[EXECUTION COPY]
Exhibit 10.1
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LEASE
Dated as of March 6, 1998
between
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-HV, INC.
as the Lessee
and
THE HARBOR VILLAGE BUSINESS TRUST
as the Lessor
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Acquisition of Independent Living Facility with Assisted Living Services
in Chicago, Illinois
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This Lease has been executed in several counterparts. To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
Nomura Asset Capital Corporation and its successors and assigns, as Lender.
TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation............................................. 1
ARTICLE II
PURCHASE AND LEASE
2.1. Acceptance and Lease of Property........................................ 1
2.2. Acceptance Procedure.................................................... 1
2.3. Lease Term.............................................................. 2
2.4. Title................................................................... 2
ARTICLE III
FUNDING OF THE ADVANCE
3.1. Lessor Commitment....................................................... 2
3.2. Procedures for Advance.................................................. 2
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date...................................................... 2
4.2. Acquisition Date........................................................ 3
4.3. Conditions Precedent to the Acquisition Date and the Advance............ 3
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor........................................... 6
6.2. Representations of Lessee............................................... 7
6.3. Representations of the Lessee with Respect to the Advance............... 9
ARTICLE VII
PAYMENT OF RENT
7.1. Rent.................................................................... 10
7.2. Payment of Rent......................................................... 11
7.3. Supplemental Rent....................................................... 11
7.4. Method of Payment....................................................... 11
ARTICLE VIII
QUIET ENJOYMENT; RIGHT TO INSPECT
8.1. Quiet Enjoyment........................................................ 11
8.2. Right to Inspect....................................................... 12
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease.............................................................. 12
9.2. No Termination or Abatement............................................ 13
ARTICLE X
SUBLEASES
10.1. Subletting............................................................. 13
ARTICLE XI
LESSEE ACKNOWLEDGMENTS
11.1. Condition of the Property.............................................. 13
11.2. Risk of Loss........................................................... 14
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges........................................................ 14
12.2. Possession and Use of the Property..................................... 14
12.3. Compliance with Requirements of Law and Insurance Requirements......... 14
12.4. Assignment by Lessee................................................... 14
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return......................................... 15
ARTICLE XIV
MODIFICATIONS, ETC.
14.1. Modifications, Substitutions and Replacements.......................... 15
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ARTICLE XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title.................................................... 16
15.2. Grants and Releases of Easements; Lessor's Waivers.................. 16
ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted Contests in Respect of Applicable Law..................... 17
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance................ 18
17.2. Hazard and Other Insurance.......................................... 18
17.3. Insurance Coverage.................................................. 18
17.4. Insurance Proceeds.................................................. 19
17.5. Insurance Requirements in Loan Documents............................ 19
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation........................................... 19
18.2. Environmental Matters............................................... 20
18.3. Notice of Environmental Matters..................................... 21
18.4. Environmental Obligations of the Lessor Pursuant to the Nomura Loan
Agreement........................................................... 21
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination upon Certain Events..................................... 21
19.2. Termination Procedures.............................................. 22
ARTICLE XX
EVENTS OF DEFAULT
20.1. Events of Default................................................... 22
20.2. Remedies............................................................ 24
20.3. Waiver of Certain Rights............................................ 27
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ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment.......................................................... 27
ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option..................................................... 27
ARTICLE XXIII
RENEWAL PROCEDURES
23.1. Renewal............................................................. 28
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket.................................................. 28
24.2. Certain Obligations Continue........................................ 32
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase Option and
Conveyance Upon Remarketing and Conveyance Upon Certain
Other Events........................................................ 32
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification............................................. 32
26.2. End of Term Indemnity............................................... 34
26.3. Environmental Indemnity............................................. 35
26.4. Proceedings in Respect of Claims.................................... 36
26.5. General Tax Indemnity............................................... 37
26.6. Funding Losses...................................................... 41
26.7. Regulation D Compensation........................................... 42
26.8. Deposits Unavailable................................................ 42
26.9. Illegality.......................................................... 42
26.10. Increased Cost and Reduced Return................................... 43
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates............................................... 44
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ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender............................................. 45
ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title.................................................. 45
ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property........................................... 45
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses................................................ 46
31.2. Brokers' Fees and Stamp Taxes....................................... 46
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1. Covenants........................................................... 46
ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc......................................... 48
33.2. Amendments and Modifications........................................ 49
33.3. No Waiver........................................................... 49
33.4. Notices............................................................. 49
33.5. Successors and Assigns.............................................. 49
33.6. Headings and Table of Contents...................................... 49
33.7. Counterparts........................................................ 49
33.8. GOVERNING LAW....................................................... 49
33.9. Original Lease...................................................... 49
33.10. Waiver of Jury Trial................................................ 49
33.11. Compliance with Loan Documents...................................... 50
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in
Lessor.............................................................. 50
33.13. Concerning the Lessor............................................... 50
33.14. Owner's Insurance Policy Proceeds................................... 50
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Schedules
SCHEDULE I Notice Information
Exhibits
EXHIBIT A Funding Request
EXHIBIT B Lease Supplement
EXHIBIT C Responsible Employee's Certificate
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LEASE
THIS LEASE (together with the Lease Supplement (as defined in Appendix 1
hereto), this "Lease"), dated as of March 6, 1998, between THE HARBOR VILLAGE
BUSINESS TRUST, a Delaware business trust, having its principal office at
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, and BROOKDALE LIVING COMMUNITIES OF ILLINOIS-
HV, INC., a Delaware corporation, having its principal office at c/o Brookdale
Living Communities, Inc., 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000.
W I T N E S S E T H:
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WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, the Property; and
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
Appendix 1 to this Lease; and the rules of interpretation set forth in Appendix
1 to this Lease shall apply to this Lease; provided, however, that capitalized
terms used but not otherwise defined in this Lease and Appendix 1 to this Lease
shall have the respective meanings specified in the Nomura Loan Agreement.
ARTICLE II
PURCHASE AND LEASE
2.1. Acceptance and Lease of Property. Subject to the terms and
conditions of this Lease, on the Acquisition Date (i) the Seller shall convey to
the Lessor, and the Lessor shall accept delivery of, the Property pursuant to
the terms hereof (and subject to the conditions set forth herein) and (ii) the
Lessor shall demise and lease to the Lessee hereunder for the Term the Lessor's
interest in the Property, subject to the Loan Documents and Mezzanine Loan
Documents and the Lessee hereby agrees, expressly for the direct benefit of the
Lessor, to lease from the Lessor for the Term, the Lessor's interest in the
Property.
2.2. Acceptance Procedure. The Lessee hereby agrees that the execution
and delivery by the Lessee on the Acquisition Date of an appropriately completed
Lease Supplement in the form of Exhibit B hereto covering the Property thereon
shall, without further act, constitute the irrevocable acceptance by the Lessee
of the Property for all purposes of this Lease and the other Operative Documents
on the terms set forth therein and herein, and that the Property, shall be
deemed to be included in the leasehold estate of this Lease and shall be subject
to the terms and conditions of this Lease as of the Acquisition Date.
2.3. Lease Term. The term of this Lease (the "Term") shall commence on
(and include) the Acquisition Date and end on (but exclude) the Expiration Date,
as such Expiration Date may be extended from time to time in accordance with
Article XXIII.
2.4. Title. The Property is leased to the Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, Permitted Liens other than Lessor Liens) and all applicable
Requirements of Law. The Lessee shall in no event have any recourse against the
Lessor for any defect in or exception to title to the Property other than to the
extent resulting from Lessor Liens.
ARTICLE III
FUNDING OF THE ADVANCE
3.1. Lessor Commitment; Earn-Out Advance. Subject to the conditions and
terms hereof, the Lessor shall, upon the written request of the Lessee, make the
Advance on the Acquisition Date up to the amount of the Commitment for the
purpose of financing the acquisition of the Property. The parties hereto agree
that (a) the Lessee's election on behalf of the Lessor, as Borrower under the
Nomura Loan Agreement, to have the Lessor borrow the Earn-Out Advance pursuant
to Section 8.32 of the Nomura Loan Agreement is subject to the consent of the
Lessor (which may be withheld in its sole and absolute discretion) and (b) to
the extent the Lessee and the Lessor agree to have the Lessor borrow the Earn-
Out Advance, this Lease and other Operative Documents shall be amended, modified
or supplemented as necessary to reflect such borrowing and an advance by the
Lessor to the Lessee of such borrowed amount.
3.2. Procedures for Advance.
----------------------
(a) The Lessee shall give the Lessor prior written notice not
later than 9:00 a.m., New York City time, five (5) Business Days prior to
the Acquisition Date, pursuant to a Funding Request substantially in the
form of Exhibit A (the "Funding Request"), specifying the proposed
Acquisition Date and the amount of Advance requested. Except as the parties
may otherwise agree in writing, the Advance shall be made solely to provide
the Lessee with funds with which to pay or reimburse itself for amounts
paid or payable to third parties as Property Cost and Transaction Expenses
paid or payable by the Lessee in connection with the preparation, execution
and delivery of the Operative Documents, and all fees paid or payable by
the Lessee to the Lessor in connection with the Operative Documents and any
amounts paid or payable by Lessee pursuant to Section 31.2 hereof.
(b) The Advance shall be made on the Acquisition Date in
immediately available federal funds by wire transfer to the account
designated by the Lessee, except that a portion of the Advance shall be
made (in accordance with instructions to be included in the Funding
Request) by wire transfer directly to an account designated by Lessee to
pay the Seller and/or to reimburse the Lessee for Transaction Expenses.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date. The Documentation Date (the "Documentation
Date") shall occur on the earliest date on which the following conditions
precedent shall have been satisfied:
(a) Lease. This Lease shall have been duly authorized, executed
and delivered by the parties thereto.
(b) SELCO Loan Agreement. The SELCO Loan Agreement shall have
been duly authorized, executed and delivered by the parties thereto.
(c) Lessee's Resolutions and Incumbency Certificate. The Lessee
shall have delivered to the Lessor a certificate of its Secretary or an
Assistant Secretary attaching and certifying as to the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Documents to which it is a party.
(d) Opinion of Counsel to the Lessee. On or prior to the
Documentation Date, the Lessor shall have received an opinion of internal
counsel for the Lessee in form and substance satisfactory to the Lessor.
(e) Certain Transaction Expenses. Counsel for the Lessor shall
have received, to the extent then invoiced, payment in full in cash of all
Transaction Expenses payable to such counsel pursuant to Section 31.1(a).
(f) SELCO Indemnity. The SELCO Indemnity shall have been duly
authorized, executed and delivered by the Parent.
(g) Opinion of Counsel to Lessor. On or prior to the
Documentation Date, the Lessee shall have received an opinion of counsel to
the Lessor in form and substance reasonably satisfactory to the Lessee.
4.2. Acquisition Date. The closing date with respect to the acquisition
of Land (and the Improvements, if any, existing thereon) (the "Acquisition
Date") shall occur on the earliest date after the Documentation Date, on which
all the conditions precedent thereto set forth in Section 4.3 with respect to
such acquisition of the Property shall have been satisfied or waived by the
applicable parties as set forth therein. The Acquisition Date for the Property
shall be the date the Advance is made.
4.3. Conditions Precedent to the Acquisition Date and the Advance. The
occurrence of the Acquisition Date and the obligation of the Lessor to make the
Advance are subject to the satisfaction or waiver of the following conditions
precedent:
(a) Operative Documents; No Default. Each of the Operative
Documents shall have been duly authorized, executed and delivered by the
parties thereto, in form and substance satisfactory to the parties hereto,
and shall be in full force and effect. No Default or Event of Default shall
exist under any of the Operative Documents (either before or after giving
effect to the transactions contemplated by the Operative Documents), and
the Lessor shall have received a fully executed copy of each of such
Operative Documents (other than this Lease, of which the
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Lessor shall receive the original). The Operative Documents (or memoranda
thereof), any supplements thereto and any financing statements in
connection therewith required under the Uniform Commercial Code shall have
been recorded, registered and filed, if necessary, in such manner as to
enable counsel to render the opinions referred to in clause (c) below and
to enable the title company to issue the title insurance policies referred
to in clause (j) below.
(b) Taxes. All taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the
Operative Documents shall have been paid or provisions for such payment
shall have been made to the satisfaction of the Lessor.
(c) Opinions of Counsel. Counsel to the Lessee (i) in the
jurisdiction in which the Property is located shall have issued to the
Lessor their opinions, all in form and substance satisfactory to the Lessor
and (ii) shall have issued to the Lessor their opinions to the effect that
upon delivery to the Custodian of the Pledged Securities pursuant to the
Securities Pledge Agreement, a valid first priority security interest in
the Pledged Securities shall have been created and granted to the Custodian
in the Pledged Securities.
(d) Governmental Approvals. All necessary (or, in the
reasonable opinion of the Lessor, advisable) Governmental Actions, in each
case required by any Requirement of Law, shall have been obtained or made
and be in full force and effect.
(e) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental Authority (i) to set
aside, restrain, enjoin or prevent the full performance of this Lease, any
other Operative Document or any transaction contemplated hereby or thereby
or (ii) which is reasonably likely to materially and adversely affect the
Lessee.
(f) Requirements of Law. The transactions contemplated by the
Operative Documents do not and will not violate any Material Requirement of
Law and do not and will not subject the Lessor to any Material adverse
regulatory prohibitions or constraints.
(g) Responsible Employee's Certificates. The Lessor shall have
received a Responsible Employee's Certificate of the Lessee, in
substantially the form of Exhibit C, dated as of the Acquisition Date,
stating that for the Lessee (i) each and every representation and warranty
of the Lessee contained in each Operative Document to which it is a party
is true and correct in all Material respects on and as of the Acquisition
Date; (ii) no Default or Event of Default has occurred and is continuing
under any Operative Document with respect to the Lessee; (iii) each
Operative Document to which the Lessee is a party is in full force and
effect with respect to it; and (iv) the Lessee has duly performed and
complied in all Material respects with all covenants, agreements and
conditions contained herein or in any Operative Document required to be
performed or complied with by it on or prior to the Acquisition Date.
(h) Environmental Audit. The Lessor shall have received an
Environmental Audit for the Property in form and substance acceptable to
the Lessor, provided, Lessor shall not deem an Environmental Audit
unacceptable solely because a Phase Two environmental site assessment is
called for.
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(i) Appraisal. The Lessor shall have received an Appraisal of
the Property.
(j) Survey and Title Insurance. The Lessee shall have delivered
to the Lessor an ALTA/1992 (Urban) Survey of the Property (other than the
Equipment located therein) prepared by a licensed surveyor and meeting the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys as
adopted by the American Land Title Association/American Society and
American Congress on Surveying and Mapping in 1992 certified to the Lessor
and the title company and otherwise in form reasonably acceptable to the
Lessor and an ALTA owner's insurance policy covering the Property (other
than any Equipment) in favor of the Lessor, and, at the option of Lessee, a
leasehold policy in favor of the Lessee evidencing the Lessee's equitable
ownership in the Property, each such policy to be dated as of the
Acquisition Date and in an amount not less than the Property Cost and to be
reasonably satisfactory to the Lessor with, to the extent available,
comprehensive, zoning and mechanics liens' endorsements and such other
endorsements reasonably requested by the Lessor.
(k) Recordation. The Lessor shall have received evidence
reasonably satisfactory to it that each of the Deed and the Lease
Supplement shall have been delivered to the title company in escrow for
recordation with the appropriate Governmental Authorities (and the issuance
of the title insurance policies in clause (j) above shall be satisfactory
evidence of the foregoing).
(l) Evidence of Property Insurance. The Lessor shall have
received evidence of insurance with respect to the Property required to be
maintained pursuant to this Lease, setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage, and
otherwise satisfying the requirements set forth in Article XVII.
(m) Lease Supplement. On or prior to the Acquisition Date, the
Lessee shall have delivered to the Lessor the Lease Supplement executed by
the Lessee.
(n) Nomura Loan Agreement Conditions Precedent. The conditions
precedent set forth in Section 3.1 of the Nomura Loan Agreement shall have
been satisfied or waived; provided, however, that the conditions precedent
set forth in Sections 3.1(a)(A)(ix), 3.1(a)(A)(xi), 3.1(a) (D)-(J) (but
with respect to Section 3.1(a)(J) only to the extent same is made by the
Lessee), (K), (M)-(T) and (V)-(W) of the Nomura Loan Agreement shall have
been satisfied by the Lessee or waived.
(o) Funding Request. The Lessor shall have received no later
than five (5) Business Days prior to the Acquisition Date a fully executed
counterpart of the applicable Funding Request, executed by the Lessee.
(p) Delivery of Pledged Securities and Certificate A. The
Lessee shall have delivered the Pledged Securities and the Certificate A to
the Custodian and the Lessor, respectively, in accordance with the
Securities Pledge Agreement and Certificate Pledge Agreement, respectively.
(q) Mezzanine Loan Agreement Conditions Precedent. The
conditions precedent set forth in Section 3.1 of the Mezzanine Loan
Agreement shall have been satisfied or waived; provided, however, that the
conditions precedent set forth in Sections 3.1(a)(A)(ix), 3.1(a)(A)(xi),
3.1(a) (D), (F) and (H)-(J) (but with respect to Section 3.1(a)(J) only to
the extent same is made
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by the Lessee), of the Mezzanine Loan Agreement shall have been satisfied
by the Lessee or waived.
All documents and instruments required to be delivered on the Acquisition Date
shall be delivered at the offices of Xxxxx, Xxxxx & Xxxxx, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or at such other location as may be determined by the
Lessor and the Lessee.
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor. The Lessor represents and warrants to
the Lessee that:
(a) ERISA. The Lessor is not and will not be funding the
Advance hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA, or
"plan" (as defined in Section 4975(e)(1) of the Code).
(b) Status. The Lessor is a duly organized and validly existing
Delaware business trust and has all requisite power and authority to own
its property and to conduct the business in which it is currently engaged.
(c) Corporate Power and Authority. The Lessor has the requisite
power and authority to execute, deliver and carry out the terms and
provisions of the Operative Documents to which it is or will be a party and
has taken all necessary action to authorize the execution, delivery and
performance of the Operative Documents to which it is a party and has duly
executed and delivered each Operative Document required to be executed and
delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such Operative
Document constitutes a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited
by insolvency, bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by equitable
principles whether enforcement is sought by proceedings in equity or at law
and except as the same may be limited by certain circumstances under law or
court decisions in respect of provisions providing for indemnification of a
party with respect to liability where such indemnification is contrary to
public policy.
(d) No Legal Bar. Neither the execution, delivery and
performance by the Lessor of the Operative Documents to which it is or will
be a party nor compliance with the terms and provisions thereof, nor the
consummation by the Lessor of the transactions contemplated therein (i)
will result in a violation by the Lessor of any provision of any Applicable
Law that would Materially adversely affect (x) the validity or
enforceability of the Operative Documents to which the Lessor is a party,
or the title to, or value or condition of, the Property, or (y) the
financial position, business or results of operations of the Lessor or the
ability of the Lessor to perform its obligations under the Operative
Documents (ii) will conflict with or result in any breach which
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would constitute a default under, or (other than pursuant to the Operative
Documents) result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Lessor
pursuant to the terms of any indenture, loan agreement or other agreement
for borrowed money to which the Lessor is a party or by which it or any of
its property or assets is bound or to which it may be subject (other than
Permitted Liens), or (iii) will violate any provision of the Trust
Agreement.
(e) Litigation. There are no actions, suits or proceedings pending or,
to the knowledge of the Lessor, threatened (i) against the Property, (ii)
that are reasonably likely to have a Materially adverse effect on the
ability of the Lessor to perform its obligations under the Operative
Documents or (iii) that question the validity of the Operative Documents or
the rights or remedies of the Lessor with respect to the Lessor or the
Property under the Operative Documents.
(f) Governmental Approvals. No Governmental Action by any Governmental
Authority having jurisdiction over the Lessor which has not been taken on
or prior to the Acquisition Date is required to authorize or is required in
connection with (i) the execution, delivery and performance by the Lessor
of any Operative Document to which it is a party, or (ii) the legality,
validity, binding effect or enforceability against the Lessor of any
Operative Document to which it is a party.
(g) Investment Company Act. The Lessor is not an "investment company"
or a company "controlled" by an "investment company," within the meaning of
the Investment Company Act.
(h) Public Utility Holding Company Act. The Lessor is not a "holding
company" or a "subsidiary company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
6.2. Representations of Lessee. The Lessee represents and warrants to
the Lessor that:
(a) Corporate Status. The Lessee (i) is a duly organized and validly
existing corporation in good standing under the laws of the State of
Delaware and (ii) has the corporate power and authority to own its
properties and to conduct the business in which it is currently engaged.
(b) Corporate Power and Authority. The Lessee has the corporate power
and authority to execute, deliver and carry out the terms and provisions of
the Operative Documents to which it is or will be a party and has taken all
necessary corporate action to authorize the execution, delivery and
performance of the Operative Documents to which it is a party and has duly
executed and delivered each Operative Document required to be executed and
delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such Operative
Document constitutes a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited
by insolvency, bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by equitable
principles whether enforcement is sought by proceedings in equity or at law
and except as the same may be limited by certain circumstances under law or
court decisions in respect of provisions providing for indemnification of a
party with respect to liability where such indemnification is contrary to
public policy.
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(c) No Legal Bar. Neither the execution, delivery and performance by
the Lessee of the Operative Documents to which it is or will be a party nor
compliance with the terms and provisions thereof, nor the consummation by
the Lessee of the transactions contemplated therein (i) will result in a
violation by the Lessee of any provision of any Applicable Law that would
Materially adversely affect (x) the validity or enforceability of the
Operative Documents to which the Lessee is a party, or the title to, or
value or condition of, the Property, or (y) the consolidated financial
position, business or consolidated results of operations of the Lessee or
the ability of the Lessee to perform its obligations under the Operative
Documents, (ii) will conflict with or result in any breach which would
constitute a default under, or (other than pursuant to the Operative
Documents) result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Lessee
pursuant to the terms of any indenture, loan agreement or other agreement
for borrowed money to which the Lessee is a party or by which it or any of
its property or assets is bound or to which it may be subject (other than
Permitted Liens), or (iii) will violate any provision of the certificate of
incorporation or by-laws of the Lessee.
(d) Litigation. There are no actions, suits or proceedings pending or,
to the knowledge of the Lessee, threatened (i) against the Property, (ii)
that are reasonably likely to have a Materially adverse effect on the
ability of the Lessee to perform its obligations under the Operative
Documents or (iii) that question the validity of the Operative Documents or
the rights or remedies of the Lessor with respect to the Lessee or the
Property under the Operative Documents.
(e) Governmental Approvals. No Governmental Action by any Governmental
Authority having jurisdiction over the Lessee or the Property which has not
been taken on or prior to the Acquisition Date is required to authorize or
is required in connection with (i) the execution, delivery and performance
by the Lessee of any Operative Document to which it is a party, or (ii) the
legality, validity, binding effect or enforceability against the Lessee of
any Operative Document to which it is a party.
(f) Investment Company Act. The Lessee is not an "investment company"
or a company "controlled" by an "investment company," within the meaning of
the Investment Company Act.
(g) Public Utility Holding Company Act. The Lessee is not a "holding
company" or a "subsidiary company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(h) Offer of Securities, etc. Neither the Lessee nor any Person
authorized to act on the Lessee's behalf has, directly or indirectly,
offered any interest in the Property or any other interest similar thereto
(the sale or offer of which would be integrated with the sale or offer of
such interest in the Property), for sale to, or solicited any offer to
acquire any of the same from, any Person other than the Lessor and other
"accredited investors" (as defined in Regulation D of the Securities and
Exchange Commission).
(i) Solvency. The Lessee's representations and warranties set forth in
Section 4.1 (c)(I) of each of the Nomura Loan Agreement and Mezzanine Loan
Agreement are true and correct.
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(j) Use of Property. The Property and the contemplated use thereof by
the Lessee and its agents, assignees, employees, lessees, licensees and
tenants will comply with all Material Requirements of Law (including,
without limitation, all zoning and land use laws and Environmental Laws)
and Material Insurance Requirements, except for such Requirements of Law as
the Lessee shall be contesting in good faith by appropriate proceedings.
There is no action, suit or proceeding (including any proceeding in
condemnation or eminent domain or under any Environmental Law) pending or,
to the best of the Lessee's knowledge, threatened with respect to the
Lessee, its Affiliates or the Property which adversely Materially affects
the title to, or the use, operation or value of, the Property.
(k) Condition of Property. The Property has all utilities required to
adequately service it for its intended use pursuant to adequate permits
(including any that may be required under applicable Environmental Laws).
No fire or other casualty with respect to the Property has occurred which
fire or other casualty has had a Material adverse effect on the Property.
The Property has available all Material services of public facilities and
other utilities necessary for use and operation of the Property as an
independent living facility with assisted living services, including
required public utilities and means of access between the Property and
public highways for pedestrians and motor vehicles. All utilities proposed
to serve the Property are located in, and vehicular access to the Property
is provided by, either public rights-of-way abutting the Property or
Appurtenant Rights.
(l) Title. The Deed will be in form and substance sufficient to convey
good and marketable title to the Property in fee simple, subject only to
Permitted Liens. The Lessor will at all times during the Term have good
title to all Equipment located on the Property and in any Improvements,
subject only to Permitted Liens and Lessor Liens, if any.
(m) Insurance. The Lessee has obtained insurance coverage covering the
Property or self insures in a manner which satisfies the terms of this
Lease, and any such coverage is in full force and effect. The Lessee
carries insurance with reputable insurers in respect of its Material
Assets, in such manner, in such amounts and against such risks as is
customarily maintained by other Persons of similar size engaged in similar
business.
(n) Flood Hazard Areas. Except as otherwise identified on the survey
delivered pursuant to Section 4.3(j), no portion of the Property is located
in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency. With respect to any
portion of the Property located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other applicable
agency, the Lessee is self-insured with respect to all risks related
thereto to the same extent as the Lessee self-insures its other assets
similarly situated, and otherwise in accordance with Section 17.2 and in
accordance with the National Flood Insurance Act of 1968, as amended, or
has provided adequate flood hazard insurance as required under the Nomura
Loan Agreement and the Mezzanine Loan Agreement.
(o) Defaults. No Event of Default or similar event which with the
lapse of time or notice or both would constitute an "Event of Default" or
similar event has occurred and is continuing hereunder or under any
Material bond, debenture, note or other evidence of indebtedness or
Material mortgage, deed of trust, indenture or loan agreement or other
instrument to which the Lessee is a party or is subject to or bound.
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(p) Use of Advance. No part of the Advance will be used directly or
indirectly for the purpose of purchasing or carrying, or for payment in
full or in part of Debt that was incurred for the purposes of purchasing or
carrying, any margin security as such term is defined in Section 207.2 of
Regulation G of the Board of Governors of the Federal Reserve System (12
C.F.R., Chapter II, Part 207).
6.3. Representations of the Lessee with Respect to the Advance. The
Lessee represents and warrants to the Lessor as of the Acquisition Date as
follows:
(a) Representations. The representations and warranties of the Lessee
set forth in the Operative Documents (including the representations and
warranties set forth in Section 6.2) are true and correct in all Material
respects on and as of the Acquisition Date, except to the extent such
representations or warranties relate solely to an earlier date, in which
case such representations and warranties shall have been true and correct
in all Material respects on and as of such earlier date. The Lessee is in
compliance in all Material respects with its respective obligations under
the Operative Documents and there exists no Default or Event of Default
under this Lease or any other Operative Document to which the Lessee is a
party. No Default or Event of Default under this Lease or any other
Operative Document to which the Lessee is a party will occur as a result
of, or by giving effect to, the Advance requested by the Funding Request on
such date.
(b) Liens. The Lessee has not permitted Liens to be placed against the
Property other than Permitted Liens.
(c) Advance. The Advance requested represents amounts owed by, or
previously paid by, the Lessee to third parties in respect of Property
Cost. The conditions precedent to the Advance set forth in Article IV have
been satisfied.
ARTICLE VII
PAYMENT OF RENT
7.1. Rent.
(a) The Lessee shall pay SELCO Basic Rent and Lessor Basic Rent on the
Acquisition Date. Thereafter the Lessee shall pay Basic Rent (to the extent
such Basic Rent (or any component thereof) is then due and owing) on (x)
each Payment Date during the Term, (y) the date required under Section
24.1(i) in connection with the Lessee's exercise of the Remarketing Option,
and (z) any date on which this Lease shall terminate.
(b) Rent shall be due and payable in lawful money of the United States
and, after the occurrence and during the continuance of a Cash Management
Event, shall be paid by wire transfer of immediately available funds on the
due date therefor from the relevant Sub-Accounts of the Cash Collateral
Account, to the extent funds exist therein. With the exception of the first
payment on the Acquisition Date of SELCO Basic Rent and Lessor Basic Rent,
for which at least two (2) Business Days prior written notice from the
Lessor shall be provided, the Lessor shall provide written notice of the
amount of Basic Rent due at least two (2) Business Days prior to each due
date therefor; provided, however, that the failure of the Lessor to provide
such notice
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shall not affect Lessee's obligations hereunder or impose liability on
Lessor. Lessee shall deposit all security deposits received by it with
respect to the Property into the Security Deposit Account and shall cause
all relevant checks to be made payable to the name of the Security Deposit
Account.
(c) So long as a Cash Management Event is not continuing, Rent shall
be payable by wire transfer of immediately available funds on the due date
therefor as follows: (i) Lessor Basic Rent and SELCO Basic Rent and
Supplemental Rent to which the Lessor is entitled shall be payable to the
Lessor at the place of payment designated in writing by the Lessor and (ii)
the remainder of Basic Rent and Supplemental Rent to which the Lender is
entitled shall be payable to the Lender or Lender's designee or to an
account identified by Lender or Lender's designee as set forth in Section
2.12 (b) of the Nomura Loan Agreement.
(d) Neither the Lessee's inability or failure to take possession of
all or any portion of the Property when delivered by the Lessor, whether or
not attributable to any act or omission of the Lessee, or for any other
reason whatsoever, shall delay or otherwise affect the Lessee's obligation
to pay Rent for the Property in accordance with the terms of this Lease.
7.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor, so
that this Lease shall yield to the Lessor the full amount thereof, without
setoff, deduction or reduction.
7.3. Supplemental Rent. The Lessee shall pay promptly as Supplemental Rent
shall become due and payable (a) after the occurrence and during the continuance
of a Cash Management Event, to the Collection Account and (b) so long as that a
Cash Management Event is not continuing, any and all Supplemental Rent payable
pursuant to the Nomura Loan Agreement and the Mezzanine Loan Agreement, to the
Lender, Lender's designee or to such parties as set forth in the Nomura Loan
Agreement and the Mezzanine Loan Agreement, and all other Supplemental Rent to
the Lessor. If the Lessee fails to pay any Supplemental Rent, the Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee shall pay as
Supplemental Rent, among other things, within ten (10) days following demand (or
such shorter period that such payment is required to be made under the Loan
Documents and the Mezzanine Loan Documents) to the extent permitted by
applicable Requirements of Law, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due or
demanded by the Lessor for the period from the due date or the date of any such
demand, as the case may be, until the same shall be paid. The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent. Unless expressly provided otherwise in this Lease, in the event of any
failure on the part of the Lessee to pay and discharge any Supplemental Rent as
and when due, the Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added under any agreement
with a third party for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.
7.4. Method of Payment. Except as otherwise set forth in the Nomura Loan
Agreement and the Mezzanine Loan Agreement, each payment of Rent or any other
amount due hereunder shall be made by the Lessee to the applicable party prior
to 12:00 noon., New York City time at the place of payment designated in writing
by the Lessor or such applicable party in funds consisting of lawful currency of
the United States of America which shall be in federal or other immediately
available funds to an account
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specified by Lender (with respect to payments to Lender) and, with respect to
all other payees, to such accounts as specified by such payees. If any payment
is due on a date which is not a Business Day, such payment shall be made on the
next succeeding Business Day. Payments received after 12:00 noon, New York City
time on the date due shall for all purposes hereof be deemed to have been paid
on the next succeeding Business Day.
ARTICLE VIII
QUIET ENJOYMENT; RIGHT TO INSPECT
8.1. Quiet Enjoyment. Subject to Sections 2.4 and 8.2, and subject to the
rights of the Lessor contained herein and the other terms of the Operative
Documents to which the Lessee is a party, the Lessee shall peaceably and quietly
have, hold and enjoy the Property for the Term, free of any claim or other
action by the Lessor or anyone claiming by, through or under the Lessor (other
than the Lessee) with respect to any matters arising from and after the
Acquisition Date. Such right of quiet enjoyment is independent of, and shall not
affect the Lessor's rights otherwise to initiate legal action to enforce, the
obligations of the Lessee under this Lease.
8.2. Right to Inspect. During the Term, the Lessee shall, upon reasonable
prior written notice from the Lessor (except that no notice shall be required if
an Event of Default under this Lease has occurred and is continuing), and
subject to the rights of permitted sublessees permit the Lessor and its
authorized representatives to inspect the Property during normal business hours,
provided that such inspections shall not unreasonably interfere with the
Lessee's business operations at the Property.
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease. This Lease shall constitute a net lease. Any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall the Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
obligations of the Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of the Property or any part thereof, or
the failure of the Property to comply with all Requirements of Law, including
any inability to occupy or use the Property by reason of such non-compliance;
(ii) any damage to, removal, abandonment, salvage, loss, contamination of or
Release from, scrapping or destruction of or any requisition or taking of the
Property or any part thereof; (iii) any restriction, prevention or curtailment
of or interference with any use of the Property or any part thereof including
eviction; (iv) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee or any other Person, or any action
taken with respect to this Lease by any trustee or receiver of the Lessee or any
other Person, or by any court, in any such proceeding; (vii) any claim that the
Lessee has or might have against any Person, including without limitation the
Lessor and any vendor, manufacturer, contractor of or for any portion of the
Property; (viii) any failure on the part of the Lessor to perform or comply with
any of the terms of this Lease (other than performance by Lessor of its
obligations set forth in Section 2.1 hereof), of any other Operative
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Document or of any other agreement; (ix) any invalidity or unenforceability or
illegality or disaffirmance of this Lease against or by the Lessee or any
provision hereof or any of the other Operative Documents or any provision of any
thereof; (x) the impossibility or illegality of performance by the Lessee, the
Lessor or both; (xi) any action by any court, administrative agency or other
Governmental Authority; (xii) any restriction, prevention or curtailment of or
interference with the construction on or any use of the Property or any part
thereof; or (xiii) any other cause or circumstances, whether or not the Lessee
shall have notice or knowledge of any of the foregoing. The parties intend that
the obligations of the Lessee hereunder shall be covenants and agreements that
are separate and independent from any obligations of the Lessor hereunder or
under any other Operative Documents and the obligations of the Lessee shall
continue unaffected unless such obligations shall have been modified or
terminated in accordance with an express provision of this Lease. Nothing
contained herein is intended to obviate or otherwise diminish any right the
Lessee may have to bring an action, either at law or in equity, to remedy any
breach by the Lessor of the Lessor's obligations hereunder.
9.2. No Termination or Abatement. The Lessee shall remain obligated under
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, or any action with respect to this Lease which
may be taken by any trustee, receiver or liquidator of the Lessor or by any
court with respect to the Lessor. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. The Lessee shall remain obligated under
this Lease in accordance with its terms and the Lessee hereby waives any and all
rights now or hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Lease. Notwithstanding any
such statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Lease. Notwithstanding anything contained in this
Article IX, this Lease may be terminated by Lessor pursuant to, inter alia,
Sections 19.1 and 20.2 hereof.
ARTICLE X
SUBLEASES
10.1. Subletting. The Lessee may, without the consent of the Lessor,
sublease the Property or any portion thereof to any Person. No sublease or other
relinquishment of possession of the Property shall in any way discharge or
diminish any of the Lessee's obligations to the Lessor hereunder, and the Lessee
shall remain directly and primarily liable under this Lease, even if assigned,
and as to the Property or portion thereof so sublet. Any sublease of the
Property shall have a term of not longer than one year or if such sublease has a
term of more than one year, such term shall not extend beyond the Term or any
Renewal Period. The Lessor hereby expressly agrees that any obligations or
covenants under this Lease may be performed by any permitted sublessee directly,
and the Lessor agrees that any such performance will be accepted in satisfaction
of the obligations or covenants in this Lease.
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ARTICLE XI
LESSEE ACKNOWLEDGMENTS
11.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES
THAT IT IS LEASING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR AND SUBJECT TO (A) THE EXISTING
STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY
STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND
(D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR ON
THE ACQUISITION DATE. THE LESSOR HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) AND SHALL NOT
BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR
LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND THE LESSOR SHALL NOT BE LIABLE
FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS)
OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
REQUIREMENT OF LAW.
11.2. Risk of Loss. During the Term the risk of loss of or decrease in
the enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges. The Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee.
12.2. Possession and Use of the Property. The Property shall be used
as an independent living facility with assisted living services in a manner
consistent with the standards applicable to properties of a similar nature in
the geographic area in which the Property is located and in any event not less
than the standards applied by Affiliates of the Lessee for other comparable
properties of the Lessee or such Affiliates in such geographic area. The Lessee
shall pay, or cause to be paid, all charges and costs required in connection
with the use of the Property as contemplated by this Lease. The Lessee shall not
intentionally commit or permit any waste of the Property or any part thereof.
12.3. Compliance with Requirements of Law and Insurance Requirements.
Subject to the terms hereof relating to permitted contests, the Lessee, at its
sole cost and expense, shall (a) comply in all Material respects with all
Requirements of Law (including all Environmental Laws) and Insurance
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Requirements relating to the Property, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XXIV, whether or not compliance therewith shall
require structural or extraordinary changes in the applicable Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all Material licenses, permits, orders, approvals, consents and
other authorizations required for the construction, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair and
restoration of the applicable Improvements.
12.4. Assignment by Lessee. Subject to the terms of the Nomura Loan
Agreement and the Mezzanine Loan Agreement, the Lessee may, with the consent of
the Lessor, assign its rights hereunder, including the Purchase Option, to any
other Person so long as the Lessee remains fully liable for all of the
obligations of the "Lessee" hereunder and under the other Operative Documents.
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return.
(a) The Lessee, at its sole cost and expense, shall maintain the
Property in good condition (ordinary wear and tear excepted) and make
all necessary repairs thereto, of every kind and nature whatsoever,
whether interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by
all Requirements of Law and Insurance Requirements and on a basis
consistent with the operation and maintenance by the Lessee or its
Affiliates of properties of a similar nature owned or leased by the
Lessee or any of its Affiliates in the geographic area where the
Property is located.
(b) The Lessor shall under no circumstances be required to build
any improvements on the Property, make any repairs, replacements,
alterations or renewals of any nature or description to the Property,
make any expenditure whatsoever in connection with this Lease or
maintain the Property in any way. The Lessor shall not be required to
maintain, repair or rebuild all or any part of the Property, and the
Lessee waives any right to (i) require the Lessor to maintain, repair,
or rebuild all or any part of the Property, or (ii) make repairs at
the expense of the Lessor pursuant to any Requirement of Law,
Insurance Requirement, contract, agreement, or covenant, condition or
restriction in effect at any time during the Term.
(c) The Lessee shall, upon the expiration or earlier termination
of this Lease, vacate and surrender the Property to the Lessor in its
then-current, "AS IS" condition, subject to the Lessee's obligations
under Sections 12.3, 13.1(a), 14.1, 15.1, 18.1(e), 18.2 and 24.1,
unless the Lessee has purchased the Property from the Lessor as
provided herein.
ARTICLE XIV
MODIFICATIONS, ETC.
14.1. Modifications, Substitutions and Replacements. The Lessee, at
its sole cost and expense, may at any time and from time to time make
alterations, renovations, improvements and additions to the Property or any part
thereof and substitutions and replacements therefor (collectively,
"Modifications");
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provided, however, that: (i) except for any Modification required to be made
pursuant to a Requirement of Law (a "Required Modification"), no Modification
shall impair the value, utility or useful life of the Property or any part
thereof from that which existed immediately prior to such Modification; (ii) the
Modification shall be done expeditiously and in a good and workmanlike manner;
(iii) the Lessee shall comply with all Requirements of Law (including all
Environmental Laws) and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy, and the
structural integrity of the Property shall not be materially adversely affected;
(iv) subject to the terms of Article XVI relating to permitted contests, the
Lessee shall pay all costs and expenses and shall discharge (or cause to be
insured or bonded over) within sixty (60) days after the same shall be filed (or
otherwise become effective) any Liens arising with respect to the Modification;
and (v) such Modifications shall comply with Sections 12.3 and 13.1(a). All
Modifications shall remain part of the realty and shall be subject to this Lease
and title thereto shall immediately vest in the Lessor; provided, however, that
with the exception of Modifications permitted pursuant to Section 2.12(f)(iv) of
the Nomura Loan Agreement, Modifications that meet each of the following
conditions shall not be subject to this Lease: (x) such Modifications are not
Required Modifications, (y) such Modifications were not financed by the Lessor
and (z) such Modifications are readily removable without impairing the value,
utility or remaining useful life of the Property. The Lessee may place upon the
Property any trade fixtures, machinery, equipment or other property belonging to
the Lessee or third parties and may remove the same at any time during the Term,
subject, however, to the terms of Section 13.1(a), and Lessor hereby waives any
liens, to which it may be entitled pursuant to any statutory or common law, in
such trade fixtures, machinery, equipment or other property; provided that such
trade fixtures, machinery, equipment or other property do not Materially impair
the value, utility or remaining useful life of the Property; provided, further,
that the Lessee shall keep and maintain at the Property and shall not, without
the Lessor's prior consent, remove from the Property any Equipment financed or
otherwise paid for (directly or indirectly) by the Lessor pursuant to this
Lease. Notwithstanding the forgoing, the Lessee shall comply with all provisions
of the Loan Documents and the Mezzanine Loan Documents with respect to
Modifications as if the Lessee were the Borrower thereunder, and to the extent
the provisions hereof are inconsistent with same, the provisions of the Loan
Documents and the Mezzanine Loan Documents shall control.
ARTICLE XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title.
(a) The Lessee agrees that except as otherwise provided herein
and subject to the terms of Article XVI relating to permitted
contests, the Lessee shall not directly or indirectly create or allow
to remain, and shall promptly discharge at its sole cost and expense,
any Lien, defect, attachment, levy, title retention agreement or claim
upon the Property or any Modifications or any Lien, attachment, levy
or claim with respect to the Rent, other than Permitted Liens and
Liens on machinery, equipment, general intangibles and other personal
property not financed by the Advance.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of the Lessor, expressed or
implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration,
addition, repair or demolition of or to the
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Property or any part thereof. NOTICE IS HEREBY GIVEN THAT THE LESSOR
IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, IN AND TO THE
PROPERTY.
15.2. Grants and Releases of Easements; Lessor's Waivers. (x) Provided
that no Event of Default shall have occurred and be continuing, (y) subject to
the rights of the Lessee under the provisions of Articles XII, XIII and XIV and
(z) provided that the following is consistent with the terms of the Loan
Documents and the Mezzanine Loan Documents, the Lessor hereby consents in each
instance to the following actions by the Lessee, in the name and stead of the
Lessor, but at the Lessee's sole cost and expense: (a) the granting of
easements, licenses, rights-of-way and other rights and privileges in the nature
of easements reasonably necessary or desirable for the use, repair, or
maintenance of the Property as herein provided; (b) the release of existing
easements or other rights in the nature of easements which are for the benefit
of the Property; (c) if required by applicable Governmental Authority for any
purpose, including, but not limited to, the dedication or transfer of unimproved
portions of the Property for road, highway or other public purposes; and (d) the
execution of amendments to any covenants and restrictions affecting the
Property; provided, however, that in each case (i) such grant, release,
dedication, transfer or amendment does not Materially impair the value, utility
or remaining useful life of the Property, (ii) such grant, release, dedication,
transfer or amendment is reasonably necessary in connection with the use,
maintenance, alteration or improvement of the Property, (iii) such grant,
release, dedication, transfer or amendment will not cause the Property or any
portion thereof to fail to comply in any Material respect with the provisions of
this Lease or any other Operative Documents and all Requirements of Law
(including, without limitation, all applicable zoning, planning, building and
subdivision ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements); (iv) all governmental consents or
approvals required prior to such grant, release, dedication, transfer or
amendment have been obtained, and all filings required prior to such action have
been made; (v) such grant, release, dedication, transfer or amendment will not
result in any down-zoning of the Property or any portion thereof or a material
reduction in the maximum density or development rights available to the Property
under all Requirements of Law; (vi) the Lessee shall remain obligated under this
Lease and under any instrument executed by the Lessee consenting to the
assignment of the Lessor's interest in this Lease as security for indebtedness,
in each such case in accordance with their terms, as though such grant, release,
dedication, transfer or amendment had not been effected and (vii) the Lessee
shall pay and perform any obligations of the Lessor under such grant, release,
dedication, transfer or amendment. The Lessor acknowledges the Lessee's right to
finance and to secure under the Uniform Commercial Code, inventory, furnishings,
furniture, equipment, machinery, leasehold improvements and other personal
property located at the Property other than Equipment which has been purchased
with funds provided by the Lessor, and Lessor hereby disclaims and waives any
interest therein and right thereto and the Lessor shall, upon the request of the
Lessee, and at the Lessee's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm any such grant, release,
dedication, transfer, annexation, amendment, disclaimer or waiver to any Person
permitted under this Section 15.2 including landlord waivers with respect to any
of the foregoing.
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ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted Contests in Respect of Applicable Law. Subject to the
terms of the Loan Documents and Mezzanine Loan Documents, if, to the extent and
for so long as (a) a test, challenge, appeal or proceeding for review of any
Applicable Law relating to the Property shall be prosecuted diligently and in
good faith in appropriate proceedings by the Lessee or (b) compliance with such
Applicable Law shall have been excused or exempted by a valid nonconforming use,
variance, permit, waiver, extension or forbearance, the Lessee shall not be
required to comply with such Applicable Law but only if and so long as any such
test, challenge, appeal, proceeding, waiver, extension, forbearance or
noncompliance shall not, in the reasonable opinion of the Lessor, involve (A)
any risk of criminal liability being imposed on the Lessor or the Property, or
(B) any risk of (1) foreclosure, forfeiture or loss of the Property, or any
Material part thereof, or (2) the nonpayment of Rent or (C) any substantial
danger of (1) the sale of, or the creation of any Lien (other than a Permitted
Lien) on, any part of the Property, (2) civil liability being imposed on the
Lessor, or the Property, or (3) enjoinment of, or interference with, the use,
possession or disposition of the Property in any Material respect.
The Lessor will not be required to join in any proceedings pursuant to
this Section 16.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) no Default has occurred and is
continuing and (ii) the Lessee pays all related expenses and indemnifies the
Lessor to its reasonable satisfaction.
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance.
(a) During the Term the Lessee shall procure and carry, at the
Lessee's sole cost and expense, commercial general liability insurance
for claims for bodily injury or death sustained by persons or damage
to property while on the Property and such other public liability
coverages as are ordinarily procured by the Lessee or its Affiliates
who own or operate similar properties. Such insurance shall be on
terms and in amounts that are in accordance with normal industry
practice. The policy shall be endorsed to name the Lessor, the Trust
Company and the Lender as additional insured. The policy shall also
specifically provide that the policy shall be considered primary
insurance which shall apply to any loss or claim before any
contribution by any insurance which the Lessor may have in force.
(b) The Lessee shall, in the construction of any Improvements
(including in connection with any Modifications thereof) and the
operation of the Property, comply with, or cause the applicable
contractor to comply with, all applicable workers' compensation laws.
17.2. Hazard and Other Insurance. During the Term the Lessee shall
keep, or cause to be kept, the Property insured against loss or damage by fire,
flood and other risks on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee or its
Affiliates and that are in accordance with normal industry practice and as
required in the Loan Documents and the
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Mezzanine Loan Documents. During the construction of any Improvements the Lessee
shall also maintain or cause to be maintained builders' risk insurance.
17.3. Insurance Coverage.
(a) The Lessee shall furnish the Lessor with certificates
showing the insurance required under Sections 17.1 and 17.2 to be in
effect and naming the Lessor as additional insured with respect to
liability coverage (excluding worker's compensation insurance), and
naming the Lessor as loss payee with respect to property coverage and
showing the mortgagee endorsement required by Section 17.3(c) with
respect to such coverage. All such insurance shall be at the cost and
expense of the Lessee. Such certificates shall include a provision for
no less than thirty (30) days' advance written notice by the insurer
to the Lessor in the event of cancellation or reduction of such
insurance.
(b) The Lessee agrees that the insurance policy or policies
required by Section 17.2 shall include an appropriate clause pursuant
to which such policy shall provide that it will not be invalidated
should the Lessee waive, in writing, prior to a loss, any or all
rights of recovery against any party for losses covered by such
policy, and that the insurance in favor of the Lessor and its rights
under and interests in said policies shall not be invalidated or
reduced by any act or omission or negligence of the Lessee or any
other Person having any interest in the Property. The Lessee hereby
waives any and all such rights against the Lessor to the extent of
payments made under such policies.
(c) All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise
reasonably appropriate considering the amount and type of insurance
being provided by such companies. Any insurance company selected by
the Lessee which is rated in Best's Insurance Guide or any successor
thereto (or if there be none, an organization having a similar
national reputation) shall have a general policyholder rating of "A"
and a financial rating of at least "12" or be otherwise acceptable to
the Lessor. All insurance policies required by Section 17.2 shall
include a standard form mortgagee endorsement in favor of the Lender.
(d) The Lessor may carry separate liability insurance so long as
(i) the Lessee's insurance is designated as primary and in no event
excess or contributory to any insurance the Lessor may have in force
which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause the Lessee's insurance
required under this Article XVII to be subject to a coinsurance
exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by Section 17.1 and Section 17.2, and shall renew
or replace each policy prior to the expiration date thereof.
Throughout the Term, at the time each of the Lessee's insurance
policies is renewed (but in no event less frequently than once each
year), the Lessee shall deliver to the Lessor certificates of
insurance evidencing that all insurance required by this Article XVII
is being maintained by the Lessee and is in effect.
17.4. Insurance Proceeds. All insurance proceeds in respect of any
loss or occurrence shall, to the extent permitted under the Loan Documents and
the Mezzanine Loan Documents, be paid to the Lender and, upon compliance with
the terms of the Loan Documents and the Mezzanine Loan
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Documents, the Lender shall pay same to the Lessee for application toward the
reconstruction, repair or refurbishment of the Property to the extent permitted
under the Loan Documents and the Mezzanine Loan Documents.
17.5. Insurance Requirements in Loan Documents and the Mezzanine Loan
Documents. Notwithstanding the provisions of Section 17.1, 17.2, 17.3 and 17.4,
the Lessee shall comply with all Insurance Requirements (as defined in the
Nomura Loan Agreement and the Mezzanine Loan Agreement) and to the extent the
provisions hereof are inconsistent with same, the provisions of the Loan
Documents and the Mezzanine Loan Documents shall control. The Lessor
acknowledges that the Insurance Requirements are acceptable to it; provided,
however, that notwithstanding the foregoing, the Lessee must at all times during
the Term have liability insurance complying with Section 17.1.
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XVIII, if all or a
portion of the Property is damaged or destroyed in whole or in part by
a Casualty or if the use, access, occupancy, easement rights or title
to the Property or any part thereof, is the subject of a Condemnation,
then the Lessee shall (i) reconstruct, refurbish and repair the
Property upon submission to the Lessor of an architect's certificate
as to the cost of such restoration and to the effect that the Property
can be fully restored to the condition required under the Operative
Documents and as to the cost of such restoration or (ii) pay the Lease
Balance.
(b) The Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At the Lessee's
reasonable request, and at the Lessee's sole cost and expense, the
Lessor shall participate in any such proceeding, action, negotiation,
prosecution or adjustment. The Lessor and the Lessee agree that this
Lease shall control the rights of the Lessor and the Lessee in and to
any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a
Casualty or of an actual, pending or threatened Condemnation of the
Property or any interest therein, the Lessor or the Lessee, as the
case may be, shall give notice thereof to the other and the Lender
promptly after the receipt of such notice.
(d) If pursuant to this Section 18.1 and Section 19.1 this Lease
shall continue in full force and effect following a Casualty or
Condemnation with respect to the Property, the Lessee shall, at its
sole cost and expense (and, without limitation, if any award,
compensation or insurance payment is not sufficient to restore the
Property in accordance with this paragraph, the Lessee shall pay the
shortfall), promptly and diligently repair any damage to the Property
caused by such Casualty or Condemnation in conformity with the
requirements of Sections 13.1 and 14.1 using the as-built plans and
specifications for the Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the Property and
all applicable
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Requirements of Law) so as to restore the Property as near as possible
to the condition, operation, function and value as existed immediately
prior to such Casualty or Condemnation with such Modification as the
Lessee may elect in accordance with Section 14.1. In such event, title
to the Property shall remain with the Lessor. Upon completion of such
restoration, the Lessee shall furnish the Lessor an architect's
certificate of substantial completion and a Responsible Employee's
Certificate confirming that such restoration has been completed
pursuant to this Lease.
(e) In no event shall a Casualty or Condemnation affect the
Lessee's obligations to pay Rent pursuant to Section 7.1 or to perform
its obligations and pay any amounts due on the Expiration Date or
pursuant to Articles XXII and XXV.
(f) Any Excess Proceeds received by the Lessor in respect of a
Casualty or Condemnation shall be turned over to the Lessee.
(g) Notwithstanding the provisions of this Section 18.1, the
Lessee shall comply with and be entitled to the benefit of all
provisions in the Loan Documents and Mezzanine Loan Documents
regarding Casualty and Condemnation and to the extent the provisions
hereof are inconsistent with same, the provisions of the Loan
Documents and Mezzanine Loan Documents shall control.
18.2. Environmental Matters. Promptly upon the Lessee's knowledge of
the existence of an Environmental Violation, the Lessee shall notify the Lessor
in writing of such Environmental Violation. If the Lessor elects not to
terminate this Lease pursuant to Section 19.1, at the Lessee's sole cost and
expense, the Lessee shall promptly and diligently commence any response, clean
up, remedial or other action necessary to remove, clean up or remediate the
Environmental Violation in accordance with the terms of Section 12.3. If the
Lessor does not deliver a Termination Notice pursuant to Section 19.1, the
Lessee shall, upon completion of remedial action by the Lessee, cause to be
prepared by an environmental consultant reasonably acceptable to the Lessor a
report describing the Environmental Violation and the actions taken by the
Lessee (or its agents) in response to such Environmental Violation, and a
statement by the consultant that the Environmental Violation has been remedied
in compliance in all material respects with applicable Environmental Law. Each
such Environmental Violation shall be remedied prior to the Expiration Date.
Nothing in this Article XVIII shall reduce or limit the Lessee's obligations
under the indemnity provisions hereof.
18.3. Notice of Environmental Matters. Promptly, but in any event
within sixty (60) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Environmental Violation on
or in connection with the Property. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to the Lessor,
within sixty (60) Business Days of receipt, copies of all written communications
with any Governmental Authority relating to any Environmental Law or any Release
in connection with the Property. The Lessee shall also promptly provide such
detailed reports of any such environmental claims as may reasonably be requested
by the Lessor. In the event that the Lessor receives written notice of any
pending or threatened claim, action or proceeding involving any Environmental
Violation on or in connection with the Property, the Lessor shall promptly give
notice thereof to the Lessee.
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18.4. Environmental Obligations of the Lessor Pursuant to the Nomura
Loan Agreement and the Mezzanine Loan Agreement. The representations, warranties
and covenants set forth in Section 4.1(d)(U) and Section 5.1(b)(D) through
Section 5.1(b)(I) of the Nomura Loan Agreement and the Mezzanine Loan Agreement
imposed upon Lessee pursuant thereto shall survive in perpetuity.
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination upon Certain Events. With respect to the Property,
if either:
(i) a Significant Condemnation occurs; or
(ii) an Environmental Violation occurs which (x) either causes
the Lender to accelerate the Principal Indebtedness or (y) is not
being addressed by the Lessee or the Parent as required hereby or by
the SELCO Environmental Guaranty;
and the Lessor or the Lessee shall have given written notice to the other party
that this Lease is to be terminated as a consequence of the occurrence of such
an event (a "Termination Notice"), then, the Lessee shall be obligated to
purchase all or a portion of the Lessor's interest in the Property on a Payment
Date prior to the date occurring one hundred eighty (180) days after the date of
the notice of termination (or if such Payment Date arises prior to the second
anniversary of the Start-Up Day, on the next Payment Date after such anniversary
that is 180 days after the date of the notice of termination) by paying the
Lessor on such Payment Date an amount equal to (a) the Equity Balance, in which
case this Lease shall not terminate but the Lease Balance shall be reduced by
the amount of such payment of Equity Balance or (b) the Lease Balance.
19.2. Termination Procedures. On the date of the payment by the Lessee
of the Lease Balance in accordance with the Termination Notice or in accordance
with Section 19.1 (such date, the "Termination Date"), this Lease shall
terminate and, concurrent with the Lessor's receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense a quitclaim
deed with respect to the Property, a quitclaim xxxx of sale with
respect to the applicable Equipment and an assignment of the Lessor's
entire interest in the Property (which shall include an assignment of
all of the Lessor's right, title and interest in and to any Net
Proceeds not previously received by the Lessor and existing subleases
and security deposits thereunder), in each case in recordable form and
otherwise in conformity with local custom and free and clear of any
Lessor Liens attributable to the Lessor;
(b) the Property shall be conveyed to such Person "AS IS" and in
its then present physical condition;
(c) in the case of a termination pursuant to clause (i) or (ii)
of Section 19.1, the Lessor shall convey to the Lessee any Net
Proceeds with respect to the Condemnation giving rise to the partial
termination of this Lease theretofore received by the Lessor or at the
request of the Lessee, such amounts shall be applied against sums due
hereunder; and
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(d) the Lessor shall execute and deliver to Lessee and the
Lessee's title insurance company an affidavit as to the absence of any
Lessor Liens and shall execute and deliver to the Lessee a statement
of termination of this Lease to the extent relating to the Property.
ARTICLE XX
EVENTS OF DEFAULT
20.1. Events of Default. The occurrence of any one or more of the
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute an "Event of Default":
(a) the Lessee shall fail to make payment of any Basic Rent,
including amounts due pursuant to Section 19.1 or 22.1 or Article
XXIV, Equity Balance or Lease Balance when due; provided, however,
that if a Cash Management Event has not occurred, the failure to pay
those portions of Basic Rent consisting of SELCO Basic Rent, Lessor
Basic Rent, the Required Debt Service Payment due on such date, the
Basic Carrying Costs Monthly Installment due on such date or the
Capital Reserve Monthly Installment due on the due date therefor shall
not constitute an Event of Default if Lessee shall cure such failure
within five (5) days after the due date therefor;
(b) the Lessee shall fail to make payment of any Supplemental
Rent (i) required to be made pursuant to the Nomura Loan Agreement or
the Mezzanine Loan Agreement on the due date therefor and such failure
is not remedied within any applicable grace period set forth in the
Loan Documents or the Mezzanine Loan Documents, and (ii) any other
component of Supplement Rent due and payable within five (5) Business
Days after receipt of notice thereof;
(c) the Lessee shall fail to maintain insurance as required by
Article XVII of this Lease;
(d) the Lessee shall fail in any Material respect to observe or
perform any term, covenant or condition of the Lessee under this Lease
or the Operative Documents to which it is party other than those
described in Section 20.1(a), (b), or (c) hereof, and such failure
shall have continued for thirty (30) days after the earlier of (i)
delivery to the Lessee of written notice thereof from the Lessor or
(ii) a Responsible Employee of the Lessee shall have knowledge of such
failure; provided, however, that if such failure is capable of cure
but cannot be cured by payment of money or cannot be cured by diligent
efforts within such thirty (30) day period but such diligent efforts
shall be properly commenced within the cure period and the Lessee is
diligently pursuing, and shall continue to pursue diligently, remedy
of such failure, the cure period shall be extended for an additional
period of time as may be necessary to cure, not to exceed an
additional one hundred twenty (120) days or to extend beyond the
Expiration Date; provided further, that failure by the Lessee to fully
comply with the requirements of Section 24.1 hereof shall not be
subject to any cure period;
(e) to the extent the same causes an Event of Default under the
Nomura Loan Agreement or the Mezzanine Loan Agreement, any
representation or warranty made by the Lessee in any of the Operative
Documents to which it is a party shall prove to have been inaccurate
in any Material respect at the time made, and if such inaccuracy can
be cured, it shall not have been
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cured within forty-five (45) days after the earlier of (i) delivery to
the Lessee of written notice thereof from the Lessor or (ii) a
Responsible Employee of the Lessee shall have knowledge of such
inaccuracy;
(f) an "Event of Default" under the Nomura Loan Agreement or,
while the Mezzanine Loan is outstanding, the Mezzanine Loan Agreement,
shall have occurred and be continuing;
(g) the Lessee or the Parent shall (i) admit in writing its
inability to pay its debts generally as they become due, (ii) file a
petition under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America
or any State or Commonwealth thereof, (iii) make a general assignment
for the benefit of its creditors, (iv) consent to the appointment of a
receiver of itself or the whole or any substantial part of its
property, (v) fail to cause the discharge of any custodian, trustee or
receiver appointed for the Lessee or the Parent, as applicable, or the
whole or a substantial part of the Lessee's or the Parent's property
within ninety (90) days after such appointment, (vi) file a petition
or answer seeking or consenting to reorganization under the United
States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof; or (vii) be adjudicated as bankrupt or insolvent;
(h) dissolution, liquidation or insolvency proceedings or a
petition under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America
or any State or Commonwealth thereof shall be filed against, consented
to or acquiesced by the Lessee or the Parent and not dismissed within
ninety (90) days from the date of its filing, or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of the Lessee or the Parent, as applicable, a receiver,
liquidator or trustee of the Lessee or the Parent or the whole or a
substantial part of any of the Lessee's or the Parent's property and
such order or decree shall not be vacated or set aside within ninety
(90) days from the date of the entry thereof;
(i) an event of default, as defined in any agreement, mortgage,
indenture or instrument under which there may be issued, or by which
there may be secured or evidenced, any indebtedness of the Lessee in a
principal amount in excess of $5,000,000, whether such indebtedness
now exists or shall hereafter be created, shall happen, if the effect
of such default is to accelerate the maturity of such indebtedness,
unless the Lessee is diligently and in good faith contesting such
default in appropriate proceedings;
(j) any Lien granted by the Lessee under any Operative Document
shall, in whole or in part, terminate, cease to be effective against,
or cease to be the legal, valid, binding and enforceable obligation
of, the Lessee;
(k) the Lessee shall directly or indirectly contest the validity
of any Operative Document in any manner in any court of competent
jurisdiction or any lien granted by the Lessee under any Operative
Document;
(l) the Lessee shall fail to satisfy any of its obligations
under the Securities Pledge Agreement or Certificate Pledge Agreement,
including, without limitation, satisfying the Collateral Requirement
(as defined in the Securities Pledge Agreement) within the applicable
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grace period provided therefor, for which the exclusive remedy for
such Event of Default is provided in Section 20.2(k); or
(m) the Lessor shall not have received all SELCO Basic Rent and
Lessor Basic Rent within five (5) days after any SELCO Payment Date.
20.2. Remedies. Upon the occurrence of any Event of Default and at any
time thereafter, the Lessor may, so long as such Event of Default is continuing,
do one or more of the following as the Lessor in its sole discretion shall
determine, without limiting any other right or remedy the Lessor may have on
account of such Event of Default:
(a) The Lessor may, by notice to the Lessee, rescind or
terminate this Lease as of the date specified in such notice; however,
(i) no reletting, reentry or taking of possession of the Property (or
any portion thereof) by the Lessor will be construed as an election on
the Lessor's part to terminate this Lease unless a written notice of
such intention is given to the Lessee, (ii) notwithstanding any
reletting, reentry or taking of possession, the Lessor may at any time
thereafter elect to terminate this Lease for a continuing Event of
Default and (iii) no act or thing done by the Lessor or any of its
agents, representatives or employees and no agreement accepting a
surrender of the Property shall be valid unless the same be made in
writing and executed by the Lessor.
(b) The Lessor may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Lessor, return the Property
promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Articles XI and
XIII and Section 12.3 hereof as if the Property were being returned at
the end of the Term, and the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and expenses incurred by the
Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of the Property, and
to the extent and in the manner permitted by Applicable Law, enter
upon the Property and take immediate possession of (to the exclusion
of the Lessee) the Property or any part thereof and expel or remove
the Lessee and any other Person who may be occupying the Property, by
summary proceedings or otherwise, all without liability to the Lessee
for or by reason of such entry or taking of possession, whether for
the restoration of damage to property caused by such taking or
otherwise and, in addition to the Lessor's other damages, the Lessee
shall be responsible for all costs and expenses incurred by the Lessor
in connection with any reletting, including, without limitation,
reasonable brokers' fees and all costs of any alterations or repairs
made by the Lessor.
(c) The Lessor may (i) sell all or any part of the Property at
public sale free and clear of any rights of the Lessee and without any
duty to account to the Lessee with respect to such action or inaction
or any proceeds (except that Excess Proceeds shall be paid by the
Lessor to the Lender to be applied in accordance with the Nomura Loan
Agreement and the Mezzanine Loan Agreement) with respect thereto
(except to the extent required by clause (ii) below if the Lessor
shall elect to exercise its rights thereunder) in which event the
Lessee's obligation to pay Basic Rent hereunder for periods commencing
after the date of such sale shall be terminated or proportionately
reduced, as the case may be; and (ii) if the Lessor shall so elect,
demand that the Lessee pay to the Lessor, and the Lessee shall pay to
the Lessor, on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (the parties agreeing that the
Lessor's actual damages would be difficult to predict, but the
aforementioned liquidated damages
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represent a reasonable approximation of such amount) (in lieu of Basic Rent
due for periods commencing on or after the Payment Date coinciding with
such date of sale (or, if the sale date is not a Payment Date, the Payment
Date next preceding the date of such sale)), an amount equal to (A) the
excess, if any, of (1) the Lease Balance calculated as of such Payment Date
(including all Rent due and unpaid to and including such Payment Date and),
over (2) the net proceeds of such sale (that is, after deducting all costs
and expenses incurred by the Lessor incident to such conveyance, including,
without limitation, repossession costs, brokerage commissions, prorations,
transfer taxes, fees and expenses for counsel, title insurance fees, survey
costs, recording fees, and any repair costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Payment Date until the date
of payment.
(d) The Lessor may, at its option, elect not to terminate this
Lease and continue to collect all Basic Rent, Supplemental Rent, and all
other amounts due the Lessor (together with all costs of collection) and
enforce the Lessee's obligations under this Lease as and when the same
become due, or are to be performed, and at the option of the Lessor, upon
any abandonment of the Property by the Lessee or re-entry of same by the
Lessor, the Lessor may, in its sole and absolute discretion, elect not to
terminate this Lease and may make the necessary repairs in order to relet
the Property, and relet the Property or any part thereof for such term or
terms (which may be for a long term extending beyond the Term of this
Lease) and at such rental or rentals and upon such other terms and
conditions as the Lessor in its reasonable discretion may deem advisable;
and upon each such reletting all rentals actually received by the Lessor
from such reletting shall be applied to the Lessee's obligations hereunder
and the other Operative Documents in such order, proportion and priority as
the Lessor may elect in the Lessor's sole and absolute discretion. If such
rentals received from such reletting during any period are less than the
Rent with respect to the Property to be paid during that period by the
Lessee hereunder, the Lessee shall pay any deficiency, as calculated by the
Lessor, to the Lessor on the next Payment Date.
(e) Unless the Property has been sold in its entirety, the
Lessor may, whether or not the Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under paragraph (b), (c)
or (d) of this Section 20.2 with respect to the Property or portion
thereof, demand, by written notice to the Lessee specifying a date (a
"Termination Date") not earlier than 10 days after the date of such notice,
that the Lessee purchase, on such Termination Date, the Property (or the
remaining portion thereof) in accordance with the provisions of Article
XXII; provided, however, that no such written notice shall be required upon
the occurrence of any Event of Default in clause (g) or (h) of Section
20.1.
(f) The Lessor may exercise any other right or remedy that may
be available to it under Applicable Law, or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover
damages for the breach hereof. Separate suits may be brought to collect any
such damages for any period(s), and such suits shall not in any manner
prejudice the Lessor's right to collect any such damages for any subsequent
period(s), or the Lessor may defer any such suit until after the expiration
of the Term, in which event such suit shall be deemed not to have accrued
until the expiration of the Term.
(g) The Lessor may retain and apply against the Lessor's damages
all sums which the Lessor would, absent such Event of Default, be required
to pay to, or turn over to, the Lessee pursuant to the terms of this Lease.
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(h) If an Event of Default shall have occurred and so long as
same is continuing, the Lessor, as a matter of right and without notice to
the Lessee, and without regard to the value of the Property or the solvency
of the Lessee, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers of the Property, and the
Lessee hereby irrevocably consents to any such appointment. Any such
receiver(s) shall have all of the usual powers and duties of receivers in
like or similar cases and all of the powers and duties of the Lessor in
case of entry, and shall continue as such and exercise such powers until
the date of confirmation of the sale of the Property unless such
receivership is sooner terminated.
(i) To the maximum extent permitted by law, the Lessee hereby
waives the benefit of any appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights
of marshaling in the event of any sale of any or all of the Property or any
interest therein.
(j) The Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of the
other Operative Documents or other agreement or any laws now or hereafter
in force, notwithstanding some or all of the obligations secured hereby may
now or hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the acceptance of
this instrument nor its enforcement, shall prejudice or in any manner
affect the Lessor's right to realize upon or enforce any other security now
or hereafter held by the Lessor, it being agreed that the Lessor shall be
entitled to enforce this instrument and any other security now or hereafter
held by the Lessor in such order and manner as the Lessor may determine in
its absolute discretion. No remedy herein conferred upon or reserved to the
Lessor is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute. Every power or remedy given by any of
the Operative Documents to the Lessor or to which it may otherwise be
entitled, may be exercised, concurrently or independently, from time to
time and as often as may be deemed expedient by the Lessor.
(k) The Lessor may exercise any and all rights under (a) the
Certificate Pledge Agreement against Certificate A and/or (b) the
Securities Pledge Agreement against the Pledged Securities, and the
collateral represented thereby.
In no event shall the Lessor, in the exercise of the remedies provided in this
instrument (including, without limitation, in connection with the assignment of
rents to Lessor, or the appointment of a receiver and the entry of such receiver
on to all or any part of the Property), be deemed a "mortgagee in possession,"
and the Lessor shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.
If, pursuant to the exercise by the Lessor of its remedies pursuant to this
Section 20.2, the Lease Balance, all other amounts due and owing from the Lessee
under this Lease and the other Operative Documents have been paid in full, then
the Lessor shall remit to the Lessee any excess amounts received by the Lessor.
20.3. Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 20.2, the Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal
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proceedings to obtain re-entry or possession; (b) any right of redemption, re-
entry or repossession; (c) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt or limiting the Lessor
with respect to the election of remedies; and (d) any other rights which might
otherwise limit or modify any of the Lessor's rights or remedies under this
Article XX.
ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment. The Lessee hereby consents to the Lessor's assignment
of this Lease to the Lender and the Lender and the Lessee acknowledge that the
Lender is a third party beneficiary of this Lease. Lessor hereby assigns to
Lessee all Lessor's right, title and interest in and to the Excess Proceeds
described in clause (iii) of the definition thereof and agrees that if Lessor
receives any of such Excess Proceeds it shall remit such Excess Proceeds to
Lender.
ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option. Provided that the Lessee shall not have given
notice of its intention to exercise the Remarketing Option, the Lessee shall
have the option on any Payment Date (a) after the second anniversary of the
Start-Up Day (exercisable by giving the Lessor irrevocable written notice (the
"Purchase Notice") of the Lessee's election to exercise such option) to purchase
all, and not less than all, of the Property on the date specified in such
Purchase Notice at a price equal to the Lease Balance theretofore accruing or
(b) to pay the Lessor the Equity Balance and reduce the amount of the Lease
Balance by the amount paid. The Lessee shall deliver the Purchase Notice to the
Lessor not less than thirty (30) days prior to such purchase or payment of the
Equity Balance. If the Lessee exercises its option to purchase the Property
pursuant to Section 22.1(a) (the "Purchase Option"), the Lessor shall transfer
to the Lessee or its designee all of the Lessor's right, title and interest in
and to the Property as of the date specified in the Purchase Notice upon receipt
of the Lease Balance in accordance with Section 25.1. Subject to Section 12.4
and with the consent of the Lessor the Lessee may assign the Purchase Option to
any Person. The Lessee may designate, in a notice given to the Lessor not less
than five (5) Business Days prior to the closing of such purchase (time being of
the essence), the transferee or transferees to whom the conveyance shall be made
(if other than to the Lessee), in which case such conveyance shall (subject to
the terms and conditions set forth herein) be made to such designee; provided,
however, that such designation of a transferee or transferees shall not cause
the Lessee to be released, fully or partially, from any of its obligations under
this Lease, including, without limitation, the obligation to pay the Lessor the
Lease Balance on the Expiration Date.
ARTICLE XXIII
RENEWAL PROCEDURES
23.1. Renewal. Subject to the conditions set forth herein, the Lessee and
the Lessor may agree to renew the Base Lease Term for the Property for up to
seven one-year terms (each, a "Renewal Term"), with each such Renewal Term to
commence on the first day following the Expiration Date then in effect. The
effective extension of the Base Lease Term for the Property shall be subject to
the satisfaction of each of the following conditions:
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(a) each renewal shall be automatic unless on or before one
hundred eighty (180) days prior to the Expiration Date the Lessee shall
have delivered written notice to the Lessor of the Lessee's determination
not to extend the Base Lease Term for the Property;
(b) on the Expiration Date then in effect prior to any renewal,
no Event of Default shall have occurred and be continuing; and
(c) the Lessee shall not have given notice of its intention to
exercise the Remarketing Option.
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 24.1, the Lessee shall have the option
beginning on the second anniversary of the Start-Up Day (the "Remarketing
Option") to market and complete the sale of the Property for the Lessor.
The Lessee's effective exercise and consummation of the Remarketing Option
shall be subject to the due and timely fulfillment of each of the following
provisions as to the Property as of the dates set forth below.
(a) Not later than one hundred eighty (180) days prior to the
Expiration Date, the Lessee shall give to the Lessor written notice of the
Lessee's exercise of the Remarketing Option, which exercise shall be
irrevocable. If Lessee does not deliver a notice of its intention not to
renew this Lease as provided in Section 23.1 and fails to timely provide
the Remarketing Notice, then this Lease shall be renewed for a Renewal Term
as provided in Section 23.1. If Lessee delivers the notice of its intention
not to renew this Lease as provided in Section 23.1 and fails to timely
provide the Remarketing Notice, then Lessee shall be deemed to have elected
to exercise its Purchase Option under Section 22.1(i).
(b) Not later than one hundred twenty (120) days prior to the
Expiration Date, the Lessee shall deliver to the Lessor an Environmental
Audit for the Property. Such Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's reasonable
discretion and shall contain conclusions reasonably satisfactory to the
Lessor as to the environmental status of the Property. If any such
Environmental Audit indicates any exceptions with respect to which a Phase
Two environment assessment is recommended, the Lessee shall also deliver
(i) a Phase Two environmental assessment by such environmental consultant
within thirty (30) days prior to the Expiration Date and (ii) a certificate
of such environmental consultant prior to the Expiration Date showing the
completion of all remedial action in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the
Lessee's exercise of the Remarketing Option, and on the Expiration Date, no
Event of Default shall exist.
(d) The Lessee shall have completed in all Material respects all
Modifications, restoration and rebuilding of the Property pursuant to
Sections 14.1 and 18.1 (as the case may be) and shall have fulfilled in all
Material respects all of the conditions and requirements in
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connection therewith pursuant to said Sections, in each case by the date on
which the Lessor receives the Lessee's notice of the Lessee's exercise of
the Remarketing Option (time being of the essence), regardless of whether
the same shall be within the Lessee's control. The Lessee shall have also
paid the cost of all Modifications commenced prior to the Expiration Date.
The Lessee shall not have been excused pursuant to Section 16.1 from
complying with any Applicable Law that involved the extension of the
ultimate imposition of such Applicable Law beyond the last day of the Term.
Any Permitted Liens (other than Lessor Liens) on the Property that were
contested by the Lessee shall have been removed.
(e) During the Marketing Period, the Lessee shall, as
nonexclusive agent for the Lessor, use best efforts to sell the Lessor's
interest in the Property and will attempt to obtain the highest purchase
price therefor and for not less than the Fair Market Sales Value of the
Property. The Lessee will be responsible for hiring brokers and making the
Property available for inspection by prospective purchasers. The Lessee
shall promptly upon request permit inspection of the Property and any
maintenance records relating to the Property by the Lessor and any
potential purchasers, and shall otherwise do all things reasonably
necessary to sell and deliver possession of the Property to any purchaser.
All such marketing of the Property shall be at the Lessee's sole expense.
The Lessee shall allow the Lessor and any potential qualified purchaser
reasonable access to the Property for the purpose of inspecting the same.
(f) The Lessee shall submit all bids to the Lessor, and the
Lessor will have the right to submit any one or more bids. The Lessee shall
deliver to the Lessor, not less than thirty (30) days prior to the
Expiration Date, binding written unconditional (except as set forth below),
irrevocable offer or offers by such purchaser or purchasers offering the
highest bid to purchase the Property. No such purchaser shall be the Lessee
or an Affiliate of the Lessee. The written offer must specify the
Expiration Date as the closing date unless the Lessor shall otherwise agree
in its reasonable discretion. Any sale by the Lessee shall be for the
highest cash bid submitted to the Lessor. The determination of the highest
bid shall be made by the Lessor prior to the end of the Marketing Period,
but in any event, the Lessor shall have no obligation to approve any bid
unless the aggregate amount of the highest bids for the Property equals or
exceeds an amount equal to the Lease Balance minus the Contingent Rental
Adjustment determined as of the Expiration Date. All bids shall be on an
all-cash basis unless the Lessor shall otherwise agree in its sole
discretion.
(g) In connection with any such sale of the Property, the Lessee
will provide to each Purchaser all customary "seller's" indemnities,
representations and warranties regarding absence of Liens (other than
Lessor Liens) and the condition of the Property. The Lessee shall have
obtained, at its cost and expense, all required governmental and regulatory
consents and approvals and shall have made all filings as required by
Applicable Law in order to carry out and complete the transfer of the
Property. As to the Lessor, any such sale shall be made on an "as is, with
all faults" basis without representation or warranty by the Lessor other
than the absence of Lessor Liens. Any agreement as to such sale shall be
made subject to the Lessor's rights hereunder.
(h) The Lessee shall pay directly, and not from the sale
proceeds, all prorations, credits, costs and expenses of the sale of the
Property, whether incurred by the Lessor or the Lessee, including without
limitation, the cost of all title insurance, surveys, environmental
reports, appraisals, transfer taxes, the Lessor's reasonable attorneys'
fees, the Lessee's attorneys' fees,
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commissions, escrow fees, recording fees, and all applicable documentary
and other transfer taxes.
(i) The Lessee shall pay to the Lessor on or prior to the
Expiration Date (or to such other Person as the Lessor shall notify the
Lessee in writing) an amount equal to the Contingent Rental Adjustment for
the Property plus all Basic Rent and all other amounts hereunder which have
accrued or will accrue prior to or as of the Expiration Date or such other
closing date approved by the parties, in the type of funds specified in
Section 7.4 hereof.
(j) The Lessee shall pay to the Lessor on or prior to the
Expiration Date the amounts, if any, required to be paid pursuant to
Section 26.2 hereof.
(k) If the Lessor approves any bid for the Property, the
purchase of the Property shall be consummated on or before the Expiration
Date and the gross proceeds (the "Gross Proceeds") of the sale of the
Property, less the documented expenses incurred by the Lessee under clause
(h) shall be paid directly to the Lessor; provided, however, that if the
sum of (x) the remaining Gross Proceeds from such sale or sales plus (y)
the Contingent Rental Adjustment received by the Lessor pursuant to clause
(i) plus (z) amounts received by the Lessor pursuant to Section 26.2 hereof
exceeds the Lease Balance as of such date, then the excess shall be paid to
Lender to be applied in accordance with the Nomura Loan Agreement and the
Mezzanine Loan Agreement on the Expiration Date or such other closing date
approved by the parties.
(l) All reconstruction, refurbishment and repair to the Property
resulting from a Casualty or Condemnation shall have been completed prior
to the end of the Marketing Period.
If one or more of the foregoing provisions shall not be fulfilled as of the
date set forth above with respect to the Property, then the Lessor shall declare
by written notice to the Lessee the Remarketing Option to be null and void
(whether or not it has been theretofore exercised by the Lessee), in which event
all of the Lessee's rights under this Section 24.1 shall immediately terminate
and the Lessee shall be obligated to purchase the Property pursuant to Section
22.1 on the Expiration Date. Notwithstanding anything in this Lease to the
contrary, in the event that the second anniversary of the Start-Up Day has not
occurred prior to the Expiration Date, the Lessee shall pay the Equity Balance
to the Lessor on the Expiration Date.
If the Lessee effectively elects the Remarketing Option and no sale of the
Property is consummated prior to the end of the Marketing Period, the Lessee
shall, in addition to making the payment required pursuant to Section 24.1(i)
above, return the Property to the Lessor (or to any other Person specified by
the Lessor). In connection with any such return of the Property, the Lessee
shall, at its own cost and expense, do each of the following:
(i) the Lessee shall, on or prior to the Expiration Date,
execute and deliver to the Lessor (or to the Lessor's designee) (A) a deed
with respect to the Property containing representations and warranties of
grantor to the Lessor (or such other Person) regarding the absence of Liens
(other than Permitted Liens of the type described in clauses (i) and (iii)
of the definition thereof), (B) a xxxx of sale with respect to any
Equipment then located on the Property and (C) an assignment of the
Lessee's entire interest in the Property (which shall include an assignment
of all of the Lessee's right, title and interest in and to any Net Proceeds
with respect to the Property not previously received by the Lessee and an
assignment of leases of the Property), in each case
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in recordable form and otherwise in conformity with local custom and free
and clear of any Liens attributable to the Lessee;
(ii) the Lessee shall execute and deliver to Lessor and the
Lessor's title insurance company an affidavit as to the absence of any
Liens (other than Permitted Liens of the type described in clauses (i) and
(iii) of the definition thereof) and shall execute and deliver to the
Lessor a statement of termination of this Lease to the extent relating to
the Property;
(iii) the Lessee shall, on the Expiration Date, transfer
possession of the Property to the Lessor or any Person designated by the
Lessor, by surrendering the same into the possession of the Lessor or such
Person, as the case may be, in the condition required by this Section 24.1
and in compliance with Applicable Law;
(iv) the Lessee shall, for a period of up to one year after the
Expiration Date, cooperate reasonably with the Lessor and/or any Person
designated by the Lessor to receive the Property, which cooperation shall
include reasonable efforts with respect to the following, all of which the
Lessee shall do on or before the Expiration Date or as soon thereafter as
is reasonably practicable: providing copies of all books and records
regarding the maintenance and ownership of the Property and all know-how,
data and technical information relating thereto, granting or assigning all
licenses necessary for the operation and maintenance of the Property and
cooperating reasonably in seeking and obtaining all necessary Governmental
Action. The obligations of the Lessee under this paragraph shall survive
the expiration or termination of this Lease; and
(v) no subleases with respect to the Property or any portion
thereof shall be in effect on the Expiration Date.
Except as expressly set forth herein, the Lessee shall have no right, power
or authority to bind the Lessor in connection with any proposed sale or sales of
the Property.
24.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent shall continue undiminished until payment
in full to the Lessor of the Contingent Rental Adjustment and all other amounts
due to the Lessor by Lessee under the Operative Documents to which the Lessee is
a party. The Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to
take action in connection with any such sale, other than as expressly provided
in this Article XXIV.
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase Option and
Conveyance Upon Remarketing and Conveyance Upon Certain Other Events. In
connection with the Lessee's exercise of its Purchase Option, upon the
Expiration Date or the purchase of the Property under Article XIX or Section
20.2(e) or 24.1 hereof and upon tender by the Lessee of the amounts set forth in
Article XIX, Section 20.2(e) or 22.1(a) or 24.1 hereof, as applicable:
(i) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense a limited warranty
deed (with covenants against grantor acts) with
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respect to the Property, a limited warranty xxxx of sale (with covenants
against grantor acts) with respect to any Equipment and an assignment of
the Lessor's entire interest in the Property (which shall include an
assignment of all of the Lessor's right, title and interest in and to any
Net Proceeds not previously received by the Lessor, and an assignment of
leases of the Property and any security deposits collected by the Lessor),
in each case in recordable form and otherwise in conformity with local
custom and free and clear of any Lessor Liens attributable to the Lessor;
(ii) the Property shall be conveyed to the Lessee "AS IS" and in its
then present physical condition;
(iii) the Lessor shall execute and deliver to Lessee and the Lessee's
title insurance company an affidavit as to the Lessor's title and the
absence of Lessor Liens; and
(iv) the Lessor shall execute such other documents reasonably
requested by the Lessee, or otherwise required under local law, to effect a
transfer of the Property and title thereto and any owner's title insurance
policy issued in the name of the Lessor.
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification. The Lessee agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and to indemnify, protect, defend, save and keep harmless each Indemnitee,
on an After Tax Basis, from and against, any and all Claims that may be imposed
on, incurred by or asserted against such Indemnitee (whether because of action
or omission by such Indemnitee or otherwise), whether or not such Indemnitee
shall also be indemnified as to any such Claim by any other Person and whether
or not such Claim arises or accrues prior to the Documentation Date or after the
Expiration Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof;
(b) the Property or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any
sale pursuant to any provision hereof), return or other disposition of all
or any part or any interest in the Property or the imposition of any Lien
other than a Lessor Lien (or incurring of any liability to refund or pay
over any amount as a result of any Lien other than a Lessor Lien) thereon,
including, without limitation: (1) Claims or penalties arising from any
violation of law or in tort (strict liability or otherwise), (2) latent or
other defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction, easement,
condition or covenant or other matter affecting title to the Property, (4)
the making of any Modifications in violation of any standards imposed by
any insurance policies required to be maintained by the Lessee pursuant to
this Lease which are in effect at any time with respect to the Property or
any part thereof, (5) any Claim for patent,
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trademark or copyright infringement, and (6) Claims arising from any public
improvements with respect to the Property resulting in any change or
special assessments being levied against the Property or any plans to
widen, modify or realign any street or highway adjacent to the Property, or
any Claim for utility "tap-in" fees;
(d) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or financial
advisor by the Lessee to act on its behalf in connection with the
transactions contemplated hereby;
(f) the existence of any Lien on or with respect to the Property, any
Improvements, or Basic Rent or Supplemental Rent, title thereto, or any
interest therein including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of the Property or by
reason of labor or materials furnished or claimed to have been furnished to
the Lessee, or any of its contractors or agents or by reason of the
financing of any personalty or equipment purchased or leased by the Lessee
or Modifications constructed by the Lessee, except with respect to any of
the foregoing Lessor Liens and Liens in favor of the Lessor; or
(g) subject to the accuracy of Lessor's representation set forth in
Section 6.1(a), the transactions contemplated by this Lease or by any other
Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
under this Section 26.1 for any of the following: (1) any Claim to the extent
resulting from the willful misconduct or gross negligence of such Indemnitee (it
being understood that the Lessee shall be required to indemnify an Indemnitee
even if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any Claim
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Documents, (3) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents, and (4) any Claim
arising from a breach or alleged breach by the Lessor of any agreement entered
into in connection with the assignment or participation of Rent. It is
expressly understood and agreed that the indemnity provided for herein shall
survive the expiration or termination of and shall be separate and independent
from any remedy under this Lease or any other Operative Document. Without
limiting the express rights of any Indemnitee under this Section 26.1, this
Section 26.1 shall be construed as an indemnity only and not a guaranty of
residual value of the Property.
26.2. End of Term Indemnity.
(a) If the Lessee elects the Remarketing Option and there would,
after giving effect, to the proposed remarketing transactions, be a
Shortfall Amount, then prior to the Expiration Date and as a condition to
the Lessee's right to complete the remarketing of the Property pursuant to
Section 24.1, the Lessee shall cause to be delivered to the Lessor at least
thirty (30) days prior to the Expiration Date, at the Lessee's sole cost
and expense, a report from an appraiser selected by
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the Lessor and reasonably satisfactory to the Lessee in form and substance
satisfactory to the Lessor (the "End of the Term Report") which shall state
the appraiser's conclusions as to the reason for any decline in the Fair
Market Sales Value of the Property from that anticipated for such date in
the Appraisal delivered on the Acquisition Date.
(b) If the Lessee elects the Remarketing Option, then on or prior to
the Expiration Date, the Lessee shall pay to the Lessor an amount (not to
exceed the Shortfall Amount) equal to the portion of the Shortfall Amount
that the End of the Term Report demonstrates was the result of a decline in
the Fair Market Sales Value of the Property due to
(i) extraordinary use, failure to maintain, to repair, to
restore, to rebuild or to replace, failure to comply with all
applicable laws, failure to use, workmanship, method of installation
or removal or maintenance, repair, rebuilding or replacement,
(excepting in each case ordinary wear and tear), or
(ii) with respect to the Property, any Modification made to, or
any rebuilding of, the Property or any part thereof by the Lessee, or
(iii) the existence of any Environmental Violations, or
(iv) any restoration or rebuilding carried out by the Lessee,
or
(v) any use of the Property or any part thereof by the Lessee
other than as permitted under this Lease, or
(vi) any grant, release, dedication, transfer or amendment made
pursuant to Section 15.2, or
(vii) the failure of the Lessor to have title to the Property
free and clear of all Liens (excluding Permitted Liens).
26.3. Environmental Indemnity. Without limitation of the other
provisions of this Article XXVI, the Lessee hereby agrees to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to, to the extent
the Lease Balance has not been fully paid, any loss of value of the Property),
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings (including informal proceedings) and orders, judgments, remedial
action, requirements, enforcement actions of any kind, and all reasonable and
documented costs and expenses incurred in connection therewith (including but
not limited to reasonable and documented attorneys' and/or paralegals' fees and
expenses), including, but not limited to, all costs incurred in connection with
any investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
arising in whole or in part, out of
(a) the presence on or under the Property of any Hazardous Substance
in violation of Environmental Law, or any releases or discharges of any
Hazardous Substance on, under, from or onto the Property in violation of
Environmental Law,
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(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the Lessee
or any predecessor in title or any employees, agents, contractors or
subcontractors of the Lessee or any predecessor in title, or any other
Persons (including such Indemnitee), in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Substances in violation of Environmental Law that
at any time are located or present on or under or that at any time migrate,
flow, percolate, diffuse or in any way move onto or under the Property,
(c) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs, remediation and removal
costs, cost of corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by
or under Environmental Laws,
(d) any claim concerning lack of compliance with Environmental Laws,
or any act or omission causing an environmental condition that requires
remediation or would allow any Governmental Authority to record a Lien on
the land records, or
(e) any residual contamination on or under the Land, or affecting any
natural resources, and to any contamination of any property or natural
resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Substances, and
irrespective of whether any of such activities were or will be undertaken
in accordance with applicable laws, regulations, codes and ordinances;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
under this Section 26.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee (it being understood
that, unless the applicable Indemnitee was in possession of the Property and
caused the Claim, the Lessee shall be required to indemnify an Indemnitee even
if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or (2) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document.
26.4. Proceedings in Respect of Claims. With respect to any amount that
the Lessee is requested by an Indemnitee to pay by reason of Section 26.1 or
26.3, such Indemnitee shall, if so requested by the Lessee and prior to any
payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall promptly notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the defense
thereof; provided, however, that the Lessee shall not have any increased
liability as a direct result of an Indemnitee's failure to provide such notice
promptly; provided, further, that the Lessee shall have acknowledged in writing
its obligation to fully indemnify such Indemnitee in respect of such action,
suit or proceeding, and, the Lessee shall keep such Indemnitee fully apprised of
the status of such action, suit
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or proceeding and shall provide such Indemnitee with all information with
respect to such action, suit or proceeding as such Indemnitee shall reasonably
request, and provided, further, that the Lessee shall not be entitled to assume
and control the defense of any such action, suit or proceeding if and to the
extent that, (A) in the reasonable opinion of such Indemnitee, (x) such action,
suit or proceeding involves any risk of imposition of criminal liability or any
risk of imposition of material civil liability on such Indemnitee or will
involve a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Lien or Lessor Lien) on the Property or any
part thereof unless, in the case of civil liability, the Lessee shall have
posted a bond or other security reasonably satisfactory to the relevant
Indemnitees in respect to such risk or (y) the control of such action, suit or
proceeding would involve an actual or potential conflict of interest, (B) such
proceeding involves Claims not fully indemnified by the Lessee which the Lessee
and the Indemnitee have been unable to sever from the indemnified claim(s), or
(C) an Event of Default has occurred and is continuing. The Indemnitee may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by the Lessee in accordance with the foregoing. The
Lessee shall not enter into any settlement or other compromise with respect to
any Claim which is entitled to be indemnified under Section 26.1 or 26.3 without
the prior written consent of the Indemnitee which consent shall not be
unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee; provided, however, that in the event
that such Indemnitee withholds consent to any settlement or other compromise,
the Lessee shall not be required to indemnify such Indemnitee under Section 26.1
or 26.3 to the extent that the applicable Claim (x) is for legal fees and
expenses incurred after the date of the proposed settlement or (y) results in a
judgment in excess of such offered money settlement.
Each Indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 26.1 or 26.3. Unless an Event of
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 26.1 or 26.3 without the prior written consent
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnitee waives its right to be indemnified under Section 26.1 or 26.3 with
respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section 26.1 or
26.3 to or on behalf of an Indemnitee, the Lessee, without any further action,
shall be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 26.1 or 26.3 shall
be paid to such Indemnitee within ten (10) Business Days after receipt of a
written demand therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable and, if requested by the Lessee, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Lessee and the Indemnitee at the expense of the
Lessee; provided, however, that if the Lessee has assumed the defense of the
related Claim or is paying the costs of the Indemnitee's defense of the related
claim on an ongoing basis, the Lessee shall not be required to pay such amount
to the applicable Indemnitee until such time as a judgment is entered with
respect to such Claim, the
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enforcement of which is not stayed or which judgment is not bonded over, or the
Claim is otherwise settled or lost. To the extent the Lessee suffers any losses
or damages as a result of an Indemnitee's failure to provide the Lessee with
prompt notice of the commencement of any action, suit or proceeding against any
Indemnitee in accordance with the first sentence of the second paragraph of this
Section 26.4, the amounts of such losses or damages may be offset against the
Lessee's indemnification obligation to such Indemnitee.
26.5. General Tax Indemnity.
(a) Indemnification. The Lessee shall pay and assume liability for,
and does hereby agree to indemnify, protect and defend the Property and all
Tax Indemnitees, and hold them harmless against, all Impositions on an
After Tax Basis.
(b) Contests. If any claim shall be made against any Tax Indemnitee
or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to
which the Lessee may have an indemnity obligation pursuant to this Section
26.5, or if any Tax Indemnitee shall determine that any Imposition to which
the Lessee may have an indemnity obligation pursuant to this Section 26.5
may be payable, such Tax Indemnitee shall promptly (and in any event,
within 30 days) notify the Lessee in writing (provided that failure to so
notify the Lessee within 30 days shall not alter such Tax Indemnitee's
rights under this Section 26.5 except to the extent such failure precludes
or materially adversely affects the ability to conduct a contest of any
indemnified Taxes) and shall not take any action with respect to such
claim, proceeding or Imposition without the written consent of the Lessee
(such consent not to be unreasonably withheld or unreasonably delayed) for
30 days after the receipt of such notice by the Lessee; provided, however,
that in the case of any such claim or proceeding, if such Tax Indemnitee
shall be required by law or regulation to take action prior to the end of
such 30-day period, such Tax Indemnitee shall in such notice to the Lessee,
so inform the Lessee, and such Tax Indemnitee shall not take any action
with respect to such claim, proceeding or Imposition without the consent of
the Lessee (such consent not to be unreasonably withheld or unreasonably
delayed) for 10 days after the receipt of such notice by the Lessee unless
the Tax Indemnitee shall be required by law or regulation to take action
prior to the end of such 10-day period.
The Lessee shall be entitled for a period of 30 days from receipt of
such notice from the Tax Indemnitee (or such shorter period as the Tax
Indemnitee has notified the Lessee is required by law or regulation for the
Tax Indemnitee to commence such contest), to request in writing that such
Tax Indemnitee contest the imposition of such Tax, at the Lessee's expense.
If (x) such contest can be pursued in the name of the Lessee and
independently from any other proceeding involving a Tax liability of such
Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax
Indemnitee, (y) such contest must be pursued in the name of the Tax
Indemnitee, but can be pursued independently from any other proceeding
involving a Tax liability of such Tax Indemnitee for which the Lessee has
not agreed to indemnify such Tax Indemnitee or (z) the Tax Indemnitee so
requests, then the Lessee shall be permitted to control the contest of such
claim, provided that in the case of a contest described in clause (y), if
the Tax Indemnitee determines in good faith that such contest by the Lessee
could have a material adverse impact on the business or operations of the
Tax Indemnitee and provides a written explanation to the Lessee of such
determination, the Tax Indemnitee may elect to control or reassert control
of the contest, and provided, that by taking control of the contest, Lessee
acknowledges that it is
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responsible for the Imposition ultimately determined to be due by reason of
such claim, and provided, further, that in determining the application of
clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall
take any and all reasonable steps to segregate claims for any Taxes for
which the Lessee indemnifies hereunder from Taxes for which the Lessee is
not obligated to indemnify hereunder, so that the Lessee can control the
contest of the former. In all other claims requested to be contested by the
Lessee, the Tax Indemnitee shall control the contest of such claim, acting
through counsel reasonably acceptable to the Lessee. In no event shall the
Lessee be permitted to contest (or the Tax Indemnitee required to contest)
any claim, (A) if such Tax Indemnitee provides the Lessee with a legal
opinion of counsel reasonably acceptable to the Lessee that such action,
suit or proceeding involves a risk of imposition of criminal liability or
will involve a material risk of the sale, forfeiture or loss of, or the
creation of any Lien (other than a Permitted Lien or Lessor Lien) on the
Property or any part of any thereof unless the Lessee shall have posted and
maintained a bond or other security reasonably satisfactory to the relevant
Tax Indemnitee in respect to such risk, (B) if an Event of Default has
occurred and is continuing unless the Lessee shall have posted and
maintained a bond or other security reasonably satisfactory to the relevant
Tax Indemnitee in respect of the Taxes subject to such claim and any and
all expenses for which the Lessee is responsible hereunder reasonably
foreseeable in connection with the contest of such claim, (C) unless the
Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee
within ten (10) Business Days after demand all reasonable out-of-pocket
costs, losses and expenses that such Tax Indemnitee may incur in connection
with contesting such Imposition including all reasonable legal, accounting
and investigatory fees and disbursements, or (D) if such contest shall
involve the payment of the Tax prior to the contest, unless the Lessee
shall provide to the Tax Indemnitee an interest-free advance in an amount
equal to the Imposition that the Indemnitee is required to pay (with no
additional net after-tax costs to such Tax Indemnitee). In addition for Tax
Indemnitee controlled contests and claims contested in the name of the Tax
Indemnitee in a public forum, no contest shall be required: (A) unless the
amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which the Lessee may be liable to pay an
indemnity under this Section 26.5(b)) exceeds $500,000 and (B) unless, if
requested by the Tax Indemnitee, the Lessee shall have provided to the Tax
Indemnitee an opinion of counsel selected by the Lessee (which may be in-
house counsel) (except, in the case of income taxes indemnified hereunder
which shall be an opinion of independent tax counsel selected by the Tax
Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis
exists to contest such claim. In no event shall a Tax Indemnitee be
required to appeal an adverse judicial determination to the United States
Supreme Court.
The party conducting the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for
Taxes (or claim for refund) but the decisions regarding what actions to be
taken shall be made by the controlling party in its sole judgement,
provided, however, that if the Tax Indemnitee is the controlling party and
the Lessee recommends the acceptance of a settlement offer made by the
relevant Governmental Authority and such Tax Indemnitee rejects such
settlement offer then the amount for which the Lessee will be required to
indemnify such Tax Indemnitee with respect to the Taxes subject to such
offer shall not exceed the amount which it would have owed if such
settlement offer had been accepted. In addition, the controlling party
shall keep the noncontrolling party reasonably informed as to the progress
of the contest, and shall provide the noncontrolling party with a copy of
(or appropriate excerpts from) any reports or claims issued by the relevant
auditing agents or taxing authority to the controlling party thereof, in
connection with such claim or the contest thereof.
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Each Tax Indemnitee shall at the Lessee's expense supply the Lessee
with such information and documents reasonably requested by the Lessee as
are necessary or advisable for the Lessee to participate in any action,
suit or proceeding to the extent permitted by this Section 26.5(b). No Tax
Indemnitee shall enter into any settlement or other compromise or fail to
appeal an adverse ruling with respect to any claim which is entitled to be
indemnified under this Section 26.5 (and with respect to which contest is
required under this Section 26.5(b)) without the prior written consent of
the Lessee, unless such Tax Indemnitee waives its right to be indemnified
under this Section 26.5 with respect to such claim.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest (and the Lessee shall not be
permitted to contest) a claim with respect to the imposition of any Tax if
such Tax Indemnitee shall waive its right to indemnification under this
Section 26.5 with respect to such claim (and any claim with respect to such
year or any other taxable year the contest of which is materially adversely
affected as a result of such waiver).
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee or any
Affiliate thereof realizes a deduction, offset, credit or refund of any
Taxes or any other savings or benefit as a result of any indemnity paid by
the Lessee pursuant to this Section 26.5 or (y) by reason of the incurrence
or imposition of any Tax (or the circumstances or event giving rise
thereto) for which a Tax Indemnitee is indemnified hereunder or any payment
made to or for the account of such Tax Indemnitee by the Lessee pursuant to
this Section 26.5 or any payment made by a Tax Indemnitee to the Lessee by
reason of this Section 26.5(c), such Tax Indemnitee at any time actually
realizes a reduction in any Taxes for which the Lessee is not required to
indemnify such Tax Indemnitee pursuant to this Section 26.5 which reduction
in Taxes was not taken into account in computing such payment by the Lessee
to or for the account of such Tax Indemnitee or by the Tax Indemnitee to
the Lessee, then such Tax Indemnitee shall promptly pay to the Lessee (xx)
the amount of such deduction, offset, credit, refund, or other savings or
benefit together with the amount of any interest received by such Tax
Indemnitee on account of such deduction, offset, credit, refund or other
savings or benefit or (yy) an amount equal to such reduction in Taxes, as
the case may be, in either case together with an amount equal to any
reduced Taxes payable by such Tax Indemnitee as a result of such payment;
provided that no such payment shall be made so long as a Default or Event
of Default shall have occurred and be continuing but shall be paid promptly
after cure of such Default or Event of Default. Each Tax Indemnitee agrees
to take such actions as the Lessee may reasonably request (provided in the
good faith judgment of the Tax Indemnitee, such actions would not result in
a material adverse effect on the Tax Indemnitee for which the Tax
Indemnitee is not entitled to indemnification from the Lessee) and to
otherwise act in good faith to claim such refunds and other available Tax
benefits, and take such other actions as may be reasonable to minimize any
payment due from the Lessee pursuant to this Section 26.5 and to maximize
the amount of any Tax savings available to it. The disallowance or
reduction of any credit, refund or other tax savings with respect to which
a Tax Indemnitee has made a payment to the Lessee under this Section
26.5(c) shall be treated as a Tax for which the Lessee is obligated to
indemnify such Tax Indemnitee hereunder without regard to the exclusions
set forth in the definition of Impositions except the exclusions set forth
in (iv), (v), (vi), (vii), (ix), (x), (xi), (xiv) and (xvi) of such
definition.
(d) Payments. Any Imposition indemnifiable under this Section 26.5
shall be paid directly when due to the applicable taxing authority if
direct payment is practicable and permitted. If direct payment to the
applicable taxing authority is not permitted or is otherwise not
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made, any amount payable to a Tax Indemnitee pursuant to Section 26.5 shall
be paid within thirty (30) days after receipt of a written demand therefor
from such Tax Indemnitee accompanied by a written statement describing in
reasonable detail the amount so payable, but not before two Business Days
prior to the date that the relevant Taxes are due. Any payments made
pursuant to this Section 26.5 shall be made directly to the Tax Indemnitee
entitled thereto or the Lessee, as the case may be, in immediately
available funds at such bank or to such account as specified by the payee
in written directions to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of the payee by
certified mail, postage prepaid at its address as set forth in Schedule I
hereto. Upon the request of any Tax Indemnitee with respect to a Tax that
the Lessee is required to pay, the Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt for the Lessee's
payment of such Tax or such other evidence of payment as is reasonably
acceptable to such Tax Indemnitee.
(e) Reports. In the case of any report, return or statement required
to be filed with respect to any Taxes that are subject to indemnification
under this Section 26.5 and of which the Lessee has knowledge, the Lessee
shall promptly notify the Tax Indemnitee of such requirement and, at the
Lessee's expense (i) if the Lessee is permitted (unless otherwise requested
by the Tax Indemnitee) by Applicable Law, timely file such report, return
or statement in its own name or (ii) if such report, return or statement is
required to be in the name of or filed by such Tax Indemnitee or the Tax
Indemnitee otherwise requests that such report, return or statement for
filing by such Tax Indemnitee in such manner as shall be reasonably
satisfactory to such Tax Indemnitee and send the same to the Tax Indemnitee
for filing no later than 15 days prior to the due date therefor. In any
case in which the Tax Indemnitee will file any such report, return or
statement, the Lessee shall, upon written request of such Tax Indemnitee,
provide such Tax Indemnitee with such information as is reasonably
necessary to allow the Tax Indemnitee to file such report, return or
statement.
(f) Verification. At the Lessee's request, the amount of any
indemnity payment by the Lessee or any payment by a Tax Indemnitee to the
Lessee pursuant to this Section 26.5 shall be verified and certified by an
independent public accounting firm mutually acceptable to the Lessee and
the Tax Indemnitee. The costs of such verification shall be borne by the
Lessee unless such verification shall result in an adjustment in the
Lessee's favor of the lesser of (i) $10,000, and (ii) five (5%) percent of
the payment as computed by the Tax Indemnitee, in which case such fee shall
be paid by the Tax Indemnitee. In no event shall the Lessee have the right
to review the Tax Indemnitee's tax returns or receive any other
confidential information from the Tax Indemnitee in connection with such
verification. Any information provided to such accountants by any Person
shall be and remain the exclusive property of such Person and shall be
deemed by the parties to be (and the accountants will confirm in writing
that they will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than such Person
and the accountants shall be entitled thereto and all such materials shall
be returned to such Person. Such accounting firm shall be requested to
make its determination within 30 days of the Lessee's request for
verifications and the computations of the accounting firm shall be final,
binding and conclusive upon the Lessee and the Tax Indemnitee. The parties
agree that the sole responsibility of the independent public accounting
firm shall be to verify the amount of a payment pursuant to this Lease and
that matters of interpretation of this Lease are not within the scope of
the independent accounting firm's responsibilities.
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(g) Tax Ownership. The Lessor represents and warrants that it will
not, prior to the termination of this Lease, claim ownership of (or any tax
benefits, including depreciation, with respect to) the Property for any
income tax purposes, it being understood that the Lessee is and will remain
the owner of the Property for such income tax purposes until the
termination of this Lease. If, notwithstanding the income tax intentions
of the parties as set forth herein, the Lessor actually receives any income
tax deductions, reductions in income tax or other income tax benefit as a
result of any claim for, or recharacterization requiring such party to
take, any tax benefits attributable to ownership of the Property for income
tax purposes, the Lessor shall pay to the Lessee, together with an amount
equal to any reduced Taxes payable by such Tax Indemnitee as a result of
such payment, the amount of such income tax savings actually realized by
the Lessor (less the amount of any anticipated increase in income tax which
the Lessor determines is currently payable as a result of such claim or
recharacterization), provided that the Lessee shall agree to reimburse the
Lessor for any subsequent increase in the Lessor's income taxes resulting
from such claim or recharacterization not taken into account in the payment
made to the Lessee, up to the amount paid to the Lessee by the Lessor. The
parties agree that this Section 26.5(g) is intended to require a payment to
the Lessee if and only if the Lessor shall have actually received an
unanticipated tax savings with respect to the Property that would not have
been received if the Lessor had advanced funds to the Lessee in the form of
a loan secured by the Property in an amount equal to the Lease Balance.
Nothing in this Section 26.5(g) shall be construed to require the Lessor to
take any affirmative action to realize any tax savings if in its good faith
judgment such action may have a material adverse affect on the Lessor.
26.6. Funding Losses. If any payment of Rent or the Lease Balance,
including pursuant to the Lessee's exercise of the Purchase Option under Section
22.1, is made on any day other than the last day of an Interest Period
applicable thereto, the Lessee shall reimburse the Lessor within fifteen (15)
days after demand for any actual resulting loss or expense incurred by it,
including any loss incurred in obtaining, liquidating or employing deposits from
third parties, swaps, xxxxxx or similar transactions entered into in connection
with or in contemplation of transactions relating to the Property, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, provided that the Lessor shall have delivered to the Lessee a
certificate signed by an officer of the Lessor as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error,
and provided, further, that such loss shall in no event exceed the then
effective Lease Rate which would have been payable for the balance of such
Interest Period. The Lessor will, at the request of the Lessee, furnish such
additional information concerning the determination of such loss as the Lessee
may reasonably request.
26.7. Regulation D Compensation. During the Term, for so long as the
Lessor (or Key Corporate Capital Inc. or SELCO) is required to maintain reserves
against "Eurocurrency Liabilities" (or any other category of liabilities which
include deposits by reference to which the Lease Rate is determined or any
category of extensions of credit or other assets which includes loans by a non-
United States office of the Lessor to United States residents), and, as a
result, the cost to the Lessor (or its Funding Office) of making or maintaining
its Advances is increased, then the Lessor may require the Lessee to pay,
contemporaneously with each payment of Rent, an additional amount at a rate per
annum up to but not exceeding the excess of (i) (A) the applicable Eurodollar
Rate divided by (B) one minus the Eurocurrency Reserve Requirements and (ii) the
applicable Eurodollar Rate. In the event that the Lessor wishes to require
payment of such additional amount, the Lessor (x) shall so notify the Lessee, in
which case such additional Rent shall be payable to the Lessor at the place
indicated in such notice with respect to each Interest Period commencing at
least three Business Days after the giving of such notice and (y) shall
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furnish to the Lessee at least five Business Days prior to each date on which
Rent is payable a certificate setting forth the amount to which it is then
entitled under this Section (which shall be consistent with its good faith
estimate of the level at which the related reserves are maintained by it). Each
such certificate shall be accompanied by such information as the Lessee may
reasonably request as to the computation set forth therein.
26.8. Deposits Unavailable. If the Eurodollar Rate is unavailable on
or prior to the day that the Eurodollar Rate is established, the Lessor shall
forthwith give notice thereof to the Lessee, whereupon until the Lessor notifies
the Lessee that the circumstances giving rise to such suspension no longer
exist, the portion of the Advance subject to the Eurodollar Rate shall begin to
bear interest at the Alternate Base Rate on the first day of the subsequent
Interest Period applicable thereto. The Lessor shall provide to the Lessee a
statement in writing of the Alternate Base Rate as calculated hereunder.
26.9. Illegality. If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lessor (or its Funding Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lessor (or its Funding Office) to make, maintain or fund the Advance, and the
Lessor shall so notify the Lessee, whereupon until the Lessor notifies the
Lessee that the circumstances giving rise to such suspension no longer exist,
the obligation to make the Advance shall be suspended. The Lessor, with the
consent of the Lessee (which consent shall not unreasonably be withheld), will
designate a different Funding Office if such designation will avoid the need for
giving such notice and will not, in the judgment of the Lessor, be otherwise
disadvantageous to the Lessor. If such notice is given (i) the Lessee shall be
entitled upon its request to a reasonable explanation of the factors underlying
such notice and (ii) the Advance shall begin to bear interest at the Alternate
Base Rate either (a) on the last day of the then current Interest Period
applicable thereto, if the Lessor may lawfully continue to maintain and fund the
Advance to such day or (b) immediately, if the Lessor shall determine that it
may not lawfully continue to maintain and fund the Advance to such day. The
Lessor shall provide to the Lessee a statement in writing of the Alternate Base
Rate as calculated hereunder.
26.10. Increased Cost and Reduced Return.
(a) In the event that the adoption of any applicable law, rule
or regulation, or any change therein or in the interpretation or
application thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof or compliance by the Lessor with any request or directive
after the date hereof (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) does or shall subject the Lessor to any additional tax
of any kind whatsoever with respect to the Operative Documents
or the Advance made by it, or change the basis or the applicable
rate of taxation of payments to the Lessor of principal,
interest or any other amount payable hereunder (except for the
imposition of or change in any tax on or measured by the overall
net income of the Lessor (other than any such tax imposed by
means of withholding));
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, insurance assessment, compulsory loan
or similar requirement against assets held by, or
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deposits or other liabilities in or for the account of, advances
or loans by, or other credit extended by, or any other
acquisition of funds by, any office of the Lessor which are not
otherwise included in determination of the rate of interest on
the Advance; or
(iii) does or shall impose on the Lessor any other
condition; and the result of any of the foregoing is to increase
the cost to the Lessor of making or maintaining the Advance or
to reduce any amount receivable hereunder;
then in any such case, the Lessee shall promptly pay to the
Lessor, upon demand, any additional amounts necessary to
compensate the Lessor for such increased cost or reduced amount
receivable which the Lessor deems to be material as determined
by the Lessor with respect to the Advance.
(b) If the Lessor shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of the
Lessor (or any entity directly or indirectly controlling the Lessor)
as a consequence of the Lessor's obligations under the Operative
Documents to a level below that which the Lessor (or any entity
directly or indirectly controlling the Lessor) could have achieved but
for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an
amount deemed by the Lessor to be material, then from time to time,
within fifteen (15) days after demand by the Lessor, the Lessee shall
pay to the Lessor such additional amount or amounts as will compensate
the Lessor for such reduction.
(c) The Lessor will promptly notify the Lessee of any event of
which it has knowledge, occurring after the date hereof, which will
entitle the Lessor to compensation pursuant to this Section and will,
if practicable, with the consent of the Lessee (which consent shall
not unreasonably be withheld), designate a different Funding Office or
take any other reasonable action if such designation or action will
avoid the need for, or reduce the amount of, such compensation and
will not, in the judgment of the Lessor, be otherwise disadvantageous
to the Lessor. A certificate signed by an officer of the Lessor
claiming compensation under this Section and setting forth in
reasonable detail its computation of the additional amount or amounts
to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Lessor may use any
reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing clauses (a) and (b) of this
Section 26.10, the Lessee shall only be obligated to compensate the
Lessor for any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in the
case of subsection (a), not earlier than the first day of any
Interest Period in effect on the date which, and (y) in the case
of subsection (b), not earlier than the date on which the Lessor
notifies the Lessee that it proposes to demand such compensation
and identifies to the Lessee the statute, regulation or other
basis upon which the claimed compensation is or will be based
and (B) any time or period during which, because of the
retroactive application of such
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statute, regulation or other basis, the Lessor did not know that
such amount would arise or accrue; and
(ii) within six months prior to any demand therefor,
accompanied by a certificate of the Lessor claiming compensation
and setting forth in reasonable detail its computation of the
additional amount or amounts to be paid to it hereunder.
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates. At any time and from time to time upon
not less than fifteen (15) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
request, the "Certifying Party") shall furnish to the Requesting Party (but in
the case of the Lessor, as Certifying Party, not more than four times per year
unless required to satisfy the requirements of any subleases and only to the
extent that the required information has been provided to the Lessor by the
Lessee) a certificate signed by an individual having the office of vice
president or higher in the Certifying Party certifying that this Lease is in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Lease as the Requesting Party may reasonably
request. Any such certificate furnished pursuant to this Article XXVII may be
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or to the
Requesting Party (or any Affiliate thereof).
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender. No surrender to the Lessor of this
Lease or of all or any portion of the Property or of any interest therein shall
be valid or effective unless agreed to and accepted in writing by the Lessor,
and no act by the Lessor or any representative or agent of the Lessor, other
than a written acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) the fee or groundleasehold estate in the Property,
except as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person or (c) a beneficial interest in the Lessor.
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ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property.
(a) It is the intent of the parties hereto that for financial
accounting purposes the Lease constitutes an "operating lease"
pursuant to Statement of Financial Accounting Standards No. 13, as
amended, and for purposes of commercial, real estate, bankruptcy and
federal, state and local income tax law, the transaction contemplated
hereby is a financing arrangement. The parties further intend that
Lessee shall be treated as owner of the Property for income tax
purposes and shall be entitled to all deductions for depreciation
thereof. Lessor shall take no action inconsistent with such treatment.
(b) It is the intent of the parties hereto that the obligations
of the Lessee under this Lease to pay Basic Rent and Supplemental Rent
or Lease Balance in connection with any purchase of the Property
pursuant to this Lease shall be treated as payments of interest on and
principal of, respectively, loans from the Lessor to the Lessee.
(c) Specifically, without limiting the generality of subsection
(b) of this Section 30.1, the Lessor and the Lessee intend and agree
that with respect to the nature of the transactions evidenced by this
Lease in the context of the exercise of remedies under the Operative
Documents, including, without limitation, in the case of any
insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or
statute of the United States of America or any State or Commonwealth
thereof affecting the Lessee and the Lessor, or any enforcement or
collection actions, the transactions evidenced by this Lease are loans
made by the Lessor as unrelated third party lender to the Lessee.
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses.
(a) The Lessee shall pay, or cause to be paid, from time to time
all Transaction Expenses in respect of the transactions taking place
on the Documentation Date and on Acquisition Date on such respected
date; provided, however, that, if the Lessee has not received written
invoices therefor prior to such date, such Transaction Expenses shall
be paid within ten (10) Business Days after the Lessee has received
written invoices therefor.
(b) The Lessee shall pay or cause to be paid (i) all Transaction
Expenses incurred by the Lessor in entering into any future amendments
or supplements with respect to any of the Operative Documents, whether
or not such amendments or supplements are ultimately entered into, or
giving or withholding of waivers of consents hereto or thereto, in
each case which have been requested by or approved by the Lessee, (ii)
all Transaction Expenses incurred by the Lessor in connection with any
purchase of the Property by the Lessee or other Person pursuant to
this Lease and (iii) all Transaction Expenses incurred by the Lessor
in respect of enforcement of any of its rights or remedies against the
Lessee in respect of the Operative Documents.
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31.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause to
be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Lease and the
other Operative Documents.
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1. Covenants. The Lessee hereby agrees that so long as this Lease
is in effect:
(a) Information. The Lessee will deliver to the Lessor:
(i) promptly upon the request of the Lessor, the publicly
available consolidated and consolidating statements of financial
position of the Lessee and its consolidated subsidiaries as of
the end of each of the Lessee's fiscal years and the related
consolidated and consolidating statements of income and cash
flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, with
such consolidated financial statements reported on by Ernst &
Young or other independent public accountants of nationally
recognized standing reasonably acceptable to the Lessor; and
with respect to each of the first three quarters of each fiscal
year of the Lessee, the publicly available unaudited
consolidated statement of financial position of the Lessee as of
the end of such quarter and the related unaudited consolidated
statements of income and cash flows for such quarter and for the
portion of the Lessee's fiscal year ended at the end of such
quarter;
(ii) as soon as possible and in any event within ten (10)
days after a Responsible Employee of the Lessee obtains
knowledge of the occurrence of each Event of Default or each
event that, with the giving of notice or time elapse, or both,
would constitute an Event of Default continuing on the date of
such statement, a statement of the authorized officer setting
forth details of such Event of Default or event and the action
that the Lessee proposes to take with respect thereto; provided
that the Lessee shall not be obligated to give notice of any
Event of Default which is remedied within ten (10) days after
such Responsible Employee first obtains knowledge;
(iii) promptly upon becoming aware thereof, written notice
of the commencement or existence of any proceeding against the
Lessee or any Affiliate of the Lessee by or before any court or
governmental agency that might, in the reasonable judgment of
the Lessee, result in a Material adverse effect on the business,
operations or financial conditions of the Lessee or the ability
of the Lessee to perform its obligations under the Operative
Documents;
(iv) as soon as possible and in any event within ten (10)
days after a Responsible Employee of the Lessee obtains
knowledge of the occurrence of any violation or alleged
violation of an Environmental Law by Lessee, a statement of an
authorized officer setting forth the details of such violation
and the action which the Lessee proposes to take with respect
thereto; and
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(v) from time to time such additional information
regarding the business, properties, condition or operations,
financial or otherwise, of the Lessee, or regarding the Property
or the status of any construction thereon, if any, as the Lessor
may reasonably request in connection with the Property.
(b) Obligations under Loan Documents and Mezzanine Loan
Documents. Absent prior written notice from the Lessor to the
contrary, the Lessee shall comply with (i) all requirements in the
Nomura Loan Agreement and the Mezzanine Loan Agreement that the
Lessor, as Borrower, furnish the Lender with notices, documents,
reports, budgets, data and all other information relating to the
Property, including, without limitation, the requirements in
connection with a defeasance of the loan pursuant to Section 2.11 of
the Nomura Loan Agreement and (ii) all requirements and obligations of
Operator set forth in the Mortgage and the Mezzanine Mortgage.
(c) Compliance with Laws. The Lessee will comply in all Material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder) with respect to its Material Assets, including the
Property, except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
(d) Further Assurances. The Lessee shall take or cause to be
taken from time to time all action necessary to assure that the intent
of the parties pursuant to the Operative Documents is given effect as
contemplated by this Lease. The Lessee shall execute and deliver, or
cause to be executed and delivered, to the Lessor from time to time,
promptly upon request therefor, any and all other and further
instruments that may be reasonably requested by the Lessor to cure any
deficiency in the execution and delivery of this Lease or any
Operative Document to which it is a party.
(e) Preservation of Existence, Etc. The Lessee will preserve and
maintain its existence and all rights, privileges and franchises
necessary and desirable in the normal conduct of its business and the
performance of its obligations hereunder and under the Operative
Documents; provided that the Lessee may consolidate with or merge with
or into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, if either the
Lessee shall be the continuing corporation, or the corporation (if
other than the Lessee) formed by such consolidation or into which the
Lessee is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Lessee substantially as an
entirety shall expressly assume, by an assumption agreement executed
and delivered to the Lessor, the performance of the Lessee's
obligations under each of the Operative Documents.
(f) Nonpetition Covenants. Lessee shall not during the Term of
the Lease acquiesce, petition or otherwise invoke or cause the Lessor
to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Lessor under
any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Lessor or any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Lessor. Lessor shall not during the
Term of the Lease acquiesce, petition or otherwise invoke or cause the
Lessee to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Lessee
under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar
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official of the Lessee or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Lessee.
ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc. Anything contained in this Lease to
the contrary notwithstanding, all claims against and liabilities of the Lessee
or the Lessor arising from events commencing prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination
for a period of one year except as to indemnification which shall continue to
survive. If any term or provision of this Lease or any application thereof shall
be declared invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any
right or option of the Lessee provided in this Lease would, in the absence of
the limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the descendants of Xxxxxxxx X. Xxxxxxxxx, the former President of
the United States, Xxxxx Xxxx, the deceased automobile manufacturer, and Xxxx X.
Xxxxxxxxxxx, the founder of the Standard Oil Company, known to be alive on the
date of the execution, acknowledgment and delivery of this Lease.
33.2. Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing in recordable form signed by the Lessor and the Lessee.
33.3. No Waiver. No failure by the Lessor or the Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
33.4. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing (including by facsimile), and
directed to the address of the appropriate party as set forth in Schedule I
hereto.
33.5. Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
33.6. Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
33.7. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
33.8. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
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WITHOUT LIMITING THE FOREGOING, IN THE EVENT THAT THIS LEASE IS DEEMED TO
CONSTITUTE A FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL GOVERN
THE CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY.
33.9. Original Lease. The single executed original of this Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt of the Lessor therefor on or following
the signature page thereof shall be the Original Executed Counterpart of this
Lease (the "Original Executed Counterpart"). To the extent that this Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the Original Executed Counterpart.
33.10. Waiver of Jury Trial. THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS LEASE AND/OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF SUCH PARTIES. THE PARTIES
HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE LEASE AND EACH SUCH OTHER OPERATIVE
DOCUMENT.
33.11. Compliance with Loan Documents. Lessor covenants and agrees
with Lessee that Lessor shall (a) not without the express written consent of the
Lessee, which consent shall not be unreasonably withheld, enter into any
amendments or modifications of the SELCO Loan Agreement, the Lessor Pledge
Agreement or any of the Loan Documents and Mezzanine Loan Documents to which it
is a party and (b) comply with the terms of the SELCO Loan Agreement, the Lessor
Pledge Agreement and the Loan Documents and Mezzanine Loan Documents to which it
is a party.
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in
Lessor. In the event the Lessee exercises its right or is obligated to pay the
Equity Balance to the Lessor as set forth in this Lease, the Lessee shall not
pay such Equity Balance without complying with the provisions of the Nomura Loan
Agreement. The parties further agree that as soon as possible (time being of the
essence) after the payment by the Lessee to the Lessor of the Equity Balance or
upon the Lessor's exercise of all its rights under the Securities Pledge
Agreement and the Certificate Pledge Agreement, including, without limitation,
its rights to possess the Pledged Securities and the Certificate A, the Lessee
shall accept a transfer requested of it by the beneficial owner of the Lessor of
its equity interest in the Lessor. The Lessee and Lessor agree to execute all
documents reasonably necessary to effectuate such transfer. The acquisition by
the Lessee of the equity interest in the Lessor shall comply with the provisions
of the Nomura Loan Agreement.
33.13. Concerning the Lessor. This Lease has been executed by
Wilmington Trust Company solely in its capacity as Trustee under the Trust
Agreement and not in its individual capacity and in no case shall the Trust
Company (or any entity acting as successor or additional Trustee under the Trust
Agreement) be personally liable for or on account of any of the statements,
representations, warranties,
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covenants or obligations of the Trust, the Trustee or the Lessor hereunder, any
such liabilities being hereby waived by the other parties hereto provided, that
Wilmington Trust Company accepts the benefits running to it hereunder and agrees
that it shall be liable in its individual capacity for its own gross negligence
or willful misconduct. If a successor Trustee is appointed in accordance with
the terms of the Trust Agreement, such successor Trustee shall, without any
further act, succeed to all the rights, duties, immunities and obligations of
the Lessor hereunder and the predecessor Trustee shall be released from all
further duties and obligations hereunder arising after such successor Trustee
will have been appointed.
33.14. Owner's Insurance Policy Proceeds. After such time as the
Lessor is paid the Equity Balance, the Lessor agrees to promptly provide the
Lessee with any proceeds of the Lessor's owner's insurance policy covering the
Property which the Lessor has received.
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IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.
BROOKDALE LIVING COMMUNITIES OF ILLINOIS-HV, INC.,
By /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Vice President
S-1
Commitment: THE HARBOR VILLAGE BUSINESS TRUST
By Wilmington Trust Company, not in its
individual capacity but solely as trustee under
the Trust Agreement
$22,500,000
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: XXXXX X. XXXXXX
Title: Vice President
S-2
THIS COUNTERPART IS NOT THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
NOMURA ASSET CAPITAL CORPORATION
By /s/ Xxxxxxx Xxxxxxx
----------------------------
Xxxxxxx Xxxxxxx
Managing Director
S-3
SCHEDULE I
Notice Information
Lessee
------
Brookdale Living Communities of Illinois-HV, Inc.
c/o Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies delivered concurrently to:
Brookdale Living Communities of Illinois-HV, Inc.
c/o Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Brookdale Living Communities of Illinois-HV, Inc.
c/o Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esquire
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxx, Xxxxxx, XxxXxx & Xxxxxxxxxx
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx, XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Lessor
------
THE HARBOR VILLAGE BUSINESS TRUST
c/o Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telephone No.: 000-000-0000
Facsimile No.: 302-651-1000
EXHIBIT A
---------
FORM OF FUNDING REQUEST
TO: THE HARBOR VILLAGE BUSINESS TRUST
_______________________
_______________________
Reference is hereby made to the Lease dated as of March __, 1998, as it may
be amended from time to time (the "Lease"), between Brookdale Living Communities
of Illinois-HV, Inc. (the "Company") and THE HARBOR VILLAGE BUSINESS TRUST.
Capitalized terms not otherwise defined herein are used herein as defined in
Appendix 1 to the Lease.
The Company hereby requests the making of an Advance in the amount of
$____________ on _____________, 199_ (the "Requested Funding Date").
In connection with such requested Advance, the Company hereby represents
and warrants to you as follows:
(a) The Advance will be allocated as follows:
(i) $___________ of the Advance shall be used solely to provide
the Company with funds with which to pay or reimburse itself for
Property Cost.
(ii) $___________ of the Advance shall be used to pay or
reimburse the Company for Transaction Expenses paid or payable by the
Company in connection with the Operative Documents and fees paid or
payable by the Company to the Lessor in connection with the Operative
Documents and any amounts paid or payable by the Company pursuant to
Section 31.1 of the Lease, and
(b) On and as of the Requested Funding Date the representations and
warranties of the Company contained in the Lease and in each of the other
Operative Documents are true and correct in all material respects as though
made on and as of such date, except to the extent such representations or
warranties relate solely to an earlier date, in which case such
representations and warranties were true and correct in all material
aspects on and as of such earlier date;
(c) On and as of the Requested Funding Date there are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened (i) that are reasonably likely to have a Material adverse effect
on the Property or (ii) that question the validity of the Operative
Documents or the rights or remedies of the Lessor with respect to the
Company or the Property under the Operative Documents;
(d) To the knowledge of the Company, there have been no Liens against
the Property since the recordation of the Deed other than Permitted Liens;
(e) On and as of the Requested Funding Date no Default or Event or
Default under the Lease has occurred and is continuing, and no Default or
Event of Default under the Lease will have occurred after giving effect to
the making of the Advance requested hereby; and
(f) All of the applicable conditions precedent to this Advance under
Article IV of the Lease have been satisfied.
Please wire transfer the proceeds of the Advance requested hereby (other
than proceeds described in paragraph (a)(iv) of this Funding Request)
to ____________.
The Company has caused this Funding Request to be executed and delivered by
its duly authorized Responsible Employee this *_______ day of __________,
199_.
BROOKDALE LIVING COMMUNITIES OF
ILLINOIS-HV, INC.,
By
--------------------------
Name:
Title:
-------------------
* Funding Request must be delivered not later than 9:00 A.M., New York City
time, five (5) Business Days prior to the Requested Funding Date.
-2-
EXHIBIT C
---------
BROOKDALE LIVING COMMUNITIES OF [ILLINOIS], INC.,
Responsible Employee's Certificate
Pursuant to Section 4.3(g) of the Lease
-----------------------
The undersigned certifies that he is the duly appointed and acting
[________] of BROOKDALE LIVING COMMUNITIES OF ILLINOIS-HV, INC., (the
"Company"), and is familiar with the terms and provisions of the Lease, dated as
of March __, 1998 (the "Lease"), among the Company, as the Lessee, THE HARBOR
VILLAGE BUSINESS TRUST, as the Lessor, and the transactions and documents
contemplated thereby. Capitalized terms used herein but not defined shall have
the meanings ascribed to them in Appendix 1 to the Lease.
Pursuant to Section 4.3(g) of the Lease, the undersigned, as [_______] of
the Company, further certifies that: (i) each and every representation and
warranty of the Company contained in each Operative Document to which is a party
is true and correct in all Material respects on and as of the Acquisition Date;
(ii) to the best of the undersigned's knowledge, no Default or Event of Default
has occurred and is continuing under any Operative Document to which the Company
is a party with respect to the Company; (iii) each Operative Document to which
the Company is a party is in full force and effect with respect to the Company;
and (iv) the Company has duly performed and complied in all Material respects
with all covenants, agreements and conditions contained in the Lease or in any
other Operative Document required to be performed or complied with by it on or
prior to such Acquisition Closing Date.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this ____ day of __________, 199__.
BROOKDALE LIVING COMMUNITIES OF
ILLINOIS-HV, INC.,
_____________________________
Name:
Title:
APPENDIX 1
to
Lease
-----
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by the Operative Documents, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Operative
Documents and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision of
any Applicable Law means that provision of such Applicable Law from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other
provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or
Appendix, Schedule or Exhibit thereto;
(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to an Operative Document as a whole and not to
any particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(ix) relative to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding";
(x) terms used herein or in the Lease but not otherwise defined
therein shall have the meanings specified therefor in the Nomura Loan Agreement.
B. Accounting Terms. In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. Conflict in Operative Documents. If there is any conflict between any
Operative Documents, such Operative Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, the Nomura Loan Agreement and, as
applicable, the Mezzanine Loan Agreement shall prevail and control.
D. Legal Representation of the Parties. The Operative Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Defined Terms. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Operative Document. Terms used herein and in the Lease but not defined herein or
in the Lease shall have the meanings ascribed to them in the Nomura Loan
Agreement.
"Acquisition Date" is defined in Section 4.2 of the Lease.
"Advance" means the advance of funds by the Lessor pursuant to Article III
of the Lease.
"After Tax Basis" means, with respect to any payment to be received, the
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the recipient (less any tax savings realized and
the present value of any tax savings projected to be realized by the recipient
as a result of the payment of the indemnified amount) with respect to the
receipt by the recipient of such amounts, such increased payment (as so reduced)
is equal to the payment otherwise required to be made.
Harbor Village Appendix 1
"Alternate Base Rate" means, for any period, an interest rate per annum
equal to the Prime Rate. If the aforesaid rate changes from time to time after
the date of the Lease, the Alternate Base Rate shall be automatically increased
or decreased, if appropriate and as the case may be, without notice to the
Lessee as of the effective time of each change. The Alternative Base Rate shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days from a SELCO Payment Date to the subsequent SELCO Payment Date.
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction
(including those pertaining to health, safety or the environment (including,
without limitation, wetlands) and those pertaining to the construction, use or
occupancy of the Property) and any restrictive covenant or deed restriction or
easement of record affecting the Property or any other Material Assets.
"Applicable Margin" means at any time .70%.
"Appraisal" means an appraisal of the Property, which Appraisal complies in
all material respects (as determined by the reasonable judgment of counsel for
the Lessor) with the requirements of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended, the rules and regulations adopted
pursuant thereto, and all other applicable Requirements of law, and will
appraise the Fair Market Sales Value of such Property, in form and substance
reasonably satisfactory to the Lessor, prepared by American Appraisal Associates
or another reputable appraiser selected by the Lessor.
"Appurtenant Rights" means (i) all agreements, easements, rights of way or
use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land or the Improvements, including, without limitation, the use of any
streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or
contiguous to the Land and (ii) all permits, licenses and rights, whether or not
of record, appurtenant to the Land.
"Architect" means, with respect to the Property, the architect acting in
such capacity. Any requirement in any Operative Document that a certificate of
the Architect be delivered shall be satisfied by delivery of certificate(s) from
one or more of the foregoing so long as such certificates collectively satisfy
the requirements set forth in such Operative Documents.
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"B Loan" means the loan made by KCCI, as Lender, to the Lessor, as
Borrower, pursuant to the SELCO Loan Agreement.
"Basic Rent" means Debt Service under and as defined in the Mezzanine Loan
Agreement and required to be paid thereunder, Debt Service under and as defined
in the Nomura Loan Agreement, Basic Carrying Costs Monthly Installments,
Operating Expense Monthly Installments and Capital Reserve Monthly Installments,
each to the extent required to be paid under the Nomura Loan Agreement and SELCO
Basic Rent and Lessor Basic Rent.
"Break Costs" means an amount equal to the amount, if any, required to
compensate the Lessor for any additional losses (including, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
funds acquired by the Lessor to fund its obligations hereunder, swaps, xxxxxx or
similar transactions entered into in connection with or in contemplation of
transactions relating to the Property) it may reasonably incur as a result of
(x) the Lessee's payment of Rent or Lease Balance other than on a Payment Date,
(y) the Advance not being made on the date specified therefore in the Funding
Request (other than as a result of a breach by the Lessor if its obligation
under Section 3.1 of the Lease to make the Advance), or (z) as a result of any
conversion of the Eurodollar Rate in accordance with Section 26.8 or 26.9 of the
Lease. A statement as to the amount of such loss, cost of expense, prepared in
good faith and in reasonable detail and submitted by the Lessor to the Lessee,
shall be conclusive and binding for all purposes absent manifest error.
"Board" means the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Capitalized Interest" is defined in Section 2.5 of the SELCO Loan
Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.
"Casualty" means any damage or destruction of all or any portion of the
Property as a result of a fire or other casualty.
"Certificate A" means the compounding investment certificate, in the
original principal amount of $5,075,000 issued by Fleet National Bank and
pledged to the Lessee pursuant to the Certificate Pledge Agreement and the
replacement certificate therefor.
"Certificate Pledge Agreement" means the Certificate Pledge Agreement,
dated as of March 6, 1998, among the Lessee, Lessor and Wilmington Trust
Company, as Custodian, pursuant to which the Lessee pledged Certificate A to the
Lessor.
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Harbor Village Appendix 1
"Certifying Party" is defined in Section 27.1 of the Lease.
"Claims" means any and all obligations, liabilities, losses, actions,
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever.
"Commitment" means the obligation of the Lessor to make the Advance to the
Lessee in an aggregate principal amount not to exceed the amount set forth
opposite the Lessor's name on its signature page to the Lease.
"Condemnation" means any condemnation, requisition, confiscation, seizure
or other taking or sale of the use, access, occupancy, easement rights or title
to the Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.
"Contingent Rental Adjustment" means the sum of (a) the maximum amount
(calculated as a percentage of the Fair Market Sales Value of the Property as
set forth in the Appraisal) that when present valued with the minimum Basic Rent
payments to be made during the Term permits the Lease to be characterized as an
"operating lease" in accordance with the Statement of Financial Accounting
Standards No. 13 as in effect on the Acquisition Date and permits recourse to
the Lessee , which in no event shall be less than all amounts due and owing
under the Nomura Loan Agreement and the Mezzanine Loan Agreement and (b) any
additional amount required to prepay the Loan or Mezzanine Loan or defease the
Loan in whole or in part pursuant to the Nomura Loan Agreement and Mezzanine
Loan Agreement, respectively, including, but not limited to, the Defeasance
Deposit or the Yield Maintenance Premium, as applicable, and all costs and fees
payable in connection therewith.
"Control" means (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or other beneficial interests or by contract or
otherwise.
"Custodian" means Wilmington Trust company, as custodian under the
Securities Pledge Agreement.
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Harbor Village Appendix 1
"Debt" means, for any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services, (ii)
all obligations of such Person under any conditional sale or other title
retention agreement relating to property purchased by such Person, (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, and (iv) all obligations of such Person as lessee under leases that
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases.
"Deed" means a limited warranty deed with respect to the real property
comprising the Property, in conformity with Applicable Law and appropriate for
recording with the applicable Governmental Authorities, conveying fee simple
title to such real property to the Lessor, subject only to Permitted Liens.
"Default" means any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Documentation Date" is defined in Section 4.1 of the Lease.
"Dollars" and "$" mean dollars in lawful currency of the United States of
America.
"End of the Term Report" is defined in Section 26.2(a) of the Lease.
"Environmental Audit" means a Phase One environmental site assessment (the
scope and performance of which meets or exceeds ASTM Standard Practice E1527-93
Standard Practice for Environmental Site Assessments: Phase One Environmental
Site Assessment Process) of the Property, and, if called for by the Phase One
assessment, a Phase Two environmental site assessment.
"Environmental Law" means, whenever enacted or promulgated, any applicable
Federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, administrative or
court order, judgment, decree, injunction, code or requirement or any agreement
with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation thereof, or any other response thereto), or the regulation or
protection of human health, safety or the environment, including air,
water, vapor, surface water, groundwater, drinking water, land (including
surface or subsurface), plant, aquatic and animal life, or
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Harbor Village Appendix 1
(y) concerning exposure to, or the use, containment, storage,
recycling, treatment, generation, discharge, emission, Release or
threatened Release, transportation, processing, handling, labeling,
containment, production, disposal or remediation of any Hazardous
Substance,
in each case as amended and as now or hereafter in effect. Applicable laws
include, but are not limited to, CERCLA; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. (S) 6901 et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42 U.S.C. (S)(S) 7401 et
seq.; the National Environmental Policy Act, 42 U.S.C. (S) 4321; the Refuse Act,
33 U.S.C. (S)(S) 401 et seq.; the Hazardous Materials Transportation Act of
1975, 49 U.S.C. (S)(S) 1801-1812; the Toxic Substances Control Act, 15 U.S.C.
(S)(S) 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
U.S.C. (S)(S) 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f et
seq., each as amended and as now or hereafter in effect, and their state and
local counterparts or equivalents, including any regulations promulgated
thereunder.
"Environmental Violation" means any activity, occurrence or condition
that violates or results in non-compliance with any Environmental Law in any
Material respect.
"Equipment" means all of Lessee's "equipment," as such term is defined
in the UCC, and, to the extent not included in such definition, all fixtures,
appliances, machinery, furniture, furnishings, decorations, tools and supplies,
now owned or hereafter acquired by Lessee using the proceeds of the Advance or
other funds from the Lessor, including but not limited to, all beds, linens,
radios, televisions, carpeting, telephones, cash registers, computers, lamps,
glassware, restaurant and kitchen equipment, all medical, dental,
rehabilitation, therapeutic and paramedic equipment and supplies, any building
equipment, including but not limited to, all heating, lighting, incinerating,
waste removal and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, security and alarm systems, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigeration, washing machines, dryers, stoves,
refrigerators, ventilating, and communications apparatus, air cooling and air
conditioning apparatus, escalators, elevators, ducts, and compressors, materials
and supplies, and all other machinery, apparatus, equipment, fixtures and
fittings now owned or hereafter acquired by Lessee using proceeds of the Advance
or other funds from the Lessor, wherever located, any portion thereof or any
appurtenances thereto, together with all additions, replacements, parts,
fittings, accessions, attachments, accessories, modifications and alterations of
any of the foregoing.
"Equity Balance" means an amount equal to the sum of (a) the aggregate
amount of the balance (inclusive of principal and Capitalized Interest) of the
loan made pursuant to the SELCO Loan Agreement, (b) $675,000, and (c) all due
and unpaid SELCO Basic Rent, Lessor Basic Rent and Supplemental Rent to which
the Lessor is entitled.
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Harbor Village Appendix 1
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time or any successor Federal statute.
"Eurocurrency Reserve Requirements" means, for any day as applied to a
payment of Rent, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Lease Rate" means, during any Interest Period, the rate
per annum equal to the sum of the Eurodollar Rate for such Interest Period plus
the Applicable Margin.
"Eurodollar Rate", subject to Section 26.8 of the Lease, means the
rate per annum at which deposits in Dollars appear with respect to a ninety (90)
day period on the Telerate Page 3750 (or any successor page), in each case as of
11:00 a.m. (London time) two Business Days prior to the beginning of such
Interest Period, or if such rate is not available, then the average (rounded
upward, if necessary, to the nearest multiple of one-sixteenth of one percent)
of the rates offered for Dollar deposits to the prime banks by leading banks in
the London interbank market at or about 11:00 a.m. (London time) two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market for delivery on the first day of such Interest Period for a ninety (90)
day period in an amount comparable to the amount of the Advance to be
outstanding during such period. The Eurodollar Rate shall be calculated on the
basis of a 360-day year for the actual number of days from a SELCO Payment Date
to the subsequent SELCO Payment Date.
"Event of Default" is defined in Section 20.1 of the Lease.
"Excess Proceeds" means (i) the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the sum of the Lease Balance paid by the Lessee
pursuant to Articles XVII and XIX of the Lease with respect to such Casualty or
Condemnation; (ii) the excess proceeds over the Lease Balance, if any, received
by the Lessor in connection with any sale of the Property pursuant to the
Lessor's exercise of remedies under Section 20.2 of the Lease or the Lessee's
exercise of the Remarketing Option under Article XXIV of the Lease and (iii)
Excess Proceeds as defined in the Nomura Loan Agreement.
"Expiration Date" means, unless the Lease shall have been earlier
terminated in accordance with the provisions of the Lease or the other Operative
Documents, March 11, 2003, or if the Term has been extended in accordance with
Article XXIII of the Lease, the last day of
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the most recent Renewal Term, provided, however, the Expiration Date for the
final potential Renewal Term under the Lease shall be March 11, 2010.
"Fair Market Sales Value" means the amounts, which in any event shall
not be less than zero, that would be paid in cash in an arm's-length transaction
between an informed and willing purchaser and an informed and willing seller,
neither of whom is under any compulsion to purchase or sell, respectively, for
the ownership of all of the Property. The Fair Market Sales Value of the
Property shall be determined based on the assumption that, except for purposes
of Article XX of the Lease and Section 26.2 of the Lease, the Property is in the
condition and state of repair required under Section 13.1 of the Lease and the
Lessee is in compliance with the other requirements of the Operative Documents.
"Fixtures" means all fixtures relating to the Improvements, including
all components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.
"Funding Office" means the office of the Lessor, if any, identified on
its signature page to the Lease as its Funding Office.
"Funding Request" is defined in Section 3.2(a) of the Lease.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Governmental Action" means all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Applicable Law, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operation of the Property.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Proceeds" is defined in Section 24.1(k) of the Lease.
"Impositions" means any and all liabilities, losses, expenses and
costs of any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever ("Taxes"), including,
without limitation, (i) real and personal property taxes, including personal
property taxes on the Property covered by the Lease that is classified by
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Harbor Village Appendix 1
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) any excise
taxes; (iv) real estate transfer taxes, conveyance taxes, mortgage taxes,
intangible taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, gross
receipts, privilege and doing business taxes, license and registration fees; and
(vi) assessments on the Property, including all assessments for public
improvements or benefits, whether or not such improvements are commenced or
completed within the Term, and in each case all interest, additions to tax and
penalties thereon, which at any time may be levied, assessed or imposed by any
Federal, state or local authority upon or with respect to (a) any Tax
Indemnitee, the Property or any part thereof or interest therein, or the Lessee
or any sublessee or user of the Property; (b) the financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
purchase, rental, lease, activity conducted on, delivery, insuring, use,
operation, improvement, transfer, return or other disposition of the Property or
any part thereof or interest therein; (c) the rentals, receipts or earnings
arising from the Property or any part thereof or interest therein; (d) the
Operative Documents or any payment made or accrued pursuant thereto; (e) the
income or other proceeds received with respect to the Property or any part
thereof or interest therein upon the sale or disposition thereof; (f) any
contract relating to the construction, acquisition or delivery of the
Improvements or any part thereof or interest therein; or (g) otherwise in
connection with the transactions contemplated by the Operative Documents.
Notwithstanding anything in the first paragraph of this definition
(except as provided in the final paragraph of this definition) the term
"Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are in
the nature of, sales, use, rental, transfer or property taxes) that
are imposed by any Governmental Authority and that are based upon or
measured by the gross or net income or gross or net receipts
(including any minimum taxes, withholding taxes or taxes on, measured
by or in the nature of capital, net worth, excess profits, items of
tax preference, capital stock, franchise, business privilege or doing
business taxes); provided that this clause (i) shall not be
interpreted to prevent a payment from being made on an After Tax Basis
if such payment is otherwise required to be so made;
(ii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs, or
relates to a period, after the termination of the Lease (but not any
Tax or imposition that relates to any period prior to the termination
of the Lease);
(iii) any Tax or imposition for so long as, but only for so long
as, it is being contested in accordance with the provisions of Section
26.5(b) of the Lease, provided that
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the foregoing shall not limit the Lessee's obligation under Section
26.5(b) of the Lease to advance to such Tax Indemnitee amounts with
respect to Taxes that are being contested in accordance with Section
26.5(b) of the Lease or any expenses incurred by such Tax Indemnitee
in connection with such contest;
(iv) any interest or penalties imposed on a Tax Indemnitee as a
result of a breach by such Tax Indemnitee of its obligations under
Section 26.5(e) of the Lease or otherwise as a result of a Tax
Indemnitee's failure to file any return or other documents timely and
as prescribed by applicable law; provided that this clause (iv) shall
not apply (x) if such interest or penalties arise as a result of a
position taken (or requested to be taken) by the Lessee in a contest
controlled by the Lessee under Section 26.5(b) of the Lease or (y) if
such failure is attributable to a failure by the Lessee to fulfill its
obligations under the Lease with respect to any such return;
(v) any Taxes or impositions imposed upon a Tax Indemnitee with
respect to any voluntary transfer, sale, financing or other voluntary
disposition of any interest in the Property or any part thereof, or
any interest therein or any interest or obligation under the Operative
Documents, or from any sale, assignment, transfer or other disposition
of any interest in a Tax Indemnitee or any Affiliate thereof, (other
than any transfer in connection with (1) the exercise by the Lessee of
its Purchase Option or any termination option or other purchase of the
Property by the Lessee, (2) the occurrence of an Event of Default, (3)
a Casualty or Condemnation affecting the Property, or (4) any
sublease, modification or addition to the Property by the Lessee);
(vi) any Taxes or impositions imposed on a Tax Indemnitee, to
the extent such Tax Indemnitee actually receives a credit (or
otherwise has a reduction in a liability for Taxes) in respect thereof
against Taxes that are not indemnified under the Lease (but only to
the extent such credit is not taken into account in calculating the
indemnity payment on an After Tax Basis);
(vii) Taxes imposed on or with respect to or payable by any Tax
Indemnitee based on, measured by or imposed with respect to any fees
received by such Tax Indemnitee;
(viii) any Taxes imposed against or payable by a Tax Indemnitee
resulting from, or that would not have been imposed but for, the gross
negligence or willful misconduct of such Tax Indemnitee;
(ix) Taxes imposed on or payable by a Tax Indemnitee to the
extent such Taxes would not have been imposed but for a breach by the
Tax Indemnitee or any Affiliate thereof of any representations,
warranties or covenants set forth in the Operative
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Documents (unless such breach is caused by the Lessee's breach of its
representations, warranties or covenants set forth in the Operative
Documents);
(x) Taxes to the extent resulting from such Tax Indemnitee's failure
to comply with the provisions of Section 26.5(b) of the Lease, which
failure precludes or materially adversely affects the ability to conduct a
contest pursuant to Section 26.5(b) of the Lease (unless such failure is
caused by the Lessee's breach of its obligations);
(xi) Taxes which are included in Property Cost if and to the extent
actually paid;
(xii) Taxes that would have been imposed in the absence of the
transactions contemplated by the Operative Documents and Taxes imposed on
or with respect to or payable as a result of activities of a Tax Indemnitee
or Affiliate thereof unrelated to the transactions contemplated by the
Operative Documents;
(xiii) Taxes imposed on or with respect to or payable by a Tax
Indemnitee resulting from, or that would not have been imposed but for the
existence of, any Lessor Lien created by or through such Tax Indemnitee or
an Affiliate thereof and not caused by acts or omissions of the Lessee,
unless required to be removed by the Lessee;
(xiv) Any Tax imposed against or payable by a Tax Indemnitee to the
extent that the amount of such Tax exceeds the amount of such Tax that
would have been imposed against or payable by such Tax Indemnitee (or, if
less, that would have been subject to indemnification under Section 26.5 of
the Lease) if such Tax Indemnitee were not a direct or indirect successor,
transferee or assign of one of the original Tax Indemnitees; provided,
however, that this exclusion (xiv) shall not apply if such direct or
indirect successor, transferee or assign acquired its interest as a result
of a transfer while an Event of Default shall have occurred and is
continuing;
(xv) Taxes imposed on or with respect to or payable by a Tax
Indemnitee that would not have been imposed but for an amendment,
supplement, modification, consent or waiver to any Operative Document not
initiated, requested or consented to by the Lessee unless such amendment,
supplement, modification, consent or waiver (A) arises due to, or in
connection with there having occurred, an Event of Default or (B) is
required by the terms of the Operative Documents or is executed in
connection with any amendment to the Operative Documents required by law;
(xvi) Taxes in the nature of intangibles, stamp, documentary or
similar Taxes;
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(xvii) Taxes imposed on or with respect to or payable by a Tax
Indemnitee or any Affiliate because such Tax Indemnitee or any Affiliate
thereof is not a United States person within the meaning of Section
7701(a)(30) of the Code;
(xviii) Any tax imposed by its express terms in lieu of or in
substitution for a Tax not subject to indemnity pursuant to the provisions
of Section 26.5 of the Lease.
Notwithstanding the foregoing, the exclusions from the definition of Impositions
set forth in clauses (i), (ii), (v), (vii), (xii), (xvi) and (xviii) (to the
extent that any such tax is imposed by its express terms in lieu of or in
substitution for a Tax set forth in clauses (i), (ii), (v), (vii), (xii) and
(xvi)) above shall not apply (but the other exclusions shall apply) to any Taxes
or any increase in Taxes imposed on a Tax Indemnitee net of any decrease in
taxes realized by such Tax Indemnitee, to the extent that such tax increase or
decrease would not have occurred if on the Funding Date the Lessor had advanced
funds to the Lessee in the form of a loan secured by the Property in an amount
equal to the Property Cost funded on the Funding Date, with debt service for
such loan equal to the Basic Rent payable on each Payment Date and a principal
balance at the maturity of such loan in an amount equal to the then outstanding
amount of the Advance at the end of the term of the Lease.
"Improvements" means, with respect to the Property, all buildings,
structures, Fixtures, Equipment, and other improvements of every kind existing
at any time and from time to time (including those purchased with amounts
advanced by the Lessor pursuant to the Lease) on or under the Land, together
with any and all appurtenances to such buildings, structures or improvements,
including sidewalks, utility pipes, conduits and lines, parking areas and
roadways, and including all Modifications and other additions to or changes in
the Improvements at any time and including all gas and electric fixtures,
radiators, heaters, washing machines, dryers, refrigerators, ovens, engines and
machinery, boilers, ranges, elevators and motors, plumbing and heating fixtures,
antennas, carpeting and other floor coverings, water heaters, awnings and storm
sashes, and cleaning apparatus which are or shall be attached to the Land or
said buildings, structures or improvements.
"Indemnitee" means the Lessor, the Trust Company, KCCI and SELCO, and their
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.
"Institutional Lender" means an insurance company, bank, savings and loan
association, trust company, commercial credit corporation, pension plan, pension
fund or pension fund advisory firm, mutual fund or other investment company, or
an institution substantially similar to any of the foregoing, in each case
having at least $250 million in capital/statutory surplus or shareholders'
equity and at least $1 billion in total assets, or any entity wholly owned by
any of the institutions meeting the foregoing criteria.
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"Insurance Requirements" means all terms and conditions of any insurance
policy either required by the Lease to be maintained by the Lessee, or required
by the Lender to be maintained pursuant to the Nomura Loan Agreement and the
Mezzanine Loan Agreement, and all reasonable and appropriate requirements of the
issuer of any such policy.
"Interest Period" shall have the meaning set forth in the Nomura Loan
Agreement for "Interest Accrual Period".
"Investment Company Act" means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"KCCI" means Key Corporate Capital Inc., a Michigan corporation, its
successors and assigns.
"Land" means the parcel of real property described on Annex 1 to the Lease
Supplement and all Appurtenant Rights attached thereto.
"Lease" means the Lease, dated as of the Documentation Date, between the
Lessor and the Lessee.
"Lease Balance" means, as of any date of determination, the sum of (a) the
Equity Balance (if same has not been paid as of such date) (b) all other amounts
owing to the Lessor and by the Lessor and Lessee under the Operative Documents
(including all due and unpaid Basic Rent and Supplemental Rent) and (c) all
amounts (but not duplicative of those described in clause (b) above) due and
owing or otherwise payable pursuant to the terms of the Nomura Loan Agreement
and the Mezzanine Loan Agreement, including, without limitation, any additional
amount required to prepay the Loan and the Mezzanine Loan or defease the Loan in
whole or in part in accordance with the terms thereof, including, without
limitation, the Defeasance Deposit or Yield Maintenance Premium, as applicable,
and all costs and fees payable in connection therewith.
"Lease Supplement" means the Memorandum of Lease substantially in the form
of Exhibit B to the Lease, executed and delivered by the Lessee and dated as of
the Acquisition Date for the Property.
"Lender" means Nomura Asset Capital Corporation, together with its
successor and assigns.
"Lessee" means Brookdale Living Communities of Illinois-HV, Inc., as
lessee, and its successors and assigns expressly permitted under the Operative
Documents.
"Lessor" means The Harbor Village Business Trust, a Delaware business
trust.
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"Lessor Basic Rent" means an amount payable quarterly in advance beginning
on the Acquisition Date in the amount of $11,617.27 and on each third Payment
Date and the Expiration Date in an amount equal to the product of the Eurodollar
Lease Rate and $675,000, calculated for the number days then elapsed since the
previous payment of Lessor Basic Rent over a year of 360 days.
"Lessor Lien" means any Lien, true lease or sublease or disposition of
title arising as a result of (a) any claim against the Lessor not resulting from
the transactions contemplated by the Operative Documents (all Liens created or
existing under the Loan Documents and Mezzanine Loan Documents are expressly
made part of the transactions contemplated by the Operative Documents), (b) any
act or omission of the Lessor which is not required by the Operative Documents
or is in violation of any of the terms of the Operative Documents, (c) any claim
against the Lessor with respect to Taxes or Transaction Expenses against which
Lessee is not required to indemnify Lessor pursuant to the Lease or (d) any
claim against the Lessor arising out of any transfer by the Lessor of all or any
portion of the interest of the Lessor in the Property or the Operative Documents
other than the transfer of title to or possession of the Property by the Lessor
pursuant to and in accordance with the Lease or pursuant to the exercise of the
remedies set forth in Article XX of the Lease.
"Lessor Pledge Agreement" means the Pledge Agreement, dated as of the
Documentation Date, between the Lessor and KCCI, pursuant to which the Lessor
pledged to KCCI the Certificate A.
"Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any irrevocable license, conditional sale or other title retention
agreement, any lease in the nature thereof, or any other right of or arrangement
with any creditor to have its claim satisfied out of any specified property or
asset with the proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or recorded, or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any Environmental Law.
"Loan Documents" has the meaning specified therefor in the Nomura Loan
Agreement.
"Marketing Period" means the period commencing upon the Lessee's election
to exercise the Remarketing Option pursuant to Section 24.1(a) of the Lease and
ending on the Expiration Date.
"Material" and "Materially" mean material to (i) as to any Person, the
consolidated financial position, business or consolidated results of operations
of such Person, (ii) as to any
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Person, the ability of such Person to perform in any material respect its
respective obligations under the Operative Documents to which it is a party, or
(iii) the value or condition of the Property.
"Material Assets" means with respect to any Person all Material interests
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible.
"Mezzanine Loan" has the meaning set forth in the Mezzanine Loan Agreement.
"Mezzanine Loan Agreement" means the Mezzanine Loan Agreement dated on or
about March 6, 1998 by and among the Lessor, as Borrower, Nomura Asset Capital
Corporation, as Lender, and the Lessee, as Guarantor and Operator, together with
all amendments, modifications and supplements thereto.
"Mezzanine Loan Documents" has the meaning set forth in the Mezzanine Loan
Agreement.
"Modifications" is defined in Section 14.1(a) of the Lease.
"Net Proceeds" means all amounts paid in connection with any Casualty or
Condemnation or any sale of the Property pursuant to Lessor's exercise of
remedies under Section 20.2 of the Lease or the Lessee's exercise of the
Remarketing Option under Article XXIV of the Lease, and all interest earned
thereon, less the expense of claiming and collecting such amounts, including all
costs and expenses in connection therewith for which the Lessor is entitled to
be reimbursed pursuant to the Lease.
"Nomura Loan Agreement" means the Loan Agreement, dated on or about March
6, 1998, by and among the Lessor, as Borrower, Nomura Asset Capital Corporation,
as Lender, and the Lessee, as Guarantor and Operator, together with all
amendments, modifications and supplements thereto.
"Operative Documents" means the following:
(a) the Lease;
(b) the Deed;
(c) the Lease Supplement;
(d) the SELCO Loan Agreement (Loan Agreement, dated as of March 6,
1998, between the Trust, as borrower and KCCI, as lender) and the
note related thereto;
(e) the Loan Documents;
(f) the Certificate Pledge Agreement;
(g) the Securities Pledge Agreement;
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(h) the Lessor Pledge Agreement;
(i) the SELCO Indemnity;
(j) the Trust Agreement; and
(k) the Mezzanine Loan Documents.
"Overdue Rate" shall have the meaning set forth in the Nomura Loan
Agreement and, while the Mezzanine Loan Agreement is outstanding, the Mezzanine
Loan Agreement, for "Default Rate."
"Parent" means Brookdale Living Communities, Inc.
"Payment Date" has the meaning set forth in the Nomura Loan Agreement and,
while the Mezzanine Loan is outstanding, the Mezzanine Loan Agreement.
"Permitted Liens" shall have the meaning set forth in the Nomura Loan
Agreement and, while the Mezzanine Loan Agreement is outstanding, the Mezzanine
Loan Agreement, for "Permitted Encumbrances", and including Lessor Liens.
"Pledge Agreements" means the Securities Pledge Agreement, the Certificate
Pledge Agreement and the Lessor Pledge Agreement.
"Pledged Securities" means the securities pledged to the Lessor by the
Lessee pursuant to the Securities Pledge Agreement and the proceeds thereof.
"Prime Rate" means the interest rate establish by KeyBank, N.A. as it's
prime rate, whether or not such rate is publicly announced and such rate may not
be the lowest interest rate charged by KeyBank, N.A. for commercial or other
extensions of credit.
"Property" means (a) a fee interest in the Land and (b) all of the
Improvements at any time located on or under the Land.
"Property Cost" means the amount of the Advance funded to the Lessee for
the purpose of acquiring the Property and paying Transaction Expenses relating
to such funding and acquisition, as such amount is set forth in the Funding
Request relating to the acquisition of the Property.
"Purchase Notice" is defined in Section 22.1 of the Lease.
"Purchase Option" is defined in Section 22.1 of the Lease.
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"Release" means any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance in violation of Environmental Law.
"Remarketing Option" is defined in Section 24.1 of the Lease.
"Renewal Term" is defined in Section 23.1 of the Lease.
"Rent" means, collectively, Basic Rent and Supplemental Rent, in each case
payable under the Lease.
"Requesting Party" is defined in Section 27.1 of the Lease.
"Required Modification" is defined in Section 14.1(a) of the Lease.
"Requirement of Law" means all Federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Property, the Improvements or the
demolition, construction, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or
alterations in or to the Property or in any way limit the use and enjoyment
thereof (including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. (S)(S) 1201 et seq. and any other similar
Federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including all
Environmental Laws), and all permits, certificates of occupancy, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments which are either of
record or known to the Lessee affecting the Property, the Appurtenant Rights and
any easements, licenses or other agreements entered into pursuant to Section
15.2 of the Lease.
"Responsible Employee" means, with respect to the Lessee, its Chairman,
President, any of its corporate Vice Presidents, its corporate Controller, its
corporate Treasurer, its corporate Assistant Treasurers or others duly
authorized by such Person to execute documents pursuant to Section 4.3(g) of the
Lease.
"Responsible Employee's Certificate" means a certificate signed by any
Responsible Employee, which certificate shall certify as true and correct the
subject matter being certified to in such certificate.
"Securities Pledge Agreement" means the Securities Pledge Agreement, dated
as of March 6, 1998, between the Lessee and the Lessor pursuant to which the
Lessee pledged the Pledged Securities to the Lessor.
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"SELCO" means SELCO Service Corporation, an Ohio corporation and its
successors and assigns.
"SELCO Basic Rent" means an amount payable quarterly in advance beginning
on the Acquisition Date in the amount of $6,990.46 and on each third Payment
Date and the Expiration Date in an amount, if any, that (a) the product of the
Eurodollar Lease Rate and the then outstanding balance (including principal and
Capitalized Interest) of the B Loan, calculated for the number of days to elapse
from the current SELCO Payment Date to the subsequent SELCO Payment Date over a
year of 360 days, exceeds (b) interest accreted/compounded on the Certificate A
from the current SELCO Payment Date to the subsequent SELCO Payment Date;
provided, however, that to the extent that on a SELCO Payment Date, the amount
of the B Loan (inclusive of principal and Capitalized Interest) is less than the
amount of the Certificate A (inclusive of principal and accreted/compounded
interest) (such differential being referred to herein as the "Deficiency") SELCO
Basic Rent shall be payable in the amount, if any, that SELCO Basic Rent
otherwise payable exceeds the Deficiency, if at all.
"SELCO Indemnity" means the Indemnity Agreement dated as of March 6, 1998
from the Parent to the Borrower's Trustee, KCCI and SELCO.
"SELCO Loan Agreement" means the Loan Agreement, dated as of March 6, 1998,
between The Harbor Village Business Trust, as Borrower, and KCCI, as lender.
"SELCO Payment Date" means the Acquisition Date, each third Payment Date
thereafter and the Expiration Date.
"Seller" means the Person selling the Land to the Lessor.
"Shortfall Amount" means, as of the Expiration Date, an amount equal to (i)
the Lease Balance, minus (ii) the Contingent Rental Adjustment received by the
Lessor from the Lessee pursuant to Section 24.1(i) of the Lease, minus (iii) the
amount of the highest binding, written, unconditional, irrevocable offer to
purchase the Property obtained by the Lessee pursuant to Section 24.1(f) of the
Lease; provided, however, that if the sale of the Property to the Person
submitting such offer is not consummated on or prior to the Expiration Date,
then the term "Shortfall Amount" shall mean an amount equal to (i) the Lease
Balance, minus (ii) the Contingent Rental Adjustment received by the Lessor from
the Lessee pursuant to Section 24.1(i) of the Lease.
"Significant Condemnation" means a Condemnation which causes the Lender to
accelerate the Principal Indebtedness under the Nomura Loan Agreement or the
Principal
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Indebtedness (as defined in the Mezzanine Loan Agreement) under the Mezzanine
Loan Agreement.
"Subsidiary" of any Person means a corporation or other entity of which
securities or other ownership interests having ordinary voting power (other than
securities or other ownership interests having such power by reason of the
happening of a contingency) to elect the majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries or by one or more of such Person's Subsidiaries.
"Supplemental Rent" means all amounts, liabilities and obligations (other
than Basic Rent) which Lessee assumes or agrees to pay to Lessor or any other
Person under the Lease or under any of the other Operative Documents, and all
amounts, liabilities and obligations (other than as described in the definition
of Basic Rent) payable by Lessor, as Borrower, under the Nomura Loan Agreement
or under any other Loan Document, the Mezzanine Loan Agreement, the Mezzanine
Loan Documents, including, without limitation, Break Costs, payments of Excess
Cash Flow, Initial Basic Carrying Costs Amount, Defeasance Deposit, Impositions,
the Initial Capital Reserve Amount and the Initial Securitization Expense
Amount, the Initial Construction Amount, the Initial Trustee Amount, fees
thereunder and any Yield Maintenance Premium and prepayment make whole amounts.
"Tax Indemnitee" means the Lessor, the Trust Company, KCCI and SELCO and
their successors, permitted assigns, directors, shareholders, partners,
officers, employees and agents.
"Taxes" is defined in the definition of Impositions.
"Term" means the period commencing on the Acquisition Date and ending on
the Expiration Date.
"Termination Date" is defined in Section 19.2 and 20.2(e) of the Lease.
"Termination Notice" is defined in Section 19.1 of the Lease.
"Transaction Expenses" means all costs and expenses incurred in connection
with the preparation, execution and delivery of the Operative Documents and the
transactions contemplated by the Operative Documents including without
limitation:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel for each of the Lessor and the Lessee in negotiating the terms of
the Operative Documents and the other transaction documents, preparing for
the closing under, and rendering opinions in connection with, such
transactions and in rendering other services
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customary for counsel representing parties to transactions of the types
involved in the transactions contemplated by the Operative Documents;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
any law firm or other external counsel of the Lessor in connection with (1)
any amendment, supplement, waiver or consent with respect to any Operative
Documents requested or approved by the Lessee and (2) any enforcement of
any rights or remedies against the Lessee in respect of the Operative
Documents;
(c) any other reasonable fees, out-of-pocket expenses, disbursements
or cost of the Lessor to the Operative Documents or any of the other
transaction documents;
(d) any and all Taxes and fees incurred in recording, registering or
filing any Operative Document or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Documents;
(e) any title fees, premiums and escrow costs and other expenses
relating to title insurance and the closings contemplated by the Operative
Documents;
(f) all expenses relating to all Environmental Audits and other due
diligence and other costs and expenses incurred in connection with the
negotiation of the purchase of the Property and in connection with the
investigation and purchase of the Property;
(g) all Transaction Costs described in Section 8.24 of the Nomura
Loan Agreement and Section 8.24 of the Mezzanine Loan Agreement; and
(h) all reasonable fees, out-of-pocket expenses, disbursements or
costs (including counsel fees and expenses) of the Trustee and the
Custodian incurred in connection with the Operative Document.
"Trust Agreement" means the Trust Agreement, dated March 5, 1998, between
the Lessor and SELCO.
"Trust Company" means Wilmington Trust Company in its individual capacity.
"Uniform Commercial Code" and "UCC" mean the Uniform Commercial Code as in
effect in any applicable jurisdiction.
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"Yield Maintenance Premium" has the meaning set forth in the Nomura Loan
Agreement, and while the Mezzanine Loan is outstanding, the Mezzanine Loan
Agreement.
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