord to such holder of an
Authorized Loan pursuant to the preceding sentence.
15.5 NOTICE AND EXECUTION. Immediately upon service of process upon
Landlord or Tenant in connection with any Taking relating to the Premises or any
portion thereof or access thereto, each party shall give the other Notice
thereof. Each party agrees to execute and deliver to the other all instruments
that may be required to effectuate the provisions of this Article 15. Tenant
reserves the right to appear in and to contest any proceedings in connection
with any such Taking. Tenant shall immediately reimburse Landlord on demand for
all reasonable out-of-pocket costs and expenses incurred by Landlord in
complying with Landlord's obligations under this Section 15.5.
ARTICLE 16
DAMAGE OR DESTRUCTION
16.1 INSURED CASUALTY. If any Improvements are damaged or destroyed by
fire or other casualty, this Lease shall continue in full force and effect
without any abatement or reduction in Base Rent, and Tenant, at Tenant's
election, may either (a) restore the
29.
35
Improvements to their condition prior to the damage or destruction, or such
other condition as Tenant shall elect in its sole and absolute discretion,
subject to Landlord's approval rights set forth in Section 11.1, or (b) not
restore the Improvements, but perform, or cause to be performed, at Tenant's
sole cost and expense, any work or service required by any Legal Requirement for
the protection of persons or property from any risk, or for the abatement of any
nuisance, created by or arising from the casualty or the damage or destruction
caused thereby.
16.2 INSURANCE PROCEEDS. In the event of any fire or other casualty,
the proceeds of any insurance policies maintained by Tenant shall be distributed
to Tenant, and Landlord shall have no claim or right with respect thereto.
ARTICLE 17
DEFAULT
17.1 DEFAULT. Each of the following events shall constitute a default
("Default") by Tenant:
(a) DEFAULT OTHER THAN EVENT OF MAJOR DEFAULT. Tenant's failure
to perform or comply with any of the terms, covenants or conditions contained in
this Lease other than those referred to in Section 17.2, where such failure
shall continue for a period of thirty (30) days after Notice thereof from
Landlord to Tenant, or in the case of a failure which cannot with due diligence
be cured within the period of thirty (30) days, Tenant's failure to proceed
promptly and with due diligence to cure the failure and thereafter to prosecute
the curing of the failure with all due diligence, it being intended that in
connection with a failure not susceptible of being cured with due diligence
within thirty (30) days, the time of Tenant within which to cure the failure
shall be extended for such period as may be reasonably necessary to complete the
cure with all due diligence; and
(b) INSOLVENCY. Subject to Section 17.3, the occurrence of: (i)
an assignment by Tenant for the benefit of creditors generally; or (ii) the
filing of a voluntary or involuntary petition by or against Tenant under any
present or future applicable federal, state or other statute or law having for
its purpose the adjudication of Tenant as a bankrupt; (iii) the appointment of a
receiver, liquidator or trustee for all or a substantial portion of the Premises
by reason of the insolvency or alleged insolvency of Tenant; or (iv) the taking
of possession by any department of city, county, state or federal government, or
any officer thereof duly authorized, of all or a substantial portion of the
Premises by reason of the insolvency or alleged insolvency of Tenant; and
Tenant's failure to timely give any Notice it is permitted to give pursuant to
Section 17.3 (or, in the event Tenant gives timely Notice and pursues a contest
under Section 17.3, Tenant's failure to finally prevail in the contest).
30.
36
17.2 EVENT OF MAJOR DEFAULT. Each of the following events shall
constitute an event of major default ("Event of Major Default") by Tenant:
(a) FAILURE TO PAY BASE RENT. Tenant's failure to pay any Base
Rent within five (5) days after Tenant's receipt of Notice thereof from Landlord
that the Base Rent is past due; or
(b) FAILURE TO PAY ADDITIONAL RENT. Tenant's failure to pay any
Additional Rent which is due to Landlord within ten (10) days after Tenant's
receipt of Notice thereof from Landlord that such Additional Rent is past due;
(c) FAILURE TO COMPLY WITH PURCHASE OBLIGATION UNDER SECTION
19.2. Tenant's failure to comply with Tenant's obligation to purchase the
Premises pursuant to Section 19.2 within twenty (20) days after Tenant's receipt
of Notice thereof from Landlord that Tenant has so failed, except in the case of
a purchase obligation arising on account of expiration of the Term of this
Lease, in which case no such Notice shall be required;
(d) FAILURE TO CARRY LIABILITY INSURANCE. Tenant's failure to
carry the liability insurance required by Section 7.1, if such failure continues
ten (10) days after Tenant's receipt of Notice thereof from Landlord that Tenant
is not carrying such required liability insurance.
17.3 CONTEST BY TENANT. If upon the filing of any involuntary petition
of the type described in Section 17.1(b) or upon the appointment of a receiver,
other than a receiver appointed in any voluntary proceeding referred to in
Section 17.1(b), or the taking of possession of all or a substantial portion of
the Premises by any department of the city, county, state or federal government,
or any officer thereof duly authorized, by reason of the alleged insolvency of
Tenant without the consent or over the objection of Tenant, should Tenant desire
to contest the same in good faith, Tenant shall, within ninety (90) days after
the filing of the petition or after the appointment or taking of possession,
give Notice to Landlord that Tenant proposes to make the contest, and the same
shall not constitute a Default so long as Tenant shall prosecute the proceedings
with due diligence and no part of the Premises shall be exposed to sale by
reason of the continuance of the contest.
17.4 REMEDIES. Landlord shall have the remedies specified below, the
parties hereby acknowledging that the remedies described in Section 17.4(b) may
be exercised by Landlord only upon the occurrence of an Event of Major Default.
Tenant shall at all times have the right to exercise and carry out the terms of
the Purchase Option in Section 19.1, notwithstanding the occurrence or existence
of any Default or Event of Major Default under this Lease, and Landlord shall
have the obligation to comply with Landlord's obligations under Section 19.1
notwithstanding any Default or Event of Major Default.
31.
37
(a) CONTINUE LEASE. In connection with a Default or an Event of
Major Default, Landlord shall have the right to enforce, by suit or otherwise,
all other covenants and conditions hereof to be performed or complied with by
Tenant and to exercise all other remedies permitted by Section 1951.4 of the
California Civil Code, or any amendments thereof or any successor laws which
replace such Section 1951.4. Landlord has the remedy described in California
Civil Code Section 1951.4 (Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover Base Rent as it becomes due, if
Tenant has right to sublet or assign, subject only to reasonable limitation).
Upon application by Landlord, a receiver may be appointed to take possession of
the Premises and exercise all rights granted to Landlord as set forth in this
Section 17.4(a); and
(b) TERMINATE LEASE. In connection with an Event of Major Default
(but not a Default), Landlord shall have the right to terminate this Lease, by
giving Tenant Notice thereof, at any time after the occurrence of such Event of
Major Default and whether or not Landlord has also exercised any right under
Section 17.4(a). In such event, Tenant shall, within twenty (20) days after
receipt of Notice from Landlord, purchase the Premises pursuant to Section 19.2.
17.5 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term, covenant or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof and no acceptance
of full or partial Rent during the continuance of any breach shall constitute a
waiver of any such breach or of the term, covenant, or condition. No term,
covenant or condition of this Lease to be performed or complied with by Tenant
or Landlord, and no breach thereof, shall be waived, terminated, altered or
modified except by a written instrument executed by Landlord and Tenant. No
waiver of any breach shall affect or alter this Lease, but each and every term,
covenant, and condition of this Lease shall continue in full force and effect
with respect to any other then existing subsequent breach thereof.
17.6 EFFECT OF ASSIGNMENT. Notwithstanding an Entity's prior
assignment or transfer of its interest as Tenant under this Lease, so long as
Landlord has been given Notice of such assignment pursuant to Sections 14.1(b)
and 21.3, Landlord shall give such Entity copies of all Notices required by this
Article 17 in connection with any Default, and such Entity shall have the period
granted hereunder to Tenant to cure such Default, unless such Entity shall have
been released from all obligations arising under this Lease. Landlord may not
assert any rights against such Entity in the absence of such Notice and
opportunity to cure, so long as Landlord has been given Notice of such
assignment pursuant to Sections 14.1(b) and 21.3.
17.7 LANDLORD CURE RIGHT. If Tenant fails to perform any covenant or
agreement to be performed by Tenant under this
32.
38
Lease, and if the failure or default continues for thirty (30) days after Notice
to Tenant and to any Mortgagee who has requested in writing notice thereof from
Landlord (except for emergencies and except for payment of any lien or
encumbrance threatening the imminent sale of the Premises or any portion
thereof, in which case payment or cure may be made as soon as necessary to
minimize the damage to person or property caused by such emergency or to prevent
any such sale), Landlord may, but shall have no obligation to, pay the same and
cure such default on behalf of and at the expense of Tenant and do all
reasonably necessary work and make all reasonably necessary payments in
connection therewith including, but not limited to, the payment of reasonable
attorneys' fees and disbursements incurred by Landlord. Notwithstanding the
foregoing, Landlord shall have no right to cure any such failure to perform by
Tenant so long as Tenant both: (1) is diligently and in good faith attempting to
cure such matter; and (2) has the financial ability to so comply.
Notwithstanding anything to the contrary in this Lease, in no event shall
Landlord have a right to cure any matters relating to the Improvements unless
such matter constitutes a crime by Landlord and subjects Landlord to criminal
penalties (except as specifically permitted in Section 8.1(b)). Upon demand,
Tenant shall reimburse Landlord for the reasonable amount so paid, together with
interest at the Lease Rate from the date incurred until the date repaid. Tenant
shall defend, indemnify, and hold Landlord harmless from and against any and all
losses, costs, expenses, liabilities, claims, causes of action and damages of
all kinds that may result to Landlord, including reasonable attorneys' fees and
disbursements incurred by Landlord, arising because of any failure by Tenant to
perform any of its obligations under this Lease. Tenant's duty to indemnify
Landlord under this Section 17.7 shall survive the expiration or earlier
termination of this Lease.
17.8 LANDLORD'S DEFAULT.
(a) GENERAL. If Landlord fails to perform any covenant or
agreement to be performed by Landlord under Article 11, Section 13.1, Section
15.4, Article 20, or Section 21.10 of this Lease (including, but not limited to,
Landlord's failure to keep the Premises free of any and all liens created by or
through Landlord except as approved by Tenant in writing), and if the failure or
default continues for thirty (30) days after Notice to Landlord and to any Fee
Mortgagee who has requested in writing notice thereof from Tenant (except for
(i) emergencies, or (ii) payment of any lien or encumbrance threatening the
imminent sale of the Premises or any portion thereof, in which case payment or
cure may be made as soon as necessary to minimize the damage to person or
property caused by such emergency or to prevent any such sale), Tenant may, but
shall have no obligation to, pay the same and cure such default on behalf of
and, so long as such failure to perform arises due to Landlord's gross
negligence, willful misconduct, or willful breach of this Lease, at the expense
of Landlord and do all reasonably necessary work and make all reasonably
necessary payments in connection therewith including, but not limited to, the
payment of reasonable attorneys' fees and
33.
39
disbursements incurred by Tenant. Notwithstanding the foregoing, Tenant shall
have no right to cure any such failure to perform by Landlord so long as
Landlord both: (1) is diligently and in good faith attempting to cure such
matter; and (2) has the financial ability to so comply. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, upon demand, Landlord shall
reimburse Tenant for the reasonable amount so paid, together with interest at
the Lease Rate from the date incurred until the date repaid. To the extent that
Landlord's failure to perform arises due to its gross negligence, willful
misconduct or willful breach of this Lease, Landlord shall defend, protect,
indemnify, and hold Tenant harmless from and against any and all losses, costs,
expenses, liabilities, claims, causes of action and damages of all kinds that
may result to Tenant, including reasonable attorneys' fees and disbursements
incurred by Tenant, arising because of any failure by Landlord to perform any of
its obligations under Article 11, Section 13.1, Section 15.4, Article 20 or
Section 21.10 of this Lease. Landlord's duty to indemnify Tenant under this
Section 17.8 shall survive the expiration or earlier termination of this Lease.
(b) DEFAULT UNDER CERTAIN PROVISIONS. Notwithstanding anything to
the contrary in Section (a) above, in the event of a default by Landlord under
Section 20.6, Tenant shall have the right to cure such default on behalf of and
at Landlord's expense, without prior notice to Landlord. In addition, in the
event of any default by Landlord under Section 20.4, 20.5 or 20.6, Tenant shall
have the right to exercise its Purchase Option pursuant to Section 19.1 hereof,
and to offset against the Purchase Price the amount of all losses and reasonable
costs and expenses (including without limitation reasonable attorneys' fees)
incurred by Tenant arising from such default by Landlord, including without
limitation all losses arising by reason of Tenant's inability to treat the
transactions contemplated by this Lease as an operating lease for financial
accounting and securities regulatory purposes, and all costs and expenses
incurred in connection with negotiating and entering into a new lease upon
exercise of the Purchase Option.
ARTICLE 18
QUIET ENJOYMENT
18.1 QUIET ENJOYMENT. Landlord covenants to secure to Tenant the quiet
possession of the Premises for the full Term against all persons claiming the
same, subject to Landlord's rights and remedies under Section 17 upon a Default
or an Event of Major Default by Tenant. The existence of any Permitted
Exceptions shall not be deemed to constitute a breach of Landlord's obligations
hereunder. Tenant shall, immediately upon demand, reimburse Landlord for all
reasonable costs, expenses and damages incurred or paid by Landlord in the
performance of Landlord's obligations under this Article 18 (except for any
costs, expenses or damages arising from Landlord's willful breach of this
Lease).
34.
40
ARTICLE 19
TENANT'S OPTION TO PURCHASE
19.1 OPTION TO PURCHASE PREMISES.
(a) PURCHASE OPTION. Tenant shall have the option ("Purchase
Option") to purchase all or part of the Premises at any time during the Term;
provided that Tenant shall be entitled to purchase less than all of the Premises
only if the portion being purchased is released from any existing Fee Mortgage
and if the portion of the Premises not purchased shall constitute one or more
legal lots after closing of the purchase and shall be reasonably viable as a
separate property. The purchase price ("Purchase Price") for the portion of the
Premises which Tenant elects to purchase shall be (i) the then-existing Funded
Amount applicable to the portion of the Premises which Tenant elects to purchase
(determined in a pro rata basis on the basis of the area being purchased), as
the same may be reduced from time to time, plus (ii) the amount of any
prepayment premium and all other fees, costs, and expenses due to any holder of
an Authorized Loan in connection with such loan (to the extent not already paid
pursuant to Section 21.21 hereof), less (iii) the amount of the Security Deposit
(or, in the event of a purchase of a portion of the Premises, a pro rata portion
of the Security Deposit). Tenant shall be entitled to a credit against the
Purchase Price equal to the principal balance(s) of any Authorized Loan and/or
Fee Mortgage existing immediately prior to the closing under this Purchase
Option if such Authorized Loan and/or Fee Mortgage are not fully repaid and all
documents reflecting the same are not cancelled and removed from the public
records on or prior to the closing under this Purchase Option. If Tenant
purchases less than all of the then-existing Premises, then the credit pursuant
to the preceding sentence shall be calculated on a pro rata basis, based upon
the ratio of the area of the Premises being purchased compared to the area of
the then-existing Premises. In lieu of payment of the Purchase Price, Tenant
shall have the right (1) to assume the UBS Loan or any other Authorized Loan or
(2) to cause Landlord to assign the Authorized Loan to a third party acceptable
to the holder of such Authorized Loan (which third party shall expressly assume
such obligations in writing), provided that Landlord is released from all
obligations under the Authorized Loan. Landlord shall execute any and all
documents necessary to effect such assumption and assignment upon Tenant's
request, provided that Tenant shall reimburse Landlord for all reasonable costs
and expenses related thereto. Notwithstanding anything to the contrary herein,
the Purchase Price shall not include any interest, fees, late charges or any
other costs or expenses incurred or charged to Landlord or Tenant by reason of a
default by Landlord under Section 20.6 hereof.
(b) PURCHASE OPTION EXERCISE NOTICE. If Tenant desires to
exercise the Purchase Option, Tenant shall deliver to Landlord a written notice
("Purchase Option Exercise Notice") of Tenant's election; provided, however,
that in the event of an
35.
41
assignment by Landlord for the benefit of creditors generally, the filing of a
voluntary or involuntary bankruptcy petition by or against Landlord or the
appointment of a receiver, liquidator or trustee for all or a substantial
portion of the Premises by reason of Landlord's insolvency or alleged
insolvency, the Purchase Option shall be deemed exercised with respect to the
entire Premises as of the calendar day immediately preceding such assignment,
filing or appointment.
(c) TRANSFER. If Tenant exercises the Purchase Option, the
purchase and sale of the Premises being purchased shall be consummated as
follows. In the event of a purchase of a portion of the Premises, the term
"Premises" as used in this Section 19.1(c) shall be deemed to mean that portion
of the Premises then to be purchased pursuant to the Purchase Option.
(i) Landlord shall grant and convey the Premises to Tenant,
its authorized agent or assignee, pursuant to a duly executed and acknowledged
grant deed ("Grant Deed"), free and clear of all title defects, liens,
encumbrances, deeds of trust, mortgages, rights-of-way and restrictive covenants
or conditions, except for the Permitted Exceptions. Landlord shall assign and
Tenant shall assume all rights, duties and obligations under the Legal
Requirements affecting the Premises, effective as of the date of recordation of
the Grant Deed;
(ii) The Purchase Price shall be paid upon delivery of the
Grant Deed and any other documents reasonably requested by Tenant to evidence
the transfer of the Premises or to release all liens of Landlord, including,
without limitation, any and all reconveyances of mortgages or other recorded
documents as requested by Tenant ("Additional Documents"). In the event that
Tenant elects to assign the Purchase Option pursuant to Section 19.1(d) below,
and Tenant's assignee pays an amount less than the Purchase Price for the
Premises, Tenant shall pay to Landlord any excess of the Purchase Price over the
amount paid by such assignee. Landlord shall deliver the Grant Deed and the
Additional Documents to Tenant on the date for closing specified by Tenant in
the Purchase Option Exercise Notice (which date shall be no sooner than ten (10)
days after the date of the Purchase Option Exercise Notice and no later than the
last day of the Term, as the same may be extended). The closing shall take place
at the location and in the manner reasonably set forth by Tenant in the Purchase
Option Exercise Notice;
(iii) If Landlord shall fail to cause title to be in the
condition required in Section 19.1(c)(i) above within the time herein prescribed
for the delivery of the Grant Deed, then Tenant shall have the right, in
addition to all other rights provided by law, by a written notice to Landlord:
(1) to extend the time in which Landlord shall clear title and deliver the Grant
Deed and Additional Documents, during which extension this Lease shall remain in
full force and effect, except Tenant shall be released from its obligation to
pay Base Rent during the extension; (2) to
36.
42
accept delivery of the Grant Deed and Additional Documents subject to such title
defects, liens, encumbrances, deeds of trust, mortgages, rights-of-way and
restrictive covenants or conditions specified and set forth in the Grant Deed
and not cleared by Landlord (but without waiving any rights or remedies
available to Tenant on account of such title exceptions); (3) to rescind, by
notice to Landlord and without any penalty or liability therefor, any and all
obligations Tenant may have under and by virtue of the Purchase Option or the
exercise thereof, whereupon this Lease shall remain in full force and effect;
(4) if the title exception is curable by the payment of money, Tenant may make
such payment and such payment shall be a credit against the Purchase Price in
favor of Tenant.
(iv) Refusal of a title company to issue a standard form of
owner's title insurance policy insuring title to the Premises in the condition
specified in subparagraph (c)(i) shall be sufficient evidence of Landlord's
failure to convey clear title and shall entitle Tenant to exercise any of the
rights specified in subparagraph (c)(iii).
(v) Base Rent shall be prorated and paid and all unpaid
Additional Rent shall be paid as of the date title to the Premises is vested of
record in Tenant. Tenant shall pay the escrow fees; the recorder's fee for
recording the Grant Deed; the premium for the title insurance policy; all
documentary transfer taxes; Tenant's attorneys' fees; Landlord's reasonable
attorneys' fees; all other costs and expenses incurred by Tenant in consummating
the transfer of the Premises; and all reasonable expenses (except as specified
in the next sentence) incurred by Landlord in consummating the transfer of the
Premises pursuant to this Section 19.1. Landlord shall pay the costs and
expenses of clearing title as required by Section 19.1(c)(i). In the event of a
purchase by Tenant under this Article 19, Landlord shall have no obligation to
return the Security Deposit to Tenant to the extent the Security Deposit has
been credited against the purchase price to be paid by Tenant pursuant to
Section 19.1(a).
(d) ASSIGNMENT. Tenant shall have the right on one or more
occasions, without Landlord's consent, to assign this purchase option, in whole
or in part, to any Entity at any time, whether or not Tenant also assigns its
interest in the Lease. Tenant shall give prior written notice to Landlord of any
such assignment.
19.2 MANDATORY PURCHASE/SALE OF PREMISES. Notwithstanding anything to
the contrary herein, upon either: (1) expiration of the Term of this Lease or
upon the occurrence of any other event terminating this Lease; or (2) the
occurrence of any event which causes the Funded Amount to be reduced to zero
(0), within thirty (30) days after Tenant's receipt of written notice of the
foregoing and of Tenant's purchase obligation under this Section 19.2, Tenant
shall purchase or cause another Entity to purchase, and Landlord shall sell, the
Premises in the same manner
37.
43
as if Tenant had exercised the Purchase Option on such date. The Purchase Price
shall be the same as if Tenant had exercised the Purchase Option, without regard
to the physical state or condition of the Premises or any Improvements (but
Tenant shall have the rights set forth in Section 19.1, including without
limitation, the terms of Sections 19.1(c)(iii) and (iv)). In the event Tenant
fails to purchase (or cause another Entity to purchase) the Premises pursuant to
its obligation under this Section 19.2, Landlord (to the extent required under
Section 21.19) shall sell the Premises to an unrelated third party and, as
applicable, (i) Tenant shall be obligated to pay to Landlord, immediately upon
demand, any excess of the Purchase Price over the amount realized by Landlord in
connection with such sale, or (ii) Landlord shall be obligated to pay to Tenant,
immediately upon demand, any excess of the amount realized by Landlord in
connection with such sale over the Purchase Price. For purposes of the preceding
sentence, the amount realized by Landlord upon a sale of the Premises shall be
net of Landlord's reasonable sale expenses and other expenses incurred by
Landlord but required to be paid by Tenant pursuant to Section 19.1(c)(v).
Landlord's obligation to pay such excess to Tenant shall survive any termination
of this Lease. Notwithstanding anything set forth elsewhere herein, if Tenant
fails to timely comply with Tenant's obligation to purchase the Premises
pursuant to this Section 19.2, upon ten (10) days' prior written Notice, then so
long as title is in the condition required by Section 19.1(c)(i), Landlord may
transfer title to the Premises to Tenant by way of the Grant Deed described in
Section 19.1(c)(i), and Tenant shall accept such Grant Deed and promptly and
properly file the same of record. Notwithstanding anything to the contrary in
this Lease, in the event of default, breach or violation by Tenant of any of
Tenant's obligations under this Section 19.2, Tenant shall have no liability to
Landlord or any other party in excess of an amount equal to the then-existing
Guaranteed Residual Value, less a credit equal to the sum of (a) any of the
Collateral which UBS or any other holder of an Authorized Loan has used,
applied, or otherwise come into possession of, plus (b) any of the Security
Deposit retained by Landlord, and Landlord shall have no recourse, claim or
counterclaim whatsoever against Tenant in excess of such amount on account of
such default, breach or violation. If the Guaranteed Residual Value has not
previously been determined as of the date Tenant's liability under this Section
19.2 has been established, then the Guaranteed Residual Value shall be
determined as of the date Tenant's liability hereunder is established.
19.3 SURVIVAL. The obligations of Landlord and Tenant under this
Article 19 shall survive the expiration or earlier termination of this Lease.
ARTICLE 20
ADDITIONAL COVENANTS OF LANDLORD
20.1 TITLE. In the event Tenant so requests in writing (and so long as
either Tenant agrees to indemnify Landlord from any liabilities or obligations
in connection therewith, or Landlord
38.
44
does not incur any liabilities or obligations in connection therewith), Landlord
shall execute all documents, instruments and agreements reasonably requested by
Tenant in order to accomplish any of the following in the manner reasonably
requested by Tenant and within the time parameters reasonably requested by
Tenant: (1) remove exceptions to title to or affecting the Premises; (2) create
exceptions to title (including, without limitation, easements and rights of way)
to or affecting the Premises (but not including any Mortgage); (3) modify any
then-existing exception to title or (4) subdivide the Premises into two or more
separate parcels. Tenant shall promptly reimburse Landlord for, or at Landlord's
request, pay directly in advance, all reasonable costs, expenses and other
amounts incurred or required to be expended by Landlord in order to comply with
Tenant's requests made in accordance with the preceding sentence, and the
failure of Tenant to reimburse or pay any such amounts shall result in the
suspension of Landlord's obligations under such sentence with respect to that
particular request until the amounts required to be paid by Tenant under this
sentence have been paid. Landlord acknowledges that it is critical to Tenant's
ability to construct improvements on the Premises to have the ability and
flexibility to accomplish the foregoing, and that the parties therefore agree
that Landlord shall not be entitled to withhold Landlord's consent to any of the
foregoing requests by Tenant, except as set forth in the preceding sentence.
20.2 LAND USE. Except where requested by Tenant pursuant to this
Section 20.2, Landlord shall not cause or give its written consent to any land
use or zoning change affecting the Premises or any changes of street grade. In
the event Tenant so requests in writing (and so long as either Tenant agrees to
indemnify Landlord from any liabilities or obligations in connection therewith,
or Landlord does not incur any liabilities or obligations in connection
therewith), Landlord shall execute all documents, instruments and agreements
reasonably requested by Tenant in order to accomplish any of the following in
the manner reasonably requested by Tenant and within the time parameters
reasonably requested by Tenant: (1) cause a change in any land use restriction
or law affecting the Premises; (2) cause a change in the zoning affecting the
Premises; or (3) cause a change in the street grade with respect to any street
in the vicinity of the Premises. Tenant shall promptly reimburse Landlord for,
or at Landlord's request, pay directly in advance, all reasonable costs,
expenses and other amounts incurred or required to be expended by Landlord in
order to comply with Tenant's requests made in accordance with the preceding
sentence, and the failure of Tenant to reimburse or pay any such amounts shall
result in the suspension of Landlord's obligations under such sentence with
respect to that particular request until the amounts required to be paid by
Tenant under this sentence have been paid. Landlord acknowledges that it is
critical to Tenant's ability to construct improvements on the Premises to have
the ability and flexibility to accomplish the foregoing, and that the parties
therefore agree that Landlord shall not be entitled to withhold Landlord's
request to any of the foregoing requests by Tenant.
39.
45
20.3 TRANSFER OF PROPERTY INTERESTS. Except as requested by Tenant
pursuant to Section 11.2 or 20.1, Landlord shall not transfer to any third party
any rights inuring to or benefits associated with the Premises (including,
without limitation, zoning rights, development rights, air space rights,
mineral, oil, gas or water rights). Nothing in this Section 20.3 shall limit
Landlord's rights pursuant to Section 13.2; provided that any purchaser of
Landlord's interest in the Premises shall be bound by the terms of this Lease,
including without limitation, the terms of this Section 20.3.
20.4 SHAREHOLDER EQUITY; NO OTHER ASSET. Landlord covenants and agrees
that during the Term of the Lease, Landlord shall maintain a shareholder equity
balance of not less than three percent (3%) of its total assets, including
without limitation, the Property. In addition, Landlord shall not, without the
prior written consent of Tenant, which consent may be withheld at Tenant's sole
discretion, acquire any significant assets other than (i) the Premises, (ii) any
Improvements to be built on the Premises, and (iii) the land and any
Improvements thereon, which is subject to those certain Ground Leases between
Landlord and Tenant, which land is described on Exhibit F attached hereto.
20.5 RECOURSE OBLIGATIONS. Landlord agrees that during the Term of
this Lease, Landlord will not incur any indebtedness for borrowed money or any
other material obligations to which the holder or obligee thereof has recourse
against Landlord to satisfy the same without Tenant's prior written consent,
which consent Tenant may withhold in its sole discretion.
20.6 DEFAULT UNDER AUTHORIZED LOAN. Landlord shall not, without
Tenant's express prior written consent, default under any Authorized Loan, or
any loan documents relating to such Authorized Loan, where such default is not
caused, directly or indirectly by a breach of any of Tenant's obligations under
this Lease, under the Pledge Agreement securing the UBS Loan or under any
documents relating to any Authorized Loan.
ARTICLE 21
MISCELLANEOUS
21.1 RELATIONSHIP. Neither this Lease nor any agreements or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as constituting Landlord and Tenant as partners or joint venturers,
one with the other, or as creating any lender/borrower, partnership, joint
venture, association or, except as set forth in Section 21.2 below, any other
relationship other than that of landlord and tenant; and, except as set forth in
Section 21.2 below, both Landlord and Tenant agree not to make any contrary
assertion, contention, claim or counterclaim in any action, suit or other legal
proceeding involving either Landlord or Tenant or the subject matter of this
Lease.
40.
46
21.2 FORM OF TRANSACTION; CERTAIN TAX MATTERS.
(a) Landlord and Tenant hereby agree and declare that the
transactions contemplated by this Lease are intended to constitute, both as to
matters of form and substance:
(i) an operating lease for financial accounting and
securities regulatory purposes, and
(ii) a financing arrangement (and not a "true lease") for
Federal, state and local income tax purposes.
Accordingly, and notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant agree and declare that (A) the transactions
contemplated hereby are intended to have a dual, rather than single, form and
(B) all references in this Lease to the "Lease" of the Premises which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of Landlord and Tenant as to the true form of such
arrangements.
(b) Landlord and Tenant agree that, in accordance with their
intentions and the substance of the transactions contemplated hereby, Tenant
(and not Landlord) shall be treated as the owner of the Premises for Federal,
state, and local income tax purposes and this Lease shall be treated as a
financing arrangement. Tenant shall be entitled to take any deduction, credit
allowance or other reporting, filing or other tax position consistent with such
characterizations. Landlord and Tenant shall not file any Federal, state or
local income tax returns, reports or other statements, or take any other
actions, in a manner which is inconsistent with the foregoing provisions of this
Section 21.2.
(c) Each party acknowledges that it has retained accounting, tax
and legal advisors to assist it in structuring this Lease and neither party is
relying on any representations of the other regarding the proper treatment of
this transaction for accounting, income tax or any other purpose. Nothing in
this Section 21.2(c) shall increase or diminish any liability or obligation of
the parties that otherwise exists pursuant to this Lease.
21.3 NOTICES. Each Notice shall be in writing and shall be sent by
personal delivery, overnight courier (charges prepaid or billed to the sender)
or by the deposit of such with the United States Postal Service, or any official
successor thereto, designated as registered or certified mail, return receipt
requested, bearing adequate postage and in each case addressed as provided in
the Basic Lease Provisions. Each Notice shall be effective upon being personally
delivered or actually received. The time period in which a response to any such
Notice must be given or any action taken with respect thereto shall commence to
run from the date of personal delivery or receipt of the Notice by the addressee
thereof, as reflected on the return receipt of the Notice. Rejection or other
refusal to accept shall be deemed to be
41.
47
receipt of the Notice sent. By giving to the other party at least thirty (30)
days' prior Notice thereof, either party to this Lease (as well as any
Mortgagee) shall have the right from time to time during the Term of this Lease
to change the address(es) thereof and to specify as the address(es) thereof any
other address(es) within the continental United States of America.
21.4 SEVERABILITY OF PROVISIONS. If any term, covenant or condition of
this Lease, or the application thereof to any Entity or circumstance, shall be
invalid or unenforceable, the remainder of this Lease, or the application of
such term, covenant or condition to Entities or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby.
21.5 ENTIRE AGREEMENT; AMENDMENT. This Lease and other documents
expressly referred to herein constitute the entire agreement of Landlord and
Tenant with respect to the subject matter hereof. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
21.6 APPROVALS AND CONSENTS. Except as expressly provided in this
Lease, whenever any provision of this Lease requires an approval or consent to
be given by one of the parties hereto, the approval or consent shall not be
unreasonably withheld or delayed. Whenever this Lease grants either party the
right to take action, exercise discretion, establish rules and regulations, or
make an allocation or other determination, except as otherwise provided, such
party shall act reasonably and in good faith and take no action which might
result in the frustration of the other party's reasonable expectations
concerning the benefits to be enjoyed under this Lease. If either party
withholds its consent or approval, unless by the express terms of this Lease
such consent or approval may be withheld in such party's sole discretion, such
party shall, upon request, promptly deliver to the other party a written
statement specifying in detail the reason or reasons why such consent or
approval was withheld or refused. If neither approval nor rejection is given by
Landlord within the time specified in Article 11 as to any particular approval
requested by Tenant under Article 11 (or, if no such time is specified, then
within thirty (30) days after request for approval is given by a Notice), then
the approval thus specifically requested in writing by Tenant shall be
conclusively and irrevocably deemed to have been given by Landlord.
21.7 TERMINOLOGY. All personal pronouns used in this Lease shall
include all other genders. The singular shall include the plural and the plural
shall include the singular. Titles of Articles, Sections and Subsections in this
Lease are for convenience only and neither limit nor amplify the provisions of
this Lease, and all references in this Lease to Articles, Sections or
Subsections shall refer to the corresponding Article, Section or
42.
48
Subsection of this Lease unless specific reference is made to the articles,
sections or other subdivisions of another document or instrument. The word
"days" as used herein shall mean calendar days unless otherwise expressly
stated.
21.8 MEMORANDUM OF LEASE. Neither party shall record this Lease.
However, concurrently with the execution of this Lease, Landlord and Tenant have
executed a Memorandum of Lease in the form attached hereto as Exhibit C and by
this reference made a part hereof, which Memorandum of Lease shall be promptly
recorded in the Official Records.
21.9 SUCCESSORS AND ASSIGNS. Subject to Articles 13 and 14, this Lease
shall inure to the benefit of and be binding upon Landlord and Tenant and their
respective heirs, executors, legal representatives, successors and assigns.
Whenever in this Lease a reference to any Entity is made, such reference shall
be deemed to include a reference to the heirs, executors, legal representatives,
successors and assigns of such Entity.
21.10 COMMISSIONS. Landlord and Tenant each represent and warrant that
neither has dealt with any broker in connection with this transaction and that
no real estate broker, salesperson or finder has the right to claim a real
estate brokerage, salesperson's commission or finder's fee by reason of contact
between the parties brought about by such broker, salesperson or finder. Each
party shall hold and save the other harmless of and from any and all loss, cost,
damage, injury or expense arising out of or in any way related to claims for
real estate broker's or salesperson's commissions or fees based upon allegations
made by the claimant that it is entitled to such a fee from the indemnified
party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party.
21.11 ATTORNEYS' FEES. In the event any action is brought by Landlord
or Tenant against the other to enforce or for the breach of any of the terms,
covenants or conditions contained in this Lease, the prevailing party shall be
entitled to recover reasonable attorneys' fees to be fixed by the court,
together with costs of suit therein incurred. Tenant shall pay the reasonable
attorneys' fees incurred by Landlord for the review and negotiation of this
Lease and the UBS Loan documents.
21.12 GOVERNING LAW. This Lease and the obligations of the parties
hereunder shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of California.
21.13 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
43.
49
21.14 TIME IS OF THE ESSENCE. Time is of the essence of this Lease,
and of each provision hereof.
21.15 NO THIRD PARTY BENEFICIARIES. This Lease is entered into by
Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
21.16 NO RECOURSE. The obligations of Tenant and Landlord (including,
without limitation, the obligations of Landlord with respect to the Identified
Matters set forth below) under this Lease shall be without recourse to any
partner, officer, trustee, beneficiary, shareholder, director or employee of
Tenant or Landlord. There shall be no limitation on Landlord's liability with
respect to any willful misconduct, bad faith breach of this Lease, gross
negligence by Landlord, or any breach by Landlord of its obligations with
respect to Sections 20.4, 20.5 or 20.6 ("Identified Matters"). Except for
Identified Matters, Landlord's liability to Tenant for any default by Landlord
under this Lease is limited to Landlord's interest in the Premises, and Tenant
agrees to look solely to Landlord's interest therein for the recovery of any
judgment against Landlord, it being intended that neither Landlord nor any of
its shareholders, employees, agents, representatives, affiliates, officers or
directors shall be personally liable for any judgment or deficiency.
21.17 ESTOPPEL CERTIFICATES. Within thirty (30) days after request
therefor by either party, the non-requesting party shall deliver, in recordable
form, a certificate to any proposed mortgagee, purchaser, sublessee or assignee
and to the requesting party, certifying (if such be the case) that this Lease is
in full force and effect, the date of Tenant's most recent payment of Rent,
that, to the best of its knowledge, the non-requesting party has no defenses or
offsets outstanding, or stating those claimed, and any other information
reasonably requested. Failure to deliver said statement in time shall be
conclusive upon the non-requesting party that: (a) this Lease is in full force
and effect, without modification except as may be represented by the requesting
party; (b) there are no uncured defaults in the requesting party's performance
and the non-requesting party has no right of offset, counterclaim or deduction
against the non-requesting party's obligations hereunder; (c) no more than one
month's Base Rent has been paid in advance; and (d) any other matters reasonably
requested in such certificate.
21.18 COLLATERAL. The parties acknowledge that Tenant has pledged
certain collateral ("Collateral") to UBS to secure SGA's obligations under the
terms of the UBS Note. If the holder of an Authorized Loan applies any of the
Collateral to satisfy an obligation under any Authorized Loan documents, such
application shall be deemed to reduce the Senior Funded Amount under this Lease
on a dollar-for-dollar basis. Tenant shall have no claims, rights or causes of
action against Landlord arising from any application of the Collateral to
satisfy an obligation under the Authorized
44.
50
Loan documents; provided, however, that nothing herein shall release Landlord
from any claims, rights or causes of action of Tenant for any breach of this
Lease by Landlord or any default by Landlord under any documents relating to an
Authorized Loan, which default does not arise, directly or indirectly from or as
a result of any default by Tenant of its obligations under the Lease.
21.19 LANDLORD'S CONTINUING OBLIGATION TO SELL. Notwithstanding
anything to the contrary herein, in the event Landlord obtains possession of the
Premises pursuant to the terms of this Lease (including, without limitation,
upon the expiration or earlier termination of this Lease where Tenant has
defaulted in its obligation to purchase the Premises pursuant to Section 19.2),
Landlord shall be under a continuing obligation to use its commercially
reasonable efforts to sell the Premises to Tenant or to one or more unrelated
third parties; provided, however, that Landlord shall not be required to sell or
attempt to sell any portion of the Premises (i) in a manner, or under
circumstances, that could materially impair Landlord's ability to enforce any of
its rights or remedies under this Lease (as determined in Landlord's sole
discretion exercised in good faith) or (ii) at a time when market conditions
render it inadvisable to sell or attempt to sell the Premises (as determined in
Landlord's sole discretion exercised in good faith).
21.20 AS-IS LEASE. Landlord makes no representations or warranties
concerning the condition, suitability or any other matters relating to the
Premises, and Tenant hereby acknowledges that Tenant leases the Premises from
Landlord on an "as is" basis.
21.21 NET LEASE. Except as otherwise provided in this Lease, Tenant
agrees that this Lease is an absolute net Lease, and the Base Rent called for
hereunder shall be paid as required net of all expenses associated with the
Premises, including without limitation, Real Estate Taxes and insurance premiums
for the insurance required to be carried hereunder, and all other reasonable and
customary costs and expenses incurred by Landlord in connection with the
Premises or this Lease, all of which shall be paid or reimbursed by Tenant
unless otherwise specifically provided herein. Tenant agrees to reimburse
Landlord, within ten (10) days following receipt of any written demand therefor,
for all fees, accrued but unpaid interest, late charges, prepayment penalties,
costs and expenses charged to Landlord or SGA by UBS (or other holder of an
Authorized Loan) pursuant to the terms and conditions of the UBS Note or other
Authorized Loan.
21.22 REPRESENTATIONS AND WARRANTIES. Tenant and Landlord each hereby
represents and warrants to the other that: (i) such party is duly organized and
existing under the laws of the jurisdiction in which it is formed, and is
qualified to do business in the State of California; (ii) such party has the
full right and authority to enter into this Lease, consummate the sale,
transfers and assignments contemplated herein and otherwise perform its
obligations under this Lease; (iii) the person or persons signatory
45.
51
to this Lease and any document executed pursuant hereto on behalf of such party
have full power and authority to bind such party; and (iv) the execution and
delivery of this Lease and the performance of such party's obligations hereunder
do not and shall not result in the violation of its organizational documents or
any contract or agreement to which such party may be a party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46.
52
[SIGNATURE PAGE TO GROUND LEASE]
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease
as of the day and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
A Texas Corporation
By: /s/ XXXXXXX XXXXXXX
---------------------------
Name: XXXXXXX XXXXXXX
---------------------------
"TENANT"
CISCO SYSTEMS, INC.,
A California Corporation
By: /s/ XXXX X. XXXXXXXX
---------------------------
Name: Xxxx X. Xxxxxxxx
Its: President and Chief
Executive Officer
By: /s/ XXXXX X. XXXXXX
---------------------------
Name: Xxxxx X. Xxxxxx
Its: Chief Financial
Officer
53
EXHIBIT A
DESCRIPTION OF LAND
REAL PROPERTY in the City of San Xxxx, County of Santa Xxxxx, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Xxxxx, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Xxxxx, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
EXHIBIT A
54
EXHIBIT B
PERMITTED EXCEPTIONS
[To include all matters of record against
the Land on the date it is acquired by Landlord]
EXHIBIT B
1.
55
EXHIBIT C
(MEMORANDUM OF LEASE)
RECORDING REQUESTED BY, AND
WHEN RECORDED, RETURN TO:
Xxxxxxx, Xxxxxxx & Xxxxxxxx
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum of Lease") is executed as of
_________________, 1995, by and between IRISH LEASING CORPORATION, a Texas
corporation ("Landlord"), and CISCO SYSTEMS, INC., a California corporation
("Tenant").
RECITALS
WHEREAS, Landlord and Tenant have executed that certain lease
("Lease") dated as of _____________, 1995, covering certain premises and related
improvements ("Premises") located in the City of San Xxxx, Santa Xxxxx County,
California and more particularly described in Schedule 1 attached hereto and
incorporated herein by this reference; and
WHEREAS, Landlord and Tenant desire to record notice of the Lease in
the real estate records of Santa Xxxxx County, California;
NOW, THEREFORE, in consideration of the foregoing, Landlord and Tenant
hereby declare as follows:
1. DEMISE. Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord, subject to the terms, covenants and
conditions contained in the Lease.
2. EXPIRATION DATE. The term of the Lease ("Term") shall commence on
______________, 1995 and shall expire five (5) years thereafter, subject to
Tenant's option to extend the Term pursuant to Section 4.2 of the Lease for one
(1) period of five (5) years.
3. OPTION TO PURCHASE. Tenant has an option to purchase the Premises,
as more particularly described in the Lease, during the Term, as it may be
extended.
EXHIBIT C
1.
56
4. RESTRICTIONS ON ENCUMBRANCES. Landlord is prohibited from recording
against the Premises liens (including, without limitation, deeds of trust),
encumbrances, and other matters that would constitute exceptions to title, and
from amending or modifying any of the foregoing that may exist now or during the
Term, as more particularly described in the Lease, and any such encumbrance or
modification of an encumbrance not authorized in writing by Tenant shall be null
and void.
5. COUNTERPARTS. This Memorandum of Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT C
2.
57
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum
of Lease as of the date and year first written above.
"LANDLORD"
IRISH LEASING CORPORATION,
A TEXAS CORPORATION
By: ___________________________
Its: ___________________________
By: ___________________________
Its: ___________________________
STATE OF __________________ )
) ss
COUNTY OF _________________ )
On _____________, before me, ______________________, Notary Public, 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 upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
___________________________
Signature
[SEAL]
EXHIBIT C
3.
58
[SIGNATURE PAGE TO MEMORANDUM OF LEASE]
"TENANT"
CISCO SYSTEMS,
A CALIFORNIA CORPORATION
By: ____________________________
Name: ______________________
Its: ______________________
Executive Officer
By: ____________________________
Name: ______________________
Its: ______________________
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _____________, before me, ______________________, Notary Public, 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 upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
__________________________
Signature
[SEAL]
EXHIBIT C
4.
59
SCHEDULE 1 TO EXHIBIT C
The Premises are described as follows:
REAL PROPERTY in the City of San Xxxx, County of Santa Xxxxx, State of
California, described as follows:
PARCEL ONE:
All of Parcel 2, as shown on that certain Map filed for record in the office of
the Recorder of the County of Santa Xxxxx, State of California on July 13, 1983,
in Book 514 of Maps page(s) 47 and 48.
PARCEL TWO:
All of Lot 54, as shown upon that certain Map entitled, "Tract No. 7559", which
Map was filed for record in the Office of the Recorder of the County of Santa
Xxxxx, State of California on December 21, 1983 in Book 522 of Maps, at pages 49
and 50.
APN: 97-53-14 and 23
SCHEDULE 1 TO EXHIBIT C
60
EXHIBIT D
CLOSING COSTS AND FEES TO BE INCLUDED IN FUNDED AMOUNT
The following items shall be included in the definition of the Funded
Amount under Section 2.16 of the Lease:
1. Title Insurance premiums
2. Arrangement Fee payable to Irish
3. Brokerage Commissions
4. Other fees and costs which are specifically authorized by
Tenant in writing to be included in the Funded Amount
EXHIBIT D
1.
61
EXHIBIT E
LEASE COMMENCEMENT DATE MEMORANDUM
THIS LEASE COMMENCEMENT DATE MEMORANDUM ("Memorandum") is entered into
this ___ day of ____________, 1995, by and between IRISH LEASING CORPORATION, a
Texas corporation ("Landlord"), and CISCO SYSTEMS, INC., a California
corporation ("Tenant") concerning that certain Lease ("Lease") between Landlord
and Tenant dated February ___, 1995. Any capitalized terms not defined in this
Memorandum shall have their meaning as defined in the Lease.
1. Pursuant to Section 4.1 of the Lease, Landlord and Tenant are
required to enter into this Memorandum within thirty (30) days after the Lease
Commencement Date.
2. Landlord and Tenant agree the that Lease Commencement Date is
_______________, 1995.
3. Landlord and Tenant agree that the Rent Commencement Date is
_______________, 1995.
4. The dollar value of the Guaranteed Residual Value (defined in
Section 2.17 of the Lease) described in paragraph 2 above is _____% of
$_____________________________, (i.e. $_____________________________).
5. The Equity Funded Amount as of the Lease Commencement Date is
$__________________.
IN WITNESS WHEREOF, the parties have executed this Memorandum as of
the date and year first above written.
"LANDLORD"
IRISH LEASING CORPORATION,
a Texas corporation
By: ___________________________
Name:______________________
Its: ______________________
"TENANT"
CISCO SYSTEMS, INC.,
a California corporation
By: ___________________________
Name:______________________
Its: ______________________
EXHIBIT E
62
EXHIBIT F
DESCRIPTION OF ADDITIONAL PROPERTY OWNED BY LANDLORD
REAL PROPERTY in the City of San Xxxx, County of Santa Xxxxx, State of
California, described as follows:
Lots 58 and 59, as shown upon that certain map entitled, "Tract No. 7559", which
Map was filed for record in the office of the Recorder of the County of Santa
Xxxxx, on December 21, 1983 in Book 522 of Maps, at pages 49 and 50.
APN: 97-53-18,22
PARCEL ONE:
Lot 50, as shown on that certain Map entitled, "Tract No. 7560," which Map was
filed for record in the office of the Recorder of the County of Santa Xxxxx,
State of California on December 21, 1983 in Book 522 of Maps, pages 51 and 52.
Reserving therefrom a perpetual right and easement to construct, install,
maintain, repair, renew, replace, operate and use a surface drainage release to
benefit Xxx 00 xx Xxxxx 0000, as contained in that certain Grant of Easement
recorded August 8, 1990 in Book L443, page 0754, Official Records, and described
as follows:
The Northwesterly 10.00 feet of the Southeasterly 30.00 feet and the
Northwesterly 100.00 feet of the Southeasterly 130.00 feet of the Northeasterly
10.00 feet of Lot 50.
PARCEL TWO:
That portion of Lot 51, as shown on that certain Map entitled, "Tract No. 7560,"
which Map was filed for record in the office of the Recorder of the County of
Santa Xxxxx, State of California on December 21, 1983 in Book 522 of Maps, pages
51 and 52, being more particularly described as follows:
Beginning at the Southeasterly corner of said Lot 51; thence along the Southerly
line of said Lot 51, S. 59 degrees 27; 51 W. 77.00 feet; thence N. 14 degrees 27
minutes 48 seconds E. 108.90 feet to the Northeasterly line of said Lot 51;
thence along said Northeasterly line S. 30 degrees 32 minutes 09 seconds E.
77.00 feet to the point of beginning, as provided for in that certain Lot Line
Adjustment granted by the Director of Planning of the City of San Xxxx, a copy
of which was recorded March 28, 1984 in the office of the Recorder of the County
of Santa Xxxxx in Book I410, page 712 of Official Records.
EXHIBIT F
63
PARCEL THREE:
Lot 5 and 6, as shown on that certain Map of Tract No. 7408, which map was filed
for record in the office of the Recorder of the County of Santa Xxxxx, State of
California on November 19, 1982 in Book 506 of Maps, pages 24, 25 and 26 and a
portion of that certain parcel of land described in the deed recorded December
22, 1972 in Book 0167, page 623, all as approved by that Lot Combination
recorded September 16, 1992 in Book M381 of Maps, page(s) 0081, Official
Records, more particularly described as follows:
Beginning at a point on the Northeasterly line of Rio Xxxxxx, as shown upon said
map, at the most Southerly corner of said Lot 5; thence along said Northeasterly
line of Rio Xxxxxx, N. 30 degrees 32 minutes 09 seconds W. 105.50 feet; thence
on a tangent curve to the right, having a radius of 367.00 feet, through a
central angle of 36 degrees 30 minutes 00 seconds an arc distance of 233.80
feet; thence on a curve to the right, tangent to the previous curve, having a
radius of 50.00 feet, through a central angle of 86 degrees 01 minutes 50
seconds an arc distance of 75.08 feet to the Southerly line of Tasman Drive as
shown upon said map; thence along said line on a curve to the left, tangent to
the previous curve, having a radius of 1149.00 feet, through a central angle of
32 degrees 31 minutes 01 seconds an arc distance of 652.09 feet; thence N. 59
degrees 28 minutes 40 seconds E. 600.40 feet; thence on a tangent curve to the
right, having a radius of 33.00 feet, through a central angle of 89 degrees 51
minutes 11 seconds an arc distance of 51.83 feet to the Southwesterly line of
First Street, as shown upon said map; thence along said line, S. 30 degrees 32
minutes 09 seconds E. 261.38 feet to the Northwesterly line of the lands of the
City and County of San Francisco, as shown upon said map; thence along said line
of the lands of the City and the County of San Francisco, S. 65 degrees 09
minutes 27 seconds W. 1396.95 feet to the point of beginning.
PARCEL FOUR:
Those rights as contained in that certain Grant Deed executed by Xxxxxx Xxxxx
and Xxxxx Xxxxx, his wife in favor of the City and County of San Francisco, a
municipal corporation recorded December 8, 1950 in Book 2111, page 319, Official
Records.
PARCEL FIVE:
A strip of land 80 feet wide, lying 40 feet either side of the following
described line and extensions thereto, across that certain parcel of land
conveyed by Xxxxxxx Xxxxxx, et ux, to Xxxxxx Xxxxx by Xxxxx Deed dated February
27, 1936 and recorded March 11, 1936, in Volume No. 765, at page 262, Official
Records, Santa Xxxxx County, hereinafter referred to as the Ezaki Parcel, said
line being more particularly described as commencing at a point in the Westerly
boundary of the existing San Xxxx-Xxxxxx Road, said point being distant along
said boundary South 30 degrees 32 minutes 30 seconds East 381.31
EXHIBIT F
64
feet from its intersection with the Northerly boundary of the above mentioned
Ezaki Parcel; thence, from said point of commencement, South 65 degrees 08
minutes 00 seconds West 1459.03 feet to a point in the common boundary between
the above mentioned Ezaki Parcel and that certain parcel of land conveyed by
Xxxx Xxxxxxxx, et al, to Xxxxx X. Xxxxxxxx, et ux, by Joint Tenancy Deed dated
November 13, 1944 and recorded November 17, 1944 in Volume No. 1227 at Page 327,
Official Records, Santa Xxxxx County, hereinafter referred to as the Xxxxxxxx
Parcel, said point being distant along said common boundary South 30 degrees 32
minutes 30 seconds East 237.04 feet from the most Westerly corner of the above
mentioned Ezaki Parcel; the Easterly end of said strip being the above mentioned
Westerly boundary of the San Xxxx-Xxxxxx Road, and the Westerly end of said
strip being the above mentioned common boundary between the Xxxxxxxx and Ezaki
Parcels.
EXHIBIT F
